COLE CREDIT PROPERTY TRUST II, INC.
As
filed with the Securities and Exchange Commission on April 27,
2007
Registration No. 333-121094
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
POST-EFFECTIVE
AMENDMENT NO. 9 TO
FORM S-11
FOR REGISTRATION UNDER
THE SECURITIES ACT OF 1933
OF CERTAIN REAL ESTATE COMPANIES
COLE CREDIT PROPERTY TRUST II, INC.
(Exact Name of Registrant as Specified in Its Governing Instruments)
2555 East Camelback Road, Suite 400
Phoenix, Arizona 85016
(602) 778-8700
(Address, Including Zip Code and Telephone Number,
Including Area Code, of Registrants Principal Executive Offices)
Blair D. Koblenz
Executive Vice President and Chief Financial Officer
Cole Credit Property Trust II, Inc.
2555 East Camelback Road, Suite 400
Phoenix, Arizona 85016
(602) 778-8700
(Name, Address, Including Zip Code and Telephone Number,
Including Area Code, of Agent for Service)
Copies to:
Lauren Burnham Prevost, Esq.
David M. Calhoun, Esq.
Heath D. Linsky, Esq.
Morris, Manning & Martin, LLP
1600 Atlanta Financial Center
3343 Peachtree Road, N.E.
Atlanta, Georgia 30326-1044
(404) 233-7000
Approximate date of commencement of proposed sale to the public: As soon as practicable
following effectiveness of this Registration Statement.
If this form is filed to register additional securities for an offering pursuant to Rule
462(b) under the Securities Act, check the following box and list the Securities Act registration
statement number of the earlier effective registration statement for
the same offering. o
If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities
Act, check the following box and list the Securities Act registration statement number of the
earlier effective registration statement for the same offering. o
If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities
Act, check the following box and list the Securities Act registration statement number of the
earlier effective registration statement for the same offering. o
If delivery of the prospectus is expected to be made pursuant to Rule 434, check the following
box. o
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This
Post-Effective Amendment No. 9 consists of the following: |
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1. The Registrants final form of Prospectus dated June 27, 2005, previously filed pursuant to Rule
424(b)(3) on June 29, 2005 and refiled herewith. |
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2.
Supplement No. 19 dated April 27, 2007, Supplement No. 18 dated April 18, 2007, Supplement No. 17 dated March 29,
2007, Supplement No. 16 dated March 20, 2007, Supplement
No. 15 dated January 24, 2007, Supplement No. 14
dated January 11, 2007 and Supplement No. 13 dated December 20, 2006 to the Registrants Prospectus
dated June 27, 2005, included herewith, each of which will be delivered as an
unattached document along with the Prospectus dated June 27,
2005. Supplement No. 13 supercedes and replaces all prior
supplements. |
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3. Part II, included herewith. |
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4. Signatures, included herewith. |
Cole Credit Property Trust II, Inc.
Maximum Offering of 50,000,000 Shares of Common Stock
Minimum Offering of 250,000 Shares of Common Stock
Cole Credit Property Trust II, Inc. is a newly organized
Maryland corporation that intends to qualify as a real estate
investment trust beginning with the taxable year ending
December 31, 2005.
We are offering up to a maximum of 45,000,000 shares of our
common stock in our primary offering for $10.00 per share,
with discounts available for certain categories of purchasers.
We also are offering up to 5,000,000 shares pursuant to our
distribution reinvestment plan at a purchase price during this
offering of $9.15 per share. We will offer these shares
until June 27, 2007, which is two years after the effective
date of this offering, unless the offering is extended.
The dealer manager of this offering, Cole Capital Corporation, a
member firm of the National Association of Securities Dealers,
Inc., is our affiliate and will offer the shares on a best
efforts basis. The minimum permitted purchase is generally
$2,500. We will not sell any shares unless we sell a minimum of
250,000 shares to the public by June 27, 2006, which
is one year from the effective date of this offering. Pending
satisfaction of this condition, all subscription payments will
be placed in an account held by the escrow agent, Wells Fargo
Bank, N.A., in trust for subscribers benefit, pending
release to us. You will not receive interest on such payments
unless they are held for more than 35 days unless we do not
sell at least 250,000 shares by June 27, 2006, which
is one year from the effective date of this offering, in which
case we will promptly return all funds in the escrow account
(including interest), and we will stop offering shares.
See Risk Factors beginning on page 18 to
read about risks you should consider before buying shares of our
common stock. These risks include the following:
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We have no operating history nor do we currently own any
properties. We are a blind pool because we do not
own any investments and have not identified any investments we
will make with proceeds from this offering. You will be unable
to evaluate the economic merit of our investments or how the
proceeds from this offering are invested and there may be a
substantial delay in receiving a return, if any, on your
investment. |
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There are substantial conflicts among us and our sponsor,
advisor, dealer manager and property manager, such as the fact
that our chairman and chief executive officer owns 100% of our
advisor, our dealer-manager and our property manager, and our
advisor and other affiliated entities may compete with us and
acquire properties suitable to our investment objectives. |
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No public market currently exists, and one may never exist, for
shares of our common stock. If you are able to sell your shares,
you would likely have to sell them at a substantial discount. |
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Until we generate operating cash flow sufficient to pay
distributions to our stockholders, we may make distributions
from the proceeds of this offering or from borrowings in
anticipation of future cash flow, which may constitute a return
of capital, reduce the amount of capital we ultimately invest in
properties and negatively impact the value of your investment. |
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We may fail to qualify as a real estate investment trust, also
known as a REIT. If we fail to qualify as a REIT, or if we
qualify and subsequently lose our REIT status, our operations
and our ability to make distributions would be adversely
affected. |
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You may not own more than 9.8% in value of the outstanding
shares of our stock or more than 9.8% of the number or value of
any class or series of our outstanding shares of stock. |
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We may incur substantial debt, which could hinder our ability to
pay distributions to our stockholders or could decrease the
value of your investment in the event that income on, or the
value of, the property securing the debt falls. |
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We are dependent on our advisor to select investments and
conduct our operations. Adverse changes in the financial
condition of our advisor or our relationship with our advisor
could adversely affect us. |
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We will pay substantial fees and expenses to our advisor, its
affiliates and participating broker-dealers, which payments
increase the risk that you will not earn a profit on your
investment. |
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This is a best efforts offering and some or all of
our shares may not be sold. |
Neither the Securities and Exchange Commission, the Attorney
General of the State of New York nor any other state securities
regulator has approved or disapproved of our common stock,
determined if this prospectus is truthful or complete or passed
on or endorsed the merits of this offering. Any representation
to the contrary is a criminal offense.
This investment involves a high degree of risk. You should
purchase these securities only if you can afford a complete loss
of your investment.
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Price | |
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Selling | |
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Dealer | |
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Net Proceeds | |
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to Public | |
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Commissions | |
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Manager Fee | |
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(Before Expenses) | |
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Primary Offering
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Per Share
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$ |
10.00 |
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$ |
0.70 |
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$ |
0.15 |
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$ |
9.15 |
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Total Minimum
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$ |
2,500,000 |
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$ |
175,000 |
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$ |
37,500 |
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$ |
2,287,500 |
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Total Maximum
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$ |
450,000,000 |
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$ |
31,500,000 |
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$ |
6,750,000 |
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$ |
411,750,000 |
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Distribution Reinvestment Plan
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Per Share
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$ |
9.15 |
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$ |
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$ |
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$ |
9.15 |
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Total Maximum
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$ |
45,750,000 |
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$ |
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$ |
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$ |
45,750,000 |
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June 27, 2005
SUITABILITY STANDARDS
An investment in our common stock involves a significant risk
and is only suitable for persons who have adequate financial
means, desire a relatively long-term investment and who will not
need immediate liquidity from their investment. Initially, we
will not have a public market for the common stock and we cannot
assure you that one will develop, which means that it may be
difficult for you to sell your shares. This investment is not
suitable for persons who require immediate liquidity or
guaranteed income, or who seek a short-term investment.
In consideration of these factors, we have established
suitability standards for initial stockholders and subsequent
purchasers of shares from our stockholders. These suitability
standards require that a purchaser of shares have, excluding the
value of a purchasers home, furnishings and automobiles,
either:
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a net worth of at least $150,000; or |
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a gross annual income of at least $45,000 and a net worth of at
least $45,000. |
The minimum purchase is 250 shares ($2,500). You may not
transfer less shares than the minimum purchase requirement. In
addition, you may not transfer or subdivide your shares so as to
retain less than the number of shares required for the minimum
purchase. In order to satisfy the minimum purchase requirements
for retirement plans, unless otherwise prohibited by state law,
a husband and wife may jointly contribute funds from their
separate IRAs, provided that each such contribution is made in
increments of $1,000. You should note that an investment in
shares of our common stock will not, in itself, create a
retirement plan and that, in order to create a retirement plan,
you must comply with all applicable provisions of the Internal
Revenue Code.
After you have purchased the minimum investment, any additional
purchase must be at least 100 shares ($1,000), except for
purchases of shares pursuant to our distribution reinvestment
plan, which may be in lesser amounts.
Several states have established suitability requirements that
are more stringent than the standards that we have established
and described above. Shares will be sold only to investors in
these states who meet the special suitability standards set
forth below:
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Arizona, California, Iowa, Michigan and Tennessee
Investors must have either (a) a net worth of at least
$225,000 or (2) gross annual income of at least $60,000 and
a net worth of at least $60,000. |
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Maine Investors must have either (1) a net
worth of at least $200,000 or (2) gross annual income of at
least $50,000 and a net worth of at least $50,000. |
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Kansas In addition to our standard suitability
requirements, it is recommended that investors should invest no
more than ten percent of their liquid net worth in our shares
and securities of other real estate investment trusts. |
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Ohio, Massachusetts and Pennsylvania Investors must
have either (a) a minimum annual gross income of $70,000
and a minimum net worth of $70,000 or (b) a minimum net worth of
$250,000. The investors maximum investment in the issuer
and affiliates cannot exceed 10% of the Ohio, Massachusetts or
Pennsylvania residents net worth. |
In all states listed above, net worth is to be determined
excluding the value of a purchasers home, furnishings and
automobiles.
Because the minimum offering of our common stock is less than
$25,000,000, Pennsylvania investors are cautioned to evaluate
carefully our ability to accomplish fully our stated objectives
and to inquire as to the current dollar volume of our
subscription proceeds.
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Each participating broker-dealer, authorized representative or
any other person selling shares on our behalf is required to:
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make every reasonable effort to determine that the purchase of
shares is a suitable and appropriate investment for each
investor based on information provided by such investor to the
broker-dealer, including such investors age, investment
objectives, income, net worth, financial situation and other
investments held by such investor; and |
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maintain records for at least six years of the information used
to determine that an investment in the shares is suitable and
appropriate for each investor. |
In making this determination, your participating broker-dealer,
authorized representative or other person selling shares on our
behalf will, based on a review of the information provided by
you, consider whether you:
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meet the minimum income and net worth standards established in
your state; |
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can reasonably benefit from an investment in our common stock
based on your overall investment objectives and portfolio
structure; |
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are able to bear the economic risk of the investment based on
your overall financial situation; and |
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have an apparent understanding of: |
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the fundamental risks of an investment in our common stock; |
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the risk that you may lose your entire investment; |
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the lack of liquidity of our common stock; |
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the restrictions on transferability of our common stock; |
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the background and qualifications of our advisor; and |
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the tax consequences of an investment in our common stock. |
In the case of sales to fiduciary accounts, the suitability
standards must be met by the fiduciary account, by the person
who directly or indirectly supplied the funds for the purchase
of the shares or by the beneficiary of the account. Given the
long-term nature of an investment in our shares, our investment
objectives and the relative illiquidity of our shares, our
suitability standards are intended to help ensure that shares of
our common stock are an appropriate investment for those of you
who become investors.
ii
TABLE OF CONTENTS
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vi
QUESTIONS AND ANSWERS ABOUT THIS OFFERING
Below we have provided some of the more frequently asked
questions and answers relating to an offering of this type.
Please see Prospectus Summary and the remainder of
this prospectus for more detailed information about this
offering.
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Q: |
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What is a REIT? |
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In general, a real estate investment trust (REIT) is a company
that: |
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pays distributions to investors of at least 90.0% of
its taxable income; |
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avoids the double taxation treatment of
income that generally results from investments in a corporation
because a REIT generally is not subject to federal corporate
income taxes on its net income, provided certain income tax
requirements are satisfied; and |
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combines the capital of many investors to acquire a
large-scale diversified real estate portfolio under professional
management. |
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How are you different from your competitors who offer
unlisted finite-life public REIT shares or real estate limited
partnership units? |
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We will focus our investments on the acquisition of
freestanding, single-tenant commercial properties net leased to
investment grade and other creditworthy tenants. Unlike funds
that invest in a limited number of multi-tenant properties, we
plan to acquire a diversified portfolio with a larger number of
single-tenant properties. Therefore, lower than expected results
of operations from one or a few investments will not necessarily
preclude our ability to realize our investment objectives of
current income to our investors and preservation of capital from
our overall portfolio. Our management believes that freestanding
retail properties, as compared to shopping centers, malls or
other retail complexes as a whole, offer a distinct investment
advantage since these properties generally offer superior
locations that are less dependent on the financial stability of
adjoining tenants. In addition, since we intend to acquire
properties that are geographically diverse, we expect to
minimize the potential adverse impact of economic downturns in
local markets. Also, when we acquire a property, we focus on
properties with a long term lease with investment grade or other
creditworthy tenants. |
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What is the experience of your officers and directors? |
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Christopher H. Cole, our chairman, chief executive officer and
president, has been active in the acquisition, financing,
management and structuring of commercial real estate
transactions for over 25 years and has been engaged as a
general partner in the structuring and management of real estate
limited partnerships since February 1979. He also is the chief
executive officer of Cole REIT Advisors II LLC, (Cole
Advisors II), which is our advisor. Through Mr. Coles
affiliated entities, as of December 31, 2004, Mr. Cole
has sponsored 47 private real estate programs with an aggregate
of over 5,000 investors since January 1, 1995. |
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Blair D. Koblenz, our executive vice president and chief
financial officer, has been active in the structuring and
financial management of commercial real estate investments for
over 20 years. He also is executive vice president and
chief financial officer of Cole Advisors II. Prior to
joining the Cole entities in 1994, he practiced in public
accounting from 1979 to 1982 with an emphasis in taxation and
business planning. He then served in a financial officer
capacity for real estate investment companies and operators in
Arizona from 1982 to 1994. |
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John M. Pons, our secretary, also is vice president, secretary
and counsel of Cole Advisors II. Prior to joining the Cole
entities in September 2003, Mr. Pons was an associate
general counsel and assistant secretary with GE Capital
Franchise Finance Corporation since December 2001. Prior to
December 2001, Mr. Pons was engaged in a private legal
practice. Mr. Pons has over nine years experience in all
aspects of real estate law, including the acquisition, sale,
leasing, development and financing of real property. |
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Marcus E. Bromley is a member of our board of directors,
chairman of its audit committee and a member of its compensation
committee. Since December 1993, Mr. Bromley has served
as a member of the board of trustees of Gables Residential
Trust, a multi-family residential REIT listed on the New York
Stock Exchange. From December 1993 until June 2000, Mr. Bromley
also served as the chief executive officer of Gables Residential
Trust. Prior to joining Gables Residential Trust, Mr. Bromley
was a division partner of Trammell Crow Residential. |
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Elizabeth L. Watson is a member of our board of directors,
chairperson of its audit committee and a member of its
compensation committee. Since September 2003, Ms. Watson
has been a partner in and has served as the chief operating
officer for NGP Capital Partners III, LLC (NGP Capital). In
addition to other positions in the real estate capital market
industry, from 1992 until 1994, Ms. Watson served as senior
vice president, chief financial officer and treasurer of Prime
Retail, Inc., a publicly traded REIT that developed and owned
factory outlet centers, and its predecessor company, The Prime
Group. |
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Will you acquire properties in joint ventures? |
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Possibly. We may want to acquire properties through one or more
joint ventures in order to diversify our portfolio of properties
in terms of geographic region, property type and tenant industry
group. Increased portfolio diversification will reduce the risk
to investors as compared to a program with a smaller number of
investments. Our joint ventures may be with our affiliates or
with third parties. Generally, we will only enter into a joint
venture in which we will control the decisions of the joint
venture. If we do enter into joint ventures, we may assume
liabilities related to the joint venture that exceed the
percentage of our investment in the joint venture. |
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What steps do you take to make sure you invest in
environmentally compliant property? |
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Generally, we will obtain a Phase I environmental
assessment of each property purchased. These assessments,
however, may not reveal all environmental hazards. In certain
instances, we will rely upon the experience of our advisor and
we expect that in most cases we will obtain a representation
from the seller that, to its knowledge, the property is not
contaminated with hazardous materials. |
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What will be the terms of your leases? |
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We will seek to secure leases from investment grade and other
creditworthy tenants before or at the time we acquire a
property. We expect that our leases generally will be net
leases, which means that the tenant would be responsible for the
cost of repairs, maintenance, property taxes, utilities,
insurance and other operating costs. In certain of these leases,
we will be responsible for the replacement of specific
structural components of a property, such as the roof of the
building or the parking lot. We expect that our leases generally
will have terms of ten or more years, some of which may have
renewal options. We may, however, enter into leases that have a
shorter term. |
|
Q: |
|
How will you determine whether tenants have the appropriate
creditworthiness for each building lease? |
|
A: |
|
We will determine creditworthiness pursuant to various methods,
including reviewing financial data and other information about
the tenant. In addition, we may use an industry credit rating
service to determine the creditworthiness of potential tenants
and any personal guarantor or corporate guarantor of each
potential tenant. We will compare the reports produced by these
services to the relevant financial and other data collected from
these parties before consummating a lease transaction. Such
relevant data from potential tenants and guarantors include
income statements and balance sheets for current and prior
periods, net worth or cash flow of guarantors, and business
plans and other data we deem relevant. |
|
Q: |
|
What is an UPREIT? |
|
A: |
|
UPREIT stands for Umbrella Partnership Real Estate
Investment Trust. We use an UPREIT structure because a
sale of property directly to a REIT generally is a taxable
transaction to the |
2
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selling property owner. In an UPREIT structure, a seller of a
property that desires to defer taxable gain on the sale of its
property may transfer the property to the UPREIT in exchange for
limited partnership units in the UPREIT and defer taxation of
gain until the seller later exchanges its UPREIT units on a
one-for-one basis for REIT shares. If the REIT shares are
publicly traded, at the time of the exchange of units for
shares, the former property owner will achieve liquidity for its
investment. Using an UPREIT structure may give us an advantage
in acquiring desired properties from persons who may not
otherwise sell their properties because of unfavorable tax
results. |
|
Q: |
|
Will the distributions I receive be taxable as ordinary
income? |
|
A: |
|
Yes and no. Generally, distributions that you receive, including
distributions that are reinvested pursuant to our distribution
reinvestment plan, will be taxed as ordinary income to the
extent they are from current or accumulated earnings and
profits. We expect that some portion of your distributions may
not be subject to tax in the year received because depreciation
expense reduces taxable income but does not reduce cash
available for distribution. The portion of your distribution
that is not subject to tax immediately is considered a return of
capital for tax purposes and will reduce the tax basis of your
investment. This, in effect, defers a portion of your tax until
your investment is sold or we are liquidated, at which time you
will be taxed at capital gains rates. However, because each
investors tax considerations are different, we suggest
that you consult with your tax advisor. You also should review
the section of this prospectus entitled Federal Income Tax
Considerations. |
|
Q: |
|
What will you do with the money raised in this offering
before you invest the proceeds in real estate? |
|
A: |
|
|
|
|
Until we invest the proceeds of this offering in real estate, we
may invest in short-term, highly liquid or other authorized
investments. Such short-term investments will not earn as high
of a return as we expect to earn on our real estate investments,
and we may be not be able to invest the proceeds in real estate
promptly. |
|
Q: |
|
How does a best efforts offering work? |
|
A: |
|
When shares are offered to the public on a best
efforts basis, the brokers participating in the offering
are only required to use their best efforts to sell the shares
and have no firm commitment or obligation to purchase any of the
shares. Therefore, we may not sell all or any of the shares that
we are offering. |
|
Q: |
|
Who can buy shares? |
|
A: |
|
Generally, you may buy shares pursuant to this prospectus
provided that you have either (1) a net worth of at least
$45,000 and a gross annual income of at least $45,000, or
(2) a net worth of at least $150,000. For this purpose, net
worth does not include your home, home furnishings and
automobiles. You should carefully read the more detailed
description under Suitability Standards immediately
following the cover page of this prospectus. |
|
Q: |
|
For whom is an investment in our shares recommended? |
|
A: |
|
An investment in our shares may be appropriate for you if you
meet the minimum suitability standards mentioned above, seek to
diversify your personal portfolio with a finite-life, real
estate-based investment, seek to receive current income, seek to
preserve capital, wish to obtain the benefits of potential
long-term capital appreciation and are able to hold your
investment for a time period consistent with our liquidity
plans. On the other hand, we caution persons who require
immediate liquidity or guaranteed income, or who seek a
short-term investment, that an investment in our shares will not
meet those needs. |
|
Q: |
|
May I make an investment through my IRA, SEP or other
tax-deferred account? |
|
A: |
|
Yes. You may make an investment through your individual
retirement account (IRA), a simplified employee pension
(SEP) plan or other tax-deferred account. In making these
investment decisions, |
3
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you should consider, at a minimum, (1) whether the
investment is in accordance with the documents and instruments
governing your IRA, plan or other account, (2) whether the
investment satisfies the fiduciary requirements associated with
your IRA, plan or other account, (3) whether the investment
will generate unrelated business taxable income (UBTI) to
your IRA, plan or other account, (4) whether there is
sufficient liquidity for such investment under your IRA, plan or
other account, (5) the need to value the assets of your
IRA, plan or other account annually or more frequently, and
(6) whether the investment would constitute a prohibited
transaction under applicable law. |
|
Q: |
|
Have you arranged for a custodian for investments made
through IRA, SEP or other tax-deferred accounts? |
|
A: |
|
Yes. Sterling Trust Company has agreed to serve as custodian for
investments made through IRA, SEP and certain other tax-deferred
accounts. Sterling Trust Company has agreed to provide this
service to our stockholders with annual maintenance fees charged
at a discounted rate. |
|
Q: |
|
Is there any minimum investment required? |
|
A: |
|
Yes. Generally, you must invest at least $2,500. Investors who
already own our shares can make additional purchases for less
than the minimum investment. You should carefully read the more
detailed description of the minimum investment requirements
appearing under Suitability Standards immediately
following the cover page of this prospectus. |
|
Q: |
|
How do I subscribe for shares? |
|
A: |
|
If you choose to purchase shares in this offering, you will need
to complete and sign a subscription agreement, like the one
contained in this prospectus as Appendix B, for a specific
number of shares and pay for the shares at the time you
subscribe. |
|
Q: |
|
Who is the transfer agent? |
|
A: |
|
The name, address and telephone number of our transfer agent is
as follows: |
|
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Phoenix Transfer, Inc.
2401 Kerner Boulevard
San Rafael, California 94901
(866) 341-2653 |
|
|
|
To ensure that any account changes are made promptly and
accurately, all changes including your address, ownership type
and distribution mailing address should be directed to the
transfer agent. |
|
Q: |
|
Will I be notified of how my investment is doing? |
|
A: |
|
Yes. We will provide you with periodic updates on the
performance of your investment with us, including: |
|
|
|
following our commencement of distributions to
stockholders, four quarterly or 12 monthly distribution
reports; |
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three quarterly financial reports; |
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an annual report; |
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an annual Form 1099; and |
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supplements to the prospectus during the offering
period. |
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We will provide this information to you via one or more of the
following methods, in our discretion and with your consent, if
necessary: |
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U.S. mail or other courier; |
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|
facsimile; |
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electronic delivery; and |
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posting on our affiliated website, which is
www.colecapital.com. |
4
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|
Q: |
|
When will I get my detailed tax information? |
|
A: |
|
Your Form 1099 tax information will be placed in the mail
by January 31 of each year. |
|
Q: |
|
Who can help answer my questions? |
|
A: |
|
If you have more questions about the offering or if you would
like additional copies of this prospectus, you should contact
your registered representative or contact: |
Cole Capital Corporation
2555 East Camelback Road, Suite 400
Phoenix, Arizona 85016
(866) 341-2653
Attn: Investor Services
www.colecapital.com
5
PROSPECTUS SUMMARY
This prospectus summary highlights material information
contained elsewhere in this prospectus. Because it is a summary,
it may not contain all of the information that is important to
you. To understand this offering fully, you should read the
entire prospectus carefully, including the Risk
Factors section and the financial statements, before
making a decision to invest in our common stock.
Cole Credit Property Trust II, Inc.
Cole Credit Property Trust II, Inc. is a newly organized
Maryland corporation incorporated on September 29, 2004,
that intends to qualify as a REIT beginning with the taxable
year that will end December 31, 2005. We expect to use
substantially all of the net proceeds from this offering to
acquire and operate commercial real estate primarily consisting
of high quality, freestanding, single-tenant commercial
properties net leased to investment grade and other creditworthy
tenants located throughout the United States. Because we have
not yet identified any specific properties to purchase, we are
considered to be a blind pool.
Our office is located at 2555 East Camelback Road,
Suite 400, Phoenix, Arizona 85016. Our telephone number
outside the State of Arizona is 866-341-2653. Our fax number is
602-778-8780, and the e-mail address of our investor relations
department is investorservices@colecapital.com.
Additional information about us and our affiliates may be
obtained at www.colecapital.com, but the contents of that
site are not incorporated by reference in or otherwise a part of
this prospectus.
Our Advisor
Cole Advisors II, a Delaware limited liability company,
will be our advisor and will be responsible for managing our
affairs on a day-to-day basis and for identifying and making
acquisitions on our behalf.
Our Management
We operate under the direction of our board of directors, the
members of which are accountable to us and our stockholders as
fiduciaries. Currently, we have three directors, Christopher H.
Cole, Marcus E. Bromley and Elizabeth L. Watson.
Mr. Bromley and Ms. Watson each will be independent of Cole
Advisors II. Our executive officers and one of our directors are
affiliated with Cole Advisors II. Our charter, which
requires that a majority of our directors be independent of Cole
Advisors II, requires that our independent directors will be
responsible for reviewing the performance of Cole
Advisors II and must approve other matters set forth in our
charter. See the Conflicts of Interest Certain
Conflict Resolution Procedures section of this prospectus.
Our directors will be elected annually by the stockholders.
Our REIT Status
If we qualify as a REIT, we generally will not be subject to
federal income tax on income that we distribute to our
stockholders. Under the Internal Revenue Code, a REIT is subject
to numerous organizational and operational requirements,
including a requirement that it distribute at least 90.0% of its
annual taxable income to its stockholders. If we fail to qualify
for taxation as a REIT in any year, our income will be taxed at
regular corporate rates, and we may be precluded from qualifying
for treatment as a REIT for the four-year period following our
failure to qualify. Even if we qualify as a REIT for federal
income tax purposes, we may still be subject to state and local
taxes on our income and property and to federal income and
excise taxes on our undistributed income.
6
Summary Risk Factors
Following are the most significant risks relating to your
investment:
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|
|
Our advisor and its affiliates will face conflicts of interest,
including significant conflicts among us and our advisor, since
(i) our chairman, chief executive officer and president
owns 100% of our advisor, our dealer manager and our property
manager, (ii) our advisor and other affiliated entities may
compete with us and acquire properties suitable to our
investment objectives, and (iii) our advisors
compensation arrangements with us and other Cole-sponsored
programs may provide incentives that are not aligned with the
interests of our stockholders. |
|
|
|
We have no operating history, nor do we currently own any
properties. This is considered a blind pool offering since we
have not identified any properties to acquire with the proceeds
of this offering. As a result, you will be unable to evaluate
the economic merit of our investments or how the proceeds of
this offering are invested and there may be a substantial delay
in receiving a return, if any, on your investment. |
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|
You may not own more than 9.8% in value of the outstanding
shares of our common stock or more than 9.8% of the number or
value of any class or series of our outstanding shares of stock.
Therefore, your ability to control the direction of our company
will be limited. |
|
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|
No public market currently exists for our shares of common stock
and one may never exist. If you are able to sell your shares,
you would likely have to sell them at a substantial discount
from their public offering price. |
|
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|
This is a best efforts offering and some or all of our shares
may not be sold. |
|
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|
If we raise substantially less than the maximum offering, we may
not be able to invest in a diverse portfolio of properties, and
the value of your investment may vary more widely with the
performance of specific properties. |
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|
We may incur substantial debt, which could hinder our ability to
pay distributions to our stockholders or could decrease the
value of your investment in the event that income on, or the
value of, the property securing the debt falls. |
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|
Until the proceeds from this offering are invested and
generating operating cash flow sufficient to make distributions
to our stockholders, we intend to pay all or a substantial
portion of our distributions from the proceeds of this offering
or from borrowings in anticipation of future cash flow, which
may constitute a return of your capital, reduce the amount of
capital we ultimately invest in properties, and negatively
impact the value of your investment. |
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We may fail to qualify as a REIT. If we fail to qualify as a
REIT, or if we qualify and subsequently lose our REIT status,
our operations and our ability to make distributions would be
adversely affected. |
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We are dependent on our advisor to select investments and
conduct our operations; thus, we would be adversely affected by
adverse changes in the financial condition of our advisor or our
relationship with our advisor. |
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|
We will pay substantial fees and expenses to our advisor and its
affiliates, which payments are not dependent on the quality of
the property acquired or the services provided to us. |
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|
Our board of directors has the authority to designate and issue
one or more classes or series of preferred stock without
stockholder approval, with rights and preferences senior to the
rights of holders of common stock, including rights to payment
of distributions. If we issue any preferred shares, the amount
of funds available for the payment of distributions on the
common stock could be reduced or eliminated. |
Before you invest in us, you should carefully read and consider
the more detailed Risk Factors section of this
prospectus.
7
Description of Real Estate Investments
We expect to use substantially all of the net proceeds from this
offering to acquire and operate commercial real estate primarily
consisting of high quality, freestanding, single-tenant
commercial properties net leased to investment grade tenants,
which generally are companies that have a debt rating by
Moodys of Baa3 or better or a credit rating by Standard
& Poors of BBB- or better, or are guaranteed by a
company with such rating, and other creditworthy tenants located
throughout the United States. We intend to hold each property
for eight to ten years. We also may invest in entities that make
similar investments. In addition, if our advisor determines
that, due to the state of the real estate market or in order to
diversify our investment portfolio, it would be advantageous to
us, we also may invest in mortgage loans secured by commercial
properties.
Our advisor, Cole Advisors II, will make recommendations to our
board of directors for our investments. All acquisitions of
commercial properties will be evaluated for tenant
creditworthiness and the reliability and stability of their
future income and capital appreciation potential. We will
consider the risk profile, credit quality and reputation of
tenants and the impact of each particular acquisition as it
relates to the portfolio as a whole. Our board of directors will
exercise its fiduciary duties to our stockholders in determining
to approve or reject each of these investment recommendations.
Because we have not yet identified any specific properties to
purchase, we are considered to be a blind pool. As we acquire
properties, we will supplement this prospectus to describe
material changes to our portfolio.
Estimated Use of Proceeds of This Offering
Depending primarily on the number of shares we sell in this
offering and assuming all shares sold under our distribution
reinvestment plan are sold at $9.15 per share, we estimate
for each share sold in this offering that approximately $8.86
will be available for the purchase of real estate. We will use
the remainder of the offering proceeds to pay the costs of the
offering, including selling commissions and the dealer manager
fee, and to pay a fee to our advisor for its services in
connection with the selection and acquisition of properties. We
will not pay selling commissions or a dealer manager fee on
shares sold under our distribution reinvestment plan. The table
below sets forth our estimated use of proceeds from this
offering:
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|
Minimum Offering | |
|
Maximum Offering | |
|
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| |
|
| |
|
|
Amount | |
|
Percent | |
|
Amount | |
|
Percent | |
|
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| |
|
| |
|
| |
|
| |
Gross Offering Proceeds
|
|
$ |
2,500,000 |
|
|
|
100.0 |
% |
|
$ |
495,750,000 |
|
|
|
100.0 |
% |
Less Public Offering Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling Commissions and Dealer Manager Fee
|
|
|
212,500 |
|
|
|
8.5 |
% |
|
|
38,250,000 |
|
|
|
7.7 |
% |
|
Organization and Offering Expenses
|
|
|
37,500 |
|
|
|
1.5 |
% |
|
|
7,436,250 |
|
|
|
1.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount Available for Investment
|
|
$ |
2,250,000 |
|
|
|
90.0 |
% |
|
$ |
450,063,750 |
|
|
|
90.8 |
% |
Acquisition and Development:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
Acquisition and Advisory Fees
|
|
|
43,902 |
|
|
|
1.8 |
% |
|
|
8,781,732 |
|
|
|
1.8 |
% |
|
Acquisition Expenses
|
|
|
10,976 |
|
|
|
0.4 |
% |
|
|
2,195,433 |
|
|
|
0.4 |
% |
|
Initial Working Capital Reserve
|
|
|
0 |
|
|
|
0 |
% |
|
|
0 |
|
|
|
0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount Invested in Properties
|
|
$ |
2,195,122 |
|
|
|
87.8 |
% |
|
$ |
439,086,585 |
|
|
|
88.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment Objectives
Our primary investment objectives are:
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|
to provide current income for you through the payment of cash
distributions; and |
|
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|
to preserve, protect and return your invested capital. |
8
We also seek capital gain from our investments. See the
Investment Objectives and Policies section of this
prospectus for a more complete description of our investment
policies and investment restrictions.
Conflicts of Interest
Cole Advisors II, as our advisor, will experience conflicts
of interest in connection with the management of our business
affairs, including the following:
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|
The management personnel of Cole Advisors II, each of whom
also makes investment decisions for other Cole-sponsored
programs, must determine which investment opportunities to
recommend to us or another Cole-sponsored program or joint
venture and must determine how to allocate resources among us
and the other Cole-sponsored programs; |
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|
Cole Advisors II may structure the terms of joint ventures
between us and other Cole-sponsored programs; |
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|
We have retained Fund Realty Advisors, Inc. (Fund Realty
Advisors), an affiliate of Cole Advisors II, to manage and
lease some or all of our properties; |
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Cole Advisors II and its affiliates will have to allocate
their time between us and other real estate programs and
activities in which they are involved; and |
|
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Cole Advisors II and its affiliates will receive fees in
connection with transactions involving the purchase, management
and sale of our properties regardless of the quality of the
property acquired or the services provided to us. |
Our officers and one of our directors also will face these
conflicts because of their affiliation with Cole
Advisors II. In addition, three persons who are officers
and/or a director of our company also serve as officers and/or
directors of Cole Credit Property Trust, Inc. (Cole
REIT I), an affiliated, private real estate program, and
Cole REIT Advisors, LLC (Cole Advisors), the advisor to Cole
REIT I. These conflicts of interest could result in decisions
that are not in our best interests. See the Conflicts of
Interest section of this prospectus for a detailed
discussion of the various conflicts of interest relating to your
investment, as well as the procedures that we have established
to mitigate a number of these potential conflicts.
9
The following chart shows the ownership structure of the various
Cole entities that are affiliated with Cole Advisors II.
|
|
(1) |
Christopher H. Cole, our chairman, chief executive officer and
president, owns 99% of the membership interests, and Cole
Holdings Corporation owns 1% of the membership interests, of
Cole Capital Partners. |
|
(2) |
The investors will own registered shares of common stock in Cole
Credit Property Trust II, Inc. |
|
(3) |
Cole Holdings Corporation currently owns 20,000 shares of our
common stock. The amount shown is prior to this offering. After
the offering, Cole Holdings Corporation will own between 7.4% of
our common stock, assuming a minimum offering, and 0.04% of our
common stock, assuming a maximum offering, including the sale of
5,000,000 shares under our distribution reinvestment plan. |
10
Prior Offering Summary
Since January 1, 1995 our chairman, chief executive officer
and president, Christopher H. Cole, through entities he directly
or indirectly controls, has previously sponsored 48 privately
offered real estate programs, including 24 limited partnerships,
four debt offerings and 19 tenant-in-common programs, and is
currently sponsoring Cole REIT I, a privately offered REIT.
As of March 31, 2005, such programs have raised an
aggregate of approximately $287.2 million from over 5,400
investors, and have owned and operated a total of
118 commercial real estate properties. Neither
Mr. Cole, nor any of our other affiliates, has previously
sponsored or organized a publicly offered REIT. The Prior
Performance Summary section of this prospectus contains a
discussion of the programs sponsored by Mr. Cole since
January 1, 1995. Certain financial results and information
relating to such programs with investment objectives similar to
ours is also provided in the Prior Performance
Tables included as Appendix A to this prospectus. The
prior performance of the programs previously sponsored by
Mr. Cole is not necessarily indicative of the results that
we will achieve. Therefore, you should not assume that you will
experience returns, if any, comparable to those experienced by
investors in such prior real estate programs.
The Offering
We are offering an aggregate of 45,000,000 shares of common
stock in our primary offering on a best-efforts basis at
$10.00 per share. Discounts are available for certain
categories of purchasers as described in the Plan of
Distribution section of this prospectus. We are also
offering 5,000,000 shares of common stock under our
distribution reinvestment plan at $9.15 per share, subject to
certain limitations, as described in the Distribution
Reinvestment Plan section of this prospectus. We will
offer shares of common stock in our primary offering until the
earlier of June 27, 2007, which is two years from the
effective date of this offering, unless the offering is
extended, or the date we sell 45,000,000 shares. We may
sell shares under the distribution reinvestment plan beyond the
termination of our primary offering until we have sold
5,000,000 shares through the reinvestment of distributions,
but only if there is an effective registration statement with
respect to the shares. Under the Securities Act of 1933, as
amended (Securities Act), and in some states, we may not be able
to continue the offering for these periods without filing a new
registration statement, or in the case of shares sold under the
distribution reinvestment plan, renew or extend the registration
statement in such state. We may terminate this offering at any
time prior to the stated termination date.
We will not sell any shares unless we sell a minimum of
250,000 shares of our common stock by June 27, 2006,
which is one year from the effective date of this offering. Our
directors, officers, advisor and their respective affiliates may
purchase for investment shares of our common stock in this
offering. However, purchases by our directors, officers, advisor
or their affiliates will not count toward meeting this minimum
threshold. Pending satisfaction of this condition, all
subscription payments will be placed in an account held by the
escrow agent, Well Fargo Bank, N.A., in trust for
subscribers benefit, pending release to us. If we do not
sell 250,000 shares of our common stock to the public by
June 27, 2006, which is one year from the effective date of
this offering, we will terminate this offering and return all
subscribers funds, plus interest, without deduction for
any expenses within ten days thereafter. Funds in escrow
will be invested in short-term investments that mature on or
before June 27, 2006, which is one year from the effective
date of this offering, or that can be readily sold or otherwise
disposed of for cash by such date without any dissipation of the
offering proceeds invested. See Plan of
Distribution Special Notice to Pennsylvania
Investors regarding the sale of shares to Pennsylvania
investors.
Compensation to Cole Advisors II and its Affiliates
Cole Advisors II and its affiliates will receive
compensation and reimbursement for services relating to this
offering and the investment and management of our assets. The
most significant items of compensation are included in the table
below. The selling commissions and dealer manager fee may vary
for different categories of purchasers. See the Plan of
Distribution section of this prospectus. The table below
assumes the shares are sold through distribution channels
associated with the highest possible selling
11
commissions and dealer manager fees and accounts for the fact
that shares are sold through our distribution reinvestment plan
at $9.15 per share with no selling commissions and no dealer
manager fee.
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|
Estimated Amount for | |
|
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|
|
Minimum Offering | |
|
|
|
|
(250,000 shares)/Maximum | |
|
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|
|
Offering | |
Type of Compensation |
|
Determination of Amount |
|
(50,000,000 shares) | |
|
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|
| |
Offering
Stage |
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Selling Commissions
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We will pay to Cole Capital Corporation 7.0% of gross proceeds
of our primary offering; we will not pay any selling commissions
on sales of shares under our distribution reinvestment plan;
Cole Capital Corporation will reallow all selling commissions to
participating broker-dealers. |
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$175,000/$31,500,000 |
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Dealer Manager Fee
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We will pay to Cole Capital Corporation 1.5% of gross proceeds
of our primary offering; we will not pay a dealer manager fee
with respect to sales under our distribution reinvestment plan. |
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$37,500/$6,750,000 |
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Other Organization and Offering Expenses
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We will reimburse Cole Advisors II up to 1.5% of gross
offering proceeds for organization and offering expenses. |
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$37,500/$7,436,250 |
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Operational
Stage |
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Acquisition and Advisory Fees
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We will pay Cole Advisors II 2.0% of the contract purchase
price of each property acquired. |
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$43,902/$8,781,732 |
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Acquisition Expenses
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We will reimburse Cole Advisors II for acquisition expenses
incurred in acquiring property. We expect these fees to be
approximately 0.5% of the purchase price of each property. In no
event will the total of all acquisition and advisory fees and
acquisition expenses payable with respect to a particular
investment exceed 6% of the contract purchase price. |
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Actual amounts are dependent upon the actual expenses incurred in acquiring a property or asset, and therefore cannot be determined at this time. |
Asset Management Fees
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We will pay Cole Advisors II a monthly fee equal to
0.02083%, which is one-twelfth of 0.25%, of the aggregate assets
value plus costs and expenses incurred by the advisor in
providing asset management services. |
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Not determinable at this time. Because the fee is based on a fixed percentage of aggregate asset value there is no maximum dollar amount of this fee. |
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Estimated Amount for | |
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Minimum Offering | |
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(250,000 shares)/Maximum | |
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Offering | |
Type of Compensation |
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Determination of Amount |
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(50,000,000 shares) | |
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Property Management and Leasing Fees
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For the management and leasing of our properties, we will pay
Fund Realty Advisors, an affiliate of our advisor, a property
management fee equal to 2.0% of gross revenues plus market-based
leasing commissions applicable to the geographic location of the
property. We also will reimburse Fund Realty Advisors
costs of managing the properties. Fund Realty Advisors or its
affiliates may also receive a fee for the initial leasing of
newly constructed properties, which would generally equal one
months rent. The aggregate of all property management and
leasing fees paid to our affiliates plus all payments to third
parties for such fees will not exceed the amount that other
nonaffiliated management and leasing companies generally charge
for similar services in the same geographic location as
determined by a survey of brokers and agents in such area. |
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Not determinable at this time. Because the fee is based on a fixed percentage of gross revenue and/or market rates, there is no maximum dollar amount of this fee. |
Operating Expenses
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We will reimburse our advisors costs of providing
administrative services, subject to the limitation that we will
not reimburse our advisor for any amount by which our operating
expenses (including the asset management fee) at the end of the
four preceding fiscal quarters exceeds the greater of(i) 2%
of average invested assets, or (ii) 25% of net income other
than any additions to reserves for depreciation, bad debt or
other similar non-cash reserves and excluding any gain from the
sale of assets for that period. Additionally, we will not
reimburse our advisor for personnel costs in connection with
services for which the advisor receives acquisition fees or real
estate commissions. |
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Not determinable at this time. |
Financing Coordination Fee
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If our advisor provides services in connection the origination
or refinancing of any debt that we obtain and use to acquire
properties or to make other permitted investments, we will pay
the advisor a financing coordination fee equal to 1% of the
amount available under such financing, subject to certain
limitations. |
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Not determinable at this time. Because the fee is based on a fixed percentage of any debt financing, there is no maximum dollar amount of this fee. |
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Estimated Amount for | |
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Minimum Offering | |
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(250,000 shares)/Maximum | |
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Offering | |
Type of Compensation |
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Determination of Amount |
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(50,000,000 shares) | |
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Liquidation/ Listing Stage |
Real Estate Commissions
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Up to one-half of the brokerage commission paid on the sale of
property, not to exceed 2.0% of the contract price for property
sold, in each case, payable to our advisor if our advisor or its
affiliates, as determined by a majority of the independent
directors, provided a substantial amount of services in
connection with the sale. |
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Not determinable at this time. Because the commission is based on a fixed percentage of the contract price for a sold property, there is no maximum dollar amount of these commissions. |
Subordinated Participation in Net Sale Proceeds (payable only if
we are not listed on an exchange)
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10.0% of remaining net sale proceeds after return of capital
plus payment to investors of an 8.0% cumulative, non-compounded
return on the capital contributed by investors. We cannot assure
you that we will provide this 8.0% return, which we have
disclosed solely as a measure for our advisors incentive
compensation. |
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Not determinable at this time. There is no maximum amount of these payments. |
Subordinated Incentive Listing Fee (payable only if we are
listed on an exchange, which we have no intent to do at this
time)
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10.0% of the amount by which our adjusted market value plus
distributions exceeds the aggregate capital contributed by
investors plus an amount equal to an 8.0% cumulative,
non-compounded annual return to investors. We cannot assure you
that we will provide this 8.0% return, which we have disclosed
solely as a measure for our advisors incentive
compensation. |
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Not determinable at this time. There is no maximum amount of this fee. |
Distribution Policy
To maintain our qualification as a REIT, we are required to make
aggregate annual distributions to our stockholders of at least
90.0% of our annual taxable income (which does not necessarily
equal net income as calculated in accordance with generally
accepted accounting principles in the United States (GAAP)). Our
board of directors may authorize distributions in excess of
those required for us to maintain REIT status depending on our
financial condition and such other factors as our board of
directors deems relevant. We have not established a minimum
distribution level. We expect to calculate our quarterly or
monthly distributions based upon daily record and distribution
declaration dates so investors may be entitled to distributions
immediately upon purchasing our shares. We expect that such
distributions will begin no later than the third quarter after
the commencement of this offering. However, because we have not
identified any probable investments, there can be no assurance
as to when, or if, we will begin to generate sufficient cash
flow for distribution to our stockholders. In the event we do
not have enough cash to make distributions, we may borrow, issue
additional securities or sell assets in order to fund
distributions. Until we are generating operating cash flow
sufficient to make distributions to our
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stockholders, we intend to pay all or a substantial portion of
our distributions from the proceeds of this offering or from
borrowings, including possible borrowings from our advisor or
its affiliates, in anticipation of future cash flow, which may
reduce the amount of capital we ultimately invest in properties,
and negatively impact the value of your investment.
Listing
We will seek to list our shares of common stock for trading on a
national securities exchange or for quotation on The Nasdaq
National Market when and if our independent directors believe
listing would be in the best interest of our stockholders.
However, at this time, we have no intent to list our shares. We
do not anticipate that there will be any market for our common
stock unless and until our shares are listed. If we do not list
our shares of common stock on a national securities exchange or
on The Nasdaq National Market by the tenth anniversary of the
commencement of this offering, our charter requires that we
either:
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seek stockholder approval of an extension or amendment of this
listing deadline; or |
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seek stockholder approval of the liquidation of our corporation. |
If we seek and do not obtain stockholder approval of an
extension or amendment to the listing deadline, we would then be
required to seek stockholder approval of our liquidation. If we
seek and fail to obtain stockholder approval of our liquidation,
our charter would not require us to list or liquidate and we
could continue to operate as before. In such event, there would
be no public market for shares of our common stock and you could
be required to hold the shares indefinitely. If we seek and
obtain stockholder approval of our liquidation, we would begin
an orderly sale of our properties and distribute, subject to our
advisors subordinated participation our net proceeds to
you.
Distribution Reinvestment Plan
Under our distribution reinvestment plan, you may have the
distributions you receive reinvested in additional shares of our
common stock. The purchase price per share under our
distribution reinvestment plan will be the higher of 91.5% of
the fair market value per share as determined by our board of
directors and $9.15 per share. No sales commissions or dealer
manager fees will be paid on shares sold under the distribution
reinvestment plan. If you participate in the distribution
reinvestment plan, you will not receive the cash from your
distributions, other than special distributions that are
designated by our board of directors. As a result, you may have
a tax liability with respect to your share of our taxable
income, but you will not receive cash distributions to pay such
liability. We may terminate the distribution reinvestment plan
at our discretion at any time upon ten days prior written
notice to you. Additionally, we will be required to discontinue
sales of shares under the distribution reinvestment plan on the
earlier of June 27, 2007, which is two years from the
effective date of this offering, unless the offering is
extended, or the date we sell 5,000,000 shares under the plan,
unless we file a new registration statement with the Securities
and Exchange Commission and applicable states.
Share Redemption Program
Our board of directors has adopted a share redemption program
that enables our stockholders to sell their shares to us in
limited circumstances. Our share redemption program permits you
to sell your shares back to us after you have held them for at
least one year, subject to the significant conditions and
limitations described below.
There are several restrictions on your ability to sell your
shares to us under the program. You generally have to hold your
shares for one year before selling your shares to us under the
plan; however, we may waive the one-year holding period in the
event of the death or bankruptcy of a stockholder. In addition,
we will limit the number of shares redeemed pursuant to our
share redemption program as follows: (1) during any
calendar year, we will not redeem in excess of 3.0% of the
weighted average number of shares outstanding during the prior
calendar year; and (2) funding for the redemption of shares
15
will be limited to the amount of net proceeds we receive from
the sale of shares under our distribution reinvestment plan.
These limits may prevent us from accommodating all requests made
in any year. During the term of this offering, and subject to
certain provisions described in Description of
Shares Share Redemption Program, the
redemption price per share will depend on the length of time you
have held such shares as follows: after one year from the
purchase date 92.5% of the amount you paid for each
share; after two years from the purchase date 95.0%
of the amount you paid for each share; after three years from
the purchase date 97.5% of the amount you paid for
each share; and after four years from the purchase
date 100.0% of the amount you paid for each share.
Upon receipt of a request for redemption, we will conduct a
Uniform Commercial Code search to ensure that no liens are held
against the shares. We will charge an administrative fee of $250
to the stockholder for the search and other costs, which will be
deducted from the proceeds of the redemption or, if a lien
exists, will be charged to the stockholder. Repurchases will be
made quarterly. If funds are not available to redeem all
requested redemptions at the end of each quarter, the shares
will be purchased on a pro rata basis and the unfulfilled
requests will be held until the next quarter, unless withdrawn.
Our board of directors may amend, suspend or terminate the share
redemption program at any time upon 30 days prior written notice
to our stockholders.
Cole Operating Partnership II, LP
We expect to own substantially all of our real estate properties
through Cole Operating Partnership II, LP (Cole
OP II), our operating partnership. We may, however, own
properties directly, through subsidiaries of Cole OP II or
through other entities. We are the sole general partner of Cole
OP II and Cole Advisors II is the initial limited
partner of Cole OP II. Our ownership of properties in Cole
OP II is referred to as an UPREIT. This UPREIT
structure may enable sellers of properties to transfer their
properties to Cole OP II in exchange for limited
partnership interests of Cole OP II and defer gain
recognition for tax purposes with respect to such transfers of
properties. The holders of units in Cole OP II may have their
units redeemed for cash or, at our option, shares of our common
stock. At present, we have no plans to acquire any specific
properties in exchange for units of Cole OP II.
ERISA Considerations
The section of this prospectus entitled ERISA
Considerations describes the effect the purchase of shares
will have on individual retirement accounts and retirement plans
subject to the Employee Retirement Income Security Act of 1974,
as amended (ERISA), and/or the Internal Revenue Code. ERISA is a
federal law that regulates the operation of certain
tax-advantaged retirement plans. Any retirement plan trustee or
individual considering purchasing shares for a retirement plan
or an individual retirement account should read the
Investment by Tax-Exempt Entities and ERISA
Considerations section of this prospectus very carefully.
Description of Shares
Our board of directors has authorized the issuance of shares of
our stock without certificates. We expect that, unless and until
our shares are listed on a national securities exchange or The
Nasdaq National Market, we will not issue shares in certificated
form. Our transfer agent maintains a stock ledger that contains
the name and address of each stockholder and the number of
shares that the stockholder holds. With respect to
uncertificated stock, we will continue to treat the stockholder
registered on our stock ledger as the owner of the shares until
the record owner and the new owner delivers a properly executed
stock transfer form to us, along with a fee to cover reasonable
transfer costs, in an amount determined by our board of
directors. We will provide the required form to you upon request.
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Stockholder Voting Rights and Limitations |
We intend to hold annual meetings of our stockholders for the
purpose of electing our directors and/or conducting other
business matters that may be presented at such meetings. We may
also call special meetings of stockholders from time to time.
You are entitled to one vote for each share of common stock you
own at any of these meetings.
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Restriction on Share Ownership |
Our charter contains restrictions on ownership of the shares
that prevent any one person from owning more than 9.8% in value
of our outstanding shares and more than 9.8% in value or number,
whichever is more restrictive, of any class or series of our
outstanding shares of stock unless exempted by our board of
directors. These restrictions are designed to enable us to
comply with ownership restrictions imposed on REITs by the
Internal Revenue Code. For a more complete description of the
shares, including restrictions on the ownership of shares,
please see the Description of Shares section of this
prospectus. Our charter also limits your ability to transfer
your shares to prospective stockholders unless (i) they
meet the minimum suitability standards regarding income or net
worth, which are described in the Suitability
Standards section immediately following the cover page of
this prospectus, and (ii) the transfer complies with
minimum purchase requirements, which are described below in the
section entitled How to Subscribe.
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RISK FACTORS
An investment in our common stock involves various risks and
uncertainties. You should carefully consider the following risk
factors in conjunction with the other information contained in
this prospectus before purchasing our common stock. The risks
discussed in this prospectus can adversely affect our business,
operating results, prospects and financial condition. These
risks could cause the value of our common stock to decline and
could cause you to lose all or part of your investment. The
risks and uncertainties described below are not the only ones we
face but do represent those risks and uncertainties that we
believe are material to our business, operating results,
prospects and financial condition. Additional risks and
uncertainties not presently known to us or that we currently
deem immaterial may also harm our business.
Risks Related to an Investment in Cole Credit Property
Trust II, Inc.
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We have no prior operating history or established
financing sources, and the prior performance of real estate
investment programs sponsored by affiliates of our advisor may
not be an indication of our future results. |
We have no operating history and you should not rely upon the
past performance of other real estate investment programs
sponsored by affiliates of our advisor to predict our future
results. We were incorporated in September 2004. As of the date
of this prospectus, we have not made any investments in real
estate or otherwise and do not own any properties or have any
operations or independent financing. Although Mr. Cole and
other members of our advisors management have significant
experience in the acquisition, finance, management and
development of commercial real estate, this is the first
publicly offered REIT sponsored by Mr. Cole or his
affiliates. Accordingly, the prior performance of real estate
investment programs sponsored by affiliates of Mr. Cole and
our advisor may not be indicative of our future results.
Moreover, neither our advisor nor we have any established
financing sources. Presently, both we and our advisor are funded
by capital contributions from Cole Holdings Corporation, a
company wholly owned by Mr. Cole. If our capital resources,
or those of our advisor, are insufficient to support our
operations, we will not be successful.
You should consider our prospects in light of the risks,
uncertainties and difficulties frequently encountered by
companies that are, like us, in their early stage of
development. To be successful in this market, we must, among
other things:
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identify and acquire investments that further our investment
strategies; |
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increase awareness of the Cole Credit Property Trust II,
Inc. name within the investment products market; |
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expand and maintain our network of licensed securities brokers
and other agents; |
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attract, integrate, motivate and retain qualified personnel to
manage our day-to-day operations; |
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respond to competition for our targeted real estate properties
and other investments as well as for potential investors; and |
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continue to build and expand our operations structure to support
our business. |
We cannot guarantee that we will succeed in achieving these
goals, and our failure to do so could cause you to lose all or a
portion of your investment.
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Because this is a blind pool offering, you will not have
the opportunity to evaluate our investments before we make them,
which makes an investment in us more speculative. |
We have not yet acquired or identified any investments that we
may make, and we do not currently own any properties.
Additionally, we will not provide you with information to
evaluate our investments
18
prior to our acquisition of properties. We will seek to invest
substantially all of the offering proceeds available for
investment, after the payment of fees and expenses, in the
acquisition of freestanding, single-tenant commercial properties
net leased to investment grade or other creditworthy tenants. We
may also, in the discretion of our advisor, invest in other
types of real estate or in entities that invest in real estate.
In addition, our advisor may make or invest in mortgage loans or
participations therein on our behalf if our board of directors
determines, due to the state of the real estate market or in
order to diversify our investment portfolio or otherwise, that
such investments are advantageous to us. We have established
policies relating to the creditworthiness of tenants of our
properties, but our board of directors will have wide discretion
in implementing these policies, and you will not have the
opportunity to evaluate potential tenants. For a more detailed
discussion of our investment policies, see the Investment
Objectives and Policies Acquisition and Investment
Policies section of this prospectus.
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There is no public trading market for our shares and there
may never be one; therefore, it will be difficult for you to
sell your shares. |
There is currently no public market for our shares and there may
never be one. You may not sell your shares unless the buyer
meets applicable suitability and minimum purchase standards. Our
charter also prohibits the ownership of more than 9.8% of our
stock, unless exempted by our board of directors, which may
inhibit large investors from desiring to purchase your shares.
Moreover, our share redemption program includes numerous
restrictions that would limit your ability to sell your shares
to us. Our board of directors could choose to amend, suspend or
terminate our share redemption program upon 30 days
notice. We describe these restrictions in more detail under the
Description of Shares Share Redemption
Program section of this prospectus. Therefore, it may be
difficult for you to sell your shares promptly or at all. If you
are able to sell your shares, you will likely have to sell them
at a substantial discount to the price you paid for the shares.
It also is likely that your shares would not be accepted as the
primary collateral for a loan. You should purchase the shares
only as a long-term investment because of the illiquid nature of
the shares.
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If we, through Cole Advisors II, are unable to find
suitable investments, then we may not be able to achieve our
investment objectives or pay distributions. |
Our ability to achieve our investment objectives and to pay
distributions is dependent upon the performance of Cole
Advisors II, our advisor, in acquiring of our investments,
selecting tenants for our properties and securing independent
financing arrangements. We currently do not own any properties
or have any operations, financing or investments. Except for
investors who purchase shares in this offering after such time
as this prospectus is supplemented to describe one or more
identified investments, you will have no opportunity to evaluate
the terms of transactions or other economic or financial data
concerning our investments. You must rely entirely on the
management ability of Cole Advisors II and the oversight of
our board of directors. We cannot be sure that Cole
Advisors II will be successful in obtaining suitable
investments on financially attractive terms or that, if it makes
investments on our behalf, our objectives will be achieved. If
we, through Cole Advisors II, are unable to find suitable
investments, we will hold the proceeds of this offering in an
interest-bearing account, invest the proceeds in short-term,
investment-grade investments or, if we cannot find at least one
suitable investment within one year after we reach our minimum
offering, or if our board of directors determines it is in the
best interests of our stockholders, liquidate. In such an event,
our ability to pay distributions to our stockholders would be
adversely affected.
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We may suffer from delays in locating suitable
investments, which could adversely affect our ability to make
distributions and the value of your investment. |
We could suffer from delays in locating suitable investments,
particularly as a result of our reliance on our advisor at times
when management of our advisor is simultaneously seeking to
locate suitable investments for other affiliated programs.
Delays we encounter in the selection, acquisition and, in the
event we develop properties, development of income-producing
properties, likely would adversely affect our ability to make
distributions and the value of your overall returns. In such
event, we my pay all or a
19
substantial portion of our distributions from the proceeds of
this offering or from borrowings in anticipation of future cash
flow, which may constitute a return of your capital.
Distributions from the proceeds of this offering or from
borrowings also could reduce the amount of capital we ultimately
invest in properties. This, in turn, would reduce the value of
your investment. In particular, where we acquire properties
prior to the start of construction or during the early stages of
construction, it will typically take several months to complete
construction and rent available space. Therefore, you could
suffer delays in the receipt of cash distributions attributable
to those particular properties. You should expect to wait
several months after the closing of a property acquisition
before we are in a position to pay cash distributions
attributable to such property.
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If we are unable to raise substantial funds, we will be
limited in the number and type of investments we may make, the
value of your investment in us will fluctuate with the
performance of the specific properties we acquire. |
This offering is being made on a best efforts basis, whereby the
brokers participating in the offering are only required to use
their best efforts to sell our shares and have no firm
commitment or obligation to purchase any of the shares. As a
result, the amount of proceeds we raise in this offering may be
substantially less than the amount we would need to achieve a
broadly diversified property portfolio. We may be unable to
raise even the minimum offering amount. If we are unable to
raise substantially more than the minimum offering amount, we
will make fewer investments resulting in less diversification in
terms of the number of investments owned, the geographic regions
in which our investments are located and the types of
investments that we make. In such event, the likelihood of our
profitability being affected by the performance of any one of
our investments will increase. For example, in the event we only
sell 250,000 shares, we may be able to make only one
investment. If we only are able to make one investment, we would
not achieve any asset diversification. Additionally, we are not
limited in the number or size of our investments or the
percentage of net proceeds we may dedicate to a single
investment. Your investment in our shares will be subject to
greater risk to the extent that we lack a diversified portfolio
of investments. In addition, our inability to raise substantial
funds would increase our fixed operating expenses as a
percentage of gross income, and our financial condition and
ability to pay distributions could be adversely affected.
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If our advisor loses or is unable to obtain key personnel,
our ability to implement our investment strategies could be
delayed or hindered, which could adversely affect our ability to
make distributions and the value of your investment. |
Our success depends to a significant degree upon the
contributions of certain of our executive officers and other key
personnel of our advisor, including Christopher H. Cole, Blair
D. Koblenz, Richard M. Arnitz, Jonathan T. Albro, John H. Lotka,
John M. Pons, Sean D. Leahy, D. Kirk McAllaster, Jr.
and Christopher P. Robertson, each of whom would be difficult to
replace. Our advisor does not have an employment agreement with
any of these key personnel and we cannot guarantee that all, or
any particular one, will remain affiliated with us and/or
advisor. If any of our key personnel were to cease their
affiliation with our advisor, our operating results could
suffer. Further, we do not intend to separately maintain key
person life insurance on Mr. Cole or any other person. We
believe that our future success depends, in large part, upon our
advisors ability to hire and retain highly skilled
managerial, operational and marketing personnel. Competition for
such personnel is intense, and we cannot assure you that our
advisor will be successful in attracting and retaining such
skilled personnel. If our advisor loses or is unable to obtain
the services of key personnel or does not establish or maintain
appropriate strategic relationships, our ability to implement
our investment strategies could be delayed or hindered, and the
value of your investment may decline.
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Our rights and the rights of our stockholders to recover
claims against our officers, directors and our advisor are
limited, which could reduce your and our recovery against them
if they cause us to incur losses. |
Maryland law provides that a director has no liability in that
capacity if he or she performs his or her duties in good faith,
in a manner he or she reasonably believes to be in the
corporations best interests and with the care that an
ordinarily prudent person in a like position would use under
similar circumstances. Our charter, in the case of our
directors, officers, employees and agents, and the advisory
agreement, in the case of our advisor, require us to indemnify
our directors, officers, employees and agents and our advisor
and its affiliates for actions taken by them in good faith and
without negligence or misconduct. Additionally, our charter
limits the liability of our directors and officers for monetary
damages to the maximum extent permitted under Maryland law. As a
result, we and our stockholders may have more limited rights
against our directors, officers, employees and agents, and our
advisor and its affiliates, than might otherwise exist under
common law, which could reduce your and our recovery against
them. In addition, we may be obligated to fund the defense costs
incurred by our directors, officers, employees and agents or our
advisor in some cases which would decrease the cash otherwise
available for distribution to you. See the section captioned
Management Limited Liability and
Indemnification of Directors, Officers, Employees and Other
Agents elsewhere herein.
Risks Related to Conflicts of Interest
We will be subject to conflicts of interest arising out of our
relationships with our advisor and its affiliates, including the
material conflicts discussed below. The Conflicts of
Interest section of this prospectus provides a more
detailed discussion of the conflicts of interest between us and
our advisor and its affiliates, and our policies to reduce or
eliminate certain potential conflicts.
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Cole Advisors II will face conflicts of interest
relating to the purchase and leasing of properties, and such
conflicts may not be resolved in our favor, which could
adversely affect our investment opportunities. |
Since January 1, 1995, affiliates of our advisor have
sponsored 47 privately offered real estate investment programs,
including 24 limited partnerships, a real estate investment
trust, three debt offerings and 19 tenant-in-common
programs, 18 of which currently are operating. Affiliates of our
advisor may sponsor other real estate investment programs in the
future. We may be buying properties at the same time as one or
more of the other Cole-sponsored programs managed by officers
and key personnel of Cole Advisors II. There is a risk that
Cole Advisors II will choose a property that provides lower
returns to us than a property purchased by another
Cole-sponsored program. We cannot be sure that officers and key
personnel acting on behalf of Cole Advisors II and on
behalf of managers of other Cole-sponsored programs will act in
our best interests when deciding whether to allocate any
particular property to us. In addition, we may acquire
properties in geographic areas where other Cole-sponsored
programs own properties. Also, we may acquire properties from,
or sell properties to, other Cole-sponsored programs. If one of
the other Cole-sponsored programs attracts a tenant that we are
competing for, we could suffer a loss of revenue due to delays
in locating another suitable tenant. You will not have the
opportunity to evaluate the manner in which these conflicts of
interest are resolved before or after making your investment.
Similar conflicts of interest may apply if our advisor
determines to make or purchase mortgage loans or participations
in mortgage loans on our behalf, since other Cole-sponsored
programs may be competing with us for these investments.
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Cole Advisors II will face conflicts of interest
relating to joint ventures, which could result in a
disproportionate benefit to the other venture partners at our
expense. |
We may enter into joint ventures with other Cole-sponsored
programs for the acquisition, development or improvement of
properties. Cole Advisors II may have conflicts of interest
in determining which Cole-sponsored program should enter into
any particular joint venture agreement. The co-venturer may have
economic or business interests or goals that are or may become
inconsistent with our business interests or goals. In addition,
Cole Advisors II may face a conflict in structuring the
terms of the
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relationship between our interests and the interest of the
affiliated co-venturer and in managing the joint venture. Since
Cole Advisors II and its affiliates will control both the
affiliated co-venturer and, to a certain extent, us, agreements
and transactions between the co-venturers with respect to any
such joint venture will not have the benefit of
arms-length negotiation of the type normally conducted
between unrelated co-venturers, which may result in the
co-venturer receiving benefits greater than the benefits that we
receive. In addition, we may assume liabilities related to the
joint venture that exceed the percentage of our investment in
the joint venture.
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We may participate in Tenant-in-Common Programs with
affiliates of our advisor that will not be the result of
arms-length negotiations and will result in conflicts of
interest. |
Cole Capital Partners, LLC (Cole Capital Partners), an affiliate
of our advisor, has developed a program to facilitate the
acquisition of real estate properties to be owned in co-tenancy
arrangements with persons who are looking to invest proceeds
from a sale of real estate to qualify for like-kind exchange
treatment under Section 1031 of the Internal Revenue Code
(a Tenant-in-Common Program). Tenant-in-Common Programs are
structured as the acquisition of real estate owned in co-tenancy
arrangements with other investors in the property
(Tenant-in-Common Participants) who are seeking to defer taxes
under Section 1031 of the Internal Revenue Code. When Cole
Capital Partners develops such a program, it generally organizes
a new entity (a Cole Exchange Entity) to acquire all or part of
a property. We may participate in the program by either
co-investing in the property with the Cole Exchange Entity or
purchasing a co-tenancy interest from the Cole Exchange Entity,
generally at the Cole Exchange Entitys cost. In that
event, as an owner of tenant-in-common interests in properties,
we will be subject to the risks inherent in the ownership of
co-tenancy interests with unrelated third parties. Our purchase
of co-tenancy interests will present conflicts of interest
between us and affiliates of our advisor. The business interests
of Cole Capital Partners and the Cole Exchange Entity may be
adverse to, or to the detriment of, our interests. Further, any
agreement that we enter into with a Cole Exchange Entity will
not be negotiated in an arms-length transaction and, as a
result of the affiliation between our advisor, Cole Capital
Partners and the Cole Exchange Entity, our advisor may be
reluctant to enforce the agreements against such entities.
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Cole Advisors II and its officers and employees and
certain of our key personnel will face competing demands
relating to their time, and this may cause our operating results
to suffer. |
Cole Advisors II and its officers and employees and certain
of our key personnel and their respective affiliates are key
personnel, general partners and sponsors of other real estate
programs having investment objectives and legal and financial
obligations similar to ours and may have other business
interests as well. Because these persons have competing demands
on their time and resources, they may have conflicts of interest
in allocating their time between our business and these other
activities. During times of intense activity in other programs
and ventures, they may devote less time and fewer resources to
our business than is necessary or appropriate. If this occurs,
the returns on our investments may suffer.
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Our officers and some of our directors face conflicts of
interest related to the positions they hold with affiliated
entities, which could hinder our ability to successfully
implement our business strategy and to generate returns to
you. |
Our executive officers and some of our directors are also
officers and directors of our advisor, our property manager, our
dealer manager and other affiliated entities. As a result, these
individuals owe fiduciary duties to these other entities and
their stockholders and limited partners, which fiduciary duties
may conflict with the duties that they owe to our stockholders
and us. Their loyalties to these other entities could result in
actions or inactions that are detrimental to our business, which
could harm the implementation of our business strategy and our
investment and leasing opportunities. Conflicts with our
business and interests are most likely to arise from involvement
in activities related to (i) allocation of new investments
and management time and services between us and the other
entities, (ii) our purchase of properties from, or sale of
properties, to affiliated entities, (iii) the timing and
terms of the investment in
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or sale of an asset, (iv) development of our properties by
affiliates, (v) investments with affiliates of our advisor,
(vi) compensation to our advisor, and (vii) our
relationship with our dealer manager and property manager. If we
do not successfully implement our business strategy, we may be
unable to generate cash needed to make distributions to you and
to maintain or increase the value of our assets.
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Cole Advisors II will face conflicts of interest
relating to the incentive fee structure under our advisory
agreement, which could result in actions that are not
necessarily in the long-term best interests of our
stockholders. |
Under our advisory agreement, Cole Advisors II will be
entitled to fees that are structured in a manner intended to
provide incentives to our advisor to perform in our best
interests and in the best interests of our stockholders.
However, because our advisor does not maintain a significant
equity interest in us and is entitled to receive substantial
minimum compensation regardless of performance, our
advisors interests will not be wholly aligned with those
of our stockholders. In that regard, our advisor could be
motivated to recommend riskier or more speculative investments
in order for us to generate the specified levels of performance
or sales proceeds that would entitle our advisor to fees. In
addition, our advisors entitlement to fees upon the sale
of our assets and to participate in sale proceeds could result
in our advisor recommending sales of our investments at the
earliest possible time at which sales of investments would
produce the level of return that would entitle the advisor to
compensation relating to such sales, even if continued ownership
of those investments might be in our best long-term interest.
Our advisory agreement will require us to pay a
performance-based termination fee to our advisor in the event
that we terminate the advisor prior to the listing of our shares
for trading on an exchange or, absent such listing, in respect
of its participation in net sales proceeds. To avoid paying this
fee, our independent directors may decide against terminating
the advisory agreement prior to our listing of our shares or
disposition of our investments even if, but for the termination
fee, termination of the advisory agreement would be in our best
interest. In addition, the requirement to pay the fee to the
advisor at termination could cause us to make different
investment or disposition decisions than we would otherwise
make, in order to satisfy our obligation to pay the fee to the
terminated advisor. Moreover, our advisor will have the right to
terminate the advisory agreement upon a change of control and
thereby trigger the payment of the performance fee, which could
have the effect of delaying, deferring or preventing the change
of control.
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There is no separate counsel for us and our affiliates,
which could result in conflicts of interest. |
Morris, Manning & Martin, LLP acts as legal counsel to
us and also represents our advisor and some of its affiliates.
There is a possibility in the future that the interests of the
various parties may become adverse and, under the Code of
Professional Responsibility of the legal profession, Morris,
Manning & Martin, LLP may be precluded from
representing any one or all of such parties. If any situation
arises in which our interests appear to be in conflict with
those of our advisor or its affiliates, additional counsel may
be retained by one or more of the parties to assure that their
interests are adequately protected. Moreover, should a conflict
of interest not be readily apparent, Morris, Manning &
Martin, LLP may inadvertently act in derogation of the interest
of the parties which could affect our ability to meet our
investment objectives.
Risks Related to This Offering and Our Corporate Structure
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The limit on the number of shares a person may own may
discourage a takeover that could otherwise result in a premium
price to our stockholders. |
Our charter, with certain exceptions, authorizes our directors
to take such actions as are necessary and desirable to preserve
our qualification as a REIT. Unless exempted by our board of
directors, no person may own more than 9.8% in value of our
outstanding stock and more than 9.8% in value or number,
whichever is more restrictive, of any class of our outstanding
stock. This restriction may have the effect of delaying,
deferring or preventing a change in control of us, including an
extraordinary transaction (such as a merger, tender offer or
sale of all or substantially all of our assets) that might
provide a premium price
23
for holders of our common stock. See the Description of
Shares Restriction on Ownership and Transfer
section of this prospectus.
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Our charter permits our board of directors to issue stock
with terms that may subordinate the rights of common
stockholders or discourage a third party from acquiring us in a
manner that might result in a premium price to our
stockholders. |
Our charter permits our board of directors to issue up to
100,000,000 shares of stock. In addition, our board of
directors, without any action by our stockholders, may amend our
charter from time to time to increase or decrease the aggregate
number of shares or the number of shares of any class or series
of stock that we have authority to issue. Our board of directors
may classify or reclassify any unissued common stock or
preferred stock and establish the preferences, conversion or
other rights, voting powers, restrictions, limitations as to
distributions, qualifications and terms or conditions of
redemption of any such stock. Thus, our board of directors could
authorize the issuance of preferred stock with terms and
conditions that could have a priority as to distributions and
amounts payable upon liquidation over the rights of the holders
of our common stock. Preferred stock could also have the effect
of delaying, deferring or preventing a change in control of us,
including an extraordinary transaction (such as a merger, tender
offer or sale of all or substantially all of our assets) that
might provide a premium price for holders of our common stock.
See the Description of Shares Preferred
Stock section of this prospectus.
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Maryland law prohibits certain business combinations,
which may make it more difficult for us to be acquired. |
Under Maryland law, business combinations between a
Maryland corporation and an interested stockholder or an
affiliate of an interested stockholder are prohibited for five
years after the most recent date on which the interested
stockholder becomes an interested stockholder. These business
combinations include a merger, consolidation, share exchange,
or, in circumstances specified in the statute, an asset transfer
or issuance or reclassification of equity securities. An
interested stockholder is defined as:
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any person who beneficially owns 10.0% or more of the voting
power of the corporations shares; or |
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an affiliate or associate of the corporation who, at any time
within the two-year period prior to the date in question, was
the beneficial owner of 10.0% or more of the voting power of the
then outstanding voting stock of the corporation. |
A person is not an interested stockholder under the statute if
the board of directors approved in advance the transaction by
which he or she otherwise would have become an interested
stockholder. However, in approving a transaction, the board of
directors may provide that its approval is subject to
compliance, at or after the time of approval, with any terms and
conditions determined by the board.
After the five-year prohibition, any business combination
between the Maryland corporation and an interested stockholder
generally must be recommended by the board of directors of the
corporation and approved by the affirmative vote of at least:
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80.0% of the votes entitled to be cast by holders of outstanding
shares of voting stock of the corporation; and |
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two-thirds of the votes entitled to be cast by holders of voting
stock of the corporation other than shares held by the
interested stockholder with whom or with whose affiliate the
business combination is to be effected or held by an affiliate
or associate of the interested stockholder. |
These super-majority vote requirements do not apply if the
corporations stockholders receive a minimum price, as
defined under Maryland law, for their shares in the form of cash
or other consideration in the same form as previously paid by
the interested stockholder for its shares. The business
combination statute permits various exemptions from its
provisions, including business combinations that are exempted by
the board of directors prior to the time that the interested
stockholder becomes an interested stockholder. Pursuant to the
statute, our board of directors has exempted any business
combination
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involving Cole Advisors II or any affiliate of Cole
Advisors II. Consequently, the five-year prohibition and
the super-majority vote requirements will not apply to business
combinations between us and Cole Advisors II or any
affiliate of Cole Advisors II. As a result, Cole
Advisors II and any affiliate of Cole Advisors II may
be able to enter into business combinations with us that may not
be in the best interest of our stockholders, without compliance
with the super-majority vote requirements and the other
provisions of the statute. The business combination statute may
discourage others from trying to acquire control of us and
increase the difficulty of consummating any offer. For a more
detailed discussion of the Maryland laws governing us and the
ownership of our shares of common stock, see the section of this
prospectus captioned Description of Shares.
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If we are required to register as an investment company
under the Investment Company Act, we could not continue our
business, which may significantly reduce the value of your
investment. |
We are not registered as an investment company under the
Investment Company Act of 1940, as amended (Investment Company
Act), pursuant to an exemption in Section 3(c)(5)(C) of the
Investment Company Act and certain No-Action Letters from the
Securities and Exchange Commission. Pursuant to this exemption,
(1) at least 55% of our assets must consist of real estate
fee interests or loans secured exclusively by real estate or
both, (2) at least 25% of our assets must consist of loans
secured primarily by real estate (this percentage will be
reduced by the amount by which the percentage in (1) above
is increased); and (3) up to 20% of our assets may consist
of miscellaneous investments. We intend to monitor compliance
with these requirements on an ongoing basis. If we were
obligated to register as an investment company, we would have to
comply with a variety of substantive requirements under the
Investment Company Act imposing, among other things:
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limitations on capital structure; |
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restrictions on specified investments; |
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prohibitions on transactions with affiliates; and |
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compliance with reporting, record keeping, voting, proxy
disclosure and other rules and regulations that would
significantly change our operations. |
In order to maintain our exemption from regulation under the
Investment Company Act, we must engage primarily in the business
of buying real estate, and these investments must be made within
a year after the offering ends. If we are unable to invest a
significant portion of the proceeds of this offering in
properties within one year of the termination of the offering,
we may avoid being required to register as an investment company
by temporarily investing any unused proceeds in government
securities with low returns. This would reduce the cash
available for distribution to investors and possibly lower your
returns.
To maintain compliance with the Investment Company Act
exemption, we may be unable to sell assets we would otherwise
want to sell and may need to sell assets we would otherwise wish
to retain. In addition, we may have to acquire additional income
or loss generating assets that we might not otherwise have
acquired or may have to forgo opportunities to acquire interests
in companies that we would otherwise want to acquire and would
be important to our investment strategy. If we were required to
register as an investment company but failed to do so, we would
be prohibited from engaging in our business, and criminal and
civil actions could be brought against us. In addition, our
contracts would be unenforceable unless a court were to require
enforcement, and a court could appoint a receiver to take
control of us and liquidate our business.
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You are bound by the majority vote on matters on which you
are entitled to vote, and therefore, your vote on a particular
matter may be superceded by the vote of others. |
You may vote on certain matters at any annual or special meeting
of stockholders, including the election of directors. However,
you will be bound by the majority vote on matters requiring
approval of a majority of the stockholders even if you do not
vote with the majority on any such matter.
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If you do not agree with the decisions of our board of
directors, you only have limited control over changes in our
policies and operations and may not be able to change such
policies and operations. |
Our board of directors determines our major policies, including
our policies regarding financing, growth, debt capitalization,
REIT qualification and distributions. Our board of directors may
amend or revise these and other policies without a vote of the
stockholders. Under the Maryland General Corporation Law and our
charter, our stockholders have a right to vote only on the
following:
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the election or removal of directors; |
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any amendment of our charter (including a change in our
investment objectives), except that our board of directors may
amend our charter without stockholder approval, to increase or
decrease the aggregate number of our shares, to increase or
decrease the number of our shares of any class or series that we
have the authority to issue, or to classify or reclassify any
unissued shares by setting or changing the preferences,
conversion or other rights, restrictions, limitations as to
distributions, qualifications or terms and conditions of
redemption of such shares, provided however, that any such
amendment does not adversely affect the rights, preferences and
privileges of the stockholders; |
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our liquidation or dissolution; and |
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any merger, consolidation or sale or other disposition of
substantially all of our assets. |
All other matters are subject to the discretion of our board of
directors.
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You are limited in your ability to sell your shares
pursuant to our share redemption program and may have to hold
your shares for an indefinite period of time. |
Our board of directors could choose to amend the terms of our
share redemption program without stockholder approval. Our board
is also free to terminate the program upon 30 days notice.
In addition, the share redemption program includes numerous
restrictions that would limit your ability to sell your shares.
Generally, you must have held your shares for at least one year
in order to participate in our share redemption program. Subject
to funds being available, we will limit the number of shares
redeemed pursuant to our share redemption program as follows:
(1) during any calendar year, we will not redeem in excess
of 3.0% of the weighted average number of shares outstanding
during the prior calendar year; and (2) funding for the
redemption of shares will be limited to the net proceeds we
receive from the sale of shares under our distribution
reinvestment plan. These limits might prevent us from
accommodating all redemption requests made in any year. See the
Description of Shares Share Redemption
Program section of this prospectus for more information
about the share redemption program. These restrictions severely
limit your ability to sell your shares should you require
liquidity and limit your ability to recover the value you
invested or the fair amount value of your shares.
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We established the offering price on an arbitrary basis;
as a result, the actual value of your investment may be
substantially less than what you pay. |
Our board of directors has arbitrarily determined the selling
price of the shares and such price bears no relationship to our
book or asset values, or to any other established criteria for
valuing issued or outstanding shares. Because the offering price
is not based upon any independent valuation, the offering price
may not be indicative of the proceeds that you would receive
upon liquidation.
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Because the dealer manager is one of our affiliates, you
will not have the benefit of an independent review of the
prospectus or us customarily performed in underwritten
offerings. |
The dealer manager, Cole Capital Corporation, is one of our
affiliates and will not make an independent review of us or the
offering. Accordingly, you will have to rely on your own broker
or dealer to make an independent review of the terms of this
offering. If your broker-dealer does not conduct such a review,
you will not have the benefit of an independent review of the
terms of this offering. Further, the
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due diligence investigation of us by the dealer manager cannot
be considered to be an independent review and, therefore, may
not be as meaningful as a review conducted by an unaffiliated
broker-dealer or investment banker.
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Your interest in Cole REIT II will be diluted if we
issue additional shares. |
Existing stockholders and potential investors in this offering
do not have preemptive rights to any shares issued by us in the
future. Our charter currently has authorized
100,000,000 shares of stock, of which
90,000,000 shares are designated as common stock and
10,000,000 are designated as preferred stock. Subject to any
limitations set forth under Maryland law, our board of directors
may increase the number of authorized shares of stock, increase
or decrease the number of shares of any class or series of stock
designated, or reclassify any unissued shares without the
necessity of obtaining stockholder approval. All of such shares
may be issued in the discretion of our board of directors.
Therefore, in the event that we (1) sell shares in this
offering or sell additional shares in the future, including
those issued pursuant to our distribution reinvestment plan,
(2) sell securities that are convertible into shares of our
common stock, (3) issue shares of our common stock in a
private offering of securities to institutional investors,
(4) issue shares of our common stock upon the exercise of
the options granted to our independent directors, (5) issue
shares to our advisor, its successors or assigns, in payment of
an outstanding fee obligation as set forth under our advisory
agreement, or (6) issue shares of our common stock to
sellers of properties acquired by us in connection with an
exchange of limited partnership interests of Cole OP II,
existing stockholders and investors purchasing shares in this
offering will likely experience dilution of their equity
investment in us. In addition, the partnership agreement for
Cole OP II contains provisions that would allow, under
certain circumstances, other entities, including other
Cole-sponsored programs, to merge into or cause the exchange or
conversion of their interest for interests of Cole OP II.
Because the limited partnership interests of Cole OP II
may, in the discretion of our board of directors, be exchanged
for shares of our common stock, any merger, exchange or
conversion between Cole OP II and another entity ultimately
could result in the issuance of a substantial number of shares
of our common stock, thereby diluting the percentage ownership
interest of other stockholders. Because of these and other
reasons described in this Risk Factors section, you
should not expect to be able to own a significant percentage of
our shares.
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Payment of fees to Cole Advisors II and its
affiliates will reduce cash available for investment and
distribution. |
Cole Advisors II and its affiliates will perform services
for us in connection with the offer and sale of the shares, the
selection and acquisition of our investments, and the management
and leasing of our properties, the servicing our mortgage loans,
if any, and the administration of our other investments. They
will be paid substantial fees for these services, which will
reduce the amount of cash available for investment in properties
or distribution to stockholders. For a more detailed discussion
of these fees, see the Management Compensation
section of this prospectus.
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We may be unable to pay or maintain cash distributions or
increase distributions over time. |
There are many factors that can affect the availability and
timing of cash distributions to stockholders. Distributions will
be based principally on cash available from our operations. The
amount of cash available for distributions will be affected by
many factors, such as our ability to buy properties as offering
proceeds become available, the yields on securities of other
real estate programs that we invest in, and our operating
expense levels, as well as many other variables. Actual cash
available for distributions may vary substantially from
estimates. With no prior operating history, we cannot assure you
that we will be able to pay or maintain distributions or that
distributions will increase over time. Nor can we give any
assurance that rents from the properties will increase, that the
securities we buy will increase in value or provide constant or
increased distributions over time, or that future acquisitions
of real properties, mortgage loans or our investments in
securities will increase our cash available for distributions to
stockholders. Our actual results may differ significantly from
the assumptions used by our board of directors in establishing
the
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distribution rate to stockholders. For a description of the
factors that can affect the availability and timing of cash
distributions to stockholders, see the section of this
prospectus captioned Description of Shares
Distributions Policy.
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If we are unable to obtain funding for future capital
needs, cash distributions to our stockholders and the value of
our investments could decline. |
When tenants do not renew their leases or otherwise vacate their
space, we will often need to expend substantial funds for tenant
improvements to the vacated space in order to attract
replacement tenants. In addition, although we expect that our
leases with tenants will require tenants to pay routine property
maintenance costs, we will likely be responsible for any major
structural repairs, such as repairs to the foundation, exterior
walls and rooftops.
We will use substantially all of this offerings gross
proceeds to buy real estate and pay various fees and expenses.
We do not intend to reserve any proceeds from this offering for
future capital needs. Accordingly, if we need additional capital
in the future to improve or maintain our properties or for any
other reason, we will have to obtain financing from other
sources, such as cash flow from operations, borrowings, property
sales or future equity offerings. These sources of funding may
not be available on attractive terms or at all. If we cannot
procure additional funding for capital improvements, our
investments may generate lower cash flows or decline in value,
or both.
General Risks Related to Investments in Real Estate
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Our operating results will be affected by economic and
regulatory changes that have an adverse impact on the real
estate market in general, and we cannot assure you that we will
be profitable or that we will realize growth in the value of our
real estate properties. |
Our operating results will be subject to risks generally
incident to the ownership of real estate, including:
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changes in general economic or local conditions; |
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changes in supply of or demand for similar or competing
properties in an area; |
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changes in interest rates and availability of permanent mortgage
funds that may render the sale of a property difficult or
unattractive; |
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changes in tax, real estate, environmental and zoning
laws; and |
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periods of high interest rates and tight money supply. |
These and other reasons may prevent us from being profitable or
from realizing growth or maintaining the value of our real
estate properties.
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Most of our retail properties will depend upon a single
tenant for all of their rental income, and our financial
condition and ability to make distributions may be adversely
affected by the bankruptcy or insolvency, a downturn in the
business, or a lease termination of a single tenant. |
We expect that most of our properties will be occupied by only
one tenant and, therefore, the success of those properties will
be materially dependent on the financial stability of such
tenants. Lease payment defaults by tenants could cause us to
reduce the amount of distributions we pay. A default of a tenant
on its lease payments to us would cause us to lose the revenue
from the property and force us to find an alternative source of
revenue to meet any mortgage payment and prevent a foreclosure
if the property is subject to a mortgage. In the event of a
default, we may experience delays in enforcing our rights as
landlord and may incur substantial costs in protecting our
investment and re-letting the property. If a lease is
terminated, there is no assurance that we will be able to lease
the property for the rent previously received or sell the
property without incurring a loss. A default by a tenant, the
failure of a guarantor to fulfill its obligations or other
premature termination of a lease, or a tenants election
not to extend a lease
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upon its expiration, could have an adverse effect on our
financial condition and our ability to pay distributions.
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If a tenant declares bankruptcy, we may be unable to
collect balances due under relevant leases. |
Any or all of the tenants, or a guarantor of a tenants
lease obligations, could be subject to a bankruptcy proceeding
pursuant to Title 11 of the bankruptcy laws of the United
States. Such a bankruptcy filing would bar all efforts by us to
collect pre-bankruptcy debts from these entities or their
properties, unless we receive an enabling order from the
bankruptcy court. Post-bankruptcy debts would be paid currently.
If a lease is assumed, all pre-bankruptcy balances owing under
it must be paid in full. If a lease is rejected by a tenant in
bankruptcy, we would have a general unsecured claim for damages.
If a lease is rejected, it is unlikely we would receive any
payments from the tenant because our claim is capped at the rent
reserved under the lease, without acceleration, for the greater
of one year or 15% of the remaining term of the lease, but not
greater than three years, plus rent already due but unpaid. This
claim could be paid only in the event funds were available, and
then only in the same percentage as that realized on other
unsecured claims.
A tenant or lease guarantor bankruptcy could delay efforts to
collect past due balances under the relevant leases, and could
ultimately preclude full collection of these sums. Such an event
could cause a decrease or cessation of rental payments that
would mean a reduction in our cash flow and the amount available
for distributions to you. In the event of a bankruptcy, we
cannot assure you that the tenant or its trustee will assume our
lease. If a given lease, or guaranty of a lease, is not assumed,
our cash flow and the amounts available for distributions to you
may be adversely affected.
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If a sale-leaseback transaction is re-characterized, our
financial condition could be adversely affected. |
We may enter into sale-leaseback transactions, whereby we would
purchase a property and then lease the same property back to the
person from whom we purchased it. In the event of the bankruptcy
of a tenant, a transaction structured as a sale-leaseback may be
re-characterized as either a financing or a joint venture,
either of which outcomes could adversely affect our business.
If the sale-leaseback were re-characterized as a financing, we
might not be considered the owner of the property, and as a
result would have the status of a creditor in relation to the
tenant. In that event, we would no longer have the right to sell
or encumber our ownership interest in the property. Instead, we
would have a claim against the tenant for the amounts owed under
the lease, with the claim arguably secured by the property. The
tenant/debtor might have the ability to propose a plan
restructuring the term, interest rate and amortization schedule
of its outstanding balance. If confirmed by the bankruptcy
court, we could be bound by the new terms, and prevented from
foreclosing our lien on the property. These outcomes could
adversely affect our cash flow and the amount available for
distributions to you.
If the sale-leaseback were re-characterized as a joint venture,
our lessee and we could be treated as co-venturers with regard
to the property. As a result, we could be held liable, under
some circumstances, for debts incurred by the lessee relating to
the property. The imposition of liability on us could adversely
affect our cash flow and the amount available for distributions
to our stockholders.
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Properties that have vacancies for a significant period of
time could be difficult to sell, which could diminish the return
on your investment. |
A property may incur vacancies either by the continued default
of tenants under their leases or the expiration of tenant
leases. If vacancies continue for a long period of time, we may
suffer reduced revenues resulting in less cash to be distributed
to stockholders. In addition, because properties market
values depend principally upon the value of the properties
leases, the resale value of properties with prolonged vacancies
could suffer, which could further reduce your return.
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We may obtain only limited warranties when we purchase a
property. |
The seller of a property will often sell such property in its
as is condition on a where is basis and
with all faults, without any warranties of
merchantability or fitness for a particular use or purpose. In
addition, purchase agreements may contain only limited
warranties, representations and indemnifications that will only
survive for a limited period after the closing. The purchase of
properties with limited warranties increases the risk that we
may lose some or all of our invested capital in the property as
well as the loss of rental income from that property.
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We may be unable to secure funds for future tenant
improvements, which could adversely impact our ability to pay
cash distributions to our stockholders. |
When tenants do not renew their leases or otherwise vacate their
space, it is usual that, in order to attract replacement
tenants, we will be required to expend substantial funds for
tenant improvements and tenant refurbishments to the vacated
space. We will use substantially all of this offerings
gross proceeds to buy real estate and pay various fees and
expenses. We do not intend to reserve any proceeds from this
offering for future capital needs. Accordingly, if we need
additional capital in the future to improve or maintain our
properties or for any other reason, we will have to obtain
financing from other sources, such as cash flow from operations,
borrowings, property sales or future equity offerings. These
sources of funding may not be available on attractive terms or
at all. If we cannot procure additional funding for capital
improvements, our investments may generate lower cash flows or
decline in value, or both.
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Our inability to sell a property when we desire to do so
could adversely impact our ability to pay cash distributions to
you. |
The real estate market is affected by many factors, such as
general economic conditions, availability of financing, interest
rates and other factors, including supply and demand, that are
beyond our control. We cannot predict whether we will be able to
sell any property for the price or on the terms set by us, or
whether any price or other terms offered by a prospective
purchaser would be acceptable to us. We cannot predict the
length of time needed to find a willing purchaser and to close
the sale of a property.
We may be required to expend funds to correct defects or to make
improvements before a property can be sold. We cannot assure you
that we will have funds available to correct such defects or to
make such improvements.
In acquiring a property, we may agree to restrictions that
prohibit the sale of that property for a period of time or
impose other restrictions, such as a limitation on the amount of
debt that can be placed or repaid on that property. These
provisions would restrict our ability to sell a property.
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We may not be able to sell our properties at a price equal
to, or greater than, the price for which we purchased such
property, which may lead to a decrease in the value of our
assets. |
Many of our leases will not contain rental increases over time.
Therefore, the value of the property to a potential purchaser
may not increase over time, which may restrict our ability to
sell a property, or in the event we are able to sell such
property, may lead to a sale price less than the price that we
paid to purchase the property.
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We may acquire or finance properties with lock-out
provisions, which may prohibit us from selling a property, or
may require us to maintain specified debt levels for a period of
years on some properties. |
Lock-out provisions could materially restrict us from selling or
otherwise disposing of or refinancing properties. These
provisions would affect our ability to turn our investments into
cash and thus affect cash available for distributions to you.
Lock out provisions may prohibit us from reducing the
outstanding indebtedness with respect to any properties,
refinancing such indebtedness on a non-recourse basis at
maturity, or increasing the amount of indebtedness with respect
to such properties.
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Lock-out provisions could impair our ability to take actions
during the lock-out period that would otherwise be in the best
interests of our stockholders and, therefore, may have an
adverse impact on the value of the shares, relative to the value
that would result if the lock-out provisions did not exist. In
particular, lock-out provisions could preclude us from
participating in major transactions that could result in a
disposition of our assets or a change in control even though
that disposition or change in control might be in the best
interests of our stockholders.
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Rising expenses could reduce cash flow and funds available
for future acquisitions. |
Any properties that we buy in the future, will be subject to
operating risks common to real estate in general, any or all of
which may negatively affect us. If any property is not fully
occupied or if rents are being paid in an amount that is
insufficient to cover operating expenses, we could be required
to expend funds with respect to that property for operating
expenses. The properties will be subject to increases in tax
rates, utility costs, operating expenses, insurance costs,
repairs and maintenance and administrative expenses.
While some of our properties may be leased on a triple-net-lease
basis or require the tenants to pay a portion of such expenses,
renewals of leases or future leases may not be negotiated on
that basis, in which event we will have to pay those costs. If
we are unable to lease properties on a triple-net-lease basis or
on a basis requiring the tenants to pay all or some of such
expenses, or if tenants fail to pay required tax, utility and
other impositions, we could be required to pay those costs which
could adversely affect funds available for future acquisitions
or cash available for distributions.
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Adverse economic conditions will negatively affect our
returns and profitability. |
Recent geopolitical events have exacerbated the general economic
slowdown that has affected the nation as a whole and the local
economies where our properties may be located. The following
market and economic challenges may adversely affect our
operating results:
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poor economic times may result in tenant defaults under leases; |
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re-leasing may require concessions or reduced rental rates under
the new leases; and |
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increased insurance premiums, resulting in part from the
increased risk of terrorism, may reduce funds available for
distribution or, to the extent such increases are passed through
to tenants, may lead to tenant defaults. Increased insurance
premiums may make it difficult to increase rents to tenants on
turnover, which may adversely affect our ability to increase our
returns. |
Our operations could be negatively affected to the extent that
an economic downturn is prolonged or becomes more severe.
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If we suffer losses that are not covered by insurance or
that are in excess of insurance coverage, we could lose invested
capital and anticipated profits. |
Each tenant is responsible for insuring its goods and premises
and, in some circumstances, may be required to reimburse us for
a share of the cost of acquiring comprehensive insurance for the
property, including casualty, liability, fire and extended
coverage customarily obtained for similar properties in amounts
that our advisor determines are sufficient to cover reasonably
foreseeable losses. Tenants of single-user properties leased on
a triple-net-lease basis typically are required to pay all
insurance costs associated with those properties. Material
losses may occur in excess of insurance proceeds with respect to
any property, as insurance may not be sufficient to fund the
losses. However, there are types of losses, generally of a
catastrophic nature, such as losses due to wars, acts of
terrorism, earthquakes, floods, hurricanes, pollution or
environmental matters, which are either uninsurable or not
economically insurable, or may be insured subject to
limitations, such as large deductibles or co-payments. Insurance
risks associated with potential terrorism acts could sharply
increase the premiums we pay for coverage against property and
casualty claims. Additionally, mortgage lenders in some cases
have begun to insist that commercial property owners purchase
specific coverage against terrorism as a condition for providing
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mortgage loans. It is uncertain whether such insurance policies
will be available, or available at reasonable cost, which could
inhibit our ability to finance or refinance our potential
properties. In these instances, we may be required to provide
other financial support, either through financial assurances or
self-insurance, to cover potential losses. We cannot assure you
that will have adequate coverage for such losses. The Terrorism
Risk Insurance Act of 2002 is designed for a sharing of
terrorism losses between insurance companies and the federal
government. We cannot be certain how this act will impact us or
what additional cost to us, if any, could result. If such an
event damaged or destroyed one or more of our properties, we
could lose both our invested capital and anticipated profits
from such property.
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Terrorist attacks, such as the attacks that occurred in
New York and Washington, D.C. on September 11, 2001,
and other acts of violence or war may affect the markets in
which we operate, our operations and our profitability. |
Terrorist attacks may negatively affect our operations and your
investment in our common shares. We cannot assure you that there
will not be further terrorist attacks against the United States
or United States businesses. Properties we may acquire may be
located in areas that may be susceptible to attack, which may
make these properties more likely to be viewed as terrorist
targets than similar, less recognizable properties. These
attacks or armed conflicts may directly impact the value of our
properties through damage, destruction, loss or increased
security costs. We may obtain terrorism insurance as required by
our lenders. The terrorism insurance that we obtain may not be
sufficient to cover loss for damages to our properties as a
result of terrorist attacks. In addition, certain losses
resulting from these types of events are uninsurable and others
would not be covered by our current terrorism insurance.
Additional terrorism insurance may not be available at a
reasonable price or at all.
The United States armed conflict in Iraq and other parts
of the world could have a further impact on our tenants. The
consequences of any armed conflict are unpredictable, and we may
not be able to foresee events that could have an adverse effect
on our business or your investment.
More generally, any of these events could result in increased
volatility in or damage to the United States and worldwide
financial markets and economy. They also could result in a
continuation of the current economic uncertainty in the United
States or abroad. Our revenues will be dependent upon payment of
rent by retailers, which may be particularly vulnerable to
uncertainty in the local economy. Adverse economic conditions
could affect the ability of our tenants to pay rent, which could
have a material adverse effect on our operating results and
financial condition, as well as our ability to pay distributions
to stockholders.
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Real estate related taxes may increase and if these
increases are not passed on to tenants, our income will be
reduced. |
Some local real property tax assessors may seek to reassess some
of our properties as a result of our acquisition of the
property. Generally, from time to time our property taxes
increase as property values or assessment rates change or for
other reasons deemed relevant by the assessors. An increase in
the assessed valuation of a property for real estate tax
purposes will result in an increase in the related real estate
taxes on that property. Although some tenant leases may permit
us to pass through such tax increases to the tenants for
payment, there is no assurance that renewal leases or future
leases will be negotiated on the same basis. Increases not
passed through to tenants will adversely affect our income, cash
available for distributions, and the amount of distributions to
you.
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Revenue from our properties depends on the amount of our
tenants retail revenue, making us vulnerable to general
economic downturns and other conditions affecting the retail
industry. |
Some of our leases may provide for base rent plus contractual
base rent increases. Some of our leases may also include a
percentage rent clause for additional rent above the base amount
based upon a specified percentage of the sales our tenants
generate.
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Under those leases that contain percentage rent clauses, our
revenue from tenants may decrease as the sales of our tenants
decrease. Generally, retailers face declining revenues during
downturns in the economy. As a result, the portion of our
revenue that we derive from percentage rent leases could decline
upon a general economic downturn.
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CC&Rs may restrict our ability to operate a
property. |
Some of our properties will most likely be contiguous to other
parcels of real property, comprising part of the same shopping
center development. In connection therewith, there will likely
exist significant covenants, conditions and restrictions, known
as CC&Rs, restricting the operation of such
property and any improvements on that property, and related to
granting easements on that property. Moreover, the operation and
management of the contiguous properties may impact such
property. Compliance with CC&Rs may adversely affect our
operating costs and reduce the amount of funds that we have
available to pay distributions.
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Our operating results may be negatively affected by
potential development and construction delays and resultant
increased costs and risks. |
While we do not currently intend to do so, we may use proceeds
from this offering to acquire and develop properties upon which
we will construct improvements. We will be subject to
uncertainties associated with re-zoning for development,
environmental concerns of governmental entities and/or community
groups, and our builders ability to build in conformity
with plans, specifications, budgeted costs, and timetables. If a
builder fails to perform, we may resort to legal action to
rescind the purchase or the construction contract or to compel
performance. A builders performance may also be affected
or delayed by conditions beyond the builders control.
Delays in completion of construction could also give tenants the
right to terminate preconstruction leases. We may incur
additional risks when we make periodic progress payments or
other advances to builders before they complete construction.
These and other such factors can result in increased costs of a
project or loss of our investment. In addition, we will be
subject to normal lease-up risks relating to newly constructed
projects. We also must rely on rental income and expense
projections and estimates of the fair market value of property
upon completion of construction when agreeing upon a price at
the time we acquire the property. If our projections are
inaccurate, we may pay too much for a property, and our return
on our investment could suffer.
While we do not currently intend to do so, we may invest in
unimproved real property. Returns from development of unimproved
properties are also subject to risks associated with re-zoning
the land for development and environmental concerns of
governmental entities and/or community groups. Although we
intend to limit any investment in unimproved property to
property we intend to develop, your investment nevertheless is
subject to the risks associated with investments in unimproved
real property.
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If we contract with an affiliated development company for
newly developed property, we cannot guarantee that our earnest
money deposit made to the development company will be fully
refunded. |
While we currently do not have an affiliated development
company, our sponsor and/or its affiliates may form a
development company. In such an event, we may enter into one or
more contracts, either directly or indirectly through joint
ventures with affiliates or others, to acquire real property
from an affiliate of Cole Advisors II that is engaged in
construction and development of commercial real properties.
Properties acquired from an affiliated development company may
be either existing income-producing properties, properties to be
developed or properties under development. We anticipate that we
will be obligated to pay a substantial earnest money deposit at
the time of contracting to acquire such properties. In the case
of properties to be developed by an affiliated development
company, we anticipate that we will be required to close the
purchase of the property upon completion of the development of
the property by our affiliate. At the time of contracting and
the payment of the earnest money deposit by us, our development
company affiliate typically will not have acquired title to any
real property. Typically, our development company affiliate will
only have a contract to acquire land, a development agreement to
develop a building on the land and an agreement with one or more
tenants to lease all or part of the
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property upon its completion. We may enter into such a contract
with our development company affiliate even if at the time of
contracting we have not yet raised sufficient proceeds in our
offering to enable us to close the purchase of such property.
However, we will not be required to close a purchase from our
development company affiliate, and will be entitled to a refund
of our earnest money, in the following circumstances:
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our development company affiliate fails to develop the property; |
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all or a specified portion of the pre-leased tenants fail to
take possession under their leases for any reason; or |
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we are unable to raise sufficient proceeds from our offering to
pay the purchase price at closing. |
The obligation of our development company affiliate to refund
our earnest money will be unsecured, and no assurance can be
made that we would be able to obtain a refund of such earnest
money deposit from it under these circumstances since our
development company affiliate may be an entity without
substantial assets or operations. However, our development
company affiliates obligation to refund our earnest money
deposit may be guaranteed by Fund Realty Advisors, our property
manager, which will enter into contracts to provide property
management and leasing services to various Cole-sponsored
programs, including us, for substantial monthly fees. As of the
time Fund Realty Advisors may be required to perform under any
guaranty, we cannot assure that Fund Realty Advisors will have
sufficient assets to refund all of our earnest money deposit in
a lump sum payment. If we were forced to collect our earnest
money deposit by enforcing the guaranty of Fund Realty Advisors,
we will likely be required to accept installment payments over
time payable out of the revenues of Fund Realty Advisors
operations. We cannot assure you that we would be able to
collect the entire amount of our earnest money deposit under
such circumstances. See Investment Objectives and
Policies Acquisition and Investment Policies.
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Competition with third parties in acquiring properties and
other investments may reduce our profitability and the return on
your investment. |
We compete with many other entities engaged in real estate
investment activities, including individuals, corporations, bank
and insurance company investment accounts, other REITs, real
estate limited partnerships, and other entities engaged in real
estate investment activities, many of which have greater
resources than we do. Larger REITs may enjoy significant
competitive advantages that result from, among other things, a
lower cost of capital and enhanced operating efficiencies. In
addition, the number of entities and the amount of funds
competing for suitable investments may increase. Any such
increase would result in increased demand for these assets and
therefore increased prices paid for them. If we pay higher
prices for properties and other investments, our profitability
will be reduced and you may experience a lower return on your
investment.
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Our properties will face competition that may affect
tenants ability to pay rent and the amount of rent paid to
us may affect the cash available for distributions and the
amount of distributions. |
We intend to locate our properties in developed areas.
Therefore, there are and will be numerous other retail
properties within the market area of each of our properties that
will compete with us for tenants. The number of competitive
properties could have a material effect on our ability to rent
space at our properties and the amount of rents charged. We
could be adversely affected if additional competitive properties
are built in locations competitive with our properties, causing
increased competition for customer traffic and creditworthy
tenants. This could result in decreased cash flow from tenants
and may require us to make capital improvements to properties
that we would not have otherwise made, thus affecting cash
available for distributions, and the amount available for
distributions to you.
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Delays in acquisitions of properties may an have adverse
effect on your investment. |
There may be a substantial period of time before the proceeds of
this offering are invested. Delays we encounter in the
selection, acquisition and/or development of properties could
adversely affect your
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returns. Where properties are acquired prior to the start of
construction or during the early stages of construction, it will
typically take several months to complete construction and rent
available space. Therefore, you could suffer delays in the
payment of cash distributions attributable to those particular
properties.
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Costs of complying with governmental laws and regulations,
including those relating to environmental matters, may adversely
affect our income and the cash available for any
distributions. |
All real property and the operations conducted on real property
are subject to federal, state and local laws and regulations
relating to environmental protection and human health and
safety. These laws and regulations generally govern wastewater
discharges, air emissions, the operation and removal of
underground and above-ground storage tanks, the use, storage,
treatment, transportation and disposal of solid and hazardous
materials, and the remediation of contamination associated with
disposals. Some of these laws and regulations may impose joint
and several liability on tenants, owners or operators for the
costs to investigate or remediate contaminated properties,
regardless of fault or whether the acts causing the
contamination were legal. This liability could be substantial.
In addition, the presence of hazardous substances, or the
failure to properly remediate these substances, may adversely
affect our ability to sell, rent or pledge such property as
collateral for future borrowings.
Some of these laws and regulations have been amended so as to
require compliance with new or more stringent standards as of
future dates. Compliance with new or more stringent laws or
regulations or stricter interpretation of existing laws may
require us to incur material expenditures. Future laws,
ordinances or regulations may impose material environmental
liability. Additionally, our tenants operations, the
existing condition of land when we buy it, operations in the
vicinity of our properties, such as the presence of underground
storage tanks, or activities of unrelated third parties may
affect our properties. In addition, there are various local,
state and federal fire, health, life-safety and similar
regulations with which we may be required to comply, and that
may subject us to liability in the form of fines or damages for
noncompliance. Any material expenditures, fines, or damages we
must pay will reduce our ability to make distributions and may
reduce the value of your investment.
State and federal laws in this area are constantly evolving, and
we intend to monitor these laws and take commercially reasonable
steps to protect ourselves from the impact of these laws,
including obtaining environmental assessments of most properties
that we acquire; however, we will not obtain an independent
third-party environmental assessment for every property we
acquire. In addition, we cannot assure you that any such
assessment that we do obtain will reveal all environmental
liabilities or that a prior owner of a property did not create a
material environmental condition not known to us. We cannot
predict what other environmental legislation or regulations will
be enacted in the future, how existing or future laws or
regulations will be administered or interpreted, or what
environmental conditions may be found to exist in the future. We
cannot assure you that our business, assets, results of
operations, liquidity or financial condition will not be
adversely affected by these laws, which may adversely affect
cash available for distributions, and the amount of
distributions to you.
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If we sell properties by providing financing to
purchasers, defaults by the purchasers would adversely affect
our cash flows. |
If we decide to sell any of our properties, we intend to use our
best efforts to sell them for cash. However, in some instances
we may sell our properties by providing financing to purchasers.
When we provide financing to purchasers, we will bear the risk
that the purchaser may default, which could negatively impact
our cash distributions to stockholders. Even in the absence of a
purchaser default, the distribution of the proceeds of sales to
our stockholders, or their reinvestment in other assets, will be
delayed until the promissory notes or other property we may
accept upon the sale are actually paid, sold, refinanced or
otherwise disposed of. In some cases, we may receive initial
down payments in cash and other property in the year of sale in
an amount less than the selling price and subsequent payments
will be spread over a number of years. If any purchaser defaults
under a financing arrangement with us, it could negatively
impact our ability to pay cash distributions to our stockholders.
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Our recovery of an investment in a mortgage that has
defaulted may be limited. |
There is no guarantee that the mortgage, loan or deed of trust
securing an investment will, following a default, permit us to
recover the original investment and interest that would have
been received absent a default. The security provided by a
mortgage, deed of trust or loan is directly related to the
difference between the amount owed and the appraised market
value of the property. Although we intend to rely on a current
real estate appraisal when we make the investment, the value of
the property is affected by factors outside our control,
including general fluctuations in the real estate market,
rezoning, neighborhood changes, highway relocations and failure
by the borrower to maintain the property.
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Our costs associated with complying with the Americans
with Disabilities Act may affect cash available for
distributions. |
Our properties will be subject to the Americans with
Disabilities Act of 1990 (Disabilities Act). Under the
Disabilities Act, all places of public accommodation are
required to comply with federal requirements related to access
and use by disabled persons. The Disabilities Act has separate
compliance requirements for public accommodations
and commercial facilities that generally requires
that buildings and services, including restaurants and retail
stores, be made accessible and available to people with
disabilities. The Disabilities Acts requirements could
require removal of access barriers and could result in the
imposition of injunctive relief, monetary penalties, or, in some
cases, an award of damages. We will attempt to acquire
properties that comply with the Disabilities Act or place the
burden on the seller or other third party, such as a tenant, to
ensure compliance with the Disabilities Act. However, we cannot
assure you that we will be able to acquire properties or
allocate responsibilities in this manner. If we cannot, our
funds used for Disabilities Act compliance may affect cash
available for distributions and the amount of distributions to
you.
Risks Associated with Debt Financing
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We may incur mortgage indebtedness and other borrowings,
which may increase our business risks. |
We expect that in most instances, we will acquire real
properties by using either existing financing or borrowing new
funds. In addition, we may incur mortgage debt and pledge all or
some of our real properties as security for that debt to obtain
funds to acquire additional real properties. We may borrow if we
need funds to satisfy the REIT tax qualification requirement
that we distribute at least 90.0% of our annual REIT taxable
income to our stockholders. We may also borrow if we otherwise
deem it necessary or advisable to assure that we maintain our
qualification as a REIT for federal income tax purposes.
If there is a shortfall between the cash flow from a property
and the cash flow needed to service mortgage debt on a property,
then the amount available for distributions to stockholders may
be reduced. In addition, incurring mortgage debt increases the
risk of loss since defaults on indebtedness secured by a
property may result in lenders initiating foreclosure actions.
In that case, we could lose the property securing the loan that
is in default, thus reducing the value of your investment. For
tax purposes, a foreclosure of any of our properties would be
treated as a sale of the property for a purchase price equal to
the outstanding balance of the debt secured by the mortgage. If
the outstanding balance of the debt secured by the mortgage
exceeds our tax basis in the property, we would recognize
taxable income on foreclosure, but would not receive any cash
proceeds. We may give full or partial guarantees to lenders of
mortgage debt to the entities that own our properties. When we
provide a guaranty on behalf of an entity that owns one of our
properties, we will be responsible to the lender for
satisfaction of the debt if it is not paid by such entity. If
any mortgages contain cross-collateralization or cross-default
provisions, a default on a single property could affect multiple
properties. If any of our properties are foreclosed upon due to
a default, our ability to pay cash distributions to our
stockholders will be adversely affected.
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High mortgage rates may make it difficult for us to
finance or refinance properties, which could reduce the number
of properties we can acquire and the amount of cash
distributions we can make. |
If we place mortgage debt on properties, we run the risk of
being unable to refinance the properties when the loans come
due, or of being unable to refinance on favorable terms. If
interest rates are higher when the properties are refinanced, we
may not be able to finance the properties and our income could
be reduced. If any of these events occur, our cash flow would be
reduced. This, in turn, would reduce cash available for
distribution to you and may hinder our ability to raise more
capital by issuing more stock or by borrowing more money.
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Lenders may require us to enter into restrictive covenants
relating to our operations, which could limit our ability to
make distributions to our stockholders. |
When providing financing, a lender could impose restrictions on
us that affect our distribution and operating policies and our
ability to incur additional debt. Loan documents we enter into
may contain covenants that limit our ability to further mortgage
the property, discontinue insurance coverage or replace Cole
Advisors II as our advisor. These or other limitations may
adversely affect our flexibility and our ability to achieve our
operating plans.
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Increases in interest rates could increase the amount of
our debt payments and adversely affect our ability to pay
distributions to our stockholders. |
We expect that we will incur indebtedness in the future.
Interest we pay will reduce cash available for distributions.
Additionally, if we incur variable rate debt, increases in
interest rates would increase our interest costs, which could
reduce our cash flows and our ability to pay distributions to
you. In addition, if we need to repay existing debt during
periods of rising interest rates, we could be required to
liquidate one or more of our investments in properties at times
that may not permit realization of the maximum return on such
investments.
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We have broad authority to incur debt, and high debt
levels could hinder our ability to make distributions and could
decrease the value of your investment. |
Our charter generally limits us to incurring debt no greater
than 60% of the greater of cost (before deducting depreciation
or other non-cash reserves) or fair market value of all of our
assets, unless any excess borrowing is approved by a majority of
our independent directors and disclosed to our stockholders in
our next quarterly report, along with a justification for such
excess borrowing. High debt levels would cause us to incur
higher interest charges, would result in higher debt service
payments, and could be accompanied by restrictive covenants.
These factors could limit the amount of cash we have available
to distribute and could result in a decline in the value of your
investment.
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We anticipate that during the term of this offering we
will request that our independent directors approve our ability
to incur debt greater than the debt limit discussed
above. |
During the term of this offering, we may want to conserve our
cash resources. Therefore, we anticipate that we will, upon the
approval of a majority of our independent directors, incur debt
that is in excess of 60% of the greater of cost (before
deducting depreciation or other non-cash reserves) or fair
market value of all of our assets. We anticipate that we will
receive, from time to time, such authority. This will result in
our having a greater than normal debt servicing payments, which
may restrict our ability to purchase additional properties or
the availability of cash to make distributions to our
stockholders.
Risks Associated with Section 1031 Exchange Transactions
and Tenant-in-Common Investments
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We may have increased exposure to liabilities from
litigation as a result of our participation in a
Tenant-in-Common Program. |
Cole Capital Partners, an affiliate of our advisor, has
developed Tenant-in-Common Programs to facilitate the
acquisition of real estate properties to be owned in co-tenancy
arrangements with persons who
37
are looking to invest proceeds from a sale of real estate to
qualify for like-kind exchange treatment under Section 1031
of the Internal Revenue Code. We may participate in the
Tenant-in-Common program by either co-investing in the property
with the Cole Exchange Entity or purchasing a tenant-in common
interest from the Cole Exchange Entity, generally at the Cole
Exchange Entitys cost. Changes in tax laws may result in
Tenant-in-Common Programs no longer being available, which may
adversely affect such programs or cause them not to achieve
their intended value. The Cole Exchange Entities are affiliates
of our advisor, and, as such, even though we do not sponsor
these Tenant-in-Common Programs, we may be named in or otherwise
required to defend against any lawsuits brought by
Tenant-in-Common Participants because of our affiliation with
sponsors of such transactions. Furthermore, in the event that
the Internal Revenue Service conducts an audit of the purchasers
of co-tenancy interests and successfully challenges the
qualification of the transaction as a like-kind exchange,
purchasers of co-tenancy interests may file a lawsuit against
the entity offering the co-tenancy interests, its sponsors,
and/or us. In such event we may be involved in one or more such
offerings and could therefore be named in or otherwise required
to defend against lawsuits brought by other Tenant-in-Common
Participants. Any amounts we are required to expend defending
any such claims will reduce the amount of funds available for
investment by us in properties or other investments and may
reduce the amount of funds available for distribution to our
stockholders. In addition, disclosure of any such litigation may
adversely affect our ability to raise additional capital in the
future through the sale of stock.
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We may be subject to risks associated with
Tenant-in-Common Programs inherent in ownership of co-tenancy
interests with non-affiliated third parties. |
In connection with some of our property acquisitions, we
currently or subsequently may become tenant-in-common owners of
properties in which Cole Exchange Entities sell tenant-in-common
interests to Tenant-in-Common Participants. As an owner of
tenant-in-common interests in properties, we will be subject to
the risks interest to the ownership of co-tenancy interests with
unrelated third parties. In a substantial majority of these
transactions, the underlying property serves as collateral for
the mortgage loan to finance the purchase of the property. To
the extent the loan is not repaid in full as part of the
Tenant-in-Common Program, the loan remains outstanding after the
sale of the co-tenancy interests to the Tenant-in-Common
Participants. Each co-tenant is a borrower under the loan
agreements. However, these loans generally are non-recourse
against the Tenant-in-Common Participants interests and are
secured by the real property. However, the Tenant-in-Common
Participants are required to indemnify, and become liable to,
the lender for customary carve-outs under the applicable
financing documents, including but not limited to fraud or
intentional misrepresentation by a co-tenant or a guarantor of
the loan, physical waste of the property, misapplication or
misappropriation of insurance proceeds, and failure to pay taxes.
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We will be subject to risks associated with the co-tenants
in our co-tenancy arrangements that otherwise may not be present
in other real estate investments. |
We may enter in tenant-in-common or other co-tenancy
arrangements with respect to a portion of the properties we
acquire. Ownership of co-tenancy interests involves risks
generally not otherwise present with an investment in real
estate such as the following:
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the risk that a co-tenant may at any time have economic or
business interests or goals that are or become inconsistent with
our business interests or goals; |
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the risk that a co-tenant may be in a position to take action
contrary to our instructions or requests or contrary to our
policies or objectives; |
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the possibility that an individual co-tenant might become
insolvent or bankrupt, or otherwise default under the applicable
mortgage loan financing documents, which may constitute an event
of default under all of the applicable mortgage loan financing
documents or allow the bankruptcy court to reject the
tenants-in-common agreement or management agreement entered into
by the co-tenants owning interests in the property; |
38
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the possibility that a co-tenant might not have adequate liquid
assets to make cash advances that may be required in order to
fund operations, maintenance and other expenses related to the
property, which could result in the loss of current or
prospective tenants and may otherwise adversely affect the
operation and maintenance of the property, and could cause a
default under the mortgage loan financing documents applicable
to the property and may result in late charges, penalties and
interest, and may lead to the exercise of foreclosure and other
remedies by the lender; |
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|
the risk that a co-tenant could breach agreements related to the
property, which may cause a default under, or result in personal
liability for, the applicable mortgage loan financing documents,
violate applicable securities law and otherwise adversely affect
the property and the co-tenancy arrangement; or |
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|
the risk that a default by any co-tenant would constitute a
default under the applicable mortgage loan financing documents
that could result in a foreclosure and the loss of all or a
substantial portion of the investment made by the co-tenants. |
Any of the above might subject a property to liabilities in
excess of those contemplated and thus reduce the amount
available for distribution to our stockholders.
In the event that our interests become adverse to those of the
other co-tenants, we will not have the contractual right to
purchase the co-tenancy interests from the other co-tenants.
Even if we are given the opportunity to purchase such co-tenancy
interests in the future, we cannot guarantee that we will have
sufficient funds available at the time to purchase co-tenancy
interests from the Tenant-in-Common Participants.
We might want to sell our co-tenancy interests in a given
property at a time when the other co-tenants in such property do
not desire to sell their interests. Therefore, we may not be
able to sell our interest in a property at the time we would
like to sell. In addition, we anticipate that it will be much
more difficult to find a willing buyer for our co-tenancy
interests in a property than it would be to find a buyer for a
property we owned outright.
Federal Income Tax Risks
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Failure to qualify as a REIT would adversely affect our
operations and our ability to make distributions. |
Morris, Manning & Martin, LLP, our legal counsel, has
rendered its opinion that we will qualify as a REIT, based upon
our representations as to the manner in which we are and will be
owned, invest in assets and operate, among other things.
However, our qualification as a REIT will depend upon our
ability to meet, through investments, actual operating results,
distributions and satisfaction of specific stockholder rules,
the various tests imposed by the Internal Revenue Code. Morris,
Manning & Martin, LLP will not review these operating
results or compliance with the qualification standards on an
ongoing basis. This means that we may fail to satisfy the REIT
requirements in the future. Also, this opinion represents
Morris, Manning & Martin, LLPs legal judgment
based on the law in effect as of the date of this prospectus.
Morris, Manning & Martin, LLPs opinion is not
binding on the Internal Revenue Service or the courts and we
will not apply for a ruling from the Internal Revenue Service
regarding our status as a REIT. Future legislative, judicial or
administrative changes to the federal income tax laws could be
applied retroactively, which could result in our
disqualification as a REIT.
If we fail to qualify as a REIT for any taxable year, we will be
subject to federal income tax on our taxable income at corporate
rates. In addition, we would generally be disqualified from
treatment as a REIT for the four taxable years following the
year of losing our REIT status. Losing our REIT status would
reduce our net earnings available for investment or distribution
to stockholders because of the additional tax liability. In
addition, distributions to stockholders would no longer qualify
for the distributions paid deduction, and we would no longer be
required to make distributions. If this occurs, we might be
required to borrow funds or liquidate some investments in order
to pay the applicable tax.
39
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Recharacterization of the Tenant-in-Common Programs may
result in a 100% tax on income from a prohibited transaction,
which would diminish our cash distributions to you. |
The Internal Revenue Service could recharacterize transactions
under the Tenant in Common Program such that Cole OP II,
rather than the Tenant-in-Common Participant, is treated as the
bona fide owner, for tax purposes, of properties acquired and
resold by a Tenant-in-Common Participant in connection with the
Tenant-in-Common Programs. Such characterization could result in
the fees paid to Cole OP II by a Tenant-in-Common
Participant as being deemed income from a prohibited
transaction, in which event the fee income paid to us in
connection with the Tenant-in-Common Programs would be subject
to a 100% penalty tax. If this occurs, our ability to pay cash
distributions to you will be adversely affected. We anticipate
that the Cole Exchange Entity will obtain a legal opinion in
connection with each Tenant-in-Common Program to the effect that
the program will qualify as a like-kind exchange under
Section 1031 of the Internal Revenue Code. However, no
assurance can be given that the Internal Revenue Service will
not take a position contrary to such an opinion.
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Recharacterization of sale-leaseback transactions may
cause us to lose our REIT status. |
We may purchase properties and lease them back to the sellers of
such properties. While we will use our best efforts to structure
any such sale-leaseback transaction so that the lease will be
characterized as a true lease, thereby allowing us
to be treated as the owner of the property for federal income
tax purposes, we cannot assure you that the IRS will not
challenge such characterization. In the event that any
sale-leaseback transaction is challenged and recharacterized as
a financing transaction or loan for federal income tax purposes,
deductions for depreciation and cost recovery relating to such
property would be disallowed. If a sale-leaseback transaction
were so recharacterized, we might fail to satisfy the REIT
qualification asset tests or the income
tests and, consequently, lose our REIT status effective
with the year of recharacterization. Alternatively, the amount
of our REIT taxable income could be recalculated which might
also cause us to fail to meet the distribution requirement for a
taxable year.
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You may have tax liability on distributions you elect to
reinvest in our common stock. |
If you participate in our distribution reinvestment plan, you
will be deemed to have received, and for income tax purposes
will be taxed on, the amount reinvested in common stock to the
extent the amount reinvested was not a tax-free return of
capital. As a result, unless you are a tax-exempt entity, you
may have to use funds from other sources to pay your tax
liability on the value of the common stock received.
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In certain circumstances, we may be subject to federal and
state income taxes as a REIT, which would reduce our cash
available for distribution to you. |
Even if we qualify and maintain our status as a REIT, we may be
subject to federal income taxes or state taxes. For example, net
income from a prohibited transaction will be subject
to a 100% tax. We may not be able to make sufficient
distributions to avoid excise taxes applicable to REITs. We may
also decide to retain income we earn from the sale or other
disposition of our property and pay income tax directly on such
income. In that event, our stockholders would be treated as if
they earned that income and paid the tax on it directly.
However, stockholders that are tax-exempt, such as charities or
qualified pension plans, would have no benefit from their deemed
payment of such tax liability. We may also be subject to state
and local taxes on our income or property, either directly or at
the level of Cole OP II or at the level of the other
companies through which we indirectly own our assets. Any
federal or state taxes we pay will reduce our cash available for
distribution to you.
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Legislative or regulatory action could adversely affect
investors. |
Under recently enacted tax legislation, the tax rate applicable
to qualifying corporate distributions received by individuals
prior to 2009 has been reduced to a maximum rate of 15.0%. This
special tax rate is generally not applicable to distributions
paid by a REIT, unless such distributions represent earnings on
which the REIT itself has been taxed. As a result, distributions
(other than capital gain distributions) we pay to individual
investors generally will be subject to the tax rates that are
otherwise applicable to
40
ordinary income, which currently are as high as 35.0%. This
change in law may make an investment in our shares comparatively
less attractive to individual investors than an investment in
the shares of non-REIT corporations, and could have an adverse
effect on the value of our common stock. You are urged to
consult with your own tax advisor with respect to the impact of
recent legislation on your investment in our common stock and
the status of legislative, regulatory or administrative
developments and proposals and their potential effect on an
investment in our common stock. You should also note that our
counsels tax opinion assumes that no legislation will be
enacted after the date of this prospectus that will be
applicable to an investment in our shares.
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Foreign purchasers of our common stock may be subject to
FIRPTA tax upon the sale of their shares. |
A foreign person disposing of a U.S. real property
interest, including shares of a U.S. corporation whose
assets consist principally of U.S. real property interests,
is generally subject to a tax, known as FIRPTA tax, on the gain
recognized on the disposition. Such FIRPTA tax does not apply,
however, to the disposition of stock in a REIT if the REIT is
domestically controlled. A REIT is
domestically controlled if less than 50.0% of the
REITs stock, by value, has been owned directly or
indirectly by persons who are not qualifying U.S. persons
during a continuous five-year period ending on the date of
disposition or, if shorter, during the entire period of the
REITs existence.
We cannot assure you that we will qualify as a
domestically controlled REIT. If we were to fail to
so qualify, gain realized by foreign investors on a sale of our
shares would be subject to FIRPTA tax, unless our shares were
traded on an established securities market and the foreign
investor did not at any time during a specified testing period
directly or indirectly own more than 5.0% of the value of our
outstanding common stock. See Federal Income Tax
Considerations Special Tax Considerations for
Non-U.S. Stockholders Sale of our Shares by a
Non-U.S. Stockholder.
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There are special considerations that apply to pension or
profit-sharing trusts or IRAs investing in |
our shares.
If you are investing the assets of a pension, profit-sharing,
401(k), Keogh or other qualified retirement plan or the assets
of an IRA in our common stock, you should satisfy yourself that,
among other things:
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your investment is consistent with your fiduciary obligations
under ERISA and the Internal Revenue Code; |
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your investment is made in accordance with the documents and
instruments governing your plan or IRA, including your
plans investment policy; |
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your investment satisfies the prudence and diversification
requirements of ERISA; |
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your investment will not impair the liquidity of the plan or IRA; |
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your investment will not produce UBTI for the plan or IRA; |
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you will be able to value the assets of the plan annually in
accordance with ERISA requirements; and |
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your investment will not constitute a prohibited transaction
under Section 406 of ERISA or Section 4975 of the
Internal Revenue Code. |
For a more complete discussion of the foregoing issues and other
risks associated with an investment in shares by retirement
plans, please see the Investment by Tax-Exempt Entities
and ERISA Considerations section of this prospectus.
41
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements. Such
statements can be identified by the use of forward-looking
terminology such as anticipates,
expects, intends, plans,
believes, seeks, estimates,
would, could, should and
variations of these words and similar expressions. Although we
believe that our expectations reflected in the forward-looking
statements are based on reasonable assumptions, these
expectations may not prove to be correct. Important factors that
could cause our actual results to differ materially from the
expectations reflected in these forward-looking statements
include those set forth above, as well as general economic,
business and market conditions, changes in federal and local
laws and regulations and increased competitive pressures.
42
ESTIMATED USE OF PROCEEDS
The following table sets forth information about how we intend
to use the proceeds raised in this offering, assuming that we
sell either the minimum offering of 250,000 shares, or the
maximum offering of $495,750,000 of shares, respectively, of
common stock pursuant to this offering. Many of the figures set
forth below represent managements best estimate since they
cannot be precisely calculated at this time. Assuming a maximum
offering we expect that approximately 88.6% of the money that
stockholders invest will be used to buy real estate or make
other investments, while the remaining approximately 11.4% will
be used for working capital, including reserves for working
capital, and to pay expenses and fees including the payment of
fees to Cole Advisors II, our advisor, and Cole Capital
Corporation, our dealer manager.
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Minimum Offering | |
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Maximum Offering | |
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Amount(1) | |
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Percent | |
|
Amount(2) | |
|
Percent | |
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| |
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Gross Offering Proceeds
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$ |
2,500,000 |
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100.0 |
% |
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$ |
495,750,000 |
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100.0 |
% |
Less Public Offering Expenses:
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Selling Commissions and Dealer Manager Fee(3)
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212,500 |
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8.5 |
% |
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38,250,000 |
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7.7 |
% |
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Organization and Offering Expenses(4)
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37,500 |
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1.5 |
% |
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7,436,250 |
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1.5 |
% |
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Amount Available for Investment(5)
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$ |
2,250,000 |
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90.0 |
% |
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$ |
450,063,750 |
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90.8 |
% |
Acquisition and Development:
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Acquisition and Advisory Fees(6)
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43,902 |
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1.8 |
% |
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8,781,732 |
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1.8 |
% |
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Acquisition Expenses(7)
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10,976 |
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0.4 |
% |
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2,195,433 |
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0.4 |
% |
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Initial Working Capital Reserve(8)
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0 |
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0 |
% |
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0 |
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0 |
% |
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Amount Invested in Properties(9)
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$ |
2,195,122 |
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87.8 |
% |
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$ |
439,086,585 |
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88.6 |
% |
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(1) |
Assumes the minimum offering of 250,000 shares are sold in
this offering. |
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(2) |
Assumes the maximum offering is sold, which includes
45,000,000 shares offered to the public at $10.00 per
share and 5,000,000 shares offered pursuant to our
distribution reinvestment plan at $9.15 per share. |
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(3) |
Includes selling commissions equal to 7.0% of aggregate gross
offering proceeds, which commissions may be reduced under
certain circumstances, and a dealer manager fee equal to 1.5% of
aggregate gross offering proceeds, both of which are payable to
the dealer manager, an affiliate of our advisor. The dealer
manager, in its sole discretion, may reallow selling commissions
of up to 7.0% of gross offering proceeds to other broker-dealers
participating in this offering attributable to the units sold by
them and may reallow its dealer manager fee up to 1.5% of gross
offering proceeds in marketing fees and due diligence expenses
to broker-dealers participating in this offering based on such
factors including the participating broker-dealers level
of marketing support, level of due diligence review and success
of its sales efforts, each as compared to those of the other
participating broker-dealers. Additionally, we will not pay a
selling commission or a dealer manager fee on shares purchased
pursuant to our distribution reinvestment plan. The amount of
selling commissions may be reduced under certain circumstances
for volume discounts. See the Plan of Distribution
section of this prospectus for a description of such provisions. |
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(4) |
Organization and offering expenses consist of reimbursement of
actual legal, accounting, printing and other accountable
offering expenses, including amounts to reimburse Cole
Advisors II, our advisor, for marketing, salaries and
direct expenses of its employees while engaged in registering
and marketing the shares and other marketing and organization
costs, other than selling commissions and the dealer manager
fee. Cole Advisors II and its affiliates will be
responsible for the payment of organization and offering
expenses, other than selling commissions and the dealer manager
fee, to the extent they exceed 1.5% of gross offering proceeds
without recourse against or reimbursement by us. We currently
estimate that approximately $7,436,250 of organization and
offering costs will be incurred if the maximum offering of
50,000,000 (approximately $495,750,000) shares is sold. |
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(5) |
Until required in connection with the acquisition and
development of properties, substantially all of the net proceeds
of the offering and, thereafter, any working capital reserves we
may have may be invested in short-term, highly-liquid
investments including government obligations, bank certificates
of deposit, short-term debt obligations and interest-bearing
accounts. |
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(6) |
Acquisition and advisory fees are defined generally as fees and
commissions paid by any party to any person in connection with
identifying, reviewing, evaluating, investing in and the
purchase, development or construction of |
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properties. We will pay our
advisor, acquisition and advisory fees up to a maximum amount of
2.0% of the contract purchase price of each property acquired,
which for purposes of this table we have assumed is an aggregate
amount equal to our estimated amount invested in properties.
Acquisition and advisory fees do not include acquisition
expenses. For purposes of this table, we have assumed that no
financing is used to acquire properties or other real estate
assets.
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(7) |
Acquisition expenses include legal fees and expenses, travel
expenses, costs of appraisals, nonrefundable option payments on
property not acquired, accounting fees and expenses, title
insurance premiums and other closing costs and miscellaneous
expenses relating to the selection, acquisition and development
of real estate properties. For purposes of this table, we have
assumed expenses of 0.5% of average invested assets, which for
purposes of this table we have assumed is our estimated amount
invested in properties; however, expenses on a particular
acquisition may be higher. Notwithstanding the foregoing,
pursuant to our charter, the total of all acquisition expenses
and acquisition fees payable with respect to a particular
property or investment shall be reasonable, and shall not exceed
an amount equal to 6% of the contract price of the property, or
in the case of a mortgage loan 6% of the funds allowed. |
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(8) |
Working capital reserves typically are utilized for
extraordinary expenses that are not covered by revenue
generation of the property, such as tenant improvements, leasing
commissions and major capital expenditures. Alternatively, a
lender may require its own formula for escrow of working capital
reserves. We do not expect to maintain working capital reserves. |
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(9) |
Includes amounts anticipated to be invested in properties net of
fees and expenses. |
44
MANAGEMENT
General
We operate under the direction of our board of directors, the
members of which are accountable to us and our stockholders as
fiduciaries. The board is responsible for the management and
control of our affairs. The board has retained Cole
Advisors II to manage our day-to-day affairs and the
acquisition and disposition of our investments, subject to the
boards supervision. Our charter has been reviewed and
ratified by at least a majority of our board of directors,
including the independent directors. This ratification by our
board of directors is required by the Statement of Policy
Regarding Real Estate Investment Trusts published by the North
American Securities Administrators Association, also known as
the NASAA REIT Guidelines.
Our charter and bylaws provide that the number of our directors
may be established by a majority of the entire board of
directors but may not be fewer than three nor more than 15,
provided, however, that there may be fewer than three directors
at any time that we have only one stockholder of record. We have
a total of three directors, including two independent directors.
Our charter provides that, from and after the commencement of
this offering, a majority of the directors must be independent
directors. An independent director is a person who
is not one of our officers or employees or an officer or
employee of Cole Advisors II or its affiliates or any other
real estate investment trust organized by our sponsor or advised
by Cole Advisors II, has not otherwise been affiliated with
such entities for the previous two years and does not serve as a
director of more than three REITs organized by
Christopher H. Cole or advised by Cole Advisors II. Of
our three directors, two will be considered independent
directors. There are no family relationships among any of our
directors or officers, or officers of our advisor. Each director
who is not an independent director must have at least three
years of relevant experience demonstrating the knowledge and
experience required to successfully acquire and manage the type
of assets being acquired by us. At least one of the independent
directors must have at least three years of relevant real estate
experience. Currently, each of our directors has substantially
in excess of three years of relevant real estate experience.
During the discussion of a proposed transaction, independent
directors may offer ideas for ways in which transactions may be
structured to offer the greatest value to us, and our management
will take these suggestions into consideration when structuring
transactions. Each director will serve until the next annual
meeting of stockholders or until his or her successor has been
duly elected and qualifies. Although the number of directors may
be increased or decreased, a decrease will not have the effect
of shortening the term of any incumbent director.
Any director may resign at any time and may be removed with or
without cause by the stockholders upon the affirmative vote of
at least a majority of all the votes entitled to be cast at a
meeting properly called for the purpose of the proposed removal.
The notice of the meeting will indicate that the purpose, or one
of the purposes, of the meeting is to determine if the director
shall be removed. Neither our advisor, any member of our board
of directors nor any of their affiliates may vote or consent on
matters submitted to the stockholders regarding the removal of
our advisor or any director after we accept any subscriptions
for the purchase of shares in this offering. In determining the
requisite percentage in interest required to approve such a
matter after we accept any subscriptions for the purchase of
shares in this offering, any shares owned by such persons will
not be included.
Any vacancy created by an increase in the number of directors or
the death, resignation, removal, adjudicated incompetence or
other incapacity of a director may be filled only by a vote of a
majority of the remaining directors. Independent directors shall
nominate replacements for vacancies in the independent director
positions. If at any time there are no directors in office,
successor directors shall be elected by the stockholders. Each
director will be bound by the charter and the bylaws.
The directors are not required to devote all of their time to
our business and are only required to devote the time to our
affairs as their duties require. The directors will meet
quarterly or more frequently if necessary. We do not expect that
the directors will be required to devote a substantial portion
of their
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time to discharge their duties as our directors. Consequently,
in the exercise of their responsibilities, the directors will be
relying heavily on our advisor. Our directors shall have a
fiduciary duty to our stockholders to supervise the relationship
between us and our advisor. The board is empowered to fix the
compensation of all officers that it selects and approve the
payment of compensation to directors for services rendered to us
in any other capacity.
Our board of directors will have written policies on investments
and borrowing, the expected terms of which are set forth in this
prospectus. The directors may establish further written policies
on investments and borrowings and shall monitor our
administrative procedures, investment operations and performance
to ensure that the policies are fulfilled and are in the best
interest of the stockholders.
The board also will be responsible for reviewing our fees and
expenses on at least an annual basis and with sufficient
frequency to determine that the expenses incurred are in the
best interest of the stockholders. In addition, a majority of
the directors, including a majority of the independent directors
who are not otherwise interested in the transaction, must
approve all transactions with Cole Advisors II or its
affiliates. The independent directors will also be responsible
for reviewing the performance of Cole Advisors II and
determining that the compensation to be paid to Cole
Advisors II is reasonable in relation to the nature and
quality of services to be performed and that the provisions of
the advisory agreement are being carried out. Specifically, the
independent directors will consider factors such as:
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the amount of the fees paid to Cole Advisors II in relation
to the size, composition and performance of our investments; |
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the success of Cole Advisors II in generating appropriate
investment opportunities; |
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rates charged to other REITs, especially REITs of similar
structure, and other investors by advisors performing similar
services; |
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additional revenues realized by Cole Advisors II and its
affiliates through their relationship with us, whether we pay
them or they are paid by others with whom we do business; |
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the quality and extent of service and advice furnished by Cole
Advisors II and the performance of our investment
portfolio; and |
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the quality of our portfolio relative to the investments
generated by Cole Advisors II or its affiliates for its
other clients. |
Neither our advisor nor any of its affiliates will vote or
consent to the voting of shares of our common stock they now own
or hereafter acquire on matters submitted to the stockholders
regarding either (1) the removal of Cole Advisors II,
any non-independent director or any of their respective
affiliates, or (2) any transaction between us and Cole
Advisors II, any non-independent director or any of their
respective affiliates.
Committees of the Board of Directors
Our entire board of directors considers all major decisions
concerning our business, including any property acquisitions.
However, our bylaws provide that our board may establish such
committees as the board believes appropriate. The board will
appoint the members of the committee in the boards
discretion. Our bylaws require that a majority of the members of
each committee of our board is to be comprised of independent
directors.
Audit Committee
Our board of directors has established an audit committee, which
consists of our two independent directors. The audit committee,
by approval of at least a majority of the members, selects the
independent registered public accounting firm to audit our
annual financial statements, reviews with the independent
registered public accounting firm the plans and results of the
audit engagement, approves the audit and non-audit services
provided by the independent registered public accounting firm,
reviews the independence
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of the independent registered public accounting firm, considers
the range of audit and non-audit fees and reviews the adequacy
of our internal accounting controls. Our board of directors has
adopted a charter for the audit committee that sets forth its
specific functions and responsibilities.
Compensation Committee
Our board of directors has established a compensation committee
which consists of our two independent directors. The primary
purpose of the compensation committee will be to oversee our
compensation programs. Our board of directors has adopted a
charter for the compensation committee that sets forth its
specific functions and responsibilities.
Executive Officers and Directors
We have provided below certain information about our executive
officers and directors.
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Christopher H. Cole
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Chairman of the Board of Directors, Chief Executive Officer and
President |
Blair D. Koblenz
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Executive Vice President and Chief Financial Officer |
John M. Pons
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Secretary |
Marcus E. Bromley
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Director |
Elizabeth L. Watson
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Director |
Christopher H. Cole has served as the chairman, chief
executive officer and president of our company since our
formation. He also has been the chief executive officer and
president of Cole Advisors II since its formation.
Mr. Cole also has served as the president and chief
executive officer of Cole Capital Partners since 2003 and has
been engaged as a general partner in the structuring and
management of real estate limited partnerships since February
1979. He also is the chief executive officer and president of
Cole Capital Advisors, Inc. (Cole Capital Advisors), Equity Fund
Advisors, Inc. (Equity Fund Advisors), and Cole Advisors.
Mr. Cole is the chief executive officer, president and
treasurer of Fund Realty Advisors, Inc. (Fund Realty Advisors).
He is the president of CHC Partners, which has served as the
general partner in prior real estate programs, since 1985.
Mr. Cole has been the president and chief executive officer
of Cole Equities since 1980. He currently serves as executive
vice president of Cole Capital Corporation. He has served as the
chairman, chief executive officer and president of Cole REIT I
since its formation. Mr. Cole served as the president of
Cole Partnerships, Inc. from its formation to August 1995 and
currently serves as chief executive officer.
Blair D. Koblenz has served as executive vice president
and chief financial officer of our company since its formation.
He has been active in the structuring and financial management
of commercial real estate investments for over 20 years. He
is also executive vice president and chief financial officer of
Cole Capital Partners, Cole Capital Advisors, Equity Fund
Advisors, Cole Advisors and Cole Advisors II.
Mr. Koblenz is the executive vice president, chief
financial officer and secretary of Fund Realty Advisors. He has
served as president of Cole Capital Corporation since December
2002 and previously served as vice president. He also serves as
vice president and chief financial officer of Cole Partnerships,
Partnership Advisors, Cole Real Estate Services, Inc., and CHC
Partners. He serves as secretary of Cole Equities, a consulting
company. Mr. Koblenz has served as a director and executive
vice president/ chief financial officer of Cole REIT I since its
formation in March 2004. Prior to joining Cole in 1994, he
practiced in public accounting at Toback & Company, CPA
from 1979 to 1982 with an emphasis in taxation and business
planning. He then served in a financial officer capacity for
real estate investment companies and operators in Arizona from
1982 to 1994. Mr. Koblenz received his B.S. degree in
Accounting from Arizona State University and is a Certified
Public Accountant, licensed in the State of Arizona. He holds
the designation of Certified Financial Planner as authorized by
the CFP Board of Standards and holds
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securities licenses. He is a member of the American Institute of
CPAs, the Arizona Society of CPAs, the Financial Planning
Association and the National Association of Real Estate
Investment Trusts (NAREIT).
John M. Pons has served as secretary of our company since
its formation. He also is vice president and counsel of Cole
Capital Partners, Cole Capital Advisors and Equity Fund
Advisors, and is vice president, secretary and counsel of Cole
Advisors and Cole Advisors II. From December 2001 until
joining Cole in September 2003, Mr. Pons was associate
general counsel and assistant secretary of GE Capital Franchise
Finance Corporation. Prior to December 2001, Mr. Pons was
engaged in a private legal practice. Mr. Pons has over nine
years experience in all aspects of real estate law, including
the acquisition, sale, leasing, development and financing of
real property. Before attending law school, Mr. Pons was a
Captain in the United States Air Force where he served from 1988
until 1992. Mr. Pons received a B.S. degree in Mathematics
from Colorado State University and a M.S. degree in
Administration from Central Michigan University before attending
the University of Denver where he earned his J.D. (Order of St.
Ives) in 1995.
Marcus E. Bromley has been a member of our board of
directors, chairman of our boards audit committee and a
member of our boards compensation committee since May
2005. Mr. Bromley has served as a member of the board of
trustees of Gables Residential Trust (GBP), a $2 billion
multi-family residential REIT with operations in Texas, Atlanta,
South Florida, Washington, D.C. and Southern California that is
listed on the New York Stock Exchange, since December 1993. From
December 1993 until June 2000, Mr. Bromley also served as
the chief executive officer of Gables Residential Trust. Prior
to joining Gables Residential Trust, Mr. Bromley was a
division partner of Trammell Crow Residential from 1982 until
1993. Mr. Bromley holds a B.S. in Economics from Washington
& Lee University and a M.B.A. from the University of North
Carolina.
Elizabeth L. Watson has been a member of our board of
directors, the chairperson of our boards audit committee
and a member of our boards compensation committee since
May 2005. Since September 2003, Ms. Watson has been a
partner in and has served as the chief operating officer for NGP
Capital Partner III, LLC (NGP Capital). Prior to joining
NGP Capital, she was a retail research analyst for Legg Mason
Wood Walker from June 2002 until September 2003. From November
1997 until June 2002, Ms. Watson was a partner in and
served as executive vice president and chief financial officer
of National Government Properties (NGP). Before joining NGP,
Ms. Watson served as the senior vice president, chief
financial officer and treasurer of Government Properties
Investors, Inc. (GPI) from June 1994 until March 1997. From 1992
until 1994, Ms. Watson served as senior vice president,
chief financial officer and treasurer of Prime Retail, Inc., a
publicly traded REIT that developed and owned factory outlet
centers, and its predecessor company, The Prime Group.
Ms. Watson received her B.S. Accounting and M.B.A. from the
University of Maryland. She holds a Masters of Real Estate from
John Hopkins University and an International Executive M.B.A.
from Georgetown University. For the past ten years, she has been
a lecturer for Johns Hopkins Universitys Real Estate
Master Program and has taught real estate accounting and
taxation, real estate finance and real estate investments. She
is a licensed certified public accountant and is a member of the
Maryland Association of CPAs, NAREIT and the National
Association of Real Estate Companies.
Compensation of Directors
We pay each of our independent directors a retainer of
$25,000 per year plus $2,000 for each board or board
committee meeting the director attends in person ($2,500 for
attendance by the chairperson of the audit committee at each
meeting of the audit committee) and $250 for each meeting the
director attends by telephone. In the event there are multiple
meetings of the board and one or more committees in a single
day, the fees will be limited to $2,500 per day ($3,000 for
the chairperson of the audit committee if there is a meeting of
such committee.) In addition, we have reserved
1,000,000 shares of common stock for future issuance upon
the exercise of stock options that may be granted to our
independent directors pursuant to our stock option plan
(described below). We granted to each of our independent
directors an option to purchase 5,000 shares of common
stock at an exercise price equal to $9.15 per share (or
greater, if such higher price is necessary so that such option
shall not be considered a nonqualified deferred
compensation plan under Section 409A of the Internal
Revenue Code) as of the date each independent
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director was elected as a director. We expect that the
independent directors will receive an additional 5,000-share
option grant on the date of each annual meeting of stockholders,
each with an exercise price equal to $9.15 per share during such
time as we are offering shares to the public at $10.00 per share
and thereafter at 100.0% of the then-current fair market value
per share. All directors receive reimbursement of reasonable
out-of-pocket expenses incurred in connection with attendance at
meetings of our board of directors. If a director is also an
employee of Cole REIT II or Cole Advisors II or their
affiliates, we do not pay compensation for services rendered as
a director. As of May 9, 2005, we had not paid compensation
to any of our directors in their capacity as a member of our
board of directors, other than granting options.
2004 Independent Directors Stock Option Plan
We have adopted an independent directors stock option
plan that is designed to attract and retain independent
directors by providing them with the opportunity to purchase our
shares in order to attract and retain these directors. Options
granted to our independent directors under the plan provide
these directors with an incentive to increase the value of our
shares and a stake in our future that corresponds to the stake
of each of our stockholders. A total of 1,000,000 shares
have been authorized and reserved for issuance under the plan.
The plan is administered by our board of directors. All of our
independent directors will be eligible to participate in the
plan. The plan authorizes the grant of non-qualified stock
options to our independent directors, subject to the absolute
discretion of the board and the applicable limitations of the
plan. We intend to grant options under our stock option plan to
each qualifying director annually. The initial option grant
generally will be made on the date the qualifying director first
becomes a director, unless the grant would cause the director to
exceed our 9.8% ownership limit, in which case the grant will be
delayed. Annual grants are expected to be made on the date of
each annual stockholder meeting in which the respective
independent director is re-elected. The exercise price for the
options granted under our independent director stock option plan
initially would be $9.15 per share (or greater, if such
higher price is necessary so that such options shall not be
considered a nonqualified deferred compensation plan
under Section 409A of the Internal Revenue Code). It is
intended that the exercise price for future options granted
under our independent director stock option plan will be at
least 100.0% of the fair market value of our common stock as of
the date that the option is granted.
Options granted to independent directors under the plan will
become exercisable on the first anniversary of the date of
grant. Options granted under our stock option plan will lapse
and no longer be exercisable on the first to occur of
(1) the tenth anniversary of the date they are granted or
(2) immediately following the date the director ceases to
be a director for cause. Options granted under the plan may be
exercised by payment of cash or through the delivery of shares
of our common stock with a fair market value equal to the
exercise price to be paid. No options issued under our stock
option plan may be exercised if such exercise would jeopardize
our status as a REIT under the Internal Revenue Code.
The term of the plan is ten years. Upon the earlier of our
dissolution or liquidation, upon our reorganization, merger or
consolidation with one or more corporations as a result of which
we are not the surviving corporation, or upon the sale of all or
substantially all of our properties, the plan will terminate,
and any outstanding options will be forfeited. Alternatively,
the board of directors may provide in writing in connection with
any such transaction for any or all of the following
alternatives:
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the assumption by the successor corporation of the options
granted or the replacement of the options with options
exercisable into the stock of the successor corporation, or a
parent or subsidiary of such corporation, with appropriate
adjustments as to the number and kind of shares and exercise
prices; |
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the continuance of the plan and the options by such successor
corporation under the original terms; and/or |
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the payment in cash or shares of our common stock in lieu of and
in complete satisfaction of such options. |
Provisions Applicable to Our Stock Option Plan
In no event shall an option be granted under our stock option
plan to an independent director if the shares available for
purchase subject to such grant, when added to all other shares
available for purchase and all other shares purchased pursuant
to other issued and outstanding options, would exceed 9.8% of
the issued and outstanding shares of common stock determined as
of the date of grant of such option. Except as otherwise
provided in an option agreement, if a change of control occurs
and the agreements effectuating the change of control do not
provide for the assumption or substitution of all options
granted under the plan, the board in its sole and absolute
discretion, may, with respect to any or all of such options,
take any or all of the following actions to be effective as of
the date of the change of control (or as of any other date fixed
by the board occurring within the 30-day period immediately
preceding the date of the change of control, but only if such
action remains contingent upon the change of control), such date
being referred to herein as the Action Effective
Date:
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accelerate the vesting and/or exercisability of the non-assumed
option; |
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unilaterally cancel any such non-assumed option that has not
vested and/or that has not become exercisable; |
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unilaterally cancel such non-assumed option in exchange for: |
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whole and/or fractional shares (or for whole shares and cash in
lieu of any fractional share) that, in the aggregate, are equal
in value to the gain that could be realized by the award
recipient upon the exercise of such option (taking into account
vesting and/or exercisability of such option); or |
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cash or other property equal in value to the gain that could be
realized upon the exercise of such option (taking into account
vesting and/or exercisability of such option); |
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unilaterally cancel such non-assumed option after providing the
holder of such option with (1) an opportunity to exercise
such non-assumed option to the extent vested within a specified
period prior to the date of the change of control, and
(2) notice of such opportunity to exercise prior to the
commencement of such specified period; and/or |
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unilaterally cancel such non-assumed option if there would be no
gain realized upon the immediate exercise price of such option
(taking into account vesting). |
If the number of our outstanding shares is changed into a
different number or kind of shares or securities through a
reorganization or merger in which we are the surviving entity,
or through a combination, recapitalization or otherwise, an
appropriate adjustment will be made in the number and kind of
shares that may be issued pursuant to the exercise of options
granted under the plan. A corresponding adjustment to the
exercise price of such options granted prior to any change will
also be made. Any such adjustment, however, will not change the
total payment, if any, applicable to the portion of the options
not exercised, but will change only the exercise price for each
share.
Compliance with the American Jobs Creation Act
As part of our strategy for compensating our independent
directors, we intend to issue options to purchase our common
stock in our independent directors stock option plan,
which is described above. This method of compensating
individuals may possibly be considered to be a
nonqualified deferred compensation plan under
Section 409A of the Internal Revenue Code (including
amendment by the American Jobs Creation Act of 2004).
Section 409A of the Internal Revenue Code is a recently
enacted section that affects plans, agreements and arrangements
that meet the definition of nonqualified deferred
compensation plans under such provision. Under
Section 409A, nonqualified deferred compensation
plans must meet certain
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requirements regarding the timing of distributions or payments
and the timing of agreements or elections to defer, and must
also prohibit any possibility of acceleration of distributions
or payments, as well as certain other requirements. Currently,
based on the statutory language and the committee reports
accompanying the statute, it is possible that some stock options
(those with an exercise price that is less than the fair market
value of the underlying stock as of the date of grant) could be
considered as nonqualified deferred compensation
plans.
If Section 409A applies to any of the awards issued under
the plan, or if Section 409A applies to any other
arrangement or agreement that we may make, and if such award,
arrangement or agreement does not meet the timing and
prohibition requirements of Section 409A, then (i) all
amounts deferred for all taxable years under the award,
arrangement or agreement would be currently includible in gross
income to the extent not subject to a substantial risk of
forfeiture and not previously included in the gross income of
the affected individual, (ii) interest at the underpayment
rate plus one percentage point would be imposed on the
underpayments that would have occurred had the compensation been
includible in income when first deferred (or, if later, when not
subject to a substantial risk of forfeiture), and (iii) a
20% additional tax is imposed on the amounts required to be
included in income. Furthermore, if the affected individual is
our employee, we would be required to withhold federal income
taxes on this amount, although there may be no funds being paid
to the individual from which we could withhold taxes. We will
also be required to report on an appropriate form (W-2 or 1099)
amounts which are deferred, whether or not they meet the
requirements of new Section 409A, and if we fail to do so,
penalties could apply.
We do not intend to issue any award, or enter into any agreement
or arrangement that would be considered a nonqualified
deferred compensation plan under Section 409A, unless
such award, agreement or arrangement complies with the timing
and prohibition requirements of Section 409A. It is our
current belief, based upon the statute and legislative history,
that the awards, agreements and arrangements that we currently
intend to implement will not be subject to taxation under
Section 409A either because the award, agreement or
arrangement will not be considered a nonqualified deferred
compensation plan, or our expectation that the Internal
Revenue Service will provide guidance or regulations clarifying
that Section 409A would not apply to such award, agreement
or arrangement. Furthermore, if this belief is not correct, we
intend to either terminate or modify such award, agreement or
arrangement (during a transitional period that the Internal
Revenue Service is required to provide by Section 885(f) of
the American Jobs Creation Act of 2004, which enacted
Section 409A) so that Section 409A would not apply to
such award, agreement or arrangement, or so that such award,
agreement or arrangement complies with Section 409As
timing and prohibition requirements. Nonetheless, there can be
no assurances that any award, agreement or arrangement which we
have entered into will not be affected by Section 409A, or
that any such award, agreement or arrangement will not be
subject to income taxation under Section 409A.
Limited Liability and Indemnification of Directors, Officers,
Employees and Other Agents
We are permitted to limit the liability of our directors,
officers and other agents, and to indemnify them, only to the
extent permitted by Maryland law and the NASAA REIT Guidelines.
Maryland law permits us to include in our charter a provision
limiting the liability of our directors and officers to our
stockholders and us for money damages, except for liability
resulting from (i) actual receipt of an improper benefit or
profit in money, property or services or (ii) active and
deliberate dishonesty established by a final judgment and that
is material to the cause of action.
The Maryland General Corporation Law requires us (unless our
charter provides otherwise, which our charter does not) to
indemnify a director or officer who has been successful in the
defense of any proceeding to which he is made a party by reason
of his service in that capacity. The Maryland General
Corporation Law allows directors and officers to be indemnified
against judgments, penalties, fines, settlements and expenses
actually incurred in a proceeding unless the following can be
established:
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an act or omission of the director or officer was material to
the cause of action adjudicated in the proceeding and was
committed in bad faith or was the result of active and
deliberate dishonesty; |
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the director or officer actually received an improper personal
benefit in money, property or services; |
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with respect to any criminal proceeding, the director or officer
had reasonable cause to believe his act or omission was
unlawful; or |
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in a proceeding by us or on our behalf, the director or officer
was adjudged to be liable to us (although a court may order
indemnification for expenses relating to an adverse judgment in
a suit by or in the right of the corporation or a judgment of
liability on the basis that personal benefit was improperly
received). |
Our charter provides that we will indemnify and hold harmless a
director, an officer, an employee, an agent, Cole
Advisors II or an affiliate against any and all losses or
liabilities reasonably incurred by such party in connection with
or by reason of any act or omission performed or omitted to be
performed on our behalf in such capacity. This provision does
not reduce the exposure of directors and officers to liability
under federal or state securities laws, nor does it limit the
stockholders ability to obtain injunctive relief or other
equitable remedies for a violation of a directors or an
officers duties to us, although the equitable remedies may
not be an effective remedy in some circumstances.
In addition to the above provisions of the Maryland General
Corporation Law, and as set forth in the NASAA REIT Guidelines,
our charter further limits our ability to indemnify and hold
harmless our directors, our officers, our employees, our agents,
Cole Advisors II and our affiliates for losses arising from
our operation by requiring that the following additional
conditions are met:
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the directors, the officers, the employees, the agents, Cole
Advisors II or our affiliates have determined, in good
faith, that the course of conduct that caused the loss or
liability was in our best interests; |
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the directors, the officers, the employees, the agents, Cole
Advisors II or our affiliates were acting on our behalf or
performing services for us; |
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in the case of non-independent directors, Cole Advisors II
or our affiliates, the liability or loss was not the result of
negligence or misconduct by the party seeking indemnification; |
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in the case of independent directors, the liability or loss was
not the result of gross negligence or willful misconduct by the
party seeking indemnification; and |
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the indemnification or agreement to hold harmless is recoverable
only out of our net assets and not from the stockholders. |
We have agreed to indemnify and hold harmless Cole
Advisors II and its affiliates performing services for us
from specific claims and liabilities arising out of the
performance of their obligations under the advisory agreement.
As a result, our stockholders and we may be entitled to a more
limited right of action than they and we would otherwise have if
these indemnification rights were not included in the advisory
agreement.
The general effect to investors of any arrangement under which
any of our controlling persons, directors or officers are
insured or indemnified against liability is a potential
reduction in distributions resulting from our payment of
premiums associated with insurance. In addition, indemnification
could reduce the legal remedies available to our stockholders
and us against the officers and directors.
The Securities and Exchange Commission takes the position that
indemnification against liabilities arising under the Securities
Act of 1933, as amended (Securities Act), is against public
policy and unenforceable. Indemnification of our directors, our
officers, our employees, our agents, Cole Advisors II or
our affiliates and any persons acting as a broker-dealer will
not be allowed for liabilities arising from or out of a
violation of state or federal securities laws, unless one or
more of the following conditions are met:
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there has been a successful adjudication on the merits of each
count involving alleged securities law violations; |
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such claims have been dismissed with prejudice on the merits by
a court of competent jurisdiction; or |
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a court of competent jurisdiction approves a settlement of the
claims against the indemnitee and finds that indemnification of
the settlement and the related costs should be made, and the
court considering the request for indemnification has been
advised of the position of the Securities and Exchange
Commission and of the published position of any state securities
regulatory authority in which our securities were offered as to
indemnification for violations of securities laws. |
Our charter provides that the advancement of our funds to our
directors, officers, employees, agents, advisor or affiliates
for legal expenses and other costs incurred as a result of any
legal action for which indemnification is being sought is
permissible only if all of the following conditions are
satisfied: (i) the legal action relates to acts or
omissions with respect to the performance of duties or services
on behalf of us; (ii) our directors, officers, employees,
agents, advisor or affiliates provide us with written
affirmation of their good faith belief that they have met the
standard of conduct necessary for indemnification;
(iii) the legal action is initiated by a third party who is
not a stockholder or, if the legal action is initiated by a
stockholder acting in his or her capacity as such, a court of
competent jurisdiction specifically approves such advancement;
and (iv) our directors, officers, employees, agents,
advisor or affiliates agree in writing to repay the advanced
funds to us together with the applicable legal rate of interest
thereon, in cases in which such persons are found not to be
entitled to indemnification.
Indemnification will be allowed for settlements and related
expenses of lawsuits alleging securities laws violations and for
expenses incurred in successfully defending any lawsuits,
provided that a court either:
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approves the settlement and finds that indemnification of the
settlement and related costs should be made; or |
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dismisses the lawsuit with prejudice or there is a successful
adjudication on the merits of each count involving alleged
securities law violations as to the particular indemnitee and a
court approves the indemnification. |
The Advisor
Our advisor is Cole Advisors II. Some of our officers and
directors also are officers, key personnel and/or directors of
Cole Advisors II. Cole Advisors II has contractual
responsibility to us and our stockholders pursuant to the
advisory agreement.
The officers and key personnel of our advisor are as follows:
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Name |
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Position(s) |
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Christopher H. Cole
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52 |
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Chief Executive Officer and President |
Blair D. Koblenz
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47 |
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Executive Vice President and Chief Financial Officer |
Christopher P. Robertson
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38 |
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Vice President, Acquisitions |
John M. Pons
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41 |
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Vice President, Secretary and Counsel |
D. Kirk McAllaster, Jr.
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38 |
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Director of Finance and Compliance |
Sean D. Leahy
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34 |
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Director of Portfolio Management |
John H. Lotka
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55 |
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Director of Marketing |
The backgrounds of Messrs. Cole, Koblenz and Pons are
described in the Management Executive Officers
and Directors section of this prospectus. Below is a brief
description of the other officers and key employees of Cole
Advisors II.
Christopher P. Robertson is vice president, acquisitions
for Cole Capital Partners, Cole Advisors and Cole
Advisors II. Prior to joining Cole in October 2003,
Mr. Robertson worked for Shell Capital, Inc., an investment
banking division of Shell Oil Company, as vice president of
business development. From 1998
53
until joining Shell Capital in 2000, he was employed at
Franchise Finance Corporation of America as its vice president
of corporate finance. While at Franchise Finance Corporation he
structured numerous sale-leaseback and senior debt transactions
in the restaurant, convenience store/gas, and automotive
aftermarket industries. Mr. Robertson received a B.B.A.
degree from Baylor University with majors in both Finance and
Real Estate in 1988. In 1993, Mr. Robertson received a
M.B.A. degree in Finance from Pepperdine University.
D. Kirk McAllaster, Jr. is director of
finance and compliance of Cole Capital Partners, Cole
Advisors and Cole Advisors II. Prior to joining Cole in May
2003, Mr. McAllaster worked for six years with
Deloitte & Touche LLP, most recently as audit senior
manager. He has over 14 years of accounting and finance
experience in public accounting and private industry.
Mr. McAllaster received a B.S. degree from California State
Polytechnic University Pomona with a major in
Accounting. He is a Certified Public Accountant and is a member
of the American Institute of CPAs and the Arizona Society
of CPAs.
Sean D. Leahy is director of portfolio management of Cole
Capital Partners, Cole Capital Advisors, Cole Advisors and Cole
Advisors II. Prior to joining Cole in September 2003,
Mr. Leahy spent four years as assistant vice president with
the Phoenix office of Lowe Enterprises, Inc., a national pension
fund advisor, where he was involved with acquisitions and
dispositions, and leasing and asset management for the
companys Arizona portfolio of commercial properties. Prior
to joining Lowe Enterprises, Mr. Leahy spent five years
with the Phoenix office of Ernst & Young, LLP, most
recently as a Real Estate Consulting Manager. Mr. Leahy is
a licensed real estate broker and Certified Public Accountant.
Mr. Leahy received a B.S. degree with majors in Finance and
Accounting from the University of Arizona.
John H. Lotka is chief marketing officer of Cole
Capital Markets, Inc. and director of marketing for Cole
Advisors II. Prior to joining Cole in March 2005, he was
founder and chief executive officer of Maximum Impact Partners,
LLC, a sales and marketing consulting firm working exclusively
with investment management companies. From 1988 until 1997 he
served as vice president of marketing at Nuveen Investments, a
mutual fund company. From 1983 until 1988, he served as a
partner at Frankel & Co., formerly the nations
largest independent marketing services agency, now part of the
Publicis Advertising Group. From 1979 until 1980, he served as
chief operating officer and chief financial officer of United of
America Bank, a community bank. Mr. Lotka also formerly
served as a member of the ICI Sales Force Marketing Committee
and was a founding member of the Forum for Investor Advice, a
mutual fund industry trade group. Mr. Lotka received his
B.S. in business administration from the University of Arizona.
He also holds a certificate from the Graduate Institute of Bank
Marketing, a joint program from University of Southern
California and Louisiana State University.
In addition to the directors and executive officers listed
above, Cole Advisors II employs personnel who have extensive
experience in selecting and managing commercial properties
similar to the properties sought to be acquired by us.
The Advisory Agreement
Many of the services to be performed by Cole Advisors II in
managing our day-to-day activities are summarized below. This
summary is provided to illustrate the material functions that we
expect Cole Advisors II will perform for us as our advisor,
and it is not intended to include all of the services that may
be provided to us by third parties. Under the terms of the
advisory agreement, Cole Advisors II will undertake to use
its commercially reasonable best efforts to present to us
investment opportunities consistent with our investment policies
and objectives as adopted by our board of directors. In its
performance of this undertaking, Cole Advisors II, either
directly or indirectly by engaging an affiliate, shall, among
other duties and subject to the authority of our board of
directors:
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find, evaluate, present and recommend to us investment
opportunities consistent with our investment policies and
objectives; |
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serve as our investment and financial advisor and provide
research and economic and statistical data in connection with
our assets and our investment policies; |
54
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provide the daily management and perform and supervise the
various administrative functions reasonably necessary for our
management and operations; |
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investigate, select, and, on our behalf, engage and conduct
business with such third parties as the advisor deems necessary
to the proper performance of its obligations under the advisory
agreement; |
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consult with our officers and board of directors and assist the
board of directors in the formulating and implementing of our
financial policies; |
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structure and negotiate the terms and conditions of our real
estate acquisitions, sales or joint ventures; |
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review and analyze each propertys operating and capital
budget; |
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acquire properties and make investments on our behalf in
compliance with our investment objectives and policies; |
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arrange, structure and negotiate financing and refinancing of
properties; |
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enter into leases of property and service contracts for assets
and, to the extent necessary, perform all other operational
functions for the maintenance and administration of such assets,
including the servicing of mortgages; and |
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prepare and review on our behalf, with the participation of one
designated principal executive officer and principal financial
officer, all reports and returns required by the Securities and
Exchange Commission, Internal Revenue Service and other state or
federal governmental agencies. |
The term of the advisory agreement will end on its first
anniversary and may be renewed for an unlimited number of
successive one-year periods. Additionally, either party may
terminate the advisory agreement without penalty immediately
upon a change of control of us, or upon 60 days
written notice. If we elect to terminate the agreement, we will
be required to obtain the approval of a majority of our
independent directors. In the event of the termination of our
advisory agreement, our advisor will be required to cooperate
with us and take all reasonable steps requested by us to assist
our board of directors in making an orderly transition of the
advisory function.
Cole Advisors II and its officers, employees and affiliates
expect to engage in other business ventures and, as a result,
their resources will not be dedicated exclusively to our
business. However, pursuant to the advisory agreement, Cole
Advisors II will be required to devote sufficient resources
to our administration to discharge its obligations. Cole
Advisors II currently has no paid employees; however, as of
March 31, 2005, its affiliates had approximately
61 full-time employees each of whom may dedicate a portion
of his or her time providing services to our advisor. Our
advisor will be responsible for a pro rata portion of each
employees compensation based upon the approximate
percentage of time the employee dedicates to our advisor. Cole
Advisors II may assign the advisory agreement to an
affiliate upon approval of a majority of our independent
directors. We may assign or transfer the advisory agreement to a
successor entity; provided that at least a majority of our
independent directors determines that any such successor advisor
possesses sufficient qualifications to perform the advisory
function and to justify the compensation payable to the advisor.
Our independent directors will base their determination on the
general facts and circumstances that they deem applicable,
including the overall experience and specific industry
experience of the successor advisor and its management. Other
factors that will be considered are the compensation to be paid
to the successor advisor and any potential conflicts of interest
that may occur.
The fees payable to Cole Advisors II under the advisory
agreement are described in detail at Management
Compensation below. We also describe in that section our
obligation to reimburse Cole Advisors II for organization
and offering expenses, administrative and management services
and payments made by Cole Advisors II to third parties in
connection with potential acquisitions.
55
Affiliated Companies
Our properties will be managed and leased initially by Fund
Realty Advisors, our property manager. Cole Capital Advisors is
the sole shareholder of Fund Realty Advisors, and Cole Holdings
Corporation is the sole owner of Cole Capital Advisors.
Christopher H. Cole is the sole owner of Cole Holdings
Corporation. Mr. Cole serves as chief executive officer,
president and treasurer of Fund Realty Advisors, and Blair D.
Koblenz serves as its executive vice president, chief financial
officer and secretary. See Conflicts of Interest.
The property manager was organized in 2002 to lease and manage
properties that we or affiliated entities acquire. We will pay
the property manager property management fees equal to 2.0% of
gross revenues from our properties. In addition, we will pay
leasing commissions to the property manager based upon the
customary leasing commission applicable to the geographic
location of the property; provided however, that the
aggregate of all property management and leasing fees paid to
the property manager plus all payments to third parties will not
exceed the amount that other nonaffiliated management and
leasing companies generally charge for similar services in the
same geographic location. The property manager will derive
substantially all of its income from the property management and
leasing services it performs for us and other Cole-sponsored
programs.
In the event that the property manager assists a tenant with
tenant improvements, a separate fee may be charged to, and
payable by, us. This fee will not exceed 5.0% of the cost of the
tenant improvements. The property manager will only provide
these services if it does not cause any of our income from the
applicable property to be treated as other than rents from real
property for purposes of the applicable REIT requirements
described under Federal Income Tax Considerations
below.
The property manager will hire, direct and establish policies
for employees who will have direct responsibility for the
operations of each property we acquire, which may include but
not be limited to on-site managers and building and maintenance
personnel. Certain employees of the property manager may be
employed on a part-time basis and also may be employed by our
advisor or certain companies affiliated with it.
The property manager also will direct the purchase of equipment
and supplies and will supervise all maintenance activity. The
management fees to be paid to the property manager will cover,
without additional expense to us, all of the property
managers general overhead costs. The principal office of
the property manager is located at 2555 East Camelback Road,
Suite 400, Phoenix, Arizona 85016.
Cole Capital Corporation, our dealer manager, is a member firm
of the National Association of Securities Dealers, Inc. (NASD).
Cole Capital Corporation was organized in December 1992 for the
purpose of participating in and facilitating the distribution of
securities of real estate programs sponsored by Cole Capital
Partners, its affiliates and its predecessors.
Cole Capital Corporation will provide certain wholesaling,
sales, promotional and marketing assistance services to us in
connection with the distribution of the shares offered pursuant
to this prospectus. It may also sell a limited number of shares
at the retail level.
Cole Capital Corporation is wholly owned by Cole Capital
Advisors which, in turn, is wholly owned by Cole Holdings
Corporation, which is wholly owned by Christopher H. Cole. Cole
Capital Corporation is an affiliate of both our advisor and the
property manager. See Conflicts of Interest.
56
The current officers of Cole Capital Corporation are:
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Name |
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Age | |
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Position(s) |
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Blair D. Koblenz
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47 |
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President and Secretary |
Christopher H. Cole
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52 |
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Executive Vice President and Treasurer |
Richard M. Arnitz
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40 |
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Senior Vice President |
Jonathan T. Albro
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42 |
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Senior Vice President |
The backgrounds of Messrs. Koblenz and Cole are described
in the Management Executive Officers and
Directors section of this prospectus.
Richard M. Arnitz is president of Cole Capital Markets,
Inc., and senior vice president of Cole Capital Corporation.
Prior to joining Cole in March 2005, Mr. Arnitz was vice
president of AIG SunAmerica Retirement Markets since 2000, where
he was responsible for all internal sales operations and the
distribution of variable annuity products. From 1987 to 2000 he
served as a due diligence analyst and head of the due diligence
department at Sentra Securities, WS Griffith, and
Spelman & Co., rising to director of marketing at
Sentra Securities and Spelman & Co. He holds a General
Securities Principal license. Mr. Arnitz received a B.S.
from Arizona State University in Corporate Finance with
specialized courses in accounting, real estate and capital
management.
Jonathan T. Albro is executive vice president, national
sales manager of Cole Capital Markets, Inc. and senior vice
president of Cole Capital Corporation. Mr. Albro has
20 years experience in the financial services industry.
Prior to joining Cole in March 2005, he served as senior vice
president, national sales manager, of MetLife Investors from
November 2001 to March 2005. He served as senior vice president,
national sales manager from November 1998 to January 2001 with
Villanova Capital, which became Gartmore Global Investments, a
global asset manager. Mr. Albro held various senior
executive positions with Hartford Life from 1992 to 1998. He
holds a general securities principal license.
Investment Decisions
The primary responsibility for the investment decisions of Cole
Advisors II and its affiliates, the negotiation for these
investments, and the property management and leasing of these
investment properties will reside with Christopher H. Cole,
Blair D. Koblenz, Sean D. Leahy and Christopher P. Robertson.
Cole Advisors II will seek to invest in commercial
properties that satisfy our investment objectives. Our board of
directors, including a majority of our independent directors,
must approve all acquisitions of real estate properties.
Certain Relationships and Related Transactions
Advisory Agreement We will enter into an Advisory
Agreement with Cole Advisors II, whereby Cole
Advisors II will manage our day-to-day operations. In
return, we will pay to Cole Advisors II a monthly asset
management fee equal to 0.02083% of the aggregate asset value of
our assets. We also will pay to Cole Advisors II up to 2.0%
of the contract purchase price of each property or asset that we
acquire, along with reimbursement of acquisition expenses. We
also will pay to Cole Advisors II a financing coordination
fee equal to 1.0% of the amount available under any debt
financing that we obtain and use for the acquisition of
properties and other investments. Additionally, we will be
required to pay to Cole Advisors II fees based on a
percentage of proceeds or stock value upon our sale of assets or
the listing of our common stock on a national securities
exchange or for quotation on The Nasdaq National Market, but
only if, in the case of our sale of assets, our investors have
received a return of their net capital invested and an 8.0%
annual cumulative, non-compounded return or, in the case of the
listing or quotation of our common stock, the market value of
our common stock plus the distributions paid to our investors
exceeds the sum of the total amount of capital raised from
investors plus the amount of cash flow necessary to generate an
8.0% annual cumulative, non-compounded return to investors. Upon
termination of the Advisory Agreement, we may be required to pay
to Cole Advisors II a similar performance fee if Cole
57
Advisors II would have been entitled to a subordinated
participation in net sale proceeds had the portfolio been
liquidated (based on an independent appraised value of the
portfolio) on the date of termination.
Christopher H. Cole, our chief executive officer, president and
a member of our board of directors, indirectly owns 100% of the
ownership and voting interests of Cole Advisors II.
Mr. Cole also is the chief executive officer and president
of Cole Advisors II. Blair D. Koblenz, our executive vice
president and chief financial officer is the executive vice
president and chief financial officer of Cole Advisors II.
John M. Pons, our vice president, secretary and counsel is the
vice president, secretary and counsel of Cole Advisors II.
For a further description of this agreement, see
Management The Advisory Agreement and
Management Compensation. See also Conflicts of
Interest.
Property Management and Leasing Agreement We will enter
into a Property Management and Leasing Agreement with Fund
Realty Advisors. We will pay to Fund Realty Advisors fees equal
to 2.0% of gross revenues from our properties. In addition, we
will pay leasing commissions to Fund Realty Advisors based upon
the customary leasing commissions applicable to the geographic
location of the property, subject to certain limits and a
monthly asset management fee equal to 0.02083% of the aggregate
asset value of our assets. Christopher H. Cole, our chief
executive officer, president and a member of our board of
directors, indirectly owns 100% of the ownership and voting
interests of Fund Realty Advisors. Mr. Cole also is the
chief executive officer, president and treasurer of Fund Realty
Advisors. Blair D. Koblenz, our executive vice president and
chief financial officer, is the executive vice president, chief
financial officer and secretary of Fund Realty Advisors. For a
further description of this agreement, see
Management Affiliated Companies
Property Manager and Management Compensation.
See also Conflicts of Interest.
Dealer Manager Agreement. We will enter into a Dealer
Manager Agreement with Cole Capital Corporation, our dealer
manager. We will pay to Cole Capital Corporation 7.0% of the
gross offering proceeds from this offering, except that no
selling commissions will be paid on shares sold under our
distribution reinvestment plan. Cole Capital Corporation may
reallow all or part of the selling commission to participating
broker-dealers. Cole Capital Corporation also will waive the
selling commission with respect to shares sold by an investment
advisory representative. Additionally, we will pay to Cole
Capital Corporation a dealer manager fee equal to 1.5% of the
gross offering proceeds sold through broker-dealers. Cole
Capital Corporation may reallow all or part of the dealer
manager fee to participating broker-dealers. We will not pay a
dealer manager fee for shares purchased through our distribution
reinvestment plan. Christopher H. Cole, our chief executive
officer, president and a member of our board of directors,
indirectly owns 100% of the ownership and voting interests of
Cole Capital Corporation. Mr. Cole also is the executive
vice president and treasurer of Cole Capital Corporation. Blair
D. Koblenz, our executive vice president and chief financial
officer, is the president and secretary of Cole Capital
Corporation. For a further description of this agreement, see
Management Affiliated Companies
Dealer Manager, Management Compensation and
Plan of Distribution. See also Conflicts of
Interest.
58
MANAGEMENT COMPENSATION
We have no paid employees. Cole Advisors II, our advisor,
and its affiliates will manage our day-to-day affairs. The
following table summarizes all of the compensation and fees we
will pay to Cole Advisors II and its affiliates, including
amounts to reimburse their costs in providing services. The
selling commissions may vary for different categories of
purchasers. See Plan of Distribution. This table
assumes the shares are sold through distribution channels
associated with the highest possible selling commissions and
dealer manager fee.
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Estimated Amount for | |
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Minimum Offering/ | |
Type of Compensation(1) |
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Determination of Amount |
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Maximum Offering(2) | |
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Offering Stage |
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Selling Commissions Cole Capital Corporation(3)
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We will pay to Cole Capital Corporation 7.0% of the gross
offering proceeds before reallowance of commissions earned by
participating broker-dealers, except that no selling commission
is payable on shares sold under our distribution reinvestment
plan. Cole Capital Corporation, our dealer manager, will reallow
100.0% of commissions earned to participating broker-dealers. |
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$175,000/$31,500,000 |
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Dealer Manager Fee Cole Capital Corporation(3)
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We will pay to Cole Capital Corporation 1.5% of the gross
offering proceeds before reallowance to participating
broker-dealers, except that no dealer manager fee is payable on
shares sold under our distribution reinvestment plan. Cole
Capital Corporation will reallow a portion of its dealer manager
fee to participating broker-dealers. See Plan of
Distribution. |
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$37,500/$6,750,000 |
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Reimbursement of Other Organization and Offering
Expenses Cole Advisors II(4)
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We will reimburse Cole Advisors II up to 1.5% of our gross
offering proceeds. Cole Advisors II will incur or pay our
organization and offering expenses (excluding selling
commissions and the dealer manager fee). We will then reimburse
Cole Advisors II for these amounts up to 1.5% of aggregate
gross offering proceeds. |
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$37,500/$7,436,250 |
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Acquisition and Operational Stage |
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Acquisition and Advisory Fees
Cole Advisors II(5)(6)
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We will pay to Cole Advisors II a 2.0% of the contract
purchase price of each property or asset. |
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$43,902/$8,781,732 |
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Acquisition Expenses Cole Advisors II
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We will reimburse our advisor for acquisition expenses incurred
in the process of acquiring property. We expect these expenses
to be approximately 0.5% of the purchase price of each property.
In no event will the total of all fees and acquisition expenses
payable with respect to a particular property or investment
exceed 6% of the contract purchase price. |
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Actual amounts are dependent upon the expenses incurred in acquiring a property or asset, and therefore, cannot be determined at this time. |
59
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Estimated Amount for | |
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Minimum Offering/ | |
Type of Compensation(1) |
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Determination of Amount |
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Maximum Offering(2) | |
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Asset Management Fee Cole Advisors II(7)(8)
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We will pay to Cole Advisors II a monthly fee equal to
0.02083%, which is one-twelfth of 0.25%, of the aggregate asset
value. |
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Actual amounts are dependent upon the aggregate asset value of our properties and, therefore, cannot be determined at the present time. Because the fee is based on a fixed percentage of aggregate asset value there is no limit on the aggregate amount of these fees. |
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Property Management Fees Fund Realty Advisors(8)
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We will pay to Fund Realty Advisors up to 2.0% of the gross
revenues from the properties plus reimbursement of Fund Realty
Advisors costs of managing the properties. |
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Actual amounts are dependent upon the gross revenues from properties and, therefore, cannot be determined at the present time. Because the fee is based on a fixed percentage of the gross revenue and/or market rates, there is no limit on the aggregate amount of these fees. |
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Leasing Commissions Fund Realty Advisors(8)
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We will pay to Fund Realty Advisors prevailing market rates.
Fund Realty Advisors may also receive a fee for the initial
listing of newly constructed properties, which generally would
equal one months rent. |
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Actual amounts are dependent upon prevailing market rates in the geographic regions in which we acquire property and, therefore, cannot be determined at the present time. There is no limit on the aggregate amount of these commissions. |
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Financing Coordination Fee Cole Advisors II(6)
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For services in connection with the origination or refinancing
of any debt financing obtained that we use to acquire properties
or to make other permitted investments, we will pay our advisor
a financing coordination fee equal to 1.0% of the amount
available under such financing; provided, however, that
our advisor will not be entitled to a financing coordination fee
in connection with the refinancing of any loan secured by any
particular property that was previously subject to a refinancing
in which our advisor received such a fee. Financing coordination
fees payable from loan proceeds from permanent financing will be
paid to our advisor as we acquire such permanent financing.
However, no acquisition fees will be paid on the investments of
loan proceeds from any line of credit until such time as we have
invested all net offering proceeds. |
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Actual amounts are dependent on the amount of any debt financing or refinancing and, therefore, cannot be determined at the present time. Because the fee is based on a fixed percentage of any debt financing, there is no limit on the aggregate amount of these fees. |
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Estimated Amount for | |
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Minimum Offering/ | |
Type of Compensation(1) |
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Determination of Amount |
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Maximum Offering(2) | |
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Operating Expenses Cole Advisors II(9)
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We will reimburse the expenses incurred by Cole Advisors II in
connection with its provision of administrative services,
including related personnel costs, subject to the limitation
that we will not reimburse our advisor for any amount by which
the operating expenses (including the asset management fee) at
the end of the four preceding fiscal quarters exceeds the
greater of (i) 2% of average invested assets, or
(ii) 25% of net income other than any additions to reserves
for depreciation, bad debt or other similar non-cash reserves
and excluding any gain from the sale of assets for that period. |
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Actual amounts are dependent upon the expenses incurred and, therefore, cannot be determined at the present time. |
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Liquidation/ Listing Stage |
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Real Estate Commissions Cole Advisors II or its
Affiliates(10)
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For substantial assistance in connection with the sale of
properties, we will pay our advisor or its affiliates an amount
equal to up to one-half of the brokerage commission paid on the
sale of property, not to exceed 2.0% of the contract price of
each property sold; provided, however, in no event may the real
estate commissions paid to our advisor, its affiliates and
unaffiliated third parties exceed 6.0% of the contract sales
price. |
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Actual amounts are dependent upon the contract price of properties sold and, therefore, cannot be determined at the present time. Because the commission is based on a fixed percentage of the contract price for a sold property, there is no limit on the aggregate amount of these commissions. |
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Subordinated Participation in Net Sale Proceeds Cole
Advisors II(11)
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After investors have received a return of their net capital
invested and an 8.0% annual cumulative, non- compounded return,
then Cole Advisors II is entitled to receive 10.0% of remaining
net sale proceeds. We cannot assure you that we will provide
this 8.0% return, which we have disclosed solely as a measure
for our advisors incentive compensation. |
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Actual amounts are dependent upon results of operations and, therefore, cannot be determined at the present time. There is no limit on the aggregate amount of these payments. |
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Subordinated Incentive Listing Fee Cole
Advisors II(11)(12)
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Upon listing our common stock on a national securities exchange
or for quotation on The Nasdaq National Market, our advisor is
entitled to a fee equal to 10.0% of the amount, if any, by which
(1) the market value of our outstanding stock plus
distributions paid by us prior to listing, exceeds (2) the
sum of the total amount of capital raised from investors and the
amount of cash flow necessary to generate an 8.0% annual
cumulative, non- compounded return to investors. We have no
intent to list our shares at this time. We cannot assure you
that we will provide this 8.0% return, which we have disclosed
solely as a measure for our advisors incentive
compensation. |
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Actual amounts are dependent upon total equity and debt capital we raise and results of operations and, therefore, cannot be determined at the present time. There is no limit on the aggregate amount of this fee. |
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(1) |
We will pay all fees, commissions and expenses in cash, other
than the subordinated participation in net sales proceeds and
incentive listing fees with respect to which we may pay to Cole
Advisors II in cash, common stock, a promissory note or any
combination of the foregoing, as we may determine in our
discretion. |
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(2) |
The estimated maximum dollar amounts are based on the sale of a
maximum of 45,000,000 shares to the public at
$10.00 per share and the sale of 5,000,000 shares at
$9.15 per share pursuant to our distribution reinvestment
plan. |
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(3) |
Selling commissions and, in some cases, the dealer manager fee,
will not be charged with regard to shares sold to or for the
account of certain categories of purchasers. See Plan of
Distribution. Selling commissions and the dealer manager
fee will not be charged with regard to shares purchased pursuant
to our distribution reinvestment plan. |
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(4) |
These organization and offering expenses include all expenses
(other than selling commissions and the dealer manager fee) to
be paid by us in connection with the offering, including our
legal, accounting, printing, mailing and filing fees, charges of
our escrow holder, due diligence expense reimbursements to
participating broker-dealers and amounts to reimburse Cole
Advisors II for its portion of the salaries of the
employees of its affiliates who provide services to our advisor
and other costs in connection with preparing supplemental sales
materials, holding educational conferences and attending retail
seminars conducted by broker-dealers. Our advisor will be
responsible for the payment of all such organization and
offering expenses to the extent such expenses exceed 1.5% of the
aggregate gross proceeds of this offering. |
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(5) |
This estimate assumes the amount of proceeds available for
investment is equal to the gross offering proceeds less the
public offering expenses, and we have assumed that no financing
is used to acquire properties or other real estate assets. Our
charter limits our ability to purchase property if the total of
all acquisition fees and expenses relating to the purchase
exceeds 6.0% of the contract purchase price unless a majority of
our directors (including a majority of our independent
directors) not otherwise interested in the transaction approve
fees and expenses in excess of this limit and determine the
transaction to be commercially competitive, fair and reasonable
to us. |
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(6) |
Included in the computation of such fees will be any real estate
commission, acquisition and advisory fee, development fee,
construction fee, non-recurring management fee, loan fees,
financing coordination fees or points or any fee of a similar
nature. |
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(7) |
Aggregate asset value will be equal to the aggregate value of
our assets (other than investments in bank accounts, money
markets funds or other current assets) at cost before deducting
depreciation, bad debts or other similar non-cash reserves and
without reduction for any debt relating to such assets at the
date of measurement, except that during such periods in which
our board of directors is determining on a regular basis the
current value of our net assets for purposes of enabling
fiduciaries of employee benefit plans stockholders to comply
with applicable Department of Labor reporting requirements,
aggregate asset value is the greater of (i) the amount
determined pursuant to the foregoing or (ii) our
assets aggregate valuation most recently established by
our board without reduction for depreciation, bad debts or other
similar non-cash reserves and without reduction for any debt
secured by or relating to such assets. |
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(8) |
The property management and leasing fees payable to Fund Realty
Advisors are subject to the limitation that the aggregate of all
property management and leasing fees paid to Fund Realty
Advisors and its affiliates plus all payments to third parties
for property management and leasing services may not exceed the
amount that other non-affiliated property management and leasing
companies generally charge for similar services in the same
geographic location. Additionally, all property management and
leasing fees, including both those paid to Fund Realty Advisors
and third parties, are subject to the limit on total operating
expenses as described in footnote (5). Fund Realty Advisors
may subcontract its duties for a fee that may be less than the
fee provided for in our property management agreement with Fund
Realty Advisors. |
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(9) |
We may reimburse our advisor in excess of that limit in the
event that a majority of our independent directors determine,
based on unusual and non-recurring factors, that a higher level
of expense is justified. In such an event, we will send notice
to each of our stockholders within 60 days after the end of
the fiscal quarter for which such determination was made, along
with an explanation of the factors our independent directors
considered in making such determination. We will not reimburse
our advisor for personnel costs in connection with services for
which the advisor receives acquisition fees or real estate
commissions. |
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We lease our office space from an affiliate of our advisor and
share the space with other Cole-related entities. The amount we
will pay under the lease will be determined on a monthly basis
based upon on the allocation of the overall lease cost to the
approximate percentage of time, size of the area that we utilize
and other resources allocated to us. |
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(10) |
Although we are most likely to pay real estate commissions to
Cole Advisors II or an affiliate in the event of our
liquidation, these fees may also be earned during our
operational stage. |
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(11) |
Upon termination of the advisory agreement, Cole
Advisors II may be entitled to a similar performance fee if
Cole Advisors II would have been entitled to a subordinated
participation in net sale proceeds had the portfolio been
liquidated (based on an independent appraised value of the
portfolio) on the date of termination. Under our charter, we
could not increase these success-based fees without the approval
of a majority of our independent directors, and any increase in
the subordinated participation in net sale proceeds would have
to be reasonable. Our charter provides that such incentive fee
is presumptively reasonable if it does not exceed
10.0% of the balance of such net proceeds remaining after
investors have received a return of their net capital
contributions and an 8.0% per year cumulative,
non-compounded return. |
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Cole Advisors II cannot earn both the subordinated
participation in net sale proceeds and the subordinated
incentive listing fee either of which may be, at our discretion,
paid in the form of cash, shares of our common stock, a
promissory note, or any combination of the foregoing. If shares
are used for payment, we do not anticipate that they will be
registered under the Securities Act and therefore, will be
subject to restrictions on transferability. Any portion of the
subordinated participation in net sale proceeds that Cole
Advisors II receives prior to our listing will offset the
amount otherwise due pursuant to the subordinated incentive
listing fee. |
62
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(12) |
If at any time the shares become listed on a national securities
exchange or included for quotation on The Nasdaq National
Market, we will negotiate in good faith with Cole
Advisors II a fee structure appropriate for an entity with
a perpetual life. Our independent directors must approve the new
fee structure negotiated with Cole Advisors II. The market
value of our outstanding stock will be calculated based on the
average market value of the shares issued and outstanding at
listing over the 30 trading days beginning 180 days after
the shares are first listed or included for quotation. We have
the option to pay the subordinated incentive listing fee in the
form of stock, cash, a promissory note or any combination
thereof. In the event the subordinated incentive listing fee is
earned by Cole Advisors II as a result of the listing of
the shares, any previous payments of the subordinated
participation in net sale proceeds will offset the amounts due
pursuant to the subordinated incentive listing fee, and we will
not be required to pay Cole Advisors II any further
subordinated participation in net sale proceeds. |
At least a majority of our independent directors must determine,
from time to time but at least annually, that our total fees and
expenses are reasonable in light of our investment performance,
net assets, net income and the fees and expenses of other
comparable unaffiliated REITs. Each such determination will be
reflected in the minutes of our board of directors. Our
independent directors shall also supervise the performance of
our advisor and the compensation that we pay to it to determine
that the provisions of our advisory agreement are being carried
out.
Each such determination will be recorded in the minutes of our
board of directors and based on the factors set forth below and
other factors that the independent directors deem relevant:
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the size of the advisory fee in relation to the size,
composition and profitability of our portfolio; |
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the success of Cole Advisors II in generating opportunities
that meet our investment objectives; |
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the rates charged to other REITs, especially similarly
structured REITs, and to investors other than REITs by advisors
performing similar services; |
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additional revenues realized by Cole Advisors II through
its relationship with us; |
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the quality and extent of service and advice furnished by Cole
Advisors II; |
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the performance of our investment portfolio, including income,
conservation or appreciation of capital, frequency of problem
investments and competence in dealing with distress
situations; and |
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the quality of our portfolio in relationship to the investments
generated by Cole Advisors II for the account of other
clients. |
Since Cole Advisors II and its affiliates are entitled to
differing levels of compensation for undertaking different
transactions on our behalf, such as the property management fees
for operating our properties and the subordinated participation
in net sale proceeds, our advisor has the ability to affect the
nature of the compensation it receives by undertaking different
transactions. However, Cole Advisors II is obligated to
exercise good faith and integrity in all its dealings with
respect to our affairs pursuant to the advisory agreement. See
Management The Advisory Agreement.
63
STOCK OWNERSHIP
The following table shows, as of the date of this prospectus,
the amount of our common stock beneficially owned by
(1) any person who is known by us to be the beneficial
owner of more than 5.0% of our outstanding shares,
(2) members of our board of directors and proposed
directors, (3) our executive officers, and (4) all of
our directors and executive officers as a group.
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Common Stock | |
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Beneficially Owned(2) | |
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Number of Shares | |
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Percentage | |
Name of Beneficial Owner(1) |
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of Common Stock | |
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of Class | |
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Cole Holdings Corporation
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20,000 |
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100.0% |
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Christopher H. Cole, Chairman of the Board of Directors, Chief
Executive Officer and President(3)
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20,000 |
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100.0% |
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Blair D. Koblenz, Executive Vice President and Chief
Financial Officer
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John M. Pons, Vice President, Secretary and Counsel
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Marcus E. Bromley, Director
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Elizabeth L. Watson, Director
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All directors and executive officers as a group (five persons)(3)
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20,000 |
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100.0% |
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(1) |
Address of each beneficial owner listed is 2555 East Camelback
Road, Suite 400, Phoenix, Arizona 85016. |
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(2) |
For purposes of calculating the percentage beneficially owned,
the number of shares of common stock deemed outstanding includes
(a) 20,000 shares outstanding as of the date of this
prospectus, and (b) shares issuable pursuant to options
held by the respective person or group that may be exercised
within 60 days following the date of this prospectus.
Beneficial ownership is determined in accordance with the rules
of the Securities and Exchange Commission that deem shares to be
beneficially owned by any person or group who has or shares
voting and investment power with respect to such shares. |
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(3) |
Includes 20,000 shares owned by Cole Holdings Corporation.
Mr. Cole is the sole stockholder of Cole Holdings
Corporation and controls the voting and disposition decisions of
Cole Holdings Corporation. |
64
CONFLICTS OF INTEREST
We are subject to various conflicts of interest arising out of
our relationship with Cole Advisors II, our advisor, and
its affiliates, including conflicts related to the arrangements
pursuant to which Cole Advisors II and its affiliates will
be compensated by us. The agreements and compensation
arrangements between us and our advisor and its affiliates were
not determined by arms-length negotiations. See the
Management Compensation section of this prospectus.
Some of the conflicts of interest in our transactions with our
advisor and its affiliates, and the limitations on our advisor
adopted to address these conflicts, are described below.
Our advisor and its affiliates will try to balance our interests
with their duties to other Cole-sponsored programs. However, to
the extent that our advisor or its affiliates take actions that
are more favorable to other entities than to us, these actions
could have a negative impact on our financial performance and,
consequently, on distributions to you and the value of our
stock. In addition, our directors, officers and certain of our
stockholders may engage for their own account in business
activities of the types conducted or to be conducted by us and
our subsidiaries. For a description of some of the risks related
to these conflicts of interest, see the section of this
prospectus captioned Risk Factors Risks
Related to Conflicts of Interest.
Our independent directors have an obligation to function on our
behalf in all situations in which a conflict of interest may
arise, and all of our directors have a fiduciary obligation to
act on behalf of our stockholders.
Interests in Other Real Estate Programs
An affiliate of our advisor acts as an advisor to, and our
officers and certain of our directors act as officers and
directors of Cole REIT I, which is a currently operating,
privately offered, real estate investment trust that has similar
investment objectives to us. In addition, as of March 31,
2005, an affiliate of our advisor has issued approximately
$63.3 million of debt pursuant to three private offerings,
the proceeds of which were used to acquire single-tenant
properties in 31 states. Cole Capital Partners, an
affiliate of our advisor, has sponsored 16 currently operating
tenant-in-common real estate programs. Affiliates of our advisor
and of our officers also act as officers and directors of
general partners of seven other currently operating limited
partnerships that have invested in unimproved and improved real
properties located in 19 different states, including Cole Credit
Property Fund Limited Partnership (Cole Credit LP I) and Cole
Credit Property Fund II Limited Partnership (Cole Credit
LP II). See Prior Performance Summary.
Affiliates of our officers and entities owned or managed by such
affiliates also may acquire or develop real estate for their own
accounts, and have done so in the past. Furthermore, affiliates
of our officers and entities owned or managed by such affiliates
intend to form additional real estate investment entities in the
future, whether public or private, which can be expected to have
the same investment objectives and policies as we do and which
may be involved in the same geographic area, and such persons
may be engaged in sponsoring one or more of such entities at
approximately the same time as our shares of common stock are
being offered. Our advisor, its affiliates and affiliates of our
officers are not obligated to present to us any particular
investment opportunity that comes to their attention, even if
such opportunity is of a character that might be suitable for
investment by us. Our advisor and its affiliates likely will
experience conflicts of interest as they simultaneously perform
services for us and other affiliated real estate programs.
Any affiliated entity, whether or not currently existing, could
compete with us in the sale or operation of the properties. We
will seek to achieve any operating efficiency or similar savings
that may result from affiliated management of competitive
properties. However, to the extent that affiliates own or
acquire property that is adjacent, or in close proximity, to a
property we own, our property may compete with the
affiliates property for tenants or purchasers.
Every transaction that we enter into with our advisor or its
affiliates is subject to an inherent conflict of interest. Our
board of directors may encounter conflicts of interest in
enforcing our rights against any
65
affiliate in the event of a default by or disagreement with an
affiliate or in invoking powers, rights or options pursuant to
any agreement between us and our advisor or any of its
affiliates.
Other Activities of Cole Advisors II and its
Affiliates
We will rely on Cole Advisors II for the day-to-day
operation of our business pursuant to an advisory agreement. As
a result of the interests of members of its management in other
Cole-sponsored programs and the fact that they have also engaged
and will continue to engage in other business activities, Cole
Advisors II and its affiliates will have conflicts of
interest in allocating their time between us and other
Cole-sponsored programs and other activities in which they are
involved. However, Cole Advisors II believes that it and
its affiliates have sufficient personnel to discharge fully
their responsibilities to all of the Cole-sponsored programs and
other ventures in which they are involved.
In addition, each of our executive officers, including
Christopher H. Cole, who also serves as the chairman of our
board of directors, also serves as an officer of our advisor,
our property manager, our dealer manager and/or other affiliated
entities. As a result, these individuals owe fiduciary duties to
these other entities, which may conflict with the fiduciary
duties that they owe to us and our stockholders.
We may purchase properties or interests in properties from
affiliates of Cole Advisors II. The prices we pay to
affiliates of our advisor for these properties will not be the
subject of arms-length negotiations, which could mean that
the acquisitions may be on terms less favorable to us than those
negotiated with unaffiliated parties. However, our charter
provides that the purchase price of any property acquired from
an affiliate may not exceed its fair market value as determined
by a competent independent appraiser. In addition, the price
must be approved by a majority of our directors who have no
financial interest in the transaction, including a majority of
our independent directors. If the price to us exceeds the cost
paid by our affiliate, our board of directors must determine
that there is substantial justification for the excess cost.
Competition in Acquiring, Leasing and Operating of
Properties
Conflicts of interest will exist to the extent that we may
acquire properties in the same geographic areas where properties
owned by other Cole-sponsored programs are located. In such a
case, a conflict could arise in the leasing of properties in the
event that we and another Cole-sponsored program were to compete
for the same tenants in negotiating leases, or a conflict could
arise in connection with the resale of properties in the event
that we and another Cole-sponsored program were to attempt to
sell similar properties at the same time. Conflicts of interest
may also exist at such time as we or our affiliates managing
property on our behalf seek to employ developers, contractors or
building managers, as well as under other circumstances. Cole
Advisors II will seek to reduce conflicts relating to the
employment of developers, contractors or building managers by
making prospective employees aware of all such properties
seeking to employ such persons. In addition, Cole
Advisors II will seek to reduce conflicts that may arise
with respect to properties available for sale or rent by making
prospective purchasers or tenants aware of all such properties.
However, these conflicts cannot be fully avoided in that there
may be established differing compensation arrangements for
employees at different properties or differing terms for resales
or leasing of the various properties.
Affiliated Dealer Manager
Since Cole Capital Corporation, our dealer manager, is an
affiliate of Cole Advisors II, we will not have the benefit
of an independent due diligence review and investigation of the
type normally performed by an unaffiliated, independent
underwriter in connection with the offering of securities. See
the Plan of Distribution section of this prospectus.
Affiliated Property Manager
We anticipate that properties we acquire will be managed and
leased by our affiliated property manager, Fund Realty Advisors,
pursuant to a property management and leasing agreement. Our
agreement with Fund Realty Advisors has a one-year term, which
may be renewed for an unlimited number of successive one-year
terms upon the mutual consent of the parties. Each such renewal
shall be for a term of no more than one year. It is the duty of
our Board of Directors to evaluate the performance
66
of the property manager annually before renewing the agreement.
We may also terminate the agreement in the event of gross
negligence or willful misconduct on the part of Fund Realty
Advisors. We expect Fund Realty Advisors to also serve as
property manager for properties owned by affiliated real estate
programs, some of which may be in competition with our
properties. Management fees to be paid to our property manager
are based on a percentage of the rental income received by the
managed properties. For a more detailed discussion of the
anticipated fees to be paid for property management services,
see the Management Affiliated Companies
section of this prospectus.
Lack of Separate Representation
Morris, Manning & Martin, LLP acts, and may in the
future act, as counsel to us, Cole Advisors II, Cole
Capital Corporation and their affiliates in connection with this
offering or otherwise. There is a possibility that in the future
the interests of the various parties may become adverse, and
under the Code of Professional Responsibility of the legal
profession, Morris, Manning & Martin, LLP may be
precluded from representing any one or all of such parties. In
the event that a dispute were to arise between us, Cole
Advisors II, Cole Capital Corporation or any of their
affiliates, separate counsel for such matters will be retained
as and when appropriate.
Joint Ventures with Affiliates of Cole Advisors II
We expect to enter into joint ventures with other Cole-sponsored
programs (as well as other parties) for the acquisition,
development or improvement of properties. See Investment
Objectives and Policies Acquisition and Investment
Policies Joint Venture Investments. Cole
Advisors II and its affiliates may have conflicts of
interest in determining that Cole-sponsored program should enter
into any particular joint venture agreement. The co-venturer may
have economic or business interests or goals which are or which
may become inconsistent with our business interests or goals. In
addition, should any such joint venture be consummated, Cole
Advisors II may face a conflict in structuring the terms of
the relationship between our interests and the interest of the
co-venturer and in managing the joint venture. Since Cole
Advisors II and its affiliates will control both us and any
affiliated co-venturer, agreements and transactions between the
co-venturers with respect to any such joint venture will not
have the benefit of arms-length negotiation of the type
normally conducted between unrelated co-venturers.
Receipt of Fees and Other Compensation by Cole
Advisors II and Its Affiliates
A transaction involving the purchase and sale of properties may
result in the receipt of commissions, fees and other
compensation by Cole Advisors II and its affiliates,
including acquisition and advisory fees, the dealer manager fee,
property management and leasing fees, real estate brokerage
commissions and participation in nonliquidating net sale
proceeds. However, the fees and compensation payable to Cole
Advisors II and its affiliates relating to the sale of
properties will only payable after the return to the
stockholders of their capital contributions plus cumulative
returns on such capital. Subject to oversight by our board of
directors, Cole Advisors II will have considerable
discretion with respect to all decisions relating to the terms
and timing of all transactions. Therefore, Cole Advisors II
may have conflicts of interest concerning certain actions taken
on our behalf, particularly due to the fact that such fees will
generally be payable to Cole Advisors II and its affiliates
regardless of the quality of the properties acquired or the
services provided to us. See the Management
Compensation section of this prospectus.
Certain Conflict Resolution Procedures
Every transaction that we enter into with Cole Advisors II
or its affiliates will be subject to an inherent conflict of
interest. Our board of directors may encounter conflicts of
interest in enforcing our rights against any affiliate in the
event of a default by or disagreement with an affiliate or in
invoking powers, rights or options pursuant to any agreement
between us and Cole Advisors II or any of its affiliates.
In order to reduce or eliminate certain potential conflicts of
interest, our charter contains a number of restrictions relating
to (1) transactions we enter into with Cole
Advisors II and its affiliates, (2) certain
67
future offerings, and (3) allocation of investment
opportunities among affiliated entities. These restrictions
include, among others, the following:
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We will not purchase or lease properties in which Cole
Advisors II, any of our directors or any of their
respective affiliates has an interest without a determination by
a majority of the directors, including a majority of the
independent directors, not otherwise interested in such
transaction that such transaction is fair and reasonable to us
and at a price to us no greater than the cost of the property to
the seller or lessor unless there is substantial justification
for any amount that exceeds such cost and such excess amount is
determined to be reasonable. In no event will we acquire any
such property at an amount in excess of its appraised value. We
will not sell or lease properties to Cole Advisors II, any
of our directors or any of their respective affiliates unless a
majority of the directors, including a majority of the
independent directors not otherwise interested in the
transaction, determines that the transaction is fair and
reasonable to us. |
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We will not make any loans to Cole Advisors II, any of our
directors or any of their respective affiliates, except that we
may make or invest in mortgage loans involving Cole Advisors II,
our directors or their respective affiliates, provided that an
appraisal of the underlying property is obtained from an
independent appraiser and the transaction is approved as fair
and reasonable to us and on terms no less favorable to us than
those available from third parties. In addition, Cole
Advisors II, any of our directors and any of their
respective affiliates will not make loans to us or to joint
ventures in which we are a joint venture partner unless approved
by a majority of the directors, including a majority of the
independent directors not otherwise interested in the
transaction as fair, competitive and commercially reasonable,
and no less favorable to us than comparable loans between
unaffiliated parties. |
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Cole Advisors II and its affiliates will be entitled to
reimbursement, at cost, for actual expenses incurred by them on
behalf of us or joint ventures in which we are a joint venture
partner; provided, however, Cole Advisors II must reimburse
us for the amount, if any, by which our total operating
expenses, including the advisor asset management fee, paid
during the previous fiscal year exceeded the greater of:
(i) 2.0% of our average invested assets for that fiscal
year, or (ii) 25.0% of our net income, before any additions
to reserves for depreciation, bad debts or other similar
non-cash reserves and before any gain from the sale of our
assets, for that fiscal year. |
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In the event that an investment opportunity becomes available
that is suitable, under all of the factors considered by Cole
Advisors II, for both us and one or more other entities
affiliated with Cole Advisors II, and for which more than
one of such entities has sufficient uninvested funds, then the
entity that has had the longest period of time elapse since it
was offered an investment opportunity will first be offered such
investment opportunity. It will be the duty of our board of
directors, including the independent directors, to insure that
this method is applied fairly to us. In determining whether or
not an investment opportunity is suitable for more than one
program, Cole Advisors II, subject to approval by our board
of directors, shall examine, among others, the following factors: |
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the anticipated cash flow of the property to be acquired and the
cash requirements of each program; |
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the effect of the acquisition both on diversification of each
programs investments by type of property, geographic area
and tenant concentration; |
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the policy of each program relating to leverage of properties; |
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the income tax effects of the purchase to each program; |
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the size of the investment; and |
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the amount of funds available to each program and the length of
time such funds have been available for investment. |
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If a subsequent development, such as a delay in the closing of a
property or a delay in the construction of a property, causes
any such investment, in the opinion of Cole Advisors II, to
be |
68
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more appropriate for a program other than the program that
committed to make the investment, Cole Advisors II may
determine that another program affiliated with Cole
Advisors II or its affiliates will make the investment. Our
board of directors has a duty to ensure that the method used by
Cole Advisors II for the allocation of the acquisition of
properties by two or more affiliated programs seeking to acquire
similar types of properties is applied fairly to us. |
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We will not accept goods or services from Cole Advisors II
or its affiliates or enter into any other transaction with Cole
Advisors II or its affiliates unless a majority of our
directors, including a majority of the independent directors,
not otherwise interested in the transaction approve such
transaction as fair and reasonable to us and on terms and
conditions not less favorable to us than those available from
unaffiliated third parties. |
The following chart shows the ownership structure of the various
Cole entities that are affiliated with Cole Advisors II.
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(1) |
Christopher H. Cole, our chairman, chief executive officer and
president, owns 99% of the membership interests, and Cole
Holdings Corporation owns 1% of the membership interests, of
Cole Capital Partners. |
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(2) |
The investors will own registered shares of common stock in Cole
Credit Property Trust II, Inc. |
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(3) |
Cole Holdings Corporation currently owns 20,000 shares of our
common stock. The amount shown is prior to this offering. After
the offering, Cole Holdings Corporation will own between 7.4% of
our common stock, assuming a minimum offering, and 0.04% of our
common stock, assuming a maximum offering, including the sale of
5,000,000 shares under our distribution reinvestment plan. |
69
INVESTMENT OBJECTIVES AND POLICIES
General
We intend to invest in commercial real estate properties. Our
primary investment objectives are:
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to provide current income for you through the payment of cash
distributions; and |
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to preserve and return your capital contributions. |
We also seek capital gain from our investments. You may be able
to obtain a return on all or a portion of your capital
contribution in connection with the sale of your shares if we
list our shares on an exchange. We cannot assure you that we
will attain any of these objectives. See Risk
Factors.
We will seek to list our shares of common stock for trading on a
national securities exchange or for quotation on The Nasdaq
National Market only if a majority of our independent directors
believe listing would be in the best interest of our
stockholders. We do not intend to list our shares at this time.
We do not anticipate that there will be any market for our
common stock until our shares are listed or quoted. In making
the decision to apply for listing of our shares or provide other
forms of liquidity, such as selling our properties and other
assets either on a portfolio basis or individually or engaging
in a business combination transaction, our board of directors
will evaluate whether listing the shares, liquidating or another
transaction would result in greater value for our stockholders.
It cannot be determined at this time the circumstances, if any,
under which the board of directors would determine to list the
shares. If we do not list our shares of common stock on a
national securities exchange or include them for quotation on
The Nasdaq National Market by the tenth anniversary of the
termination or completion of this offering, our charter requires
that we either:
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seek stockholder approval of an extension or amendment of this
listing deadline; or |
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seek stockholder approval to adopt a plan of liquidation of the
corporation. |
If we sought and did not obtain stockholder approval of an
extension or amendment to the listing deadline, we would then be
required to seek stockholder approval of our plan of
liquidation. If we sought and failed to obtain stockholder
approval of our plan of liquidation, our charter would not
require us to list or liquidate, and we would continue to
operate as before. In such event, there will be no public market
for shares of our common stock and you may be required to hold
the shares indefinitely. If we sought and obtained stockholder
approval of our plan of liquidation, we would begin an orderly
sale of our properties and distribute our net proceeds to our
investors.
Our board of directors may revise our investment policies, which
we describe in more detail below, without the concurrence of our
stockholders. Our independent directors will review our
investment policies, which we discuss in detail below, at least
annually to determine that our policies are in the best interest
of our stockholders.
Acquisition and Investment Policies
We intend to invest primarily in high quality, income-generating
retail properties, net leased to investment grade and other
creditworthy tenants. Our investments may be direct investments
in such properties or in other entities that own or invest in,
directly or indirectly, interests in such properties. We will
seek to acquire a portfolio of real estate that is diversified
by geographical location and by type and size of property. We
anticipate that our properties will consist of real estate
primarily improved for use as retail establishments, principally
freestanding, single-tenant retail properties.
Many of our properties will be leased to tenants in the chain or
franchise retail industry, including but not limited to
convenience stores, drug stores and restaurant properties. Our
advisor intends to monitor industry trends and invest in
properties that serve to provide the most favorable return
balanced with risk. Our management will target primarily retail
businesses with established track records. Because this
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industry is highly property dependent, our advisor believes it
offers highly competitive sale-leaseback investment
opportunities.
We believe that our focus on the acquisition of freestanding,
retail properties net leased to investment grade and other
creditworthy tenants presents lower investment risks and greater
stability than other sectors of todays commercial real
estate market. Unlike funds that invest in a limited number of
multi-tenant properties, we plan to acquire a diversified
portfolio with a large number of single-tenant properties. As a
result, lower than expected results of operations from one or a
few investments will not necessarily preclude our ability to
realize our investment objectives of cash flow and preservation
of capital from our overall portfolio. Our management believes
that freestanding retail properties, as opposed to investments
in shopping centers, malls or other large retail complexes as a
whole, offer a distinct investment advantage since these
properties generally offer superior locations that are less
dependent on the financial stability of adjoining tenants. In
addition, since we intend to acquire properties that are
geographically diverse, we expect to minimize the potential
adverse impact of economic downturns in local markets. Our
management believes that a portfolio consisting primarily of
freestanding, single-tenant retail properties, net leased to
creditworthy tenants diversified geographically and by brand and
number of tenants will enhance our liquidity opportunities for
investors by making the sale of individual properties, multiple
properties or our investment portfolio as a whole attractive to
institutional investors and by making a possible listing of our
shares attractive to the public investment community.
To the extent feasible, we will seek to achieve a well-balanced
portfolio diversified by geographic location, age of the
property and lease maturity. We will pursue properties whose
tenants represent a variety of industries so as to avoid
concentration in any one industry. We expect these industries to
include all types of retail establishments, convenience stores,
drug stores and restaurant properties. We expect that tenants of
our properties will also be diversified between national,
regional and local brands. We will generally target properties
with lease terms in excess of ten years. We may acquire
properties with shorter terms if the property is in an
attractive location, if the property is difficult to replace, or
if the property has other significant favorable attributes. We
expect that these investments will provide long-term value by
virtue of their size, location, quality and condition and lease
characteristics. We currently expect all of our acquisitions
will be in the United States.
Many retail companies today are entering into sale-leaseback
arrangements as a strategy for applying more capital that would
otherwise be applied to their real estate holdings to their core
operating businesses. We believe that our investment strategy
will enable us to take advantage of the increased emphasis on
retailers core business operations in todays
competitive corporate environment as retailers attempt to divest
from real estate assets.
There is no limitation in the number, size or type of properties
that we may acquire or on the percentage of net proceeds of this
offering that may be invested in a single property. The number
and mix of properties will depend upon real estate market
conditions and other circumstances existing at the time of
acquisition of properties and the amount of proceeds raised in
this offering. For a further description, see the section titled
- Other Possible Investments below.
We intend to incur debt to acquire properties where our board
determines that incurring such debt is in our best interest. In
addition, from time to time, we may acquire some properties
without financing and later incur mortgage debt secured by
selected or all of such properties if favorable financing terms
are available. We will use the proceeds from such loans to
acquire additional properties. See - Borrowing
Policies under this section for a more detailed
explanation of our borrowing intentions and limitations.
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Investment Grade and Other Creditworthy Tenants |
In evaluating potential property acquisitions consistent with
our investment objectives, we will apply credit underwriting
criteria to the tenants of existing properties and when
re-leasing properties in our portfolio. Tenants of our
properties will typically be large national or super-regional
retail chains that are creditworthy entities having significant
net worth and operating income. Generally these tenants must be
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experienced multi-unit operators with a proven track record in
order to meet the credit tests applied by our advisor.
A tenant will be considered investment grade when
the tenant has a debt rating by Moodys of Baa3 or better
or a credit rating by Standard & Poors of BBB- or
better, or its payments are guaranteed by a company with such
rating.
Moodys ratings are opinions of future relative
creditworthiness based on an evaluation of franchise value,
financial statement analysis and management quality. The rating
given to a debt obligation describes the level of risk
associated with receiving full and timely payment of principal
and interest on that specific debt obligation and how that risk
compares with that of all other debt obligations. The rating,
therefore, measures the ability of a company to generate cash in
the future.
A Moodys debt rating of Baa3, which is the lowest
investment grade rating given by Moodys, is assigned to
companies with adequate financial security. However, certain
protective elements may be lacking or may be unreliable over any
given period of time. A Moodys debt rating of Aaa, which
is the highest investment grade rating given by Moodys, is
assigned to companies with exceptional financial security. Thus,
investment grade tenants will be judged by Moodys to have
at least adequate financial security, and will in some cases
have exceptional financial security.
Standard & Poors assigns a credit rating to both
companies as a whole and to each issuance or class of a
companys debt. A Standard & Poors credit
rating of BBB-, which is the lowest investment grade rating
given by Standard & Poors, is assigned to
companies that exhibit adequate protection parameters. However,
adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity of the company to meet its
financial commitments. A Standard & Poors credit
rating of AAA+, which is the highest investment grade rating
given by Standard & Poors, is assigned to
companies or issuances with extremely strong capacities to meet
their financial commitments. Thus, investment grade tenants will
be judged by Standard & Poors to have at least
adequate protection parameters, and will in some cases have
extremely strong financial positions.
Other creditworthy tenants are tenants with financial profiles
that our advisor believes meet our investment objectives. In
making such determination, our advisor will look to factors that
may include the financial condition of the tenant and/or
guarantor, the operating history of the property with such
tenant, the tenants market share and track record within
its industry segment, the general health and outlook of the
tenants industry segment, and the lease length and terms
at the time of the acquisition.
We typically purchase properties with existing leases, and when
spaces become vacant or existing leases expire we anticipate
entering into net leases. Net leases
means leases that typically require that tenants pay all or a
majority of the operating expenses, including real estate taxes,
special assessments and sales and use taxes, utilities,
insurance and building repairs related to the property, in
addition to the lease payments. There are various forms of net
leases, typically classified as triple net, double net and
bondable. Triple net and bondable leases typically require the
tenant to pay typically all costs associated with a property in
addition to the base rent and percentage rent, if any. Double
net leases typically have the landlord responsible for the roof
and structure of the building while the tenant is responsible
for all remaining expenses associated with the real estate.
Since each lease is an individually negotiated contract between
two or more parties, each contract will have different
obligations of both the landlord and tenant. Many large national
tenants have standard lease forms that generally do not vary
from property to property, and we will have limited ability to
revise the terms of leases to those tenants. At this time, the
various obligations of the landlord and tenant under the leases
to be associated with our properties have not been determined.
We anticipate that the leases will have terms in excess of ten
years. We may acquire properties under which the lease term has
partially run. We may acquire properties with shorter terms if
the property is in an attractive location, if the property is
difficult to replace, or if the property has other significant
favorable
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real estate attributes. Under the leases, tenants will pay a
predetermined annual base rent. Some of the leases also will
contain provisions that increase the amount of base rent payable
at points during the lease term and/or percentage rent that can
be calculated by a number of factors. Under net leases, the
tenants generally will be required to pay the real estate taxes,
insurance, utilities and common area maintenance charges
associated with the properties. In addition, we will generally
require that each tenant pay the cost of the liability insurance
covering the property or provide such coverage. The third party
liability coverage will insure, among others, our company, our
operating partnership, and any entity formed by us to hold the
property. Each tenant will also obtain, at its own expense,
property insurance naming the above parties as the insured party
for fire and other casualty losses in an amount that will
generally be equal to the full replacement value of such
property. Our tenants will be required to obtain our
advisors approval of all such insurance.
In general, leases may not be assigned or subleased without our
prior written consent. The original tenant generally will remain
fully liable under the lease unless we release that tenant.
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Other Possible Investments |
Although we expect that most of our property acquisitions will
be of the type described above, we may make other investments.
For example, we are not limited to investments in single-tenant
retail properties or properties leased to investment grade
tenants. We may invest in other commercial properties, such as
shopping centers, business and industrial parks, manufacturing
facilities, office buildings and warehouse and distribution
facilities, or in other entities that make such investments or
own such properties, in order to reduce overall portfolio risks
or enhance overall portfolio returns if our advisor determines
that it would be advantageous to do so. Further, to the extent
that our advisor determines it is in our best interest, due to
the state of the real estate market, in order to diversify our
investment portfolio or otherwise, we will make or invest in
mortgage loans secured by the same types of commercial
properties that we intend to acquire. It is the policy of our
board of directors to limit our investments in properties other
than freestanding, single-tenant retail properties to 20% of our
investment portfolio.
Our criteria for investing in mortgage loans will be
substantially the same as those involved in our investment in
properties.
We do not intend to make loans to other persons (other than
mortgage loans), to underwrite securities of other issuers or to
engage in the purchase and sale of any types of investments
other than interests in real estate.
Cole Advisors II will have substantial discretion with
respect to the selection of specific investments and the
purchase and sale of our properties, subject to the approval of
our board of directors. In pursuing our investment objectives
and making investment decisions for us, Cole Advisors II
will evaluate the proposed terms of the purchase against all
aspects of the transaction, including the condition and
financial performance of the property, the terms of existing
leases and the creditworthiness of the tenant, terms of the
lease and property and location characteristics. Because the
factors considered, including the specific weight we place on
each factor, will vary for each potential investment, we do not,
and are not able to, assign a specific weight or level of
importance to any particular factor.
In addition to procuring and reviewing an independent valuation
estimate and property condition report, our advisor will also
consider the following:
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unit level store performance |
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property location, visibility and access |
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age of the property, physical condition and curb appeal |
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neighboring property uses |
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local market conditions including vacancy rates |
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area demographics, including trade area population and average
household income |
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neighborhood growth patterns and economic conditions |
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presence of demand generators |
Our advisor will consider whether properties leased and/or
guaranteed by companies that maintain an investment grade rating
by either Standard and Poors or Moodys Investor
Services. Our advisor will also consider non-rated and
non-investment grade rated tenants that we consider
creditworthy, as described in Investment Grade and Other
Creditworthy Tenants above.
Our advisor will carefully review the terms of each existing
lease by considering various factors, including:
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rent escalations; |
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remaining lease term |
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renewal option terms |
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tenant purchase options |
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termination options |
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scope of the landlords maintenance, repair and replacement
requirements |
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projected net cash flow yield |
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projected internal rates of return |
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Conditions to Closing Our Acquisitions |
Generally, we will condition our obligation to close the
purchase of any investment on the delivery and verification of
certain documents from the seller or developer, including, where
appropriate:
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plans and specifications |
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surveys |
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evidence of marketable title, subject to such liens and
encumbrances as are acceptable to Cole Advisors II |
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financial statements covering recent operations of properties
having operating histories |
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title and liability insurance policies |
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tenant estoppel certificates |
We generally will not purchase any property unless and until we
also obtain what is generally referred to as a
Phase I environmental site assessment and are
generally satisfied with the environmental status of the
property. However, we may purchase a property without obtaining
such assessment if our advisor determines it is not warranted. A
Phase I environmental site assessment basically consists of
a visual survey of the building and the property in an attempt
to identify areas of potential environmental concerns, visually
observing neighboring properties to asses surface conditions or
activities that may have an adverse environmental impact on the
property, and contacting local governmental agency personnel who
perform a regulatory agency file search in an attempt to
determine any known environmental concerns in the immediate
identity of the property. A Phase I environmental site
assessment does not generally include any sampling or testing of
soil, ground water or building materials from the property and
may not reveal all environmental hazards on a property.
We may enter into arrangements with the seller or developer of a
suitable property being developed or constructed. In such cases,
we will be obligated to purchase the property at the completion
of construction, provided that the construction conforms to
definitive plans, specifications, and costs approved by us in
advance. We would receive a certificate of an architect,
engineer or other appropriate party, stating that the property
complies with all plans and specifications. If renovation or
remodeling is required prior to the purchase of a property, we
expect to pay a negotiated maximum amount upon completion. We do
not currently intend to construct or develop properties or to
render any services in connection with such development or
construction.
In determining whether to purchase a particular property, we
may, in accordance with customary practices, obtain an option on
such property. The amount paid for an option, if any, is normally
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surrendered if the property is not purchased and is normally
credited against the purchase price if the property is purchased.
Our investment in real estate generally will take the form of
holding fee title or a long-term leasehold estate. We will
acquire such interests either directly through our operating
partnership, or indirectly through limited liability companies
or through investments in joint ventures, partnerships,
co-tenancies or other co-ownership arrangements with the
developers of the properties, affiliates of Cole
Advisors II or other persons. See Our Operating
Partnership Agreement and Joint Venture
Investments sections below. In addition, we may purchase
properties and lease them back to the sellers of such
properties. While we will use our best efforts to structure any
such sale-leaseback transaction so that the lease will be
characterized as a true lease and that we will be
treated as the owner of the property for federal income tax
purposes, we cannot assure you that the Internal Revenue Service
will not challenge this characterization. In the event that any
sale-leaseback transaction is re-characterized as a financing
transaction for federal income tax purposes, deductions for
depreciation and cost recovery relating to such property would
be disallowed. See Federal Income Tax
Considerations Sale-Leaseback Transactions.
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Joint Venture Investments |
We may enter into joint ventures, partnerships, co-tenancies and
other co-ownership arrangements for the acquisition, development
or improvement of properties with affiliates of our advisor,
including other real estate programs sponsored by affiliates of
our advisor. We may also enter into such arrangements with real
estate developers, owners and other unaffiliated third parties.
In determining whether to invest in a particular arrangement of
this type, Cole Advisors II will evaluate the real property
that such joint venture or other entity owns or is being formed
to own under the same criteria described above in
Investment Decisions for the selection
of our real estate property investments.
Our policy is to invest in joint ventures only when we will have
a right of first refusal to purchase the co-venturers
interest in the joint venture if the co-venturer elects to sell
such interest. In the event that the co-venturer elects to sell
property held in any such joint venture, however, we may not
have sufficient funds to exercise our right of first refusal to
buy the other co-venturers interest in the property held
by the joint venture. In the event that any joint venture with
an affiliated entity holds interests in more than one property,
the interest in each such property may be specially allocated
based upon the respective proportion of funds invested by each
co-venturer in each such property.
Cole Advisors II may have conflicts of interest in
determining which Cole-sponsored program should enter into any
particular joint venture agreement. The co-venturer may have
economic or business interests or goals that are or may become
inconsistent with our business interests or goals. In addition,
Cole Advisors II may face a conflict in structuring the
terms of the relationship between our interests and the interest
of the affiliated co-venturer and in managing the joint venture.
Since Cole Advisors II and its affiliates will control both
the affiliated co-venturer and, to a certain extent, us,
agreements and transactions between the co-venturers with
respect to any such joint venture will not have the benefit of
arms-length negotiation of the type normally conducted
between unrelated co-venturers, which may result in the
co-venturer receiving benefits greater than the benefits that we
receive. In addition, we may have liabilities that exceed the
percentage of our investment in the joint venture.
We may enter into joint ventures with other Cole real estate
programs only if a majority of our directors not otherwise
interested in the transaction and a majority of our independent
directors approve the transaction as being fair and reasonable
to us. In addition, the investment by each joint venture partner
must be substantially on the same terms and conditions as those
received by other joint venturers.
Our advisor believes that utilizing borrowing is consistent with
our investment objective of maximizing the return to investors.
By operating on a leveraged basis, we will have more funds
available for investment
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in properties. This will allow us to make more investments than
would otherwise be possible, resulting in a more diversified
portfolio. Our use of leverage increases the risk of default on
the mortgage payments and a resulting foreclosure of a
particular property, as described in the Risk
Factors General Risks Related to Investments in Real
Estate section of this prospectus. The number of
properties that we can acquire will be affected by the amount of
funds available to us. Accordingly, borrowing funds will allow
us to increase our diversification. There is no limitation on
the amount we may borrow against any single improved property.
However, under our charter, we are required to limit our
borrowings to 60% of the greater of cost (before deducting
depreciation or other non-cash reserves) or fair market value of
our gross assets, unless excess borrowing is approved by a
majority of the independent directors and will be disclosed to
our stockholders in our next quarterly report, along with a
justification for such excess borrowing. We expect that during
the period of this offering we will request that our independent
directors approve borrowings in excess of this limitation since
we will then be in the process of raising our equity capital to
acquire our portfolio. However, we anticipate that our overall
leverage following our offering stage will be within our charter
limit. To the extent that we do not obtain mortgage loans on our
properties, our ability to acquire additional properties will be
restricted.
Our advisor will use its best efforts to obtain financing on the
most favorable terms available to us. All of our financing
arrangements must be approved by a majority of our board members
including a majority of our independent directors. Lenders may
have recourse to assets not securing the repayment of the
indebtedness. Our advisor may refinance properties during the
term of a loan only in limited circumstances, such as when a
decline in interest rates makes it beneficial to prepay an
existing mortgage, when an existing mortgage matures or if an
attractive investment becomes available and the proceeds from
the refinancing can be used to purchase such investment. The
benefits of the refinancing may include increased cash flow
resulting from reduced debt service requirements, an increase in
dividend distributions from proceeds of the refinancing, if any,
and an increase in property ownership is some refinancing
proceeds are reinvested in real estate.
Our ability to increase our diversification through borrowing
may be adversely impacted if banks and other lending
institutions reduce the amount of funds available for loans
secured by real estate. When interest rates on mortgage loans
are high or financing is otherwise unavailable on a timely
basis, we may purchase certain properties for cash with the
intention of obtaining a mortgage loan for a portion of the
purchase price at a later time. To the extent that we do not
obtain mortgage loans on our properties, our ability to acquire
additional properties will be restricted.
We may not borrow money from any of our directors or from our
advisor or its affiliates unless such loan is approved by a
majority of the directors not otherwise interested in the
transaction (including a majority of the independent directors)
as fair, competitive and commercially reasonable and no less
favorable to us than comparable loans between unaffiliated
parties.
Making Loans and Investments in Mortgages
Our criteria for investing in mortgage loans will be
substantially the same as those involved in our investment in
properties. We are not limited as to the amount of gross
offering proceeds that we may apply to mortgage loan investments.
We will not make loans to other entities or other persons unless
secured by mortgages. We will not make or invest in mortgage
loans on any one property if the aggregate amount of all
mortgage loans outstanding on the property, including our
borrowings, would exceed an amount equal to 85.0% of the
appraised value of the property as determined by an independent
third party appraiser, unless we find substantial justification
due to the presence of other underwriting criteria. We may find
such justification in connection with the purchase of mortgage
loans in cases in which we believe there is a high probability
of our foreclosure upon the property in order to acquire the
underlying assets and in which the cost of the mortgage loan
investment does not exceed the fair market value of the
underlying property. We will not invest in or make mortgage
loans unless an appraisal is obtained concerning the underlying
property, except for those loans insured or guaranteed by a
government or government agency. In cases in which a
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majority of our independent directors so determine and in the
event the transaction is with our advisor, any of our directors
or their respective affiliates, the appraisal will be obtained
from a certified independent appraiser to support its
determination of fair market value.
We may invest in first, second and third mortgage loans,
wraparound mortgage loans, construction mortgage loans on real
property, and loans on leasehold interest mortgages. However, we
will not make or invest in any mortgage loans that are
subordinate to any mortgage or equity interest of our advisor or
any of its or our, affiliates. We also may invest in
participations in mortgage loans. Second and wraparound mortgage
loans are secured by second or wraparound deeds of trust on real
property that is already subject to prior mortgage indebtedness.
A wraparound loan is one or more junior mortgage loans having a
principal amount equal to the outstanding balance under the
existing mortgage loan, plus the amount actually to be advanced
under the wraparound mortgage loan. Under a wraparound loan, we
would generally make principal and interest payments on behalf
of the borrower to the holders of the prior mortgage loans.
Third mortgage loans are secured by third deeds of trust on real
property that is already subject to prior first and second
mortgage indebtedness. Construction loans are loans made for
either original development or renovation of property.
Construction loans in which we would generally consider an
investment would be secured by first deeds of trust on real
property for terms of six months to two years. Loans on
leasehold interests are secured by an assignment of the
borrowers leasehold interest in the particular real
property. These loans are generally for terms of from six months
to 15 years. The leasehold interest loans are either
amortized over a period that is shorter than the lease term or
have a maturity date prior to the date the lease terminates.
These loans would generally permit us to cure any default under
the lease. Mortgage participation investments are investments in
partial interests of mortgages of the type described above that
are made and administered by third-party mortgage lenders.
Generally, we will not invest in any mortgage loans, including
those described above, on any one property if the aggregate
amount of mortgage loans outstanding on the property, including
our loans, would exceed an amount equal to 85% of the appraised
value of the property.
In evaluating prospective mortgage loan investments, our advisor
will consider factors such as the following:
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ratio of the investment amount to the underlying propertys
value |
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propertys potential for capital appreciation |
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expected levels of rental and occupancy rates |
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current and projected cash flow of the property |
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potential for rent increases |
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degree of liquidity of the investment |
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propertys income-producing capacity |
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quality, experience and creditworthiness of the borrower |
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general economic conditions in the area where the property is
located |
In addition, we will seek to obtain a customary lenders
title insurance policy or commitment as to the priority of the
mortgage or condition of the title. Because the factors
considered, including the specific weight we place on each
factor, will vary for each prospective mortgage loan investment,
we do not, and are not able to, assign a specific weight or
level of importance to any particular factor.
We may originate loans from mortgage brokers or personal
solicitations of suitable borrowers, or may purchase existing
loans that were originated by other lenders. We may purchase
existing mortgage loans from affiliates, and we may make or
invest in mortgage loans in which the borrower is an affiliate.
See Conflicts of Interest. Our advisor will evaluate
all potential mortgage loan investments to determine if the
security for the loan and the loan-to-value ratio meets our
investment criteria and objectives. An officer, director, agent
or employee of our advisor will inspect the property during the
loan approval process. We do not expect to make or invest in
mortgage loans with a maturity of more than ten years from the
date of our investment, and we anticipate that most loans will
have a term of five years. Most loans that we will consider for
investment would provide for monthly payments of interest and
some may also provide for principal amortization, although many
loans of the nature that we will consider provide for
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payments of interest only and a payment of principal in full at
the end of the loan term. We will not originate loans with
negative amortization provisions.
We do not have any policies directing the portion of our assets
that may be invested in construction loans, loans secured by
leasehold interests and second, third and wraparound mortgage
loans. However, we recognize that these types of loans are
riskier than first deeds of trust or first priority mortgages on
income-producing, fee-simple properties, and we expect to
minimize the amount of these types of loans in our portfolio, to
the extent that that we make or invest in mortgage loans. Our
advisor will evaluate the fact that these types of loans are
riskier in determining the rate of interest on the loans. We do
not have any policy that limits the amount that we may invest in
any single mortgage loan or the amount we may invest in mortgage
loans to any one borrower.
Our mortgage loan investments may be subject to regulation by
federal, state and local authorities and subject to various laws
and judicial and administrative decisions imposing various
requirements and restrictions, including among other things,
regulating credit granting activities, establishing maximum
interest rates and finance charges, requiring disclosures to
customers, governing secured transactions and setting
collection, repossession and claims handling procedures and
other trade practices. In addition, certain states have enacted
legislation requiring the licensing of mortgage bankers or other
lenders and these requirements may affect our ability to
effectuate our proposed investments in mortgage loans.
Commencement of operations in these or other jurisdictions may
be dependent upon a finding of our financial responsibility,
character and fitness. We may determine not to make mortgage
loans in any jurisdiction in which the regulatory authority
determines that we have not complied in all material respects
with applicable requirements.
Acquisition of Properties from Affiliates
We may acquire properties or interests in properties from or in
co-ownership arrangements with affiliated entities, including
properties acquired from affiliates engaged in construction and
development of commercial real properties. We will not acquire
any property from an affiliate unless a majority of our
directors not otherwise interested in the transaction and a
majority of our independent directors determine that the
transaction is fair and reasonable to us. The purchase price
that we will pay for any property we acquire from our
affiliates, including property developed by an affiliate as well
as property held by an affiliate that has already been
developed, will not exceed the current appraised value of the
property. In addition, the price of the property we acquire from
an affiliate may not exceed the cost of the property to our
affiliate, unless a majority of our directors and a majority of
our independent directors determine that substantial
justification for the excess exists and the excess is reasonable.
In the case of properties we acquire from an affiliate that have
not been constructed at the time of contracting, our affiliate
will generally be required to obtain an independent as
built appraisal for the property prior to our contracting
for the property, in which case the purchase price we will pay
under the purchase contract will not exceed the anticipated fair
market value of the developed property as determined by the
appraisal. Our contract with any affiliate engaged in
development of properties for sale to us will require it to
deliver to us at closing title to the property, as well as an
assignment of leases.
In the case of properties to be developed by any of our
affiliates and sold to us, if any of our affiliates develop
properties, we anticipate that our development company affiliate
will:
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acquire a parcel of land; |
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enter into contracts for the construction and development of a
commercial building thereon; |
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enter into an agreement with one or more tenants to lease all or
a majority of the property upon its completion; |
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secure an earnest money deposit from us, which may be used for
acquisition and development expenses; |
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secure a financing commitment from a commercial bank or other
institutional lender to finance the remaining
acquisition and development expenses; |
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complete the development and allow the tenant or tenants to take
possession of the property; and |
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provide for the acquisition of the property by us. |
We will be required to pay a substantial sum to our development
company affiliate at the time of entering into the contract as a
refundable earnest money deposit to be credited against the
purchase price at closing, which will be applied to the cost of
acquiring the land and initial development costs. We expect that
the earnest money deposit will represent approximately 20.0% to
30.0% of the purchase price of the developed property set forth
in the purchase contract.
We may enter into a contract to acquire property from an
affiliate engaged in property development even if we have not
yet raised sufficient proceeds to enable us to pay the full
amount of the purchase price at closing. We may also elect to
close a purchase before the development of the property has been
completed, in which case we would obtain an assignment of the
construction and development contracts from our affiliate and
would complete the construction either directly or through a
joint venture with an affiliate. Any contract between us,
directly or indirectly through a joint venture with an
affiliate, and an affiliated development company for the
purchase of property to be developed will provide that we will
be obligated to purchase the property only if:
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the affiliated development company completes the improvements,
which generally will include the completion of the development,
in accordance with the specifications of the contract; |
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one or more approved tenants takes possession of the building
under a lease satisfactory to our advisor; and |
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we have sufficient proceeds available for investment at closing
to pay the balance of the purchase price remaining after payment
of the earnest money deposit. |
Our advisor will not cause us to enter into a contract to
acquire property from an affiliated development company if it
does not reasonably anticipate that funds will be available to
purchase the property at the time of closing. If we enter into a
contract to acquire property from an affiliated development
company and, at the time for closing, are unable to purchase the
property because we do not have sufficient proceeds available
for investment, we will not be required to close the purchase of
the property and will be entitled to a refund of our earnest
money deposit from the affiliated development company. Because
the affiliated development company may be an entity without
substantial assets or operations, our board of directors may
require that the affiliated development companys
obligation to refund our earnest money deposit be guaranteed by
another entity, such as Fund Realty Advisors, our affiliated
property manager, which provides property management and leasing
services to various Cole programs, including us, for substantial
monthly fees. As of the time Fund Realty Advisors or any other
guarantor may be required to perform under any guaranty, we
cannot assure you that such guarantor will have sufficient
assets to refund all of our earnest money deposit in a lump sum
payment. In such a case, we would be required to accept
installment payments over time payable out of the revenues of
the guarantors operations. We cannot assure you that we
would be able to collect the entire amount of our earnest money
deposit under such circumstances. See Risk
Factors General Risks Related to Investments in Real
Estate.
Tenant-in-Common Program
Persons selling real estate held for investment often seek to
reinvest the proceeds of that sale in another real estate
investment in an effort to obtain favorable tax treatment under
Section 1031 of the Internal Revenue Code. Cole Capital
Partners, an affiliate of our advisor, has developed a
Tenant-in-Common Program to facilitate these transactions,
referred to as like-kind exchanges. For each Tenant-in-Common
Program, Cole Capital Partners or another Cole affiliate will
create a single member limited liability company (each of which
we refer to as a Cole Exchange Entity). A Cole Exchange Entity
will acquire all or part of a real estate property to be owned
in co-tenancy arrangements with persons wishing to engage in
like-kind exchanges (Tenant-in-Common Participants). Generally,
a Cole Exchange Entity will acquire the subject property and
prepare and, through a registered broker-dealer, market a
private placement memorandum for the sale of co-tenancy
interests in that property. In many instances, affiliates
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of our advisor will sell or contribute a property to a Cole
Exchange Entity for the purpose of selling off the property.
Properties acquired in connection with the Tenant-in-Common
Program, if any, initially may be partially or entirely financed
with debt. When a Section 1031 Tenant-in-Common Participant
wishes to acquire a co-tenancy interest, the Cole Exchange
Entity will deed an undivided co-tenancy interest in the subject
property to a newly formed single-member limited liability
company that is owned by the Tenant-in-Common Participant.
Typically, multiple investors will acquire co-tenancy interests
in a single property. In a substantial majority of these
transactions, the underlying property serves as collateral for
the mortgage loan used to finance the purchase of the property.
To the extent the loan is not repaid in full as part of the
Tenant-in-Common Program, the loan remains outstanding after the
sale of the co-tenancy interests to the Tenant-in-Common
Participants. Each co-tenant is a borrower under the loan
financing documents. However, these loans generally are
non-recourse against the Tenant-in-Common Participants and are
secured by the real property. However, the Tenant-in-Common
Participants are required to indemnify and become liable to the
lender for customer/carve-outs under the loan financing
documents, including but not limited to fraud or intentional
misrepresentation by a co-tenant or a guarantor of the loan,
physical waste of the property, misapplication or
misappropriation of insurance proceeds and failure to pay taxes.
Although we do not presently intend to participate in a
Tenant-in-Common Program, we may do so if our board of
directors, including a majority of our independent directors,
determines that our participation is in the best interest of our
stockholders. In the event that our board of directors
determines that it is in our best interest to participate in the
Tenant-in-Common Program, we may co-invest in the property with
the Cole Exchange Entity by purchasing an interest in the
property directly from the original seller or purchasing a
tenant-in-common interest from the Cole Exchange Entity. In that
event, as an owner of tenant-in-common interests in properties,
we will be subject to the risks that ownership of co-tenancy
interests with unrelated third parties entails. Furthermore, to
the extent we guarantee any loans associated with the properties
that are subject to the Tenant-in-Common Programs, we, as well
as the co-tenants, will become liable for the lenders
customary carve-outs under the applicable mortgage loan
financing documents, including but not limited to fraud or
intentional misrepresentation by a co-tenant or a guarantor of
the loan, physical waste of the property, misapplication or
misappropriation of insurance proceeds, and failure to pay taxes.
We may co-invest with or purchase tenant-in-common interests
from a Cole Exchange Entity only if a majority of our directors
not otherwise interested in the transaction and a majority of
our independent directors approves of the transaction as being
fair, competitive and commercially reasonable to us. We
anticipate that in the event we purchase a tenant-in-common
interest from a Cole Exchange Entity, generally we will purchase
the interest at the Cole Exchange Entitys cost (before
offering expenses and fees). However, if the price to us is in
excess of the cost of the asset paid by our affiliate, a
majority of our directors not otherwise interested in the
transaction and a majority of our independent directors must
determine that substantial justification for such excess exists
and that such excess is reasonable. In no event shall the cost
of such asset to us exceed the greater of the Cole Exchange
Entitys cost or the current appraised value for the
property interest performed by an independent appraiser.
Although the Cole Exchange Entity will charge fees and expenses
to Tenant-in-Common Participants and/or will sell the
tenant-in-common interests at a price above the price it paid
for the property, we will not pay any fees or expenses to the
Cole Exchange Entity. We will, however, pay our advisor the
acquisition and advisory fees and reimburse the advisor for its
expenses as described under Management Compensation
to the same extent as with other types of property acquisitions.
All purchasers of co-tenancy interests, including our operating
partnership if it purchases co-tenancy interests, will be
required to execute a tenants-in-common agreement with the other
purchasers of co-tenancy interests in that particular property.
They will also be required to execute an asset management
agreement with Equity Fund Advisors, our affiliate, which would
provide for the payment of asset management and leasing fees to
Equity Fund Advisors. If we purchase co-tenancy interests, we
will be subject to various risks associated with co-tenancy
arrangements which are not otherwise present in real
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estate investments, such as the risk that the interests of the
non-affiliated Tenant-in-Common Participants will become adverse
to our interests.
In any Tenant-in-Common Program, Cole Capital Partners, the Cole
Exchange Entity, or the other Tenant-in-Common Participants may
have economic or business interests or goals that are or may
become inconsistent with our business interests or goals. For
instance, Cole Capital Partners will receive substantial fees in
connection with its sponsoring of a Tenant-in-Common Program
(although we will be required to pay such fees) and our
participation in such a transaction likely would facilitate its
consummation of the transactions. For these reasons, our advisor
may face a conflict in structuring the terms of the relationship
between our interests and the interest of Cole Capital Partners
or the Cole Exchange Entity. As a result, agreements and
transactions between the parties with respect to the property
will not have the benefit of arms-length negotiation of
the type normally conducted between unrelated parties.
Disposition Policies
We intend to hold each property we acquire for an extended
period, generally eight to ten years. However, circumstances
might arise that could result in the early sale of some
properties. We may sell a property before the end of the
expected holding period if we believe the sale of the property
would be in the best interests of our stockholders.
The determination of whether a particular property should be
sold or otherwise disposed of will be made after consideration
of relevant factors, including prevailing economic conditions
and current tenant creditworthiness, with a view to achieving
maximum capital appreciation. We cannot assure you that this
objective will be realized. The selling price of a property that
is net leased will be determined in large part by the amount of
rent payable under the lease. If a tenant has a repurchase
option at a formula price, we may be limited in realizing any
appreciation. In connection with our sales of properties we may
lend the purchaser all or a portion of the purchase price. In
these instances, our taxable income may exceed the cash received
in the sale. The terms of payment will be affected by custom in
the area in which the property being sold is located and the
then-prevailing economic conditions.
Investment Limitations
Our charter places numerous limitations on us with respect to
the manner in which we may invest our funds or issue securities.
These limitations cannot be changed unless our charter is
amended, which requires approval of our stockholders. Unless our
charter is amended, we will not:
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borrow in excess of 60% of the greater of the aggregate cost
(before deducting depreciation or other non-cash reserves) or
fair market value of all assets owned by us, unless approved by
a majority of our independent directors and disclosed to our
stockholders in our next quarterly report, along with a
justification for such excess borrowing; |
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make investments in unimproved property or mortgage loans on
unimproved property in excess of 10.0% of our total assets; |
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make investments in non-freestanding, non-single tenant property
in excess of 20.0% of our total assets; |
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make or invest in mortgage loans unless an appraisal is obtained
concerning the underlying property, except for those mortgage
loans insured or guaranteed by a government or government agency; |
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make or invest in mortgage loans, including construction loans,
on any one property if the aggregate amount of all mortgage
loans on such property would exceed an amount equal to 85.0% of
the appraised value of such property unless substantial
justification exists for exceeding such limit because of the
presence of other underwriting criteria; |
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make an investment in a property or mortgage loan if the related
acquisition fees and acquisition expenses are unreasonable or
exceed 6.0% of the purchase price of the property or, in the
case of a |
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mortgage loan, 6.0% of the funds advanced; provided that the
investment may be made if a majority of our independent
directors determines that the transaction is commercially
competitive, fair and reasonable to us; |
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invest in equity securities unless a majority of our independent
directors approves such investment as being fair, competitive
and commercially reasonable; |
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invest in real estate contracts of sale, otherwise known as land
sale contracts, unless the contract is in recordable form and is
appropriately recorded in the chain of title; |
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invest in commodities or commodity futures contracts, except for
futures contracts when used solely for the purpose of hedging in
connection with our ordinary business of investing in real
estate assets and mortgages; |
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issue equity securities on a deferred payment basis or other
similar arrangement; |
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issue debt securities in the absence of adequate cash flow to
cover debt service; |
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issue equity securities that are assessable after we have
received the consideration for which our board of directors
authorized their issuance; or |
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issue equity securities redeemable solely at the option of the
holder, which restriction has no effect on our share redemption
program or the ability of our operating partnership to issue
redeemable partnership interests. |
In addition, our charter includes many other investment
limitations in connection with conflict-of-interest
transactions, which limitations are described above under
Conflicts of Interest. Our charter also includes
restrictions on roll-up transactions, which are described under
Description of Shares below.
Change in Investment Objectives and Limitations
Our charter requires that our independent directors review our
investment policies at least annually to determine that the
policies we follow are in the best interest of our stockholders.
Each determination and the basis therefor shall be set forth in
the minutes of the meetings of our board of directors. The
methods of implementing our investment policies also may vary as
new investment techniques are developed. The methods of
implementing our investment objectives and policies, except as
otherwise provided in the organizational documents, may be
altered by a majority of our directors, including a majority of
the independent directors, without the approval of our
stockholders.
Real Property Investments
As of the date of this prospectus, we have not acquired or
contracted to acquire any specific real properties or mortgage
loans. Cole Advisors II, our advisor, is continually
evaluating various potential property investments and engaging
in discussions and negotiations with sellers, developers and
potential tenants regarding the purchase and development of
properties for us and other Cole-sponsored programs. At such
time while this offering is pending, if we believe that a
reasonable probability exists that we will acquire a specific
property, this prospectus will be supplemented to disclose the
negotiations and pending acquisition of such property. We expect
that this will normally occur upon the signing of a purchase
agreement for the acquisition of a specific property, but may
occur before or after such signing or upon the satisfaction or
expiration of major contingencies in any such purchase
agreement, depending on the particular circumstances surrounding
each potential investment. A supplement to this prospectus will
describe any improvements proposed to be constructed thereon and
other information that we consider appropriate for an
understanding of the transaction. Further data will be made
available after any pending acquisition is consummated, also by
means of a supplement to this prospectus, if appropriate. YOU
SHOULD UNDERSTAND THAT THE DISCLOSURE OF ANY PROPOSED
ACQUISITION CANNOT BE RELIED UPON AS AN ASSURANCE THAT WE WILL
ULTIMATELY CONSUMMATE SUCH ACQUISITION OR THAT THE INFORMATION
PROVIDED CON-
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CERNING THE PROPOSED ACQUISITION WILL NOT CHANGE BETWEEN THE
DATE OF THE SUPPLEMENT AND ANY ACTUAL PURCHASE.
We intend to obtain adequate insurance coverage for all
properties in which we invest.
Other Policies
Subject to applicable law, our board of directors has the
authority, without further stockholder approval, to issue
additional authorized common stock and/or preferred stock or
otherwise raise capital in any manner and on the terms and for
the consideration it deems appropriate, including in exchange
for property and/or as consideration for acquisitions. Existing
stockholders will have no preemptive right to additional shares
issued in any future offering or other issuance of our capital
stock, and any offering or issuance may cause a dilution of your
investment. In addition, preferred shares could have
distribution, voting, liquidation and other rights and
preferences that are senior to those of our common shares. See
Description of Shares. We may in the future issue
common stock or preferred stock in connection with acquisitions,
including issuing common stock or preferred stock in exchange
for property. We also may issue units of partnership interest in
our operating partnership in connection with acquisitions of
property or other assets or entities.
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PLAN OF OPERATION
Certain statements contained in this Plan of
Operation and elsewhere in this prospectus constitute
forward-looking statements. Such statements include,
in particular, statements about our plans, strategies and
prospects, as well as information about our business and
industry. These forward-looking statements are not historical
facts but our current intent, belief or expectations of our
business and industry. You can generally identify
forward-looking statements by our use of forward-looking
terminology, such as may, will,
anticipate, expect, intend,
plan, believe, seek,
estimate, would, could,
should and variations of these words and similar
expressions. You should not rely on our forward-looking
statements because the matters they describe are subject to
known and unknown risks, uncertainties and other unpredictable
factors, many of which are beyond our control.
These forward-looking statements are subject to various risks
and uncertainties, including those discussed above under
Risk Factors, which could cause our actual results
to differ materially from those projected in any forward-looking
statement we make. We do not undertake to publicly update or
revise any forward-looking statements, whether as a result of
new information, future events or otherwise. You should read the
following discussion along with our financial statements and the
related notes included in this prospectus.
General
As of the date of this prospectus, we have not commenced
operations. After the minimum subscription of
250,000 shares is achieved, subscription proceeds will be
released to us (except for subscriptions from Pennsylvania
investors see Plan of Distribution
Special Notice to Pennsylvania Investors) and applied to
investments in properties and other assets and the payment or
reimbursement of selling commissions and other organization and
offering expenses. See Estimated Use of Proceeds. We
will experience a relative increase in liquidity as additional
subscriptions for shares are received and a relative decrease in
liquidity as net offering proceeds are expended in connection
with the acquisition, development and operation of properties.
We have not entered into any arrangements to acquire any
specific properties with the net proceeds from this offering.
The number of properties we may acquire will depend upon the
number of shares sold and the resulting amount of the net
proceeds available for investment in properties.
Our advisor also may, but will not be required to, establish
reserves from gross offering proceeds, out of cash flow
generated by operating properties or out of non-liquidating net
sale proceeds from the sale of our properties. Working capital
reserves are typically utilized for non-operating expenses such
as tenant improvements, leasing commissions and major capital
expenditures. Alternatively, a lender may require its own
formula for escrow of working capital reserves.
The net proceeds of this offering will provide funds to enable
us to purchase properties. We may acquire properties free and
clear of permanent mortgage indebtedness by paying the entire
purchase price of each property in cash or for equity
securities, or a combination thereof, or we may selectively
encumber all or certain properties, if favorable financing terms
are available, following acquisition. The proceeds from such
loans will be used to acquire additional properties or increase
cash flow. In addition, we intend to borrow funds to purchase
properties. In the event that this offering is not fully sold,
our ability to diversify our investments may be diminished.
We intend to make an election under Section 856(c) of the
Internal Revenue Code to be taxed as a REIT under the Internal
Revenue Code, beginning with the taxable year ended
December 31, 2005. If we qualify as a REIT for federal
income tax purposes, we generally will not be subject to federal
income tax on income that we distribute to our stockholders. If
we fail to qualify as a REIT in any taxable year, we will be
subject to federal income tax on our taxable income at regular
corporate rates and will not be permitted to qualify for
treatment as a REIT for federal income tax purposes for four
years following the year in which our qualification is denied.
Such an event could materially and adversely affect our net
income. However, we believe that we are organized and operate in
a manner that will enable us to qualify
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for treatment as a REIT for federal income tax purposes during
the year ended December 31, 2005, and we intend to continue
to operate so as to remain qualified as a REIT for federal
income tax purposes.
We will monitor the various qualification tests that we must
meet to maintain our status as a REIT. Ownership of our shares
will be monitored to ensure that no more than 50.0% in value of
our outstanding shares is owned, directly or indirectly, by five
or fewer individuals at any time after the first taxable year
for which we make an election to be taxed as a REIT. We will
also determine, on a quarterly basis, that the gross income,
asset and distribution tests as described in the section of this
prospectus entitled Federal Income Tax
Considerations Requirements for Qualification
are met.
Liquidity and Capital Resources
We expect to meet our short-term operating liquidity
requirements initially through advances from our advisor or its
affiliates, from time to time, as we need to fund our operating
expenses incurred before we have raised the minimum offering of
250,000 shares. After we break escrow, we expect we will
meet our short-term operating liquidity requirements from the
proceeds of this offering and that any advances from our advisor
will be repaid, without interest, as funds are available after
meeting our current liquidity requirements, subject to the
limitations on reimbursement set forth in the Management
Compensation section of this prospectus. We do not expect
our operating costs to be significant until we make our initial
investments. As of March 31, 2005, we have not received any
advances from our advisor. We expect that any advances will be
made under a revolving advance arrangement, which will not be
written, with our advisor. We expect that this arrangement will
allow for repayments to be made as funds are available from the
offering proceeds or from operating cash flows, but no later
than two years from the date of the advance. The terms of the
arrangement will be finalized upon the initial advance, if any.
The offering and organizational costs associated with this
offering will initially be paid by our advisor, which may be
reimbursed for such costs up to 1.5% of the capital raised by us
in this offering. As of March 31, 2005, our advisor has
paid approximately $595,000 of such costs. After we make our
initial investments from the proceeds of this offering, we
expect our short-term operating liquidity requirements to be met
through net cash provided by property operations. Operating cash
flows are expected to increase as properties are added to our
portfolio.
On a long-term basis, our principal demands for funds will be
for property acquisitions, either directly or through investment
interests, for the payment of operating expenses and
distributions, and for the payment of interest on our
outstanding indebtedness and other investments. Generally, cash
needs for items other than property acquisitions will be met
from operations and property acquisitions from funding by public
offerings of our shares. However, there may be a delay between
the sale of our shares and our purchase of properties that could
result in a delay in the benefits to our stockholders, if any,
of returns generated from our investment operations. Our advisor
will evaluate potential additional property acquisitions and
engage in negotiations with sellers on our behalf. Investors
should be aware that after a purchase contract is executed that
contains specific terms, the property will not be purchased
until the successful completion of due diligence, which includes
review of the title insurance commitment, an appraisal and an
environmental analysis. In some instances, the proposed
acquisition will require the negotiation of final binding
agreements, which may include financing documents. During this
period, we may decide to temporarily invest any unused proceeds
from the offering in certain investments that could yield lower
returns than the properties. These lower returns may affect our
ability to make distributions.
Our board of directors will determine the amount and timing of
distributions to our stockholders and will base such
determination on a number of factors, including funds available
for payment of distributions, financial condition, capital
expenditure requirements and annual distribution requirements
needed to maintain our status as a REIT under the Internal
Revenue Code.
Potential future sources of capital include proceeds from this
offering, proceeds from secured or unsecured financings from
banks or other lenders, proceeds from the sale of properties and
undistributed funds from operations. If necessary, we may use
financings or other sources of capital in the event of
unforeseen significant capital expenditures. Currently, we do
not have a credit facility or other third party
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source of liquidity. To the extent we do not secure a credit
facility or other third party source of liquidity, we will be
dependent upon the proceeds of this offering and income from
operations in order to meet our long term liquidity requirements
and to fund our distributions.
Results of Operations
As of the initial date of this prospectus, no significant
operations had commenced because we were in our development
stage. No operations will commence until we have sold
250,000 shares of our common stock in this offering. Our
management is not aware of any material trends or uncertainties,
other than national economic conditions affecting real estate
generally (such as lower capitalization rates, which lead to
lower rents), that may reasonably be expected to have a material
impact, favorable or unfavorable, on revenues or income from the
acquisition and operations of real properties and mortgage
loans, other than those referred to in this prospectus.
Inflation
The real estate market has not been affected significantly by
inflation in the past several years due to the relatively low
inflation rate. However, in the event inflation does become a
factor, our leases typically do not include provisions that
would protect us from the impact of inflation.
Critical Accounting Policies
As of March 31, 2005 and December 31, 2004, the only
asset we held was cash and cash equivalents of $200,000. The
valuation of this amount does not require estimates or judgment
by management.
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PRIOR PERFORMANCE SUMMARY
Prior Investment Programs
The information presented in this section represents the
historical experience of certain real estate programs managed
over the last ten years by Cole Capital Advisors, Cole Capital
Partners and other affiliates of our advisor, including certain
officers and directors of our advisor. Investors should not
assume that they will experience returns, if any, comparable to
those experienced by investors in such prior real estate
programs.
During the period from January 1, 1995 to March 31,
2005, affiliates of our advisor have sponsored 48 privately
offered prior programs including 24 limited partnerships, a real
estate investment trust (Cole REIT I), four debt offerings and
nineteen tenant-in-common programs. As of March 31, 2005,
such prior programs have raised approximately
$287.2 million from 5,400 investors. Each of the 24 limited
partnerships, the real estate investment trust, three of the
debt offerings and the 19 tenant-in-common programs have
investment objectives and policies similar to that of this
program. See Tables I and II of the Prior Performance Tables for
more detailed information about the experience of our affiliates
in raising and investing funds for offerings initiated over the
last four years and compensation paid to the sponsors of these
programs.
We intend to conduct this offering in conjunction with future
offerings by one or more public and private real estate entities
sponsored by Cole Capital Advisors, Cole Capital Partners and
their affiliates. To the extent that such entities have the same
or similar objectives as ours or involve similar or nearby
properties, such entities may be in competition with the
properties acquired by us. See the Conflicts of
Interest section of this prospectus for additional
information.
The information in this section and in the Prior Performance
Tables attached to this prospectus as Appendix A provides
relevant summary information concerning real estate programs
sponsored by our affiliates. The Prior Performance Tables set
forth information as of the dates indicated regarding certain of
these prior programs as to (1) experience in raising and
investing funds (Table I); (2) compensation to the sponsor
and its affiliates (Table II); (3) annual operating
results of prior real estate programs (Table III);
(4) results of completed programs (Table IV); and
(5) results of sales or disposals of properties (Table V).
Additionally, Table VI, which is contained in Part II of
the registration statement for this offering and which is not
part of the prospectus, contains certain additional information
relating to properties acquired by the prior real estate
programs. We will furnish copies of such table to any
prospective investor upon request and without charge. The
purpose of this prior performance information is to enable you
to evaluate accurately the experience of our advisor and its
affiliates in sponsoring like programs. The following discussion
is intended to summarize briefly the objectives and performance
of the prior real estate programs and to disclose any material
adverse business developments sustained by them.
Summary Information
During the period from January 1, 1995 to March 31,
2005, affiliates of our advisor have been general partners in 24
limited partnerships with similar objectives to our program,
involving the sale of limited partnership interests to 3,400
investors, raising approximately $138.0 million of capital.
The foregoing partnerships have purchased in the aggregate 47
properties for an approximate acquisition cost of
$254.6 million, of which 51.1% is attributable to 20
shopping centers, 46.0% is attributable to 23 single-tenant
commercial properties, 0.8% is attributable to one office
building, 1.1% is attributable to one data center and 1.0% is
attributable to two unimproved or partially-improved land
parcels intended for high-rise/data center development. 21 of
the properties are located in the Phoenix metropolitan area, one
is located in northern Arizona and 25 are located in the
following states: three in Tennessee; three in Oklahoma; two in
California; two in Florida; two in Ohio; and one each in
Alabama, Indiana, Iowa, Kentucky, Michigan, Mississippi, Nevada,
New Mexico, New York, South Carolina, Texas, Virginia and
Washington. The properties have been purchased on terms varying
from all cash to market rate financing. To date, 21 of the
properties have been sold.
87
Of the above, three real estate investment programs that
acquired retail shopping centers, one real estate investment
program that developed a data center and two limited
partnerships that acquired single-tenant commercial properties,
have been sponsored since March 31, 2002. Cole Capital
Partners, through wholly owned subsidiaries, serves as the
general partner of Cole Credit Property Fund Limited Partnership
(CCPF) and Cole Credit Property Fund II Limited Partnership
(CCPF II). As of March 31, 2005, CCPF had raised
$25.0 million and acquired 14 properties or an interest
therein in 12 states across the U.S. for an aggregate
acquisition cost of approximately $55.8 million. All of
such properties are single-tenant commercial properties that
were net leased to investment grade tenants, which are companies
that have a debt rating by Moodys of Baa3 or better or a
credit rating by Standard & Poors of BBB- or
better, or are guaranteed by a company with such rating, as of
the date of acquisition. Subsequent to the acquisition by CCPF,
the tenants at two properties representing less than 7.5% of the
funds invested equity have been downgraded below
investment grade, one of which has filed for Chapter 11
bankruptcy protection. As of March 31, 2005, CCPF II
had raised approximately $24.5 million and had acquired ten
properties or an interest therein (including one property
co-owned with CCPF) in seven states for an aggregate acquisition
cost of approximately $61.3 million.
In addition to the partnerships described above, as of
March 31, 2005, Cole Collateralized Senior Notes, LLC
(CCSN), a subsidiary of Cole Capital Advisors had issued
approximately $28.0 million in Series A Notes, and had
acquired 25 restaurants and 15 single-tenant retail properties
located in 18 states for an aggregate acquisition cost of
approximately $123.7 million. As of March 31, 2005,
CCSN had sold 24 properties, of which three were sold as part of
Cole Capital Partners tenant-in-common program and three
were sold to Cole REIT I.
In addition to the partnerships described above, as of
March 31, 2005, Cole Collateralized Senior Notes II,
LLC (CCSN II), a subsidiary of Cole Capital Advisors had
issued approximately $28.7 million in Series B Notes
and had acquired 23 single-tenant retail properties in 13 states
for an aggregate acquisition cost of approximately
$138.0 million. As of March 31, 2005, CCSN II had
sold ten properties, of which seven were sold as part of Cole
Capital Partners tenant-in-common program and three were
sold to Cole REIT I.
In addition to the partnerships described above, as of
March 31, 2005, Cole Collateralized Senior Notes III,
LLC (CCSN III), a subsidiary of Cole Capital Advisors, had
issued approximately $6.6 million in Series C Notes
and had not acquired any properties.
In addition, as of March 31, 2005, Cole REIT I, had raised
approximately $46.1 million, and had acquired 13
single-tenant retail properties in ten states for an aggregate
acquisition cost of approximately $79.8 million.
In addition, the Cole Exchange Entities, offer properties to
Code Section 1031 exchange investors in the form of the
sale of tenant-in-common ownership interests in such properties.
As of March 31, 2005, aggregate ownership interests of
$39.8 million had been sold in 16 private offerings of
properties located in 12 states. In addition, as of
March 31, 2005, three other Tenant-in-Common Programs were
ongoing with an aggregate offering amount of approximately
$17.4 million for which no amounts had been raised as of
such date. See the Prior Performance Tables attached to this
memorandum as Appendix A for additional information
regarding the foregoing programs.
The following table shows a breakdown of the aggregate amount of
the acquisition and development costs of the properties
purchased by the prior real estate programs of our affiliates as
of March 31, 2005:
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Type of Property |
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New | |
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Used | |
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Construction | |
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| |
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| |
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| |
Retail
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1.0 |
% |
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99.0 |
% |
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Office buildings
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100 |
% |
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Land
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100 |
% |
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Data Center
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100 |
% |
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These programs have sold 49 of the total of 118 properties, or
41.5% of such properties. The original purchase price of the
properties that were sold was $166.4 million, and the
aggregate sales price of such properties was
$213.3 million. See Tables III, IV and V of the Prior
Performance Tables for more detailed information as to the
operating results of such programs whose offerings closed in the
last five years, results of such programs that have completed
their operations over the last five years and the sales or other
disposals of properties with investment objectives similar to
ours over the last three years.
An entity affiliated with the officers of Cole Partnerships,
Inc. has raised $5 million in a debt offering for general
corporate purposes, including investments in joint ventures with
affiliates, which has been repaid.
The prior programs sponsored by our affiliates have occasionally
been adversely affected by the cyclical nature of the real
estate market. They have experienced, and may in the future
experience, decreases in net income when economic conditions
decline. For example, one of these programs, Cole Santa Fe
Investors, LP owns an approximately 262,000 square foot
shopping center property. One of the tenants of the property,
which leases approximately 50,000 square feet (approximately 19%
of the leasable space), has filed for bankruptcy and
discontinued making rent payments. Distributions to investors in
that program have been suspended indefinitely beginning with the
quarter ended December 31, 2003. In addition, Cole
Southwest Opportunity Fund, LP completed development of a
Phoenix, Arizona facility in August 2001 through a joint venture
and was unable to lease the facility as a result of the severe
downturn in the telecommunications industry. On April 6,
2005, the Phoenix facility was sold for $16.3 million.
Vacant land parcels in Las Vegas, Nevada, formerly owned by a
wholly owned subsidiary of Cole Southwest Opportunity Fund, LP
were previously sold. As a result of these sale transactions,
the sponsor estimates that investors will receive approximately
81% of their original investment upon liquidation of the limited
partnership. A continued vacancy in the property owned by Santa
Fe Investors, LP could adversely affect the ultimate performance
of this prior program. See Prior Performance
Tables Table III.
89
FEDERAL INCOME TAX CONSIDERATIONS
General
The following is a summary of material federal income tax
considerations associated with an investment in shares of our
common stock. This summary does not address all possible tax
considerations that may be material to an investor and does not
constitute tax advice. Moreover, this summary does not deal with
all tax aspects that might be relevant to you, as a prospective
stockholder, in light of your personal circumstances, nor does
it deal with particular types of stockholders that are subject
to special treatment under the Internal Revenue Code, such as
insurance companies, tax-exempt organizations or financial
institutions or broker-dealers.
The Internal Revenue Code provisions governing the federal
income tax treatment of REITs are highly technical and complex,
and this summary is qualified in its entirety by the express
language of applicable Internal Revenue Code provisions,
treasury regulations promulgated thereunder (Treasury
Regulations) and administrative and judicial interpretations
thereof.
We urge you, as a prospective investor, to consult your own tax
advisor regarding the specific tax consequences to you of a
purchase of shares, ownership and sale of the shares and of our
election to be taxed as a REIT. These consequences include the
federal, state, local, foreign and other tax consequences of
such purchase, ownership, sale and election.
Opinion of Counsel
Morris, Manning & Martin, LLP has acted as our counsel,
has reviewed this summary and is of the opinion that it fairly
summarizes the federal income tax considerations addressed that
are material to our stockholders. It is also the opinion of our
counsel that we will qualify to be taxed as a REIT under the
Internal Revenue Code for our taxable year ended
December 31, 2005, provided that we have operated and will
continue to operate in accordance with various assumptions and
the factual representations we made to counsel concerning our
business, properties and operations. We must emphasize that all
opinions issued by Morris, Manning & Martin, LLP are
based on various assumptions and are conditioned upon the
assumptions and representations we made concerning certain
factual matters related to our business and properties.
Moreover, our qualification for taxation as a REIT depends on
our ability to meet the various qualification tests imposed
under the Internal Revenue Code discussed below, the results of
which will not be reviewed by Morris, Manning & Martin,
LLP. Accordingly, we cannot assure you that the actual results
of our operations for any one taxable year will satisfy these
requirements. See Risk Factors Federal Income
Tax Risks. The statements made in this section of the
prospectus and in the opinion of Morris, Manning &
Martin, LLP are based upon existing law and Treasury
Regulations, as currently applicable, currently published
administrative positions of the Internal Revenue Service and
judicial decisions, all of which are subject to change, either
prospectively or retroactively. We cannot assure you that any
changes will not modify the conclusions expressed in
counsels opinion. Moreover, an opinion of counsel is not
binding on the Internal Revenue Service, and we cannot assure
you that the Internal Revenue Service will not successfully
challenge our status as a REIT.
Taxation of the Company
We plan to make an election to be taxed as a REIT under
Sections 856 through 860 of the Internal Revenue Code,
effective for our taxable year ending December 31, 2005. We
believe that, commencing with such taxable year, we will be
organized and will operate in such a manner as to qualify for
taxation as a REIT under the Internal Revenue Code. We intend to
continue to operate in such a manner, but no assurance can be
given that we will operate in a manner so as to qualify or
remain qualified as a REIT. Pursuant to our charter, our board
of directors has the authority to make any tax elections on our
behalf that, in their sole judgment, are in our best interest.
This authority includes the ability to elect not to qualify as a
REIT for federal income tax purposes or, after qualifying as a
REIT to revoke or otherwise terminate our status as a REIT. Our
board of directors has the authority under our charter to make
these
90
elections without the necessity of obtaining the approval of our
stockholders. In addition, our board of directors has the
authority to waive any restrictions and limitations contained in
our charter that are intended to preserve our status as a REIT
during any period in which our board of directors has determined
not to pursue or preserve our status as a REIT.
Although we currently intend to operate so as to be taxed as a
REIT, changes in the law could affect that decision. For
example, in 2003, Congress passed major federal tax legislation
that illustrates the changes in tax law that could affect that
decision. One of the changes reduced the tax rate on recipients
of distributions paid by corporations to individuals to a
maximum of 15.0%. REIT distributions generally do not qualify
for this reduced rate. The tax changes did not, however, reduce
the corporate tax rates. Therefore, the maximum corporate tax
rate of 35.0% has not been affected. Even with the reduction of
the rate of tax on distributions received by individuals, the
combined maximum corporate and individual federal income tax
rate is 44.75% and with the effect of state income taxes, the
combined tax rate can exceed 50.0%. If we qualify for taxation
as a REIT, we generally will not be subject to federal corporate
income taxes on that portion of our ordinary income or capital
gain that we distribute currently to our stockholders. Thus,
REIT status generally continues to result in substantially
reduced tax rates when compared to the taxation of corporations.
Although REITs continue to receive substantially better tax
treatment than entities taxed as corporations, it is possible
that future legislation would cause a REIT to be a less
advantageous tax status for companies that invest in real
estate, and it could become more advantageous for such companies
to elect to be taxed for federal income tax purposes as a
corporation. As a result, our charter provides our board of
directors with the ability, under certain circumstances, to
elect not to qualify us as a REIT or, after we have qualified as
a REIT, to revoke or otherwise terminate our REIT election and
cause us to be taxed as a corporation, without the vote of our
stockholders. Our board of directors has fiduciary duties to us
and to all investors and could only cause such changes in our
tax treatment if it determines in good faith that such changes
are in the best interest of our stockholders.
If we qualify for taxation as a REIT, we generally will not be
subject to federal corporate income taxes on that portion of our
ordinary income or capital gain that we distribute currently to
our stockholders, because the REIT provisions of the Internal
Revenue Code generally allow a REIT to deduct distributions paid
to its stockholders. This substantially eliminates the federal
double taxation on earnings (taxation at both the
corporate level and stockholder level) that usually results from
an investment in a corporation.
Even if we qualify for taxation as a REIT, however, we will be
subject to federal income taxation as follows:
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we will be taxed at regular corporate rates on our undistributed
REIT taxable income, including undistributed net capital gains; |
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under some circumstances, we will be subject to alternative
minimum tax; |
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if we have net income from the sale or other disposition of
foreclosure property that is held primarily for sale
to customers in the ordinary course of business or other
non-qualifying income from foreclosure property, we will be
subject to tax at the highest corporate rate on that income; |
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if we have net income from prohibited transactions (which are,
in general, sales or other dispositions of property other than
foreclosure property held primarily for sale to customers in the
ordinary course of business), our income will be subject to a
100.0% tax; |
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if we fail to satisfy either of the 75.0% or 95.0% gross income
tests (discussed below) but have nonetheless maintained our
qualification as a REIT because applicable conditions have been
met, we will be subject to a 100.0% tax on an amount equal to
the greater of the amount by which we fail the 75.0% or 95.0%
test multiplied by a fraction calculated to reflect our
profitability; |
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if we fail to distribute during each year at least the sum of
(i) 85.0% of our REIT ordinary income for the year,
(ii) 95.0% of our REIT capital gain net income for such
year and (iii) any |
91
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undistributed taxable income from prior periods, we will be
subject to a 4.0% excise tax on the excess of the required
distribution over the amounts actually distributed; and |
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if we acquire any asset from a C corporation (i.e., a
corporation generally subject to corporate-level tax) in a
carryover-basis transaction and we subsequently recognize gain
on the disposition of the asset during the ten-year period
beginning on the date on which we acquired the asset, then a
portion of the gains may be subject to tax at the highest
regular corporate rate, pursuant to guidelines issued by the
Internal Revenue Service. |
Requirements for Qualification as a REIT
In order for us to qualify, and continue to qualify, as a REIT,
we must meet, and we must continue to meet, the requirements
discussed below relating to our organization, sources of income,
nature of assets, distributions of income to our stockholders
and recordkeeping.
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Organizational Requirements |
In order to qualify for taxation as a REIT under the Internal
Revenue Code, we must:
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be a domestic corporation; |
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elect to be taxed as a REIT and satisfy relevant filing and
other administrative requirements; |
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be managed by one or more trustees or directors; |
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have transferable shares; |
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not be a financial institution or an insurance company; |
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use a calendar year for federal income tax purposes; |
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have at least 100 stockholders for at least 335 days of
each taxable year of twelve months; and |
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not be closely held. |
As a Maryland corporation, we satisfy the first requirement, and
we intend to file an election to be taxed as a REIT with the
Internal Revenue Service. In addition, we are managed by a board
of directors, we have transferable shares and we do not intend
to operate as a financial institution or insurance company. We
utilize the calendar year for federal income tax purposes. We
would be treated as closely held only if five or fewer
individuals or certain tax-exempt entities own, directly or
indirectly, more than 50.0% (by value) of our shares at any time
during the last half of our taxable year. For purposes of the
closely held test, the Internal Revenue Code generally permits a
look-through for pension funds and certain other tax-exempt
entities to the beneficiaries of the entity to determine if the
REIT is closely held. We do not currently meet the requirement
of having more than 100 stockholders, and we are closely held.
However, these requirements do not apply until after the first
taxable year for which an election is made to be taxed as a
REIT. We anticipate issuing sufficient shares with sufficient
diversity of ownership pursuant to this offering to allow us to
satisfy these requirements after our 2004 taxable year. In
addition, our charter provides for restrictions regarding
transfer of shares that are intended to assist us in continuing
to satisfy these share ownership requirements. Such transfer
restrictions are described in Description of
Shares Restrictions on Ownership and Transfer.
These provisions permit us to refuse to recognize certain
transfers of shares that would tend to violate these REIT
provisions. We can offer no assurance that our refusal to
recognize a transfer will be effective. However, based on the
foregoing, we should currently satisfy the organizational
requirements, including the share ownership requirements,
required for qualifying as a REIT under the Internal Revenue
Code. Notwithstanding compliance with the share ownership
requirements outlined above, tax-exempt stockholders may be
required to treat all or a portion of their distributions from
us as unrelated business taxable income (UBTI) if tax-exempt
stockholders, in the aggregate, exceed certain ownership
thresholds set forth in the Internal Revenue Code. See
Treatment of Tax-Exempt Stockholders
below.
92
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Ownership of Interests in Partnerships and Qualified REIT
Subsidiaries |
In the case of a REIT that is a partner in a partnership,
Treasury Regulations provide that the REIT is deemed to own its
proportionate share, based on its interest in partnership
capital, of the assets of the partnership and is deemed to have
earned its allocable share of partnership income. Also, if a
REIT owns a qualified REIT subsidiary, which is defined as a
corporation wholly owned by a REIT that does not elect to be
taxed as a taxable REIT subsidiary under the Internal Revenue
Code, the REIT will be deemed to own all of the
subsidiarys assets and liabilities and it will be deemed
to be entitled to treat the income of that subsidiary as its
own. In addition, the character of the assets and gross income
of the partnership or qualified REIT subsidiary shall retain the
same character in the hands of the REIT for purposes of
satisfying the gross income tests and asset tests set forth in
the Internal Revenue Code.
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Operational Requirements Gross Income
Tests |
To maintain our qualification as a REIT, we must, on an annual
basis, satisfy the following gross income requirements:
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At least 75.0% of our gross income, excluding gross income from
prohibited transactions, for each taxable year must be derived
directly or indirectly from investments relating to real
property or mortgages on real property. Gross income includes
rents from real property and, in some circumstances,
interest, but excludes gross income from dispositions of
property held primarily for sale to customers in the ordinary
course of a trade or business. Such dispositions are referred to
as prohibited transactions. This is known as the
75.0% Income Test. |
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At least 95.0% of our gross income, excluding gross income from
prohibited transactions, for each taxable year must be derived
from the real property investments described above and from
distributions, interest and gains from the sale or disposition
of stock or securities or from any combination of the foregoing.
This is known as the 95.0% Income Test. |
The rents we receive, or that we are deemed to receive, qualify
as rents from real property for purposes of
satisfying the gross income requirements for a REIT only if the
following conditions are met:
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the amount of rent received from a tenant generally must not be
based in whole or in part on the income or profits of any
person; however, an amount received or accrued generally will
not be excluded from the term rents from real
property solely by reason of being based on a fixed
percentage or percentages of gross receipts or sales; |
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rents received from a tenant will not qualify as rents
from real property if an owner of 10.0% or more of the
REIT directly or constructively owns 10.0% or more of the tenant
or a subtenant of the tenant (in which case only rent
attributable to the subtenant is disqualified); |
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if rent attributable to personal property leased in connection
with a lease of real property is greater than 15.0% of the total
rent received under the lease, then the portion of rent
attributable to the personal property will not qualify as
rents from real property; and |
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the REIT must not operate or manage the property or furnish or
render services to tenants, other than through an
independent contractor who is adequately compensated
and from whom the REIT does not derive any income. However, a
REIT may provide services with respect to its properties, and
the income derived therefrom will qualify as rents from
real property, if the services are usually or
customarily rendered in connection with the rental of
space only and are not otherwise considered rendered to
the occupant. Even if the services with respect to a
property are impermissible tenant services, the income derived
therefrom will qualify as rents from real property
if such income does not exceed 1.0% of all amounts received or
accrued with respect to that property. |
We will be paid interest on the mortgage loans that we make or
acquire. All interest qualifies under the 95.0% gross income
test. If a mortgage loan is secured exclusively by real
property, all of such interest will also qualify for the 75.0%
income test. If both real property and other property secure the
mortgage
93
loan, all of the interest on such mortgage loan will also
qualify for the 75.0% gross income test if the amount of the
loan did not exceed the fair market value of the real property
at the time of the loan commitment.
If we acquire ownership of property by reason of the default of
a borrower on a loan or possession of property by reason of a
tenant default, if the property qualifies and we elect to treat
it as foreclosure property, the income from the property will
qualify under the 75.0% Income Test and the 95.0% Income Test
notwithstanding its failure to satisfy these requirements for
three years, or if extended for good cause, up to a total of six
years. In that event, we must satisfy a number of complex rules,
one of which is a requirement that we operate the property
through an independent contractor. We will be subject to tax on
that portion of our net income from foreclosure property that
does not otherwise qualify under the 75.0% Income Test.
Prior to the making of investments in properties, we may satisfy
the 75.0% Income Test and the 95.0% Income Test by investing in
liquid assets such as government securities or certificates of
deposit, but earnings from those types of assets are qualifying
income under the 75.0% Income Test only for one year from the
receipt of proceeds. Accordingly, to the extent that offering
proceeds have not been invested in properties prior to the
expiration of this one-year period, in order to satisfy the
75.0% Income Test, we may invest the offering proceeds in less
liquid investments such as mortgage-backed securities, maturing
mortgage loans purchased from mortgage lenders or shares in
other REITs. We expect to receive proceeds from the offering in
a series of closings and to trace those proceeds for purposes of
determining the one-year period for new capital
investments. No rulings or regulations have been issued
under the provisions of the Internal Revenue Code governing
new capital investments, however, so there can be no
assurance that the Internal Revenue Service will agree with this
method of calculation.
Except for amounts received with respect to certain investments
of cash reserves, we anticipate that substantially all of our
gross income will be derived from sources that will allow us to
satisfy the income tests described above. We can give no
assurance in this regard, however. Notwithstanding our failure
to satisfy one or both of the 75.0% Income and the 95.0% Income
Tests for any taxable year, we may still qualify as a REIT for
that year if we are eligible for relief under specific
provisions of the Internal Revenue Code. These relief provisions
generally will be available if:
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our failure to meet these tests was due to reasonable cause and
not due to willful neglect; |
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we attach a schedule of our income sources to our federal income
tax return; and |
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any incorrect information on the schedule is not due to fraud
with intent to evade tax. |
It is not possible, however, to state whether, in all
circumstances, we would be entitled to the benefit of these
relief provisions. For example, if we fail to satisfy the gross
income tests because nonqualifying income that we intentionally
earn exceeds the limits on this income, the Internal Revenue
Service could conclude that our failure to satisfy the tests was
not due to reasonable cause. As discussed above in
Taxation of the Company, even if these
relief provisions apply, a tax would be imposed with respect to
the excess net income.
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Operational Requirements Asset Tests |
At the close of each quarter of our taxable year, we also must
satisfy the following three tests relating to the nature and
diversification of our assets:
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First, at least 75.0% of the value of our total assets must be
represented by real estate assets, cash, cash items and
government securities. The term real estate assets
includes real property, mortgages on real property, shares in
other qualified REITs and a proportionate share of any real
estate assets owned by a partnership in which we are a partner
or of any qualified REIT subsidiary of ours. |
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Second, no more than 25.0% of our total assets may be
represented by securities other than those in the 75.0% asset
class. |
94
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Third, of the investments included in the 25.0% asset class, the
value of any one issuers securities that we own may not
exceed 5.0% of the value of our total assets. Additionally, we
may not own more than 10.0% of any one issuers outstanding
voting securities. |
The 5.0% test must generally be met for any quarter in which we
acquire securities. Further, if we meet the asset tests at the
close of any quarter, we will not lose our REIT status for a
failure to satisfy the asset tests at the end of a later quarter
if such failure occurs solely because of changes in asset
values. If our failure to satisfy the asset tests results from
an acquisition of securities or other property during a quarter,
we can cure the failure by disposing of a sufficient amount of
nonqualifying assets within 30 days after the close of that
quarter. We maintain, and will continue to maintain, adequate
records of the value of our assets to ensure compliance with the
asset tests and will take other action within 30 days after
the close of any quarter as may be required to cure any
noncompliance.
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Operational Requirements Annual Distribution
Requirement |
In order to be taxed as a REIT, we are required to make
distributions, other than capital gain distributions, to our
stockholders each year in the amount of at least 90.0% of our
REIT taxable income, which is computed without regard to the
distributions paid deduction and our capital gain and subject to
certain other potential adjustments.
While we must generally make distributions in the taxable year
to which they relate, we may also pay distributions in the
following taxable year if (1) they are declared before we
timely file our federal income tax return for the taxable year
in question, and if (2) they are made on or before the
first regular distribution payment date after the declaration.
Even if we satisfy the foregoing distribution requirement and,
accordingly, continue to qualify as a REIT for tax purposes, we
will still be subject to tax on the excess of our net capital
gain and our REIT taxable income, as adjusted, over the amount
of distributions made to stockholders.
In addition, if we fail to distribute during each calendar year
at least the sum of:
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85.0% of our ordinary income for that year; |
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95.0% of our capital gain net income other than the capital gain
net income that we elect to retain and pay tax on for that
year; and |
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any undistributed taxable income from prior periods, |
we will be subject to a 4.0% excise tax on the excess of the
amount of such required distributions over amounts actually
distributed during such year.
We intend to make timely distributions sufficient to satisfy
this requirement; however, it is possible that we may experience
timing differences between (1) the actual receipt of income
and payment of deductible expenses, and (2) the inclusion
of that income. It is also possible that we may be allocated a
share of net capital gain attributable to the sale of
depreciated property that exceeds our allocable share of cash
attributable to that sale.
In such circumstances, we may have less cash than is necessary
to meet our annual distribution requirement or to avoid income
or excise taxation on certain undistributed income. We may find
it necessary in such circumstances to arrange for financing or
raise funds through the issuance of additional shares in order
to meet our distribution requirements, or we may pay taxable
stock distributions to meet the distribution requirement.
If we fail to satisfy the distribution requirement for any
taxable year by reason of a later adjustment to our taxable
income made by the Internal Revenue Service, we may be able to
pay deficiency distributions in a later year and
include such distributions in our deductions for distributions
paid for the earlier year. In such event, we may be able to
avoid being taxed on amounts distributed as deficiency
distributions, but we would be required in such circumstances to
pay interest to the Internal Revenue Service based upon the
amount of any deduction taken for deficiency distributions for
the earlier year.
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As noted above, we may also elect to retain, rather than
distribute, our net long-term capital gains. The effect of such
an election would be as follows:
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we would be required to pay the tax on these gains; |
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our stockholders, while required to include their proportionate
share of the undistributed long-term capital gains in income,
would receive a credit or refund for their share of the tax paid
by us; and |
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the basis of a stockholders shares would be increased by
the difference between the designated amount included in the
stockholders long-term capital gains and the tax deemed
paid with respect to such shares. |
In computing our REIT taxable income, we will use the accrual
method of accounting and depreciate depreciable property under
the alternative depreciation system. We are required to file an
annual federal income tax return, which, like other corporate
returns, is subject to examination by the Internal Revenue
Service. Because the tax law requires us to make many judgments
regarding the proper treatment of a transaction or an item of
income or deduction, it is possible that the Internal Revenue
Service will challenge positions we take in computing our REIT
taxable income and our distributions. Issues could arise, for
example, with respect to the allocation of the purchase price of
properties between depreciable or amortizable assets and
non-depreciable or non-amortizable assets such as land and the
current deductibility of fees paid to Cole Advisors or its
affiliates. Were the Internal Revenue Service successfully to
challenge our characterization of a transaction or determination
of our REIT taxable income, we could be found to have failed to
satisfy a requirement for qualification as a REIT. If, as a
result of a challenge, we are determined to have failed to
satisfy the distribution requirements for a taxable year, we
would be disqualified as a REIT unless we were permitted to pay
a deficiency distribution to our stockholders and pay interest
thereon to the Internal Revenue Service, as provided by the
Internal Revenue Code. A deficiency distribution cannot be used
to satisfy the distribution requirement, however, if the failure
to meet the requirement is not due to a later adjustment to our
income by the Internal Revenue Service.
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Operational Requirements Recordkeeping |
In order to continue to qualify as a REIT, we must maintain
records as specified in applicable Treasury Regulations.
Further, we must request, on an annual basis, information
designed to disclose the ownership of our outstanding shares. We
intend to comply with such requirements.
Failure to Qualify as a REIT
If we fail to qualify as a REIT for any reason in a taxable year
and applicable relief provisions do not apply, we will be
subject to tax, including any applicable alternative minimum
tax, on our taxable income at regular corporate rates. We will
not be able to deduct distributions paid to our stockholders in
any year in which we fail to qualify as a REIT. We also will be
disqualified for the four taxable years following the year
during which qualification was lost unless we are entitled to
relief under specific statutory provisions. See Risk
Factors Federal Income Tax Risks.
Sale-Leaseback Transactions
Some of our investments may be in the form of sale-leaseback
transactions. In most instances, depending on the economic terms
of the transaction, we will be treated for federal income tax
purposes as either the owner of the property or the holder of a
debt secured by the property. We do not expect to request an
opinion of counsel concerning the status of any leases of
properties as true leases for federal income tax purposes.
The Internal Revenue Service may take the position that a
specific sale-leaseback transaction that we treat as a true
lease is not a true lease for federal income tax purposes but
is, instead, a financing arrangement or loan. We may also
structure some sale-leaseback transactions as loans. In this
event, for purposes of the asset tests and the 75.0% Income
Test, each such loan likely would be viewed as secured by real
property to the extent of the fair market value of the
underlying property. We expect that, for this
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purpose, the fair market value of the underlying property would
be determined without taking into account our lease. If a
sale-leaseback transaction were so recharacterized, we might
fail to satisfy the asset tests or the income tests and,
consequently, lose our REIT status effective with the year of
recharacterization. Alternatively, the amount of our REIT
taxable income could be recalculated, which might also cause us
to fail to meet the distribution requirement for a taxable year.
Taxation of U.S. Stockholders
In this section, the phrase U.S. stockholder
means a holder of shares that for federal income tax purposes:
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is a citizen or resident of the United States; |
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is a corporation, partnership or other entity created or
organized in or under the laws of the United States or of any
political subdivision thereof; |
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is an estate or trust, the income of which is subject to
U.S. federal income taxation regardless of its
source; or |
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a trust, if a U.S. court is able to exercise primary
supervision over the administration of the trust and one or more
U.S. persons have the authority to control all substantial
decisions of the trust. |
For any taxable year for which we qualify for taxation as a
REIT, amounts distributed to taxable U.S. stockholders will
be taxed as described below.
Distributions to U.S. stockholders, other than capital gain
distributions discussed below, will constitute distributions up
to the amount of our current or accumulated earnings and profits
and will be taxable to the stockholders as ordinary income.
Individuals receiving qualified dividends,
distributions from domestic and certain qualifying foreign
subchapter C corporations, may be entitled to the new lower
rates on distributions (at rates applicable to long-term capital
gains, currently at a maximum rate of 15%) provided certain
holding period requirements are met. However, individuals
receiving distributions from us, a REIT, will generally not be
eligible for the new lower rates on distributions except with
respect to the portion of any distribution which
(a) represents distributions being passed through to us
from a corporation in which we own shares (but only if such
distributions would be eligible for the new lower rates on
distributions if paid by the corporation to its individual
stockholders), (b) is equal to our REIT taxable income
(taking into account the distributions paid deduction available
to us) less any taxes paid by us on these items during our
previous taxable year, or (c) are attributable to built-in
gains realized and recognized by us from disposition of
properties acquired by us in non-recognition transaction, less
any taxes paid by us on these items during our previous taxable
year. These distributions are not eligible for the distributions
received deduction generally available to corporations. To the
extent that we make a distribution in excess of our current or
accumulated earnings and profits, the distribution will be
treated first as a tax-free return of capital, reducing the tax
basis in each U.S. stockholders shares, and the
amount of each distribution in excess of a
U.S. stockholders tax basis in its shares will be
taxable as gain realized from the sale of its shares.
Distributions that we declare in October, November or December
of any year payable to a stockholder of record on a specified
date in any of these months will be treated as both paid by us
and received by the stockholder on December 31 of the year,
provided that we actually pay the distribution during January of
the following calendar year. U.S. stockholders may not
include any of our losses on their own federal income tax
returns.
We will be treated as having sufficient earnings and profits to
treat as a distribution any distribution by us up to the amount
required to be distributed in order to avoid imposition of the
4.0% excise tax discussed above. Moreover, any deficiency
dividend will be treated as an ordinary or capital gain
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distribution, as the case may be, regardless of our earnings and
profits. As a result, stockholders may be required to treat as
taxable some distributions that would otherwise result in a
tax-free return of capital.
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Capital Gain Distributions |
Distributions to U.S. stockholders that we properly
designate as capital gain distributions will be treated as
long-term capital gains, to the extent they do not exceed our
actual net capital gain, for the taxable year without regard to
the period for which the U.S. stockholder has held his or
her shares.
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Passive Activity Loss and Investment Interest
Limitations |
Our distributions and any gain you realize from a disposition of
shares will not be treated as passive activity income, and
stockholders may not be able to utilize any of their
passive losses to offset this income on their
personal tax returns. Our distributions (to the extent they do
not constitute a return of capital) will generally be treated as
investment income for purposes of the limitations on the
deduction of investment interest. Net capital gain from a
disposition of shares and capital gain distributions generally
will be included in investment income for purposes of the
investment interest deduction limitations only if, and to the
extent, you so elect, in which case any such capital gains will
be taxed as ordinary income.
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Certain Dispositions of the Shares |
In general, any gain or loss realized upon a taxable disposition
of shares by a U.S. stockholder who is not a dealer in
securities, including any disposition pursuant to our proposed
share redemption program, will be treated as long-term capital
gain or loss if the shares have been held for more than twelve
months and as short-term capital gain or loss if the shares have
been held for twelve months or less. If, however, a
U.S. stockholder has received any capital gains
distributions with respect to his shares, any loss realized upon
a taxable disposition of shares held for six months or less, to
the extent of the capital gains distributions received with
respect to his shares, will be treated as long-term capital
loss. Also, the Internal Revenue Service is authorized to issue
Treasury Regulations that would subject a portion of the capital
gain a U.S. stockholder recognizes from selling his shares
or from a capital gain distribution to a tax at a 25.0% rate, to
the extent the capital gain is attributable to depreciation
previously deducted.
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Information Reporting Requirements and Backup Withholding
for U.S. Stockholders |
Under some circumstances, U.S. stockholders may be subject
to backup withholding at a rate of 30.0% on payments made with
respect to, or cash proceeds of a sale or exchange of, our
shares. Backup withholding will apply only if the stockholder:
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fails to furnish his or her taxpayer identification number,
which, for an individual, would be his or her Social Security
Number; |
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furnishes an incorrect tax identification number; |
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is notified by the Internal Revenue Service that he or she has
failed properly to report payments of interest and distributions
or is otherwise subject to backup withholding; or |
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under some circumstances, fails to certify, under penalties of
perjury, that he or she has furnished a correct tax
identification number and that (a) he or she has not been
notified by the Internal Revenue Service that he or she is
subject to backup withholding for failure to report interest and
distribution payments or (b) he or she has been notified by
the Internal Revenue Service that he or she is no longer subject
to backup withholding. |
Backup withholding will not apply with respect to payments made
to some stockholders, such as corporations and tax-exempt
organizations. Backup withholding is not an additional tax.
Rather, the amount of any backup withholding with respect to a
payment to a U.S. stockholder will be allowed as a credit
against the U.S. stockholders U.S. federal
income tax liability and may entitle the U.S. stockholder
to a refund, provided that the required information is furnished
to the Internal Revenue Service.
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U.S. stockholders should consult their own tax advisors
regarding their qualifications for exemption from backup
withholding and the procedure for obtaining an exemption.
Treatment of Tax-Exempt Stockholders
Tax-exempt entities such as employee pension benefit trusts,
individual retirement accounts and charitable remainder trusts
generally are exempt from federal income taxation. Such entities
are subject to taxation, however, on any UBTI, as defined in the
Internal Revenue Code. Our payment of distributions to a
tax-exempt employee pension benefit trust or other domestic
tax-exempt stockholder generally will not constitute UBTI to
such stockholder unless such stockholder has borrowed to acquire
or carry its shares.
In the event that we were deemed to be predominately
held by qualified employee pension benefit trusts that
each hold more than 10.0% (in value) of our shares, such trusts
would be required to treat a certain percentage of the
distributions paid to them as UBTI. We would be deemed to be
predominately held by such trusts if either
(i) one employee pension benefit trust owns more than 25.0%
in value of our shares, or (ii) any group of such trusts,
each owning more than 10.0% in value of our shares, holds in the
aggregate more than 50.0% in value of our shares. If either of
these ownership thresholds were ever exceeded, any qualified
employee pension benefit trust holding more than 10.0% in value
of our shares would be subject to tax on that portion of our
distributions made to it which is equal to the percentage of our
income that would be UBTI if we were a qualified trust, rather
than a REIT. We will attempt to monitor the concentration of
ownership of employee pension benefit trusts in our shares, and
we do not expect our shares to be deemed to be
predominately held by qualified employee pension
benefit trusts, as defined in the Internal Revenue Code, to the
extent required to trigger the treatment of our income as to
such trusts.
For social clubs, voluntary employee benefit associations,
supplemental unemployment benefit trusts and qualified group
legal services plans exempt from federal income taxation under
Sections 501(c)(7), (c)(9), (c)(17) and (c)(20) of the
Internal Revenue Code, respectively, income from an investment
in our shares will constitute UBTI unless the stockholder in
question is able to deduct amounts set aside or
placed in reserve for certain purposes so as to offset the UBTI
generated. Any such organization that is a prospective
stockholder should consult its own tax advisor concerning these
set aside and reserve requirements.
Special Tax Considerations for Non-U.S. Stockholders
The rules governing U.S. income taxation of non-resident
alien individuals, foreign corporations, foreign partnerships
and foreign trusts and estates (non-U.S. stockholders) are
complex. The following discussion is intended only as a summary
of these rules. Non-U.S. stockholders should consult with
their own tax advisors to determine the impact of federal, state
and local income tax laws on an investment in our shares,
including any reporting requirements.
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Income Effectively Connected with a U.S. Trade or
Business |
In general, non-U.S. stockholders will be subject to
regular U.S. federal income taxation with respect to their
investment in our shares if the income derived therefrom is
effectively connected with the
non-U.S. stockholders conduct of a trade or business
in the United States. A corporate non-U.S. stockholder that
receives income that is (or is treated as) effectively connected
with a U.S. trade or business also may be subject to a
branch profits tax under Section 884 of the Internal
Revenue Code, which is payable in addition to the regular
U.S. federal corporate income tax.
The following discussion will apply to
non-U.S. stockholders whose income derived from ownership
of our shares is deemed to be not effectively
connected with a U.S. trade or business.
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Distributions Not Attributable to Gain from the Sale or
Exchange of a United States Real Property Interest |
A distribution to a non-U.S. stockholder that is not
attributable to gain realized by us from the sale or exchange of
a United States real property interest within the
meaning of the Foreign Investment in Real Property Tax Act of
1980, as amended (FIRPTA), and that we do not designate as a
capital gain distribution will be treated as an ordinary income
distribution to the extent that it is made out of current or
accumulated earnings and profits. Generally, any ordinary income
distribution will be subject to a U.S. federal income tax
equal to 30.0% of the gross amount of the distribution unless
this tax is reduced by the provisions of an applicable tax
treaty. Any such distribution in excess of our earnings and
profits will be treated first as a return of capital that will
reduce each non-U.S. stockholders basis in its shares
(but not below zero) and then as gain from the disposition of
those shares, the tax treatment of which is described under the
rules discussed below with respect to dispositions of shares.
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Distributions Attributable to Gain from the Sale or
Exchange of a United States Real Property Interest |
Distributions to a non-U.S. stockholder that are
attributable to gain from the sale or exchange of a United
States real property interest will be taxed to a
non-U.S. stockholder under Internal Revenue Code provisions
enacted by FIRPTA. Under FIRPTA, such distributions are taxed to
a non-U.S. stockholder as if the distributions were gains
effectively connected with a U.S. trade or
business. Accordingly, a non-U.S. stockholder will be taxed
at the normal capital gain rates applicable to a
U.S. stockholder (subject to any applicable alternative
minimum tax and a special alternative minimum tax in the case of
non-resident alien individuals). Distributions subject to FIRPTA
also may be subject to a 30.0% branch profits tax when made to a
corporate non-U.S. stockholder that is not entitled to a
treaty exemption.
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Withholding Obligations With Respect to Distributions to
Non-U.S. Stockholders |
Although tax treaties may reduce our withholding obligations,
based on current law, we will generally be required to withhold
from distributions to non-U.S. stockholders, and remit to
the Internal Revenue Service:
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35.0% of designated capital gain distributions or, if greater,
35.0% of the amount of any distributions that could be
designated as capital gain distributions; and |
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30.0% of ordinary income distributions (i.e.,
distributions paid out of our earnings and profits). |
In addition, if we designate prior distributions as capital gain
distributions, subsequent distributions, up to the amount of the
prior distributions, will be treated as capital gain
distributions for purposes of withholding. A distribution in
excess of our earnings and profits will be subject to 30.0%
withholding if at the time of the distribution it cannot be
determined whether the distribution will be in an amount in
excess of our current or accumulated earnings and profits. If
the amount of tax we withhold with respect to a distribution to
a non-U.S. stockholder exceeds the stockholders
U.S. tax liability with respect to that distribution, the
non-U.S. stockholder may file a claim with the Internal
Revenue Service for a refund of the excess.
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Sale of Our Shares by a Non-U.S. Stockholder |
A sale of our shares by a non-U.S. stockholder will
generally not be subject to U.S. federal income taxation
unless our shares constitute a United States real property
interest. Our shares will not constitute a United States real
property interest if we are a domestically controlled
REIT. A domestically controlled REIT is a REIT
that at all times during a specified testing period has less
than 50.0% in value of its shares held directly or indirectly by
non-U.S. stockholders. We currently anticipate that we will
be a domestically controlled REIT. Therefore, sales of our
shares should not be subject to taxation under FIRPTA. However,
we do expect to sell our shares to non-U.S. stockholders
and we cannot assure you that we will continue to be a
domestically controlled REIT. If we were not a domestically
controlled REIT, whether a non-U.S. stockholders sale
of our shares would be subject to tax under FIRPTA as a
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sale of a United States real property interest would depend on
whether our shares were regularly traded on an
established securities market and on the size of the selling
stockholders interest in us. Our shares currently are not
regularly traded on an established securities market.
If the gain on the sale of shares were subject to taxation under
FIRPTA, a non-U.S. stockholder would be subject to the same
treatment as a U.S. stockholder with respect to the gain,
subject to any applicable alternative minimum tax and a special
alternative minimum tax in the case of non-resident alien
individuals. In addition, distributions that are treated as gain
from the disposition of shares and are subject to tax under
FIRPTA also may be subject to a 30.0% branch profits tax when
made to a corporate non-U.S. stockholder that is not
entitled to a treaty exemption. Under FIRPTA, the purchaser of
our shares may be required to withhold 10.0% of the purchase
price and remit this amount to the Internal Revenue Service.
Even if not subject to FIRPTA, capital gains will be taxable to
a non-U.S. stockholder if the non-U.S. stockholder is
a non-resident alien individual who is present in the United
States for 183 days or more during the taxable year and
some other conditions apply, in which case the non-resident
alien individual will be subject to a 30.0% tax on his or her
U.S. source capital gains.
Recently promulgated Treasury Regulations may alter the
procedures for claiming the benefits of an income tax treaty.
Our non-U.S. stockholders should consult their tax advisors
concerning the effect, if any, of these Treasury Regulations on
an investment in our shares.
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Information Reporting Requirements and Backup Withholding
for Non-U.S. Stockholders |
Additional issues may arise for information reporting and backup
withholding for non-U.S. stockholders.
Non-U.S. stockholders should consult their tax advisors
with regard to U.S. information reporting and backup
withholding requirements under the Internal Revenue Code.
Statement of Stock Ownership
We are required to demand annual written statements from the
record holders of designated percentages of our shares
disclosing the actual owners of the shares. Any record
stockholder who, upon our request, does not provide us with
required information concerning actual ownership of the shares
is required to include specified information relating to his or
her shares in his or her federal income tax return. We also must
maintain, within the Internal Revenue District in which we are
required to file, our federal income tax return, permanent
records showing the information we have received about the
actual ownership of shares and a list of those persons failing
or refusing to comply with our demand.
State and Local Taxation
We and any operating subsidiaries that we may form may be
subject to state and local tax in states and localities in which
they or we do business or own property. The tax treatment of us,
Cole OP II, any operating subsidiaries we may form and the
holders of our shares in local jurisdictions may differ from the
federal income tax treatment described above.
Tax Aspects of Our Operating Partnership
The following discussion summarizes certain federal income tax
considerations applicable to our investment in Cole OP II,
our operating partnership. The discussion does not cover state
or local tax laws or any federal tax laws other than income tax
laws.
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Classification as a Partnership |
We will be entitled to include in our income a distributive
share of Cole OP IIs income and to deduct our
distributive share of Cole OP IIs losses only if Cole
OP II is classified for federal income tax purposes as a
partnership, rather than as an association taxable as a
corporation. Under applicable Treasury Regulations known as
Check-the-Box-Regulations, an unincorporated entity with at
least two members
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may elect to be classified either as an association taxable as a
corporation or as a partnership. If such an entity fails to make
an election, it generally will be treated as a partnership for
federal income tax purposes. Cole OP II intends to be
classified as a partnership for federal income tax purposes and
will not elect to be treated as an association taxable as a
corporation under the Check-the-Box-Regulations.
Even though Cole OP II will be treated as a partnership for
federal income tax purposes, it may be taxed as a corporation if
it is deemed to be a publicly traded partnership. A
publicly traded partnership is a partnership whose interests are
traded on an established securities market or are readily
tradable on a secondary market, or the substantial equivalent
thereof. However, even if the foregoing requirements are met, a
publicly traded partnership will not be treated as a corporation
for federal income tax purposes if at least 90.0% of such
partnerships gross income for a taxable year consists of
qualifying income under Section 7704(d) of the
Internal Revenue Code. Qualifying income generally includes any
income that is qualifying income for purposes of the 95.0%
Income Test applicable to REITs (90.0% Passive-Type Income
Exception). See Requirements for Qualification
as a REIT Operational Requirements Gross
Income Tests above.
Under applicable Treasury Regulations known as the PTP
Regulations, limited safe harbors from the definition of a
publicly traded partnership are provided. Pursuant to one of
those safe harbors (the Private Placement Exclusion), interests
in a partnership will not be treated as readily tradable on a
secondary market or the substantial equivalent thereof if
(i) all interests in the partnership were issued in a
transaction (or transactions) that was not required to be
registered under the Securities Act, and (ii) the
partnership does not have more than 100 partners at any time
during the partnerships taxable year. In determining the
number of partners in a partnership, a person owning an interest
in a flow-through entity, such as a partnership, grantor trust
or S corporation, that owns an interest in the partnership
is treated as a partner in such partnership only if
(a) substantially all of the value of the owners
interest in the flow-through is attributable to the flow-through
entitys interest, direct or indirect, in the partnership
and (b) a principal purpose of the use of the flow-through
entity is to permit the partnership to satisfy the 100 partner
limitation. Cole OP II qualifies for the Private Placement
Exclusion. Moreover, even if Cole OP II were considered a
publicly traded partnership under the PTP Regulations because it
is deemed to have more than 100 partners, we believe Cole
OP II should not be treated as a corporation because it is
eligible for the 90.0% Passive-Type Income Exception described
above.
We have not requested, and do not intend to request, a ruling
from the Internal Revenue Service that Cole OP II will be
classified as a partnership for federal income tax purposes.
Morris, Manning & Martin, LLP is of the opinion,
however, that based on certain factual assumptions and
representations, Cole OP II will be treated for federal
income tax purposes as a partnership and not as an association
taxable as a corporation, or as a publicly traded partnership.
Unlike a tax ruling, however, an opinion of counsel is not
binding upon the Internal Revenue Service, and we can offer no
assurance that the Internal Revenue Service will not challenge
the status of Cole OP II as a partnership for federal
income tax purposes. If such challenge were sustained by a
court, Cole OP II would be treated as a corporation for
federal income tax purposes, as described below. In addition,
the opinion of Morris, Manning & Martin, LLP is based
on existing law, which is to a great extent the result of
administrative and judicial interpretation. No assurance can be
given that administrative or judicial changes would not modify
the conclusions expressed in the opinion.
If for any reason Cole OP II were taxable as a corporation,
rather than a partnership, for federal income tax purposes, we
would not be able to qualify as a REIT. See
Requirements for Qualification as a
REIT Operational Requirements Gross
Income Tests and Operational
Requirements Asset Tests above. In addition,
any change in Cole OP IIs status for tax purposes
might be treated as a taxable event, in which case we might
incur a tax liability without any related cash distribution.
Further, items of income and deduction of Cole OP II would
not pass through to its partners, and its partners would be
treated as stockholders for tax purposes. Consequently, Cole
OP II would be required to pay income tax at corporate tax
rates on its net income, and distributions to its partners would
not be deductible in computing Cole OP IIs taxable
income.
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Income Taxation of the Operating Partnership and Its
Partners |
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Partners, Not a Partnership, Subject to Tax |
A partnership is not a taxable entity for federal income tax
purposes. As a partner in Cole OP II, we will be required
to take into account our allocable share of Cole
OP IIs income, gains, losses, deductions and credits
for any taxable year of Cole OP II ending within or with
our taxable year, without regard to whether we have received or
will receive any distribution from Cole OP II.
Although a partnership agreement generally determines the
allocation of income and losses among partners, such allocations
will be disregarded for tax purposes under Section 704(b)
of the Internal Revenue Code if they do not comply with the
provisions of Section 704(b) of the Internal Revenue Code
and the Treasury Regulations promulgated thereunder. If an
allocation is not recognized for federal income tax purposes,
the item subject to the allocation will be reallocated in
accordance with the partners interests in the partnership,
which will be determined by taking into account all of the facts
and circumstances relating to the economic arrangement of the
partners with respect to such item. Cole OP IIs
allocations of taxable income and loss are intended to comply
with the requirements of Section 704(b) of the Internal
Revenue Code and the Treasury Regulations promulgated thereunder.
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Tax Allocations With Respect to Contributed Properties |
Pursuant to Section 704(c) of the Internal Revenue Code,
income, gain, loss and deductions attributable to appreciated or
depreciated property that is contributed to a partnership in
exchange for an interest in the partnership must be allocated
for federal income tax purposes in a manner such that the
contributor is charged with, or benefits from, the unrealized
gain or unrealized loss associated with the property at the time
of the contribution. The amount of such unrealized gain or
unrealized loss is generally equal to the difference between the
fair market value of the contributed property at the time of
contribution and the adjusted tax basis of such property at the
time of contribution. Under applicable Treasury Regulations,
partnerships are required to use a reasonable method
for allocating items subject to Section 704(c) of the
Internal Revenue Code, and several reasonable allocation methods
are described therein.
Under the partnership agreement for Cole OP II,
depreciation or amortization deductions of Cole OP II
generally will be allocated among the partners in accordance
with their respective interests in Cole OP II, except to
the extent that Cole OP II is required under
Section 704(c) of the Internal Revenue Code to use a method
for allocating depreciation deductions attributable to its
properties that results in us receiving a disproportionately
large share of such deductions. We may possibly (1) be
allocated lower amounts of depreciation deductions for tax
purposes with respect to contributed properties than would be
allocated to us if each such property were to have a tax basis
equal to its fair market value at the time of contribution, and
(2) be allocated taxable gain in the event of a sale of
such contributed properties in excess of the economic profit
allocated to us as a result of such sale. These allocations may
cause us to recognize taxable income in excess of cash proceeds
received by us, which might adversely affect our ability to
comply with the REIT distribution requirements, although we do
not anticipate that this event will occur. The foregoing
principles also will affect the calculation of our earnings and
profits for purposes of determining which portion of our
distributions is taxable as a distribution. The allocations
described in this paragraph may result in a higher portion of
our distributions being taxed as a distribution if we acquire
properties in exchange for units of the Cole OP II than
would have occurred had we purchased such properties for cash.
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Basis in Operating Partnership Interest |
The adjusted tax basis of our partnership interest in Cole
OP II generally is equal to (1) the amount of cash and
the basis of any other property contributed to Cole OP II
by us, (2) increased by (a) our allocable share of
Cole OP IIs income and (b) our allocable share
of indebtedness of Cole OP II, and
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(3) reduced, but not below zero, by (a) our allocable
share of Cole OP IIs loss and (b) the amount of
cash distributed to us, including constructive cash
distributions resulting from a reduction in our share of
indebtedness of Cole OP II.
If the allocation of our distributive share of Cole
OP IIs loss would reduce the adjusted tax basis of
our partnership interest in Cole OP II below zero, the
recognition of such loss will be deferred until such time as the
recognition of such loss would not reduce our adjusted tax basis
below zero. If a distribution from Cole OP II or a
reduction in our share of Cole OP IIs liabilities
(which is treated as a constructive distribution for tax
purposes) would reduce our adjusted tax basis below zero, any
such distribution, including a constructive distribution, would
constitute taxable income to us. The gain realized by us upon
the receipt of any such distribution or constructive
distribution would normally be characterized as capital gain,
and if our partnership interest in Cole OP II has been held
for longer than the long-term capital gain holding period
(currently one year), the distribution would constitute
long-term capital gain.
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Depreciation Deductions Available to the Operating
Partnership |
Cole OP II will use a portion of contributions made by us
from offering proceeds to acquire interests in properties. To
the extent that Cole OP II acquires properties for cash,
Cole OP IIs initial basis in such properties for
federal income tax purposes generally will be equal to the
purchase price paid by Cole OP II. Cole OP II plans to
depreciate each such depreciable property for federal income tax
purposes under the alternative depreciation system of
depreciation. Under this system, Cole OP II generally will
depreciate such buildings and improvements over a 40-year
recovery period using a straight-line method and a mid-month
convention and will depreciate furnishings and equipment over a
twelve-year recovery period. To the extent that Cole OP II
acquires properties in exchange for units of Cole OP II,
Cole OP IIs initial basis in each such property for
federal income tax purposes should be the same as the
transferors basis in that property on the date of
acquisition by Cole OP II. Although the law is not entirely
clear, Cole OP II generally intends to depreciate such
depreciable property for federal income tax purposes over the
same remaining useful lives and under the same methods used by
the transferors.
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Sale of the Operating Partnerships Property |
Generally, any gain realized by Cole OP II on the sale of
property held for more than one year will be long-term capital
gain, except for any portion of such gain that is treated as
depreciation or cost recovery recapture. Any gain recognized by
Cole OP II upon the disposition of a property acquired by
Cole OP II for cash will be allocated among the partners in
accordance with their respective percentage interests in Cole
OP II.
Our share of any gain realized by Cole OP II on the sale of
any property held by Cole OP II as inventory or other
property held primarily for sale to customers in the ordinary
course of Cole OP IIs trade or business will be
treated as income from a prohibited transaction that is subject
to a 100.0% penalty tax. Such prohibited transaction income also
may have an adverse effect upon our ability to satisfy the
income tests for maintaining our REIT status. See
Requirements for Qualification as a
REIT Operational Requirements Gross
Income Tests above. We, however, do not currently intend
to acquire or hold or allow Cole OP II to acquire or hold
any property that represents inventory or other property held
primarily for sale to customers in the ordinary course of our or
Cole OP IIs trade or business.
Each of the properties (Tenant-in-Common Program Properties)
that are the subject of the Tenant-in-Common Program will
initially be purchased by a single member limited liability
company or similar entity, referred to in this prospectus as a
Cole Exchange Entity. Each Cole Exchange Entity will initially
be owned by our affiliate, Cole Capital Partners or its
affiliate. Cole Capital Partners will then market co-tenancy
interests in these properties to those persons who wish to
re-invest proceeds arising from dispositions of real estate
assets owned by the Tenant-in-Common Participants. The
Tenant-in-Common Participants will be able to defer the
recognition of taxable gain arising from the sale of their
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real estate assets by investing proceeds into the co-tenancy
interests that qualify for purposes of Section 1031 of the
Internal Revenue Code as replacement real estate assets. We
anticipate that the Cole Exchange Entity will obtain a legal
opinion in connection with each Tenant-in-Common Program to the
effect that the program will qualify as a like-kind exchange
under Section 1031 of the Internal Revenue Code. However,
no assurance can be given that the Internal Revenue Service will
not take a position contrary to such an opinion.
As Cole Capital Partners successfully markets co-tenancy
interests in the properties, these will be sold to the
Tenant-in-Common Participants. Cole Capital Partners will
recognize gain or loss arising from such sales measured by the
difference between the sum of its cost basis and costs of
closing and the price at which it sells such interests to the
Tenant-in-Common Participants. Cole Capital Partners will be
responsible for reporting such income to the extent of any net
gains and will be liable for any resulting tax. This will have
no impact on our tax liability.
If Cole OP II purchases interests in the Tenant-in-Common
Program Properties, the tax treatment will be the same as it
would with respect to other acquisitions of real property. Cole
OP II will become the owner of an interest in real estate,
it will have a basis in the real estate equal to its cost, and
its holding period for such real estate will begin on the day of
the acquisition. Upon subsequent sale of such interest, it will
recognize gain or loss in the same fashion it would with any
other real estate investments. Any fees that a Cole Exchange
Entity pays to Cole OP II for participating in a
Tenant-in-Common Program will be taxable as ordinary income to
Cole OP II.
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INVESTMENT BY TAX-EXEMPT ENTITIES AND ERISA CONSIDERATIONS
General
The following is a summary of some non-tax considerations
associated with an investment in our shares by tax-qualified
pension, stock bonus or profit-sharing plans, employee benefit
plans described in Section 3(3) of ERISA, annuities
described in Section 403(a) or (b) of the Internal
Revenue Code, an individual retirement account or annuity
described in Sections 408 or 408A of the Internal Revenue
Code, an Archer MSA described in Section 220(d) of the
Internal Revenue Code, a health savings account described in
Section 223(d) of the Internal Revenue Code, or a Coverdell
education savings account described in Section 530 of the
Internal Revenue Code, which are referred to as Plans and IRAs,
as applicable. This summary is based on provisions of ERISA and
the Internal Revenue Code, including amendments thereto through
the date of this prospectus, and relevant regulations and
opinions issued by the Department of Labor and the Internal
Revenue Service through the date of this prospectus. We cannot
assure you that adverse tax decisions or legislative, regulatory
or administrative changes that would significantly modify the
statements expressed herein will not occur. Any such changes may
or may not apply to transactions entered into prior to the date
of their enactment.
Our management has attempted to structure us in such a manner
that we will be an attractive investment vehicle for Plans and
IRAs. However, in considering an investment in our shares, those
involved with making such an investment decision should consider
applicable provisions of the Internal Revenue Code and ERISA.
While each of the ERISA and Internal Revenue Code issues
discussed below may not apply to all Plans and IRAs, individuals
involved with making investment decisions with respect to Plans
and IRAs should carefully review the rules and exceptions
described below, and determine their applicability to their
situation.
In general, individuals making investment decisions with respect
to Plans and IRAs should, at a minimum, consider:
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whether the investment is in accordance with the documents and
instruments governing such Plan or IRA; |
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whether the investment satisfies the prudence and
diversification and other fiduciary requirements of ERISA, if
applicable; |
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whether the investment will result in UBTI to the Plan or IRA,
see Federal Income Tax Considerations
Treatment of Tax-Exempt Stockholders; |
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whether there is sufficient liquidity for the Plan or IRA,
considering the minimum distribution requirements under the
Internal Revenue Code and the liquidity needs of such Plan or
IRA, after taking this investment into account; |
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the need to value the assets of the Plan or IRA
annually; and |
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whether the investment would constitute or give rise to a
prohibited transaction under ERISA or the Internal Revenue Code,
if applicable. |
Additionally, individuals making investment decisions with
respect to Plans and IRAs must remember that ERISA requires that
the assets of an employee benefit plan must generally be held in
trust, and that the trustee, or a duly authorized named
fiduciary or investment manager, must have authority and
discretion to manage and control the assets of an employee
benefit plan.
Minimum Distribution Requirements Plan
Liquidity
Potential Plan or IRA investors who intend to purchase our
shares should consider the limited liquidity of an investment in
our shares as it relates to the minimum distribution
requirements under the Internal Revenue Code, if applicable. If
the shares are held in an IRA or Plan and, before we sell our
properties, mandatory distributions are required to be made to
the participant or beneficiary of such IRA
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or Plan, pursuant to the Internal Revenue Code, then this would
require that a distribution of the shares be made in kind to
such participant or beneficiary, which may not be permissible
under the terms and provisions of such IRA or Plan. Even if
permissible, a distribution of shares in kind must be included
in the taxable income of the recipient for the year in which the
shares are received at the then current fair market value of the
shares, even though there would be no corresponding cash
distribution with which to pay the income tax liability arising
because of the distribution of shares. See Risk
Factors Federal Income Tax Risks. The fair
market value of any such distribution-in-kind can be only an
estimated value per share because no public market for our
shares exists or is likely to develop. See Annual
Valuation Requirement below. Further, there can be no
assurance that such estimated value could actually be realized
by a stockholder because estimates do not necessarily indicate
the price at which our shares could be sold. Also, for
distributions subject to mandatory income tax withholding under
Section 3405 or other tax withholding provisions of the
Internal Revenue Code, the trustee of a Plan may have an
obligation, even in situations involving in-kind distributions
of shares, to liquidate a portion of the in-kind shares
distributed in order to satisfy such withholding obligations,
although there might be no market for such shares. There may
also be similar state and/or local tax withholding or other tax
obligations that should be considered.
Annual Valuation Requirement
Fiduciaries of Plans are required to determine the fair market
value of the assets of such Plans on at least an annual basis.
If the fair market value of any particular asset is not readily
available, the fiduciary is required to make a good faith
determination of that assets value. Also, a trustee or
custodian of an IRA must provide an IRA participant and the
Internal Revenue Service with a statement of the value of the
IRA each year. However, currently, neither the Internal Revenue
Service nor the Department of Labor has promulgated regulations
specifying how fair market value should be
determined.
Unless and until our shares are listed on a national securities
exchange or are included for quotation on The Nasdaq National
Market, it is not expected that a public market for our shares
will develop. To assist fiduciaries of Plans subject to the
annual reporting requirements of ERISA and IRA trustees or
custodians to prepare reports relating to an investment in our
shares, we intend to provide reports of our quarterly and annual
determinations of the current value of our net assets per
outstanding share to those fiduciaries (including IRA trustees
and custodians) who identify themselves to us and request the
reports. Until two years after any subsequent offering of our
shares, we intend to use the offering price of shares in our
most recent offering as the per share net asset value (unless we
have made a special distribution to stockholders of net sales
proceeds from the sale of one or more properties prior to the
date of determination of net asset value, in which case we will
use the offering price less the per share amount of the special
distribution). Beginning two years after the last offering of
our shares, our board of directors will determine the value of
the properties and our other assets based on such information as
our board determines appropriate, which may include independent
valuations of our properties or of our enterprise as a whole.
We anticipate that we will provide annual reports of our
determination of value (1) to IRA trustees and custodians
not later than January 15 of each year, and (2) to
other Plan fiduciaries within 75 days after the end of each
calendar year. Each determination may be based upon valuation
information available as of October 31 of the preceding
year, updated, however, for any material changes occurring
between October 31 and December 31.
There can be no assurance, however, with respect to any estimate
of value that we prepare, that:
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the estimated value per share would actually be realized by our
stockholders upon liquidation, because these estimates do not
necessarily indicate the price at which properties can be sold; |
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our stockholders would be able to realize estimated net asset
values if they were to attempt to sell their shares, because no
public market for our shares exists or is likely to
develop; or |
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that the value, or method used to establish value, would comply
with ERISA or Internal Revenue Code requirements described above. |
Fiduciary Obligations Prohibited Transactions
Any person identified as a fiduciary with respect to
a Plan incurs duties and obligations under ERISA as discussed
herein. For purposes of ERISA, any person who exercises any
authority or control with respect to the management or
disposition of the assets of a Plan is considered to be a
fiduciary of such Plan. Further, many transactions between Plans
or IRAs and parties-in-interest or
disqualified persons are prohibited by ERISA and/or
the Internal Revenue Code. ERISA also requires generally that
the assets of Plans be held in trust and that the trustee, or a
duly authorized investment manager, have exclusive authority and
discretion to manage and control the assets of the Plan.
In the event that our properties and other assets were deemed to
be assets of a Plan or IRA, referred to herein as Plan
Assets, our directors would, and employees of our
affiliates might be deemed fiduciaries of any Plans or IRAs
investing as stockholders. If this were to occur, certain
contemplated transactions between us and our directors and
employees of our affiliates could be deemed to be
prohibited transactions. Additionally, ERISAs
fiduciary standards applicable to investments by Plans would
extend to our directors and possibly employees of our affiliates
as Plan fiduciaries with respect to investments made by us, and
the requirement that Plan Assets be held in trust could be
deemed to be violated.
Plan Assets Definition
Neither ERISA nor the Internal Revenue Code contains a
definition of Plan Assets. A Department of Labor regulation,
referred to in this discussion as the Plan Asset Regulation,
provides guidelines as to whether, and under what circumstances,
the underlying assets of an entity will be deemed to constitute
Plan Assets. Under the Plan Asset Regulation, the assets of an
entity in which a Plan or IRA makes an equity investment will
generally be deemed to be assets of such Plan or IRA unless the
entity satisfies one of the exceptions to this general rule.
Generally, the exceptions require that the investment in the
entity be one of the following:
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in securities issued by an investment company registered under
the Investment Company Act; |
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in publicly offered securities, defined generally as
interests that are freely transferable, widely
held and registered with the Securities and Exchange
Commission; |
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in an operating company, which includes
venture capital operating companies and real
estate operating companies; or |
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in which equity participation by benefit plan
investors is not significant. |
Plan Assets Registered Investment Company
Exception
The shares we are offering will not be issued by a registered
investment company. Therefore we do not anticipate that we will
qualify for the exception for investments issued by a registered
investment company.
Publicly Offered Securities Exemption
As noted above, if a Plan acquires publicly offered
securities, the assets of the issuer of the securities
will not be deemed to be Plan Assets under the Plan Asset
Regulation. The definition of publicly offered securities
requires that such securities be widely held,
freely transferable and satisfy registration
requirements under federal securities laws.
Under the Plan Asset Regulation, a class of securities will meet
the registration requirements under federal securities laws if
they are (i) part of a class of securities registered under
section 12(b) or 12(g) of the Exchange Act, or
(ii) part of an offering of securities to the public
pursuant to an effective
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registration statement under the Securities Act and the class of
securities of which such security is a part is registered under
the Exchange Act within 120 days (or such later time as may
be allowed by the Securities and Exchange Commission) after the
end of the fiscal year of the issuer during which the offering
of such securities to the public occurred. We anticipate that we
will meet the registration requirements under the Plan Asset
Regulation. Also under the Plan Asset Regulation, a class of
securities will be widely held if it is held by 100
or more persons independent of the issuer. We anticipate that
this requirement will be easily met. Although our shares are
intended to satisfy the registration requirements under this
definition, and we expect that our securities will be
widely-held, the freely transferable
requirement must also be satisfied in order for us to qualify
for the publicly offered securities exception.
The Plan Asset Regulation provides that whether a security
is freely transferable is a factual question to be
determined on the basis of all relevant facts and
circumstances. Our shares are subject to certain
restrictions on transferability typically found in REITs, and
are intended to ensure that we continue to qualify for federal
income tax treatment as a REIT. The Plan Asset Regulation
provides, however, that where the minimum investment in a public
offering of securities is $10,000 or less, the presence of a
restriction on transferability intended to prohibit transfers
that would result in a termination or reclassification of the
entity for state or federal tax purposes will not ordinarily
affect a determination that such securities are freely
transferable. The minimum investment in our shares is less
than $10,000. Thus, the restrictions imposed in order to
maintain our status as a REIT should not prevent the shares from
being deemed freely transferable. Therefore, we
anticipate that we will meet the publicly offered
securities exception, although there are no assurances
that we will qualify for this exception.
Plan Assets Operating Company Exception
If we are deemed not to qualify for the publicly offered
securities exemption, the Plan Asset Regulation also
provides an exception with respect to securities issued by an
operating company, which includes venture
capital operating companies and real estate
operating companies. To constitute a venture capital
operating company, 50.0% of more of the assets of the entity
must be invested in venture capital investments. A
venture capital investment is an investment in an operating
company (other than a venture capital operating company) as to
which the entity has or obtains direct management rights. To
constitute a real estate operating company, 50.0% or more of the
assets of an entity must be invested in real estate which is
managed or developed and with respect to which such entity has
the right to substantially participate directly in the
management or development activities.
While the Plan Asset Regulation and relevant opinions issued by
the Department of Labor regarding real estate operating
companies are not entirely clear as to whether an investment in
real estate must be direct, it is common practice to
insure that an investment is made either
(i) directly into real estate,
(ii) through wholly owned subsidiaries, or
(iii) through entities in which all but a de minimis
interest is separately held by an affiliate solely to comply
with the minimum safe harbor requirements established by the
Internal Revenue Service for classification as a partnership for
federal tax purposes. We have structured ourselves, and our
operating partnership, in this manner in order to enable us to
meet the real estate operating company exception. To the extent
interests in our operating partnership are obtained by
third-party investors, it is possible that the real estate
operating company exception will cease to apply to us. However,
in such an event we believe that we are structured in a manner
which would allow us to meet the venture capital operating
company exception because our investment in our operating
partnership, an entity investing directly in real estate over
which we maintain substantially all of the control over the
management and development activities, would constitute a
venture capital investment.
Notwithstanding the foregoing, 50.0% of our, or our operating
partnerships investment, as the case may be, must be in
real estate over which we maintain the right to substantially
participate in the management and development activities. An
example in the Plan Asset Regulation indicates that if 50.0% or
more of an entitys properties are subject to long-term
leases under which substantially all management and maintenance
activities with respect to the properties are the responsibility
of the lessee, such that the entity merely assumes the risk of
ownership of income-producing real property, then the entity may
not be
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eligible for the real estate operating company
exception. By contrast, a second example in the Plan Asset
Regulation indicates that if 50.0% or more of an entitys
investments are in shopping centers in which individual stores
are leased for relatively short periods to various merchants, as
opposed to long-term leases where substantially all management
and maintenance activities are the responsibility of the lessee,
then the entity will likely qualify as a real estate operating
company. The second example further provides that the entity may
retain contractors, including affiliates, to conduct the
management of the properties so long as the entity has the
responsibility to supervise and the authority to terminate the
contractors. We intend to use contractors over which we have the
right to supervise and the authority to terminate. Due to the
uncertainty of the application of the standards set forth in the
Plan Asset Regulation, there can be no assurance as to our
ability to structure our operations, or the operations of our
operating partnership, as the case may be, to qualify for the
real estate operating company exception.
Plan Assets Not Significant Investment
Exception
The Plan Asset Regulation provides that equity participation in
an entity by benefit plan investors is significant
if at any time 25.0% or more of the value of any class of equity
interests is held by benefit plan investors. In the event we
determine that we fail to meet the publicly offered
securities exception, as a result of a failure to sell an
adequate number of shares or otherwise, and we cannot ultimately
establish that we are an operating company, we intend to
restrict ownership of each class of equity interests held by
benefit plan investors to an aggregate value of less than 25.0%
and thus qualify for the exception for investments in which
equity participation by benefit plan investors is not
significant.
Consequences of Holding Plan Assets
In the event that our underlying assets were treated by the
Department of Labor as Plan Assets, our management would be
treated as fiduciaries with respect to each Plan or IRA
stockholder, and an investment in our shares might expose the
fiduciaries of the Plan or IRA to co-fiduciary liability under
ERISA for any breach by our management of the fiduciary duties
mandated under ERISA. Further, if our assets are deemed to be
Plan Assets, an investment by a Plan or IRA in our shares might
be deemed to result in an impermissible commingling of Plan
Assets with other property.
If our management or affiliates were treated as fiduciaries with
respect to Plan or IRA stockholders, the prohibited transaction
restrictions of ERISA would apply to any transaction involving
our assets. These restrictions could, for example, require that
we avoid transactions with entities that are affiliated with our
affiliates or us or restructure our activities in order to
obtain an administrative exemption from the prohibited
transaction restrictions. Alternatively, we might have to
provide Plan or IRA stockholders with the opportunity to sell
their shares to us or we might dissolve or terminate.
Prohibited Transactions
Generally, both ERISA and the Internal Revenue Code prohibit
Plans and IRAs from engaging in certain transactions involving
Plan Assets with specified parties, such as sales or exchanges
or leasing of property, loans or other extensions of credit,
furnishing goods or services, or transfers to, or use of, Plan
Assets. The specified parties are referred to as
parties-in-interest under ERISA and as
disqualified persons under the Internal Revenue
Code. These definitions generally include both parties owning
threshold percentage interests in an investment entity and
persons providing services to the Plan or IRA, as
well as employer sponsors of the Plan or IRA, fiduciaries and
other individuals or entities affiliated with the foregoing.
A person generally is a fiduciary with respect to a Plan or IRA
for these purposes if, among other things, the person has
discretionary authority or control with respect to Plan Assets
or provides investment advice for a fee with respect to Plan
Assets. Under Department of Labor regulations, a person will be
deemed to be providing investment advice if that person renders
advice as to the advisability of investing in our shares, and
that person regularly provides investment advice to the Plan or
IRA pursuant to a mutual agreement or understanding that such
advice will serve as the primary basis for investment
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decisions, and that the advice will be individualized for the
Plan or IRA based on its particular needs. Thus, if we are
deemed to hold Plan Assets, our management could be
characterized as fiduciaries with respect to such assets, and
each would be deemed to be a party-in-interest under ERISA and a
disqualified person under the Internal Revenue Code with respect
to investing Plans and IRAs. Whether or not we are deemed to
hold Plan Assets, if we or our affiliates are affiliated with a
Plan or IRA investor, we might be a disqualified person or
party-in-interest with respect to such Plan or IRA investor,
resulting in a prohibited transaction merely upon investment by
such Plan or IRA in our shares.
Prohibited Transactions Consequences
ERISA forbids Plans from engaging in prohibited transactions.
Fiduciaries of a Plan that allow a prohibited transaction to
occur will breach their fiduciary responsibilities under ERISA,
and may be liable for any damage sustained by the Plan, as well
as civil (and criminal, if the violation was willful) penalties.
If it is determined by the Department of Labor or the Internal
Revenue Service that a prohibited transaction has occurred, any
disqualified person or party-in-interest involved with the
prohibited transaction would be required to reverse or unwind
the transaction and, for a Plan, compensate the Plan for any
loss resulting therefrom. Additionally, the Internal Revenue
Code requires that a disqualified person involved with a
prohibited transaction must pay an excise tax equal to a
percentage of the amount involved in the transaction
for each year in which the transaction remains uncorrected. The
percentage is generally 15.0%, but is increased to 100.0% if the
prohibited transaction is not corrected promptly. For IRAs, if
an IRA engages in a prohibited transaction, the tax-exempt
status of the IRA may be lost.
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DESCRIPTION OF SHARES
We were formed under the laws of the state of Maryland. The
rights of our stockholders are governed by Maryland law as well
as our charter and bylaws. The following summary of the terms of
our common stock is only a summary, and you should refer to the
Maryland General Corporation Law and our charter and bylaws for
a full description. The following summary is qualified in its
entirety by the more detailed information contained in our
charter and bylaws. Copies of our charter and bylaws are
available upon request.
Our charter authorizes us to issue up to 100,000,000 shares
of stock, of which 90,000,000 shares are designated as
common stock at $0.01 par value per share and
10,000,000 shares are designated as preferred stock at
$0.01 par value per share. As of the date of this
prospectus, 20,000 shares of our common stock are issued
and outstanding and no shares of preferred stock were issued and
outstanding. Our board of directors may amend our charter to
increase or decrease the aggregate number of our authorized
shares or the number of shares of any class or series that we
have authority to issue without any action by our stockholders.
Our charter also contains a provision permitting our board of
directors, including at least a majority of the independent
directors who do not have an interest in the transaction and
without any action by our stockholders, to classify or
reclassify any unissued common stock or preferred stock into one
or more classes or series by setting or changing the
preferences, conversion or other rights, voting powers,
restrictions, limitations as to distributions or other
distributions, qualifications, or terms or conditions of
redemption of any new class or series of stock, subject to
certain restrictions, including the express terms of any class
or series of stock outstanding at the time. We believe that the
power to classify or reclassify unissued shares of stock and
thereafter issue the classified or reclassified shares provides
us with increased flexibility in structuring possible future
financings and acquisitions and in meeting other needs that
might arise.
Our charter and bylaws contain certain provisions that could
make it more difficult to acquire control of our company by
means of a tender offer, a proxy contest or otherwise. These
provisions are expected to discourage certain types of coercive
takeover practices and inadequate takeover bids and to encourage
persons seeking to acquire control of our company to negotiate
first with our board of directors. We believe that these
provisions increase the likelihood that proposals initially will
be on more attractive terms than would be the case in their
absence and facilitate negotiations that may result in
improvement of the terms of an initial offer that might involve
a premium price for our common stock or otherwise be in the best
interest of our stockholders. See Risk Factors
Risks Related to an Investment in Cole REIT II.
Common Stock
Subject to any preferential rights of any other class or series
of stock and to the provisions of our charter regarding the
restriction on the transfer of common stock, the holders of
common stock are entitled to such distributions as may be
authorized from time to time by our board of directors out of
legally available funds and declared by us and, upon our
liquidation, are entitled to receive all assets available for
distribution to our stockholders. Upon issuance for full payment
in accordance with the terms of this offering, all common stock
issued in the offering will be fully paid and non-assessable.
Holders of common stock will not have preemptive rights, which
means that they will not have an automatic option to purchase
any new shares that we issue, or preference, conversion,
exchange, sinking fund, redemption or appraisal rights. Shares
of our common stock have equal distribution, liquidation and
other rights.
Preferred Stock
Our charter authorizes our board of directors to designate and
issue one or more classes or series of preferred stock without
stockholder approval and to fix the voting rights, liquidation
preferences, distribution rates, conversion rights, redemption
rights and terms, including sinking fund provisions, and certain
other rights and preferences with respect to such preferred
stock. Because our board of directors has the power to establish
the preferences and rights of each class or series of preferred
stock, it may
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afford the holders of any series or class of preferred stock
preferences, powers, and rights senior to the rights of holders
of common stock. If we ever created and issued preferred stock
with a distribution preference over common stock, payment of any
distribution preferences of outstanding preferred stock would
reduce the amount of funds available for the payment of
distributions on the common stock. Further, holders of preferred
stock are normally entitled to receive a preference payment in
the event we liquidate, dissolve, or wind up before any payment
is made to the common stockholders, likely reducing the amount
common stockholders would otherwise receive upon such an
occurrence. In addition, under certain circumstances, the
issuance of preferred stock may delay, prevent, render more
difficult or tend to discourage the following:
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a merger, offer, or proxy contest; |
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the assumption of control by a holder of a large block of our
securities; or |
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the removal of incumbent management. |
Also, our board of directors, without stockholder approval, may
issue preferred stock with voting and conversion rights that
could adversely affect the holders of common stock.
We currently have no preferred stock issued or outstanding. Our
board of directors has no present plans to issue shares of
preferred stock, but it may do so at any time in the future
without stockholder approval.
Meetings and Special Voting Requirements
Subject to our charter restrictions on transfer of our stock,
each holder of common stock is entitled at each meeting of
stockholders to one vote per share owned by such stockholder on
all matters submitted to a vote of stockholders, including the
election of directors. There is no cumulative voting in the
election of our board of directors, which means that the holders
of a majority of shares of our outstanding common stock can
elect all of the directors then standing for election and the
holders of the remaining shares of common stock will not be able
to elect any directors.
Under Maryland law, a Maryland corporation generally cannot
dissolve, amend its charter, merge, sell all or substantially
all of its assets, engage in a share exchange or engage in
similar transactions outside the ordinary course of business,
unless approved by the affirmative vote of stockholders holding
at least two-thirds of the shares entitled to vote on the
matter. However, a Maryland corporation may provide in its
charter for approval of these matters by a lesser percentage,
but not less than a majority of all of the votes entitled to be
cast on the matter. Our charter provides for approval of these
matters by the affirmative vote of a majority of the votes
entitled to be cast.
However, under the Maryland General Corporation Law and our
charter, the following events do not require stockholder
approval:
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stock exchanges in which we are the successor; |
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mergers with or into a 90.0% or more owned subsidiary, provided
that the charter of the successor is not amended and that the
contract rights of any stock issued in the merger are identical
to those of the stock that was exchanged; |
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mergers in which we do not: |
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reclassify or change the terms of any of shares that are
outstanding immediately before the effective time of the merger; |
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amend our charter; and |
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result in the issuance of more than 20.0% of the number of
shares of any class or series of shares outstanding immediately
before the merger; and |
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transfers of less than substantially all of our assets. |
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Also, because our operating assets are held by our subsidiaries,
these subsidiaries may be able to merge or sell all or
substantially all of their assets without the approval of our
stockholders.
An annual meeting of our stockholders will be held each year, at
least 30 days after delivery of our annual report to our
stockholders. Special meetings of stockholders may be called
only upon the request of a majority of our directors, a majority
of the independent directors, the president, the chief executive
officer or upon the written request of stockholders holding at
least ten percent of our outstanding shares. Upon receipt of a
written request of stockholders holding at least ten percent of
our outstanding shares stating the purpose of the special
meeting, our secretary will provide all of our stockholders
written notice of the meeting and the purpose of such meeting.
The meeting must be held not less than 15 nor more than
60 days after the distribution of the notice of meeting.
The presence of holders of a majority of our outstanding shares,
either in person or by proxy, will constitute a quorum.
Our stockholders are entitled to receive a copy of our
stockholder list upon request. The list provided by us will
include each stockholders name, address and telephone
number, if available, and the number of shares owned by each
stockholder and will be sent within ten days of the receipt by
us of the request. A stockholder requesting a list will be
required to pay reasonable costs of postage and duplication.
Stockholders and their representatives shall also be given
access to our corporate records at reasonable times. We have the
right to request that a requesting stockholder represent to us
that the list and records will not be used to pursue commercial
interests.
If we do not list our shares of common stock on a national
securities exchange or on The Nasdaq National Market by the
tenth anniversary of the completion or termination of this
offering, our charter requires that we either (i) seek
stockholder approval of an extension or amendment of this
listing deadline, or (ii) seek stockholder approval of the
liquidation of the corporation. If we sought and did not obtain
stockholder approval of an extension or amendment to the listing
deadline, we would then be required to seek stockholder approval
of our liquidation. If we sought and failed to obtain
stockholder approval of our liquidation, our charter would not
require us to list or liquidate and we could continue to operate
as before. In such event, there will be no public market for
shares of our common stock and you may be required to hold the
shares indefinitely. If we sought and obtained stockholder
approval of our liquidation, we would begin an orderly sale of
our properties and distribute our net proceeds to you. In the
event that the listing of our stock on a national securities
exchange or on The Nasdaq National Market occurs on or before
the tenth anniversary of the commencement of this public
offering, the corporation shall continue perpetually unless
dissolved pursuant to any applicable provision of the Maryland
General Corporation Law.
Restrictions on Ownership and Transfer
In order for us to qualify as a REIT under the Internal Revenue
Code, we must meet the following criteria regarding our
stockholders ownership of our shares:
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five or fewer individuals (as defined in the Internal Revenue
Code to include certain tax exempt organizations and trusts) may
not own, directly or indirectly, more than 50.0% in value of our
outstanding shares during the last half of a taxable
year; and |
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100 or more persons must beneficially own our shares during at
least 335 days of a taxable year of twelve months or during
a proportionate part of a shorter taxable year. |
See Federal Income Tax Considerations for further
discussion of this topic. We may prohibit certain acquisitions
and transfers of shares so as to ensure our initial and
continued qualification as a REIT under the Internal Revenue
Code. However, there can be no assurance that this prohibition
will be effective. Because we believe it is essential for us to
qualify as a REIT, and, once qualified, to continue to qualify,
our charter provides (subject to certain exceptions) that no
stockholder may own, or be deemed to own by virtue of the
attribution provisions of the Internal Revenue Code, more than
9.8% in value of our outstanding shares of stock or more than
9.8% of the number or value (in either case as determined in
good faith by our board of directors) of any class or series of
our outstanding shares of common stock. The 9.8% ownership limit
must be measured in terms of the more restrictive of value or
number of shares.
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Our board of directors, in its sole discretion, may waive this
ownership limit if evidence satisfactory to our directors is
presented that such ownership will not then or in the future
jeopardize our status as a REIT. Also, these restrictions on
transferability and ownership will not apply if our directors
determine that it is no longer in our best interests to continue
to qualify as a REIT.
Additionally, our charter further prohibits the transfer or
issuance of our stock if such transfer or issuance:
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with respect to transfers only, results in our common stock
being owned by fewer than 100 persons; |
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results in our being closely held within the meaning
of Section 856(h) of the Internal Revenue Code; |
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results in our owning, directly or indirectly, more than 9.8% of
the ownership interests in any tenant or subtenant; or |
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otherwise results in our disqualification as a REIT. |
Any attempted transfer of our stock which, if effective, would
result in our stock being owned by fewer than 100 persons will
be null and void. In the event of any attempted transfer of our
stock which, if effective, would result in (i) violation of
the ownership limit discussed above, (ii) in our being
closely held under Section 856(h) of the
Internal Revenue Code, (iii) our owning (directly or
indirectly) more than 9.8% of the ownership interests in any
tenant or subtenant or (iv) our otherwise failing to
qualify as a REIT, then the number of shares causing the
violation (rounded to the nearest whole share) will be
automatically transferred to a trust for the exclusive benefit
of one or more charitable beneficiaries, and the proposed
transferee will not acquire any rights in the shares. To avoid
confusion, these shares so transferred to a beneficial trust
will be referred to in this prospectus as Excess
Securities. Excess Securities will remain issued and
outstanding shares and will be entitled to the same rights and
privileges as all other shares of the same class or series. The
trustee of the beneficial trust, as holder of the Excess
Securities, will be entitled to receive all distributions
authorized by the board of directors on such securities for the
benefit of the charitable beneficiary. Our charter further
entitles the trustee of the beneficial trust to vote all Excess
Securities.
The trustee of the beneficial trust may select a transferee to
whom the Excess Securities may be sold as long as such sale does
not violate the 9.8% ownership limit or the other restrictions
on transfer. Upon sale of the Excess Securities, the intended
transferee (the transferee of the Excess Securities whose
ownership would violate the 9.8% ownership limit or the other
restrictions on transfer) will receive from the trustee of the
beneficial trust the lesser of such sale proceeds, or the price
per share the intended transferee paid for the Excess Securities
(or, in the case of a gift or devise to the intended transferee,
the price per share equal to the market value per share on the
date of the transfer to the intended transferee). The trustee of
the beneficial trust will distribute to the charitable
beneficiary any amount the trustee receives in excess of the
amount to be paid to the intended transferee.
In addition, we have the right to purchase any Excess Securities
at the lesser of (i) the price per share paid in the
transfer that created the Excess Securities, or (ii) the
current market price, until the Excess Securities are sold by
the trustee of the beneficial trust. An intended transferee must
pay, upon demand, to the trustee of the beneficial trust (for
the benefit of the beneficial trust) the amount of any
distribution we pay to an intended transferee on Excess
Securities prior to our discovery that such Excess Securities
have been transferred in violation of the provisions of the
charter. If any legal decision, statute, rule, or regulation
deems or declares the transfer restrictions included in our
charter to be void or invalid, then we may, at our option, deem
the intended transferee of any Excess Securities to have acted
as an agent on our behalf in acquiring such Excess Securities
and to hold such Excess Securities on our behalf.
Any person who (i) acquires or attempts to acquire shares
in violation of the foregoing ownership restriction, transfers
or receives shares subject to such limitations, or would have
owned shares that resulted in a transfer to a charitable trust,
or (ii) proposes or attempts any of the transactions in
clause (i), is required to give us 15 days
written notice prior to such transaction. In both cases, such
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persons must provide to us such other information as we may
request in order to determine the effect, if any, of such
transfer on our status as a REIT. The foregoing restrictions
will continue to apply until our board of directors determines
it is no longer in our best interest to continue to qualify as a
REIT.
The ownership restriction does not apply to the underwriter in a
public offering of shares or to a person or persons so exempted
from the ownership limit by our board of directors based upon
appropriate assurances that our qualification as a REIT is not
jeopardized. Any person who owns 5.0% or more of the outstanding
shares during any taxable year will be asked to deliver a
statement or affidavit setting forth the number of shares
beneficially owned, directly or indirectly.
Distribution Policy
When we have sufficient cash flow available to pay
distributions, we intend to pay regular distributions to our
stockholders. As of the date of this prospectus, we have no real
estate investments. We currently have not identified any
probable real estate investments. We will not make real estate
investments until we identify investment opportunities and raise
sufficient capital pursuant to this offering to do so. We cannot
predict when we will begin to generate sufficient cash flow from
these investments to pay distributions as a result of such
investments; however, we expect that these will begin no later
than the third quarter after the commencement of this offering.
Because all of our operations will be performed indirectly
through Cole OP II, our operating partnership, our ability
to pay distributions depends on Cole OP IIs ability
to pay distributions to its partners, including to us. In the
event we do not have enough cash from operations to fund the
distribution, we may borrow, issue additional securities or sell
assets in order to fund the distributions or make the
distributions out of net proceeds from this offering.
Distributions will be paid to our stockholders as of the record
date selected by our board of directors. We expect to declare
and pay distributions at least quarterly. Once we have
sufficient cash flow, we may pay distributions monthly or more
frequently. We expect to regularly pay distributions unless our
results of operations, our general financial condition, general
economic conditions, or other factors inhibit us from doing so.
Distributions will be authorized at the discretion of our board
of directors, which will be directed, in substantial part, by
its obligation to cause us to comply with the REIT requirements
of the Internal Revenue Code. The funds we receive from
operations that are available for distribution may be affected
by a number of factors, including the following:
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the amount of time required for us to invest the funds received
in the offering; |
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our operating and interest expenses; |
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the ability of tenants to meet their obligations under the
leases associated with our properties; |
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the amount of distributions or dividends received by us from our
indirect real estate investments; |
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our ability to keep our properties occupied; |
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our ability to maintain or increase rental rates when renewing
or replacing current leases; |
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capital expenditures and reserves for such expenditures; |
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the issuance of additional shares; and |
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financings and refinancings. |
We must distribute to our stockholders at least 90.0% of our
taxable income each year in order to meet the requirements for
being treated as a REIT under the Internal Revenue Code. This
requirement is described in greater detail in the Federal
Income Tax Considerations Requirements For
Qualification as a REIT Operational
Requirements Annual Distribution Requirements
section of this prospectus. Our directors may authorize
distributions in excess of this percentage as they deem
appropriate. Because we may receive income from interest or
rents at various times during our fiscal year, distributions may
not reflect our income earned in that particular distribution
period, but may be made in anticipation of cash flow that we
expect to receive during a later period and may be made in
advance of actual receipt of funds
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in an attempt to make distributions relatively uniform. To allow
for such differences in timing between the receipt of income and
the payment of expenses, and the effect of required debt
payments, among other things, could require us to borrow funds
from third parties on a short-term basis, issue new securities,
or sell assets to meet the distribution requirements that are
necessary to achieve the tax benefits associated with qualifying
as a REIT. These methods of obtaining funding could affect
future distributions by increasing operating costs and
decreasing available cash. In addition, such distributions may
constitute a return of capital. See Federal Income Tax
Considerations Requirements for Qualification as a
REIT.
Stockholder Liability
The Maryland General Corporation Law provides that our
stockholders:
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are not liable personally or individually in any manner
whatsoever for any debt, act, omission or obligation incurred by
us or our board of directors; and |
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are under no obligation to us or our creditors with respect to
their shares other than the obligation to pay to us the full
amount of the consideration for which their shares were issued. |
Business Combinations
Under Maryland law, business combinations between a
Maryland corporation and an interested stockholder or an
affiliate of an interested stockholder are prohibited for five
years after the most recent date on which the interested
stockholder becomes an interested stockholder. These business
combinations include a merger, consolidation, share exchange,
or, in circumstances specified in the statute, an asset transfer
or issuance or reclassification of equity securities. An
interested stockholder is defined as:
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any person who beneficially owns ten percent or more of the
voting power of the corporations shares; or |
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an affiliate or associate of the corporation who, at any time
within the two-year period prior to the date in question, was
the beneficial owner of ten percent or more of the voting power
of the then outstanding voting stock of the corporation. |
A person is not an interested stockholder under the statute if
the board of directors approved in advance the transaction by
which he otherwise would have become an interested stockholder.
However, in approving a transaction, the board of directors may
provide that its approval is subject to compliance, at or after
the time of approval, with any terms and conditions determined
by the board.
After the five-year prohibition, any business combination
between the Maryland corporation and an interested stockholder
generally must be recommended by the board of directors of the
corporation and approved by the affirmative vote of at least:
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80.0% of the votes entitled to be cast by holders of outstanding
shares of voting stock of the corporation; and |
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two-thirds of the votes entitled to be cast by holders of voting
stock of the corporation other than shares held by the
interested stockholder with whom or with whose affiliate the
business combination is to be effected or held by an affiliate
or associate of the interested stockholder. |
These super-majority vote requirements do not apply if the
corporations stockholders receive a minimum price, as
defined under Maryland law, for their shares in the form of cash
or other consideration in the same form as previously paid by
the interested stockholder for its shares.
The statute permits various exemptions from its provisions,
including business combinations that are exempted by the board
of directors before the time that the interested stockholder
becomes an interested stockholder. Pursuant to the statute, our
board of directors has exempted any business combination with
Cole Advisors II or any affiliate of Cole Advisors II.
Consequently, the five-year prohibition and the super-majority
vote requirements will not apply to business combinations
between us and Cole Advisors II or any
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affiliate of Cole Advisors II. As a result, Cole
Advisors II or any affiliate of Cole Advisors II may
be able to enter into business combinations with us that may not
be in the best interest of our stockholders, without compliance
with the super-majority vote requirements and the other
provisions of the statute.
The business combination statute may discourage others from
trying to acquire control of us and increase the difficulty of
consummating any offer.
Control Share Acquisitions
With some exceptions, Maryland law provides that control shares
of a Maryland corporation acquired in a control share
acquisition have no voting rights except to the extent approved
by a vote of stockholders holding two-thirds of the votes
entitled to be cast on the matter, excluding control
shares:
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owned by the acquiring person; |
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owned by our officers; and |
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owned by our employees who are also directors. |
Control shares mean voting shares which, if
aggregated with all other voting shares owned by an acquiring
person or shares for which the acquiring person can exercise or
direct the exercise of voting power, would entitle the acquiring
person to exercise voting power in electing directors within one
of the following ranges of voting power:
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one-tenth or more but less than one-third; |
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one-third or more but less than a majority; or |
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a majority or more of all voting power. |
Control shares do not include shares the acquiring person is
then entitled to vote as a result of having previously obtained
stockholder approval. A control share acquisition occurs when,
subject to some exceptions, a person directly or indirectly
acquires ownership or the power to direct the exercise of voting
power (except solely by virtue of a revocable proxy) of issued
and outstanding control shares. A person who has made or
proposes to make a control share acquisition, upon satisfaction
of some specific conditions, including an undertaking to pay
expenses, may compel our board of directors to call a special
meeting of our stockholders to be held within 50 days of a
demand to consider the voting rights of the control shares. If
no request for a meeting is made, we may present the question at
any stockholders meeting.
If voting rights are not approved at the meeting or if the
acquiring person does not deliver an acquiring person statement
as required by the statute, then, subject to some conditions and
limitations, we may redeem any or all of the control shares
(except those for which voting rights have been previously
approved) for fair value determined, without regard to the
absence of voting rights for the control shares, as of the date
of the last control share acquisition by the acquiror or of any
meeting of stockholders at which the voting rights of such
shares are considered and not approved. If voting rights for
control shares are approved at a stockholders meeting and the
acquiror becomes entitled to vote a majority of the shares
entitled to vote, all other stockholders may exercise appraisal
rights. The fair value of the shares as determined for purposes
of such appraisal rights may not be less than the highest price
per share paid by the acquiror in the control share acquisition.
The control share acquisition statute does not apply to shares
acquired in a merger, consolidation, or share exchange if we are
a party to the transaction or to acquisitions approved or
exempted by our charter or bylaws.
As permitted by Maryland General Corporation Law, our bylaws
contain a provision exempting from the control share acquisition
statute any and all acquisitions of our common stock by Cole
Advisors II or any affiliate of Cole Advisors II.
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Subtitle 8
Subtitle 8 of Title 3 of the Maryland General
Corporation Law permits a Maryland corporation with a class of
equity securities registered under the Exchange Act and at least
three independent directors to elect to be subject, by provision
in its charter or bylaws or a resolution of its board of
directors and notwithstanding any contrary provision in the
charter or bylaws, to any or all of five provisions:
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a classified board, |
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a two-thirds vote requirement for removing a director, |
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a requirement that the number of directors be fixed only by vote
of the directors, |
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a requirement that a vacancy on the board be filled only by the
remaining directors and for the remainder of the full term of
the class of directors in which the vacancy occurred, and |
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a majority requirement for the calling of a special meeting of
stockholders. |
Pursuant to Subtitle 8, we have elected to provide that
vacancies on our board of directors may be filled only by the
remaining directors and for the remainder of the full term of
the directorship in which the vacancy occurred. Through
provisions in our charter and bylaws unrelated to
Subtitle 8, we already vest in the board the exclusive
power to fix the number of directorships.
Advance Notice of Director Nominations and New Business
Our bylaws provide that with respect to an annual meeting of
stockholders, nominations of individuals for election to the
board of directors and the proposal of business to be considered
by stockholders may be made only (i) pursuant to our notice
of the meeting, (ii) by the board of directors or
(iii) by a stockholder who is entitled to vote at the
meeting and who has complied with the advance notice procedures
of the bylaws. With respect to special meetings of stockholders,
only the business specified in our notice of the meeting may be
brought before the meeting. Nominations of individuals for
election to the board of directors at a special meeting may be
made only (i) pursuant to our notice of the meeting,
(ii) by the board of directors, or (iii) provided that
the board of directors has determined that directors will be
elected at the meeting, by a stockholder who is entitled to vote
at the meeting and who has complied with the advance notice
provisions of the bylaws.
Share Redemption Program
Our board of directors has adopted a share redemption program
that enables our stockholders to sell their shares to us in
limited circumstances. Our share redemption program permits you
to sell your shares back to us after you have held them for at
least one year, subject to the significant conditions and
limitations described below.
Our common stock is currently not listed on a national
securities exchange, or included for quotation on a national
securities market, and we will not seek to list our stock until
such time as our independent directors believe that the listing
of our stock would be in the best interest of our stockholders.
In order to provide stockholders with the benefit of interim
liquidity, stockholders who have held their shares for at least
one year may present all or a portion consisting of at least
25%, of the holders shares to us for redemption at any
time in accordance with the procedures outlined below. At that
time, we may, subject to the conditions and limitations
described below, redeem the shares presented for redemption for
cash to the extent that we have sufficient funds available to us
to fund such redemption. We will not pay to our board of
directors, advisor or its affiliates any fees to complete any
transactions under our share redemption program.
During the term of this offering, the redemption price per share
will depend on the length of time you have held such shares as
follows: after one year from the purchase date 92.5%
of the amount you paid
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for each share; after two years from the purchase
date 95.0% of the amount you paid for each share,
after three years from the purchase date 97.5% of
the amount you paid for each share; and after four years from
the purchase date 100.0% of the amount you paid for
each share (in each case, as adjusted for any stock dividends,
combinations, splits, recapitalizations and the like with
respect to our common stock). At any time we are engaged in an
offering of shares, the per share price for shares purchased
under our redemption plan will always be equal to or lower than
the applicable per share offering price. Thereafter the per
share redemption price will be based on the then-current net
asset value of the shares (as adjusted for any stock dividends,
combinations, splits, recapitalizations and the like with
respect to our common stock). Our board of directors will
announce any redemption price adjustment and the time period of
its effectiveness as a part of its regular communications with
our stockholders. At any time the redemption price is determined
by any method other than the net asset value of the shares, if
we have sold property and have made one or more special
distributions to our stockholders of all or a portion of the net
proceeds from such sales, the per share redemption price will be
reduced by the net sale proceeds per share distributed to
investors prior to the redemption date as a result of the sale
of such property in the special distribution. Our board of
directors will, in its sole discretion, determine which
distributions, if any, constitute a special distribution. While
our board of directors does not have specific criteria for
determining a special distribution, we expect that a special
distribution will only occur upon the sale of a property and the
subsequent distribution of the net sale proceeds. Upon receipt
of a request for redemption, we will conduct a Uniform
Commercial Code search to ensure that no liens are held against
the shares. We will charge an administrative fee of $250 to the
stockholder for the search and other costs, which will be
deducted from the proceeds of the redemption or, if a lien
exists, will be charged to the stockholder. Subject to our
waiver of the one-year holding period requirement, shares
required to be redeemed in connection with the death of a
stockholder may be repurchased without the one-year activity
period requirement, at a purchase price equal to the price
actually paid for the shares.
During any calendar year, we will not redeem in excess of 3.0%
of the weighted average number of shares outstanding during the
prior calendar year. The cash available for redemption will be
limited to the proceeds from the sale of shares pursuant to our
distribution reinvestment plan.
We will redeem our shares on the last business day of the month
following the end of each quarter. Requests for redemption would
have to be received on or prior to the end of the quarter in
order for us to repurchase the shares as of the end of the next
month. You may withdraw your request to have your shares
redeemed at any time prior to the last day of the applicable
quarter.
If we could not purchase all shares presented for redemption in
any quarter, based upon insufficient cash available and the
limit on the number of shares we may redeem during any calendar
year, we would attempt to honor redemption requests on a pro
rata basis. We would treat the unsatisfied portion of the
redemption request as a request for redemption the following
quarter. At such time, you may then (1) withdraw your
request for redemption at any time prior to the last day of the
new quarter or (2) ask that we honor your request at such
time, if, any, when sufficient funds become available. Such
pending requests will generally be honored on a pro rata basis.
We will determine whether we have sufficient funds available as
soon as practicable after the end of each quarter, but in any
event prior to the applicable payment date.
Our board of directors may choose to amend, suspend or terminate
our share redemption program upon 30 days notice at any
time. Additionally we will be required to discontinue sales of
shares under the distribution reinvestment plan on the earlier
of June 27, 2007, which is two years from the effective
date of this offering, unless the offering is extended, or the
date we sell 5,000,000 shares under the plan, unless we file a
new registration statement with the Securities and Exchange
Commission and applicable states. Because the redemption of
shares will be funded with the net proceeds we receive from the
sale of shares under the distribution reinvestment plan, the
discontinuance or termination of the distribution reinvestment
plan will adversely affect our ability to redeem shares under
the share redemption program. We would notify you of such
developments (i) in the annual or quarterly reports
mentioned above or (ii) by means of a separate mailing to
you, accompanied by disclosure in a current or periodic report
under the Exchange
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Act. During this offering, we would also include this
information in a prospectus supplement or post-effective
amendment to the registration statement, as then required under
federal securities laws.
Our share redemption program is only intended to provide interim
liquidity for stockholders until a liquidity event occurs, such
as the listing of the shares on a national securities exchange,
inclusion of the shares for on a national market system, or our
merger with a listed company. The share redemption program will
be terminated if the shares become listed on a national
securities exchange or included for quotation on a national
market system. We cannot guarantee that a liquidity event will
occur.
The shares we redeem under our share redemption program will be
cancelled and return to the status of unauthorized but unissued
shares. We do not intend to resell such shares to the public
unless they are first registered with the Securities and
Exchange Commission under the Securities Act and under
appropriate state securities laws or otherwise sold in
compliance with such laws.
Restrictions on Roll-up Transactions
A Roll-up Transaction is a transaction involving the
acquisition, merger, conversion or consolidation, directly or
indirectly, of us and the issuance of securities of an entity
(Roll-up Entity) that is created or would survive after the
successful completion of a Roll-up Transaction. This term does
not include:
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a transaction involving our securities that have been listed on
a national securities exchange or included for quotation on The
Nasdaq National Market for at least 12 months; or |
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a transaction involving our conversion to trust, or association
form if, as a consequence of the transaction, there will be no
significant adverse change in stockholder voting rights, the
term of our existence, compensation to Cole Advisors II or
our investment objectives. |
In connection with any Roll-up Transaction involving the
issuance of securities of a Roll-up Entity, an appraisal of all
of our assets shall be obtained from a competent independent
appraiser. The assets shall be appraised on a consistent basis,
and the appraisal will be based on the evaluation of all
relevant information and will indicate the value of the assets
as of a date immediately prior to the announcement of the
proposed Roll-up Transaction. The appraisal shall assume an
orderly liquidation of assets over a 12-month period. The terms
of the engagement of the independent appraiser shall clearly
state that the engagement is for the benefit of us and our
stockholders. A summary of the appraisal, indicating all
material assumptions underlying the appraisal, shall be included
in a report to stockholders in connection with any proposed
Roll-up Transaction.
In connection with a proposed Roll-up Transaction, the sponsor
of the Roll-up Transaction must offer to stockholders who vote
no on the proposal the choice of:
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(1) accepting the securities of the Roll-up Entity offered
in the proposed Roll-up Transaction; or |
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(2) one of the following: |
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(a) remaining as holders of our common stock and preserving
their interests therein on the same terms and conditions as
existed previously, or |
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(b) receiving cash in an amount equal to the
stockholders pro rata share of the appraised value of our
net assets. |
We are prohibited from participating in any Roll-up Transaction:
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that would result in the stockholders having voting rights in a
Roll-up Entity that are less than those provided in our charter
and described elsewhere in this prospectus, including rights
with respect to the election and removal of directors, annual
reports, annual and special meetings, amendment of our charter,
and our dissolution; |
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that includes provisions that would materially impede or
frustrate the accumulation of shares by any purchaser of the
securities of the Roll-up Entity, except to the minimum extent
necessary to preserve the tax status of the Roll-up Entity, or
which would limit the ability of an investor to exercise the
voting rights of its securities of the Roll-up Entity on the
basis of the number of shares held by that investor; |
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in which our investors rights to access of records of the
Roll-up Entity will be less than those provided in the section
of this prospectus entitled Meetings and
Special Voting Requirements above; or |
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in which any of the costs of the Roll-up Transaction would be
borne by us if the Roll-up Transaction is not approved by the
stockholders. |
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SUMMARY OF DISTRIBUTION REINVESTMENT PLAN
The following is a summary of our distribution reinvestment
plan. A complete copy of our form of distribution reinvestment
plan is included in this prospectus as Appendix C.
Investment of Distributions
We have adopted a distribution reinvestment plan pursuant to
which, our stockholders and, subject to certain conditions set
forth in our distribution reinvestment plan, any stockholder or
partner of any other publicly offered limited partnership, real
estate investment trust or other real estate program sponsored
by our advisor or its affiliates, may participate in our
distribution reinvestment plan and elect to purchase shares of
our common stock with our distributions or distributions from
such other programs. We are offering 5,000,000 shares for
sale pursuant to our distribution reinvestment plan. We intend
to offer shares at the higher of 91.5% of the estimated value of
a share of our common stock, as estimated by our board of
directors or $9.15 per share. We have the discretion to extend
the offering period for the shares being offered pursuant to
this prospectus under our distribution reinvestment plan beyond
the termination of this offering until we have sold
5,000,000 shares through the reinvestment of distributions.
We may also offer shares pursuant to a new registration
statement.
No dealer manager fees or sales commissions will be paid with
respect to shares purchased pursuant to the distribution
reinvestment plan, therefore, we will retain all of the proceeds
from the reinvestment of distributions. Accordingly,
substantially all the economic benefits resulting from
distribution reinvestment purchases by stockholders from the
elimination of the dealer manager fee and selling commissions
will inure to the benefit of the participant through the reduced
purchase price.
Pursuant to the terms of our distribution reinvestment plan the
reinvestment agent, which currently is us, will act on behalf of
participants to reinvest the cash distributions they receive
from us. Stockholders participating in the distribution
reinvestment plan may purchase fractional shares. If sufficient
shares are not available for issuance under our distribution
reinvestment plan, the reinvestment agent will remit excess cash
distributions to the participants. Participants purchasing
shares pursuant to our distribution reinvestment plan will have
the same rights as stockholders with respect to shares purchased
under the plan and will be treated in the same manner as if such
shares were issued pursuant to our offering.
After the termination of the offering of our shares registered
for sale pursuant to the distribution reinvestment plan under
the this prospectus and any subsequent offering, we may
determine to allow participants to reinvest cash distributions
from us in shares issued by another Cole-sponsored program only
if all of the following conditions are satisfied:
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prior to the time of such reinvestment, the participant has
received the final prospectus and any supplements thereto
offering interests in the subsequent Cole-sponsored program and
such prospectus allows investments pursuant to a distribution
reinvestment plan; |
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a registration statement covering the interests in the
subsequent Cole-sponsored program has been declared effective
under the Securities Act; |
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the offer and sale of such interests are qualified for sale
under applicable state securities laws; |
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the participant executes the subscription agreement included
with the prospectus for the subsequent Cole-sponsored
program; and |
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the participant qualifies under applicable investor suitability
standards as contained in the prospectus for the subsequent
Cole-sponsored program. |
Stockholders who invest in subsequent Cole-sponsored programs
pursuant to our distribution reinvestment plan will become
investors in such subsequent Cole-sponsored program and, as
such, will receive the same reports as other investors in the
subsequent Cole-sponsored program.
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Election to Participate or Terminate Participation
A stockholder may become a participant in our distribution
reinvestment plan by making a written election to participate on
his or her subscription agreement at the time he or she
subscribes for shares. Any stockholder who has not previously
elected to participate in the distribution reinvestment plan may
so elect at any time by delivering to the reinvestment agent a
completed enrollment form or other written authorization
required by the reinvestment agent. Participation in our
distribution reinvestment plan will commence with the next
distribution payable after receipt of the participants
notice, provided it is received at least ten days prior to the
last day of the fiscal quarter, month or other period to which
the distribution relates.
Some brokers may determine not to offer their clients the
opportunity to participate in our distribution reinvestment
plan. Any prospective investor who wishes to participate in our
distribution reinvestment plan should consult with his or her
broker as to the brokers position regarding participation
in the distribution reinvestment plan.
We reserve the right to prohibit qualified retirement plans from
participating in our distribution reinvestment plan if such
participation would cause our underlying assets to constitute
plan assets of qualified retirement plans. See
Investment by Tax-Exempt Entities and ERISA
Considerations.
Each stockholder electing to participate in our distribution
reinvestment plan agrees that, if at any time he or she fails to
meet the applicable investor suitability standards or cannot
make the other investor representations or warranties set forth
in the then current prospectus or subscription agreement
relating to such investment, he or she will promptly notify the
reinvestment agent in writing of that fact.
Subscribers should note that affirmative action in the form of
written notice to the reinvestment agent must be taken to
withdraw from participation in our distribution reinvestment
plan. A withdrawal from participation in our distribution
reinvestment plan will be effective with respect to
distributions for a quarterly or monthly distribution period, as
applicable, only if written notice of termination is received at
least ten days prior to the end of such distribution period. In
addition, a transfer of shares prior to the date our shares are
listed for trading on a national securities exchange or included
for quotation on The Nasdaq National Market, which we have no
intent to do at this time and which may never occur will
terminate participation in the distribution reinvestment plan
with respect to such transferred shares as of the first day of
the distribution period in which the transfer is effective,
unless the transferee demonstrates to the reinvestment agent
that the transferee meets the requirements for participation in
the plan and affirmatively elects to participate in the plan by
providing to the reinvestment agent an executed enrollment form
or other written authorization required by the reinvestment
agent.
Offers and sales of shares pursuant to the distribution
reinvestment plan must be registered in every state in which
such offers and sales are made. Generally, such registrations
are for a period of one year. Thus, we may have to stop selling
shares pursuant to the distribution reinvestment plan in any
states in which our registration is not renewed or extended.
Reports to Participants
Within 90 days after the end of each calendar year, the
reinvestment agent will mail to each participant a statement of
account describing, as to such participant, the distributions
received, the number of shares purchased, the purchase price for
such shares and the total shares purchased on behalf of the
participant during the prior year pursuant to our distribution
reinvestment plan.
Excluded Distributions
Our board of directors may designate that certain cash or other
distributions attributable to net sales proceeds will be
excluded from distributions that may be reinvested in shares
under our distribution reinvestment plan (Excluded
Distributions). Accordingly, in the event that proceeds
attributable to the potential sale transaction described above
are distributed to stockholders as an Excluded Distribution,
such amounts may not be reinvested in our shares pursuant to our
distribution reinvestment plan. The
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determination of whether all or part of a distribution will be
deemed to be an Excluded Distribution is separate and unrelated
to our requirement to distribute 90% of our taxable REIT income.
In its initial determination of whether to make a distribution
and the amount of the distribution, our board of directors will
consider, among other factors, our cash position and our
distribution requirements as a REIT. Once our board of directors
determines to make the distribution, it will then consider
whether all or part of the distribution will be deemed to be an
Excluded Distribution. In most instances, we expect that our
board of directors would not deem any of the distribution to be
an Excluded Distribution. In that event, the amount distributed
to participants in our distribution reinvestment plan will be
reinvested in additional shares of our common stock. If all or a
portion of the distribution is deemed to be an Excluded
Distribution, the distribution will be made to all stockholders,
however, the excluded portion will not be reinvested. As a
result, we would not be able to use any of the Excluded
Distribution to assist in meeting future distributions and the
stockholders would not be able to use the distribution to
purchase additional shares of our common stock through our
distribution reinvestment plan. We currently do not have any
planned Excluded Distributions, which will only be made, if at
all, in addition to, not in lieu of, regular distributions.
Federal Income Tax Considerations
Taxable participants will incur tax liability for partnership
income allocated to them even though they have elected not to
receive their distributions in cash but rather to have their
distributions reinvested under our distributions reinvestment
plan. See Risk Factors Federal Income Tax
Risks. Tax information regarding each participants
participation in the plan will be provided to each participant
at least annually.
Amendment and Termination
We reserve the right to amend any aspect of our distribution
reinvestment plan with ten days notice to participants.
The reinvestment agent also reserves the right to terminate a
participants individual participation in the plan, and we
reserve the right to terminate our distribution reinvestment
plan itself in our sole discretion at any time, by sending ten
days prior written notice of termination to the terminated
participant or, upon termination of the plan, to all
participants.
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OUR OPERATING PARTNERSHIP AGREEMENT
General
Cole OP II was formed in September, 2004 to acquire, own
and operate properties on our behalf. It will be an Umbrella
Partnership Real Estate Investment Trust, or UPREIT, which
structure is utilized generally to provide for the acquisition
of real property from owners who desire to defer taxable gain
that would otherwise be recognized by them upon the disposition
of their property. These owners may also desire to achieve
diversity in their investment and other benefits afforded to
owners of stock in a REIT. For purposes of satisfying the asset
and income tests for qualification as a REIT for tax purposes,
the REITs proportionate share of the assets and income of
an UPREIT, such as Cole OP II, will be deemed to be assets
and income of the REIT.
A property owner may contribute property to an UPREIT in
exchange for limited partnership units on a tax-free basis. In
addition, Cole OP II is structured to make distributions
with respect to limited partnership units that will be
equivalent to the distributions made to holders of our common
stock. Finally, a limited partner in Cole OP II may later
exchange his or her limited partnership units in Cole OP II
for shares of our common stock in a taxable transaction.
The partnership agreement for Cole OP II contains
provisions that would allow, under certain circumstances, other
entities, including other Cole-sponsored programs, to merge into
or cause the exchange or conversion of their interests for
interests of Cole OP II. In the event of such a merger,
exchange or conversion, Cole OP II would issue additional
limited partnership interests, which would be entitled to the
same exchange rights as other limited partnership interests of
Cole OP II. As a result, any such merger, exchange or
conversion ultimately could result in the issuance of a
substantial number of shares of our common stock, thereby
diluting the percentage ownership interest of other stockholders.
We intend to hold substantially all of our assets through Cole
OP II. We are the sole general partner of Cole OP II,
and our advisor, Cole Advisors II, is the only limited
partner of Cole OP II. As the sole general partner of Cole
OP II, we have the exclusive power to manage and conduct
the business of Cole OP II.
The following is a summary of certain provisions of the
partnership agreement of Cole OP II. This summary is not
complete and is qualified by the specific language in the
partnership agreement. You should refer to the partnership
agreement, itself, which we have filed as an exhibit to the
registration statement, for more detail.
Capital Contributions
As we accept subscriptions for shares, we will transfer
substantially all of the net proceeds of the offering to Cole
OP II as a capital contribution. However, we will be deemed
to have made capital contributions in the amount of the gross
offering proceeds received from investors. Cole OP II will
be deemed to have simultaneously paid the selling commissions
and other costs associated with the offering. If Cole OP II
requires additional funds at any time in excess of capital
contributions made by our advisor and us (which are minimal in
amount), or from borrowings, we may borrow funds from a
financial institution or other lender and lend such funds to
Cole OP II on the same terms and conditions as are
applicable to our borrowing of such funds. In addition, we are
authorized to cause Cole OP II to issue partnership
interests for less than fair market value if we conclude in good
faith that such issuance is in the best interests of Cole
OP II and us.
Operations
The partnership agreement requires that Cole OP II be
operated in a manner that will enable us to (1) satisfy the
requirements for being classified as a REIT for tax purposes,
(2) avoid any federal income or excise tax liability, and
(3) ensure that Cole OP II will not be classified as a
publicly traded partnership for purposes of
Section 7704 of the Internal Revenue Code, which
classification could result
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in Cole OP II being taxed as a corporation, rather than as
a partnership. See Federal Income Tax
Considerations Tax Aspects of Our Operating
Partnership Classification as a Partnership.
The partnership agreement provides that Cole OP II will
distribute cash flow from operations as follows:
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first, to us until we have received aggregate distributions with
respect to the current fiscal year equal to the minimum amount
necessary for us to distribute to our stockholders to enable us
to maintain our status as a REIT under the Internal Revenue Code
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next, to the limited partners until our limited partners have
received aggregate distributions equal to the amount that would
have been distributed to them with respect to all prior fiscal
years had all Cole OP II income for all such prior fiscal
years been allocated to us, each limited partner held a number
of our common shares equal to the number of Cole OP II
units that it holds and the REIT had distributed all such
amounts to our stockholders (including the limited partners); |
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next, to us and to the limited partners until each partner has
received aggregate distributions with respect to the current
fiscal year and all fiscal years had all Cole OP II income
for the current fiscal year and all such prior fiscal years been
allocated to us, our income with respect to the current fiscal
year and each such prior fiscal year equaled the minimum amount
necessary to maintain our status as a REIT under the Internal
Revenue Code, each limited partner held a number of common
shares equal to the number of Cole OP II units that we hold
and we had distributed all such amounts to its stockholders
(including the limited partners); and |
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finally, to us and the limited partners in accordance with the
partners percentage interests in Cole OP II. |
Similarly, the partnership agreement of Cole OP II provides
that taxable income is allocated to the limited partners of Cole
OP II in accordance with their relative percentage
interests such that a holder of one unit of limited partnership
interest in Cole OP II will be allocated taxable income for
each taxable year in an amount equal to the amount of taxable
income to be recognized by a holder of one of our shares,
subject to compliance with the provisions of
Sections 704(b) and 704(c) of the Internal Revenue Code and
corresponding Treasury Regulations. Losses, if any, generally
will be allocated among the partners in accordance with their
respective percentage interests in Cole OP II.
Upon the liquidation of Cole OP II, after payment of debts
and obligations, any remaining assets of Cole OP II will be
distributed to partners with positive capital accounts in
accordance with their respective positive capital account
balances. If we were to have a negative balance in our capital
account following a liquidation, we would be obligated to
contribute cash to Cole OP II equal to such negative
balance for distribution to other partners, if any, having
positive balances in such capital accounts.
In addition to the administrative and operating costs and
expenses incurred by Cole OP II in acquiring and operating
real properties, Cole OP II will pay all of our
administrative costs and expenses, and such expenses will be
treated as expenses of Cole OP II. Such expenses will
include:
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all expenses relating to the formation and continuity of our
existence; |
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all expenses relating to the public offering and registration of
securities by us; |
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all expenses associated with the preparation and filing of any
periodic reports by us under federal, state or local laws or
regulations; |
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all expenses associated with compliance by us with applicable
laws, rules and regulations; |
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all costs and expenses relating to any issuance or redemption of
partnership interests or shares of our common stock; and |
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all our other operating or administrative costs incurred in the
ordinary course of our business on behalf of Cole OP II. |
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All claims between the partners of Cole OP II arising out
of the partnership agreement are subject to binding arbitration.
Exchange Rights
The limited partners of Cole OP II, including Cole
Advisors II, have the right to cause their limited
partnership units to be redeemed by Cole OP II or purchased
by us for cash. In either event, the cash amount to be paid will
be equal to the cash value of the number of our shares that
would be issuable if the limited partnership units were
exchanged for our shares on a one-for-one basis. Alternatively,
we may elect to purchase the limited partnership units by
issuing one share of our common stock for each limited
partnership unit exchanged. As of March 31, 2005, there are
9,009 partnership units outstanding. These exchange rights may
not be exercised, however, if and to the extent that the
delivery of shares upon exercise would (1) result in any
person owning shares in excess of our ownership limits,
(2) result in shares being owned by fewer than 100 persons,
(3) cause us to be closely held within the
meaning of Section 856(h) of the Internal Revenue Code,
(4) cause us to own 10.0% or more of the ownership
interests in a tenant within the meaning of
Section 856(d)(2)(B) of the Internal Revenue Code, or
(5) cause the acquisition of shares by a redeemed limited
partner to be integrated with any other distribution
of our shares for purposes of complying with the Securities Act.
Subject to the foregoing, limited partners of Cole OP II
may exercise their exchange rights at any time after one year
following the date of issuance of their limited partnership
units. However, a limited partner may not deliver more than two
exchange notices each calendar year and may not exercise an
exchange right for less than 1,000 limited partnership units,
unless such limited partner holds less than 1,000 units, in
which case, it must exercise his exchange right for all of his
units. We do not expect to issue any of the shares of common
stock offered hereby to limited partners of Cole OP II in
exchange for their limited partnership units. Rather, in the
event a limited partner of Cole OP II exercises its
exchange rights, and we elect to purchase the limited
partnership units with shares of our common stock, we expect to
issue unregistered shares of common stock, or subsequently
registered shares of common stock, in connection with such
transaction.
Amendments to the Partnership Agreement
Our consent, as the general partner of Cole OP II, is
required for any amendment to the partnership agreement. We, as
the general partner of Cole OP II, and without the consent of
any limited partner, may amend the partnership agreement in any
manner, provided, however, that the consent of limited partners
holding more than 50% of the interests of the limited partners
is required for the following:
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any amendment affecting the conversion factor or the exchange
right in a manner adverse to the limited partners; |
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any amendment that would adversely affect the rights of the
limited partners to receive the distributions payable to them
pursuant to the partnership agreement (other than the issuance
of additional limited partnership interests); |
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any amendment that would alter the allocations of Cole OP
IIs profit and loss to the limited partners (other than
the issuance of additional limited partnership interests); |
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any amendment that would impose on the limited partners any
obligation to make additional capital contributions to Cole
OP II; and |
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any amendment pursuant to a plan of merger, plan of exchange or
plan of conversion, unless the partnership agreement of the
surviving limited partnership does not materially differ from
the partnership agreement of Cole OP II immediately before
the transaction. |
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Termination of the Partnership
Cole OP II will have perpetual duration, unless it is
dissolved earlier upon the first to occur of the following:
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we declare for bankruptcy or withdraw from the partnership,
provided, however, that the remaining partners may decide
to continue the business; |
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ninety days after the sale or other disposition of all or
substantially all of the assets of the partnership; |
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the exchange of all limited partnership interests (other than
such interests we, or are affiliates, hold); or |
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we elect, as the general partner, to dissolve the partnership. |
Transferability of Interests
We may not (1) voluntarily withdraw as the general partner
of Cole OP II, (2) engage in any merger, consolidation
or other business combination, or (3) transfer our general
partnership interest in Cole OP II (except to a wholly
owned subsidiary), unless the transaction in which such
withdrawal, business combination or transfer occurs results in
the limited partners receiving or having the right to receive an
amount of cash, securities or other property equal in value to
the amount they would have received if they had exercised their
exchange rights immediately prior to such transaction or unless,
in the case of a merger or other business combination, the
successor entity contributes substantially all of its assets to
Cole OP II in return for an interest in Cole OP II and
agrees to assume all obligations of the general partner of Cole
OP II. We may also enter into a business combination or
transfer our general partnership interest upon the receipt of
the consent of a majority-in-interest of the limited partners of
Cole OP II, other than Cole Advisors II and other
affiliates of Christopher H. Cole. With certain exceptions, a
limited partner may not transfer its interests in Cole
OP II, in whole or in part, without our written consent as
general partner.
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PLAN OF DISTRIBUTION
The Offering
We are offering a maximum of 50,000,000 shares of our
common stock to the public through Cole Capital Corporation, our
dealer manager, a registered broker-dealer affiliated with our
advisor. Of this amount, we are offering 45,000,000 shares
in our primary offering at a price of $10.00 per share,
except as provided below. The shares are being offered on a
best efforts basis, which means generally that the
dealer manager will be required to use only its best efforts to
sell the shares and it has no firm commitment or obligation to
purchase any of the shares. We are also offering
5,000,000 shares for sale pursuant to our distribution
reinvestment plan. The purchase price for shares sold under our
distribution reinvestment plan will be equal to the higher of
91.5% of the estimated value of a share of common stock, as
estimated by our board of directors and $9.15 per share. The
reduced purchase price for shares purchased pursuant to our
distribution reinvestment plan reflects that there will be no
fees, commissions or expenses paid with respect to these shares.
The offering of shares of our common stock will terminate on or
before June 27, 2007, which is two years after the
effective date of this offering, unless the offering is
extended. At the discretion of our board of directors, we may
elect to extend the termination date of our offering of shares
reserved for issuance pursuant to our distribution reinvestment
plan until we have sold 5,000,000 shares through the
reinvestment of distributions, in which case participants in the
plan will be notified. This offering must be registered in every
state in which we offer or sell shares. Generally, such
registrations are for a period of one year. Thus, we may have to
stop selling shares in any state in which our registration is
not renewed or otherwise extended annually. We reserve the right
to terminate this offering at any time prior to the stated
termination date.
Cole Capital Corporation
Cole Capital Corporation, our dealer manager, was organized in
1992 for the purpose of participating in and facilitating the
distribution of securities in programs sponsored by Cole Capital
Partners, its affiliates and its predecessors. For additional
information about Cole Capital Corporation, including
information relating to Cole Capital Corporations
affiliation with us, please refer to the section of this
prospectus captioned Management Affiliated
Companies Dealer Manager.
Compensation We Will Pay for the Sale of Our Shares
Except as provided below, we will pay our dealer manager selling
commissions of 7.0% of the gross offering proceeds. We also will
pay the dealer manager a fee in the amount of 1.5% of the gross
offering proceeds as compensation for acting as the dealer
manager and for expenses incurred in connection with marketing
and due diligence expense reimbursement. No sales commissions or
dealer manager fees will be paid with respect to shares
purchased pursuant to the distribution reinvestment plan. We
will not pay referral or similar fees to any accountants,
attorneys or other persons in connection with the distribution
of the shares. See the Summary of Distribution
Reinvestment Plan Investment of Distributions
section of this prospectus.
We expect our dealer manager to utilize two distribution
channels to sell our shares, which have different selling
commissions, and consequently, a different purchase price for
the shares. In the event of the sale of shares in our primary
offering by other broker-dealers that are members of the NASD,
the purchase price will be $10.00 per share, reflecting the
7.0% commission payable to our dealer manager, which it may
reallow to such participating broker-dealers. In the event of
the sale of shares in our primary offering to an investment
advisory representative, the purchase price for such shares will
be $9.30 per share, reflecting the fact that our dealer manager
will waive the 7.0% selling commission on such shares. We will
not pay selling commissions or a dealer manager fee in
connection with the sale of shares under our distribution
reinvestment plan. The dealer manager may reallow to each of the
participating broker dealers a portion of its dealer manager fee
earned on the proceeds raised by the participating
broker-dealer. This reallowance would be in the form of a
non-accountable marketing allowance and due diligence expense
reimbursement. The amount of the reallowance will be determined
by the dealer manager based
130
upon factors including the participating broker-dealers
level of marketing support, level of due diligence review and
success of its sales efforts, each as compared to those of the
other participating broker-dealers.
The table below sets forth the nature and amount of compensation
we will pay to our dealer manager and the participating
broker-dealers in this offering. The amounts shown assume that
all shares are sold in our primary offering through
participating broker-dealers, which is the distribution channel
with the highest possible selling commissions and dealer manager
fees.
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Per Share | |
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Total Minimum | |
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Total Maximum | |
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Primary Offering
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Price to Public
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$ |
10.00 |
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$ |
2,500,000 |
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|
$ |
450,000,000 |
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Selling Commissions
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0.70 |
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|
|
175,000 |
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|
|
31,500,000 |
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Dealer Manager fees
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0.15 |
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37,500 |
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|
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6,750,000 |
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Proceeds to Cole REIT II
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|
$ |
9.15 |
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|
$ |
2,287,500 |
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|
$ |
411,750,000 |
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Reinvestment Plan
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Price to Public
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$ |
9.15 |
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|
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$ |
45,750,000 |
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Distribution Selling Commissions
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Dealer Manager Fees
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Proceeds to Cole REIT II
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$ |
9.15 |
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|
|
|
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|
$ |
45,750,000 |
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|
We may sell shares in our primary offering to retirement plans
of broker-dealers participating in the offering, to
broker-dealers in their individual capacities, to IRAs and
qualified plans of their registered representatives or to any
one of their registered representatives in their individual
capacities at a discount. The purchase price for such shares
shall be $9.30 per share (unless a higher price is required
pursuant to Section 409A of the Internal Revenue Code),
reflecting the fact that selling commissions in the amount of
$0.70 per share will not be payable in connection with such
sales. The net proceeds to us from such sales will not be
affected by such sales of shares at a discount.
We or our affiliates also may provide non-cash incentive items
for registered representatives of our dealer manager and the
participating broker-dealers, which in no event shall exceed an
aggregate of $100 per annum per participating salesperson. The
value of such items will be considered underwriting compensation
in connection with this offering.
The total amount of underwriting compensation, including
commissions and reimbursement of expenses paid in connection
with the offering will not exceed 10% of the gross proceeds of
this offering, plus an additional 0.5% of gross proceeds for
reimbursement of bona fide due diligence expenses. Underwriting
compensation includes selling commissions, dealer manager fees
(including due diligence and other expense reimbursements),
wholesaling compensation and expense reimbursement relating to
sales seminars and sales incentives.
We have agreed to indemnify the participating broker-dealers,
including our dealer manager and selected registered investment
advisors, against certain liabilities arising under the
Securities Act. However, the Securities and Exchange Commission
takes the position that indemnification against liabilities
arising under the Securities Act is against public policy and is
unenforceable.
Shares Purchased by Affiliates
Our executive officers and directors, as well as officers and
employees of Cole Advisors II and their family members
(including spouses, parents, grandparents, children and
siblings) or other affiliates, may purchase shares offered in
this offering at a discount. The purchase price for such shares
shall be $9.15 per share (unless a higher price is required
pursuant to Section 409A of the Internal Revenue Code),
reflecting the fact that selling commissions in the amount of
$0.70 per share and a dealer manager fee in the amount of
$0.15 per share will not be payable in connection with such
sales. The net offering proceeds
131
we receive will not be affected by such sales of shares at a
discount. Our executive officers, directors and other affiliates
will be expected to hold their shares purchased as stockholders
for investment and not with a view towards resale. In addition,
shares purchased by Cole Advisors II or its affiliates will
not be entitled to vote on any matter presented to the
stockholders for a vote. Any shares of our common stock
purchased by an affiliate will not count toward the minimum
offering of 250,000 shares. With the exception of the
20,000 shares initially sold to Cole Holdings Corporation in
connection with our organization, no director, officer, advisor
or any affiliate may own more than 9.8% in value or number of
our outstanding common stock.
Volume Discounts
Volume discounts based on reduced sales commissions are
available for purchasers of certain minimum numbers
of shares, as defined below, volume discounts resulting in
reductions in selling commissions payable with respect to such
sales are available. In such event, any such reduction will be
credited to the investor by reducing the purchase price per
share. The following table illustrates the various discount
levels available;
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Purchase Price Per | |
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Sales | |
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Incremental Share | |
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Dealer | |
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Dollar Volume |
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Commission | |
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in Volume | |
|
Manager Fees | |
|
Net Proceeds | |
Shares Purchased |
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Percent | |
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Per Share | |
|
Discount Range | |
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Per Share | |
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Per Share | |
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| |
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| |
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| |
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| |
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| |
$250,000 or less
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|
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7.0 |
% |
|
$ |
0.70 |
|
|
$ |
10.00 |
|
|
$ |
0.15 |
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|
$ |
9.15 |
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$250,001-$500,000
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|
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6.0 |
% |
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0.60 |
|
|
$ |
9.90 |
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|
|
0.15 |
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|
|
9.15 |
|
$500,001-$1,000,000
|
|
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5.0 |
% |
|
|
0.50 |
|
|
$ |
9.80 |
|
|
|
0.15 |
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|
|
9.15 |
|
$1,000,001-$2,000,000
|
|
|
4.0 |
% |
|
|
0.40 |
|
|
$ |
9.70 |
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|
|
0.15 |
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|
9.15 |
|
$2,000,001-$5,000,000
|
|
|
3.0 |
% |
|
|
0.30 |
|
|
$ |
9.60 |
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|
|
0.15 |
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|
|
9.15 |
|
$5,000,001-$10,000,000
|
|
|
2.0 |
% |
|
|
0.20 |
|
|
$ |
9.50 |
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|
|
0.15 |
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|
|
9.15 |
|
Over $10,000,001
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|
|
1.0 |
% |
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|
0.10 |
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|
$ |
9.40 |
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|
|
0.15 |
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|
|
9.15 |
|
For example, if an investor purchases 60,000 shares, the
investor would pay (1) $250,000 for the first
25,000 shares, (2) $247,500 for the next
25,000 shares ($9.90 per share), and (3) $98,000 for
the next 10,000 shares ($9.80 per share), for a total
purchase price of $595,500 (approximately $9.925 per share)
rather than $600,000 for the shares. After the payment of sales
commissions of $37,500 (approximately $0.625 per share) and
payment of the dealer manager fee, we would receive net proceeds
of $549,000 ($9.15 per share). The net proceeds to us will not
be affected by volume discounts. All investors will be deemed to
have contributed the same amount per share to us for purposes of
declaring and paying distributions. Therefore, an investor who
has received a volume discount will realize a better return on
his or her investment in our shares than investors who do not
qualify for a discount.
Subscriptions may be combined for the purpose of determining the
volume discounts in the case of subscriptions made by any
purchaser, as that term is defined below, provided
all such shares are purchased through the same broker-dealer.
The volume discount is prorated among the separate subscribers
considered to be a single purchaser. Any request to
combine more than one subscription must be made in writing,
submitted simultaneously with the subscription for shares, and
must set forth the basis for such request. Any request for
volume discounts will be subject to our verification that all of
the combined subscriptions were made by a single
purchaser.
For the purposes of such volume discounts, the term
purchaser includes:
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an individual, his or her spouse and their children under the
age of 21 who purchase the shares for his, her or their own
account; |
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a corporation, partnership, association, joint-stock company,
trust fund or any organized group of persons, whether
incorporated or not; |
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|
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an employees trust, pension, profit-sharing or other
employee benefit plan qualified under Section 401(a) of the
Internal Revenue Code; and |
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|
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all commingled trust funds maintained by a given bank. |
132
In addition, investors may request in writing to aggregate
subscriptions as part of a combined order for purposes of
determining the number of shares purchased, provided that any
aggregate group of subscriptions must be received from the same
broker-dealer, including our dealer manager.
In order to encourage purchases of 1,000,000 or more shares, a
potential purchaser who proposes to purchase at least 1,000,000
shares may agree with Cole Advisors II and Cole Capital
Corporation to have the dealer manager fee with respect to the
sale of such shares reduced to as little as 1.0%, and, with the
agreement of the participating broker, to have the selling
commission payable with respect to the sale of such shares
reduced to as little as 0.5%. The aggregate fees payable with
respect to the sale of such shares would be reduced by
$0.70 per share, resulting in a purchase price of
$9.30 per share, rather than $10.00 per share.
Because all investors will be deemed to have contributed the
same amount per share to us for purposes of declaring and paying
distributions, investors who pay a reduced or no commission will
receive a higher return on their investment than investors who
do not qualify for such discount.
Subscription Process
To purchase shares in this offering, you must complete and sign
a subscription agreement, like the one contained in this
prospectus as Appendix B. You should pay for your shares by
delivering a check for the full purchase price of the shares,
payable to Wells Fargo Bank, N.A., Escrow Agent for Cole
Credit Property Trust II, Inc. You should exercise
care to ensure that the subscription agreement is filled out
correctly and completely. By executing the subscription
agreement, you will attest that you meet the suitability
standards described in this prospectus and agree to be bound by
all of the terms of the subscription agreement.
Subscriptions will be effective only upon our acceptance, and we
reserve the right to reject any subscription in whole or in
part. We may not accept a subscription for shares until at least
five business days after the date you receive this prospectus.
Subject to compliance with Rule 15c2-4 of the Exchange Act,
our dealer manager and/or the broker-dealers participating in
the offering will promptly submit a subscribers check to
the escrow agent on the business day following receipt of the
subscribers subscription documents and check. In certain
circumstances where the suitability review procedures are more
lengthy than customary, a subscribers check will be
promptly deposited with the escrow agent in compliance with
Exchange Act Rule 15c2-4. The proceeds from your
subscription will be deposited in a segregated escrow account
with our escrow agent, and will be held in trust for your
benefit, pending release to us.
After we have received subscriptions for at least
250,000 shares of our common stock, we will accept or
reject subscriptions within 35 days after we receive them.
If your subscription agreement is rejected, your funds, without
interest, or reductions for offering expenses, commissions or
fees will be returned to you within ten business days after the
date of such rejection. If your subscription is accepted, we
will send you a confirmation of your purchase after you have
been admitted as an investor. After we have sold at least
250,000 shares of our common stock, we expect to admit new
investors at least monthly and we may admit new investors more
frequently. The escrow agent will not release your funds to us
until we admit you as a stockholder.
Minimum Offering
Subscription proceeds will be placed in escrow until such time
as subscriptions aggregating at least the minimum offering of
250,000 shares of our common stock have been received and
accepted by us. Any shares purchased by our advisor or its
affiliates will not be counted in calculating the minimum
offering. Funds in escrow will be invested in short-term
investments, which may include obligations of, or obligations
guaranteed by, the U.S. government or bank money-market
accounts or certificates of deposit of national or state banks
that have deposits insured by the Federal Deposit Insurance
Corporation (including certificates of deposit of any bank
acting as a depository or custodian for any such funds) that can
be readily sold, with appropriate safety of principal.
Subscribers may not withdraw funds from the escrow account.
133
If subscriptions for at least the minimum offering have not been
received and accepted by June 27, 2006, which is one year
after the effective date of this offering, our escrow agent will
promptly so notify us, this offering will be terminated and your
funds and subscription agreement will be returned to you within
ten days after the date of such termination. Interest will
accrue on funds in the escrow account as applicable to the
short-term investments in which such funds are invested. During
any period in which subscription proceeds are held in escrow for
more than 35 days, interest earned thereon will be
allocated among subscribers on the basis of the respective
amounts of their subscriptions and the number of days that such
amounts were on deposit. Such interest will be paid to
subscribers upon the termination of the escrow period, subject
to withholding for taxes pursuant to applicable Treasury
Regulations. We will bear all expenses of the escrow and, as
such, any interest to be paid to any subscriber will not be
reduced for such expense.
Special Notice to Pennsylvania Investors
Subscription proceeds received from residents of Pennsylvania
will be placed in a separate interest-bearing escrow account
with the escrow agent until subscriptions for shares aggregating
at least $25,000,000, have been received and accepted by us. If
we have not raised a minimum of $25,000,000 in gross offering
proceeds (including sales made to residents of other
jurisdictions) by the end of each 120-day escrow period (with
the initial 120-day escrow period commencing upon the
effectiveness of this offering), we will notify Pennsylvania
investors in writing by certified mail within ten calendar days
after the end of each 120-day escrow period that they have a
right to have their investment returned to them. If a
Pennsylvania investor requests the return of his or her
subscription funds within ten calendar days after receipt of the
notification, we must return those funds, together with any
interest earned on the funds for the time those funds remain in
escrow subsequent to the initial 120-day escrow period, to the
investor within ten calendar days after receipt of the
investors request.
Investments by IRAs and Qualified Plans
Sterling Trust Company has agreed to act as an IRA custodian for
purchasers of our common stock who desire to establish an IRA,
SEP or certain other tax-deferred accounts or transfer or
rollover existing accounts. Sterling Trust Company has agreed to
provide this service to our stockholders with annual maintenance
fees charged at a discounted rate. Further information as to
custodial services is available through your broker or may be
requested from us.
HOW TO SUBSCRIBE
Investors who meet the applicable suitability standards and
minimum purchase requirements described in the Suitability
Standards section of this prospectus may purchase shares
of common stock. If you want to purchase shares, you must
proceed as follows:
|
|
|
(1) Read the entire prospectus and the current
supplement(s), if any, accompanying this prospectus. |
|
|
(2) Complete the execution copy of the subscription
agreement. A specimen copy of the subscription agreement,
including instructions for completing it, is included in this
prospectus as Appendix B. |
|
|
(3) Deliver a check to Cole Capital Corporation for the
full purchase price of the shares being subscribed for, payable
to Wells Fargo Bank, N.A., Escrow Agent for Cole Credit
Property Trust II, Inc. along with the completed
subscription agreement. Certain dealers who have net
capital, as defined in the applicable federal securities
regulations, of $250,000 or more may instruct their customers to
make their checks payable directly to the dealer. In such case,
the dealer will issue a check made payable to the escrow agent
for the purchase price of your subscription. The name of the
dealer appears on the subscription agreement. |
134
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|
|
(4) By executing the subscription agreement and paying the
full purchase price for the shares subscribed for, you will
attest that you meet the suitability standards as provided in
the Suitability Standards section of this prospectus
and as stated in the subscription agreement and agree to be
bound by the terms of the subscription agreement. |
An approved trustee must process through us and forward us
subscriptions made through IRAs, Keogh plans, 401(k) plans and
other tax-deferred plans. If you want to purchase shares through
an IRA, SEP or other tax-deferred account, Sterling Trust
Company has agreed to serve as IRA custodian for such purpose.
Sterling Trust Company has agreed to provide this service to our
stockholders with annual maintenance fees charged at a
discounted rate.
SUPPLEMENTAL SALES MATERIAL
In addition to this prospectus, we may utilize certain sales
material in connection with the offering of the shares, although
only when accompanied by or preceded by the delivery of this
prospectus. The sales materials may include information relating
to this offering, the past performance of Cole Advisors II,
our advisor, and its affiliates, property brochures and articles
and publications concerning real estate. In certain
jurisdictions, some or all of our sales material may not be
permitted and will not be used in those jurisdictions.
The offering of shares is made only by means of this prospectus.
Although the information contained in our supplemental sales
material will not conflict with any of the information contained
in this prospectus, the supplemental materials do not purport to
be complete, and should not be considered a part of this
prospectus or the registration statement of which this
prospectus is a part.
LEGAL MATTERS
Venable LLP, Baltimore, Maryland, will pass upon the legality of
the common stock and Morris, Manning & Martin, LLP,
Atlanta, Georgia, will pass upon legal matters in connection
with our status as a REIT for federal income tax purposes.
Morris, Manning & Martin, LLP will rely on the opinion
of Venable LLP as to all matters of Maryland law. Neither
Venable LLP nor Morris, Manning & Martin, LLP purport
to represent our stockholders or potential investors, who should
consult their own counsel. Morris, Manning & Martin,
LLP also provides legal services to Cole Advisors II, our
advisor, as well as affiliates of Cole Advisors II, and may
continue to do so in the future.
EXPERTS
The financial statements as of March 31, 2005 and
December 31, 2004, and for the three month period ended
March 31, 2005 and the period September 29, 2004 (date
of inception) to December 31, 2004, included in this
prospectus have been audited by Deloitte & Touche LLP,
an independent registered public accounting firm, as stated in
their report appearing herein, and have been included in
reliance upon the report of such firm given upon their authority
as experts in accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION
We have filed a registration statement on Form S-11 with
the Securities and Exchange Commission in connection with our
initial public offering. We are required to file annual,
quarterly and current reports, proxy statements and other
information with the Securities and Exchange Commission.
135
You may request and obtain a copy of these filings, at no cost
to you, by writing or telephoning us at the following address:
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Cole Credit Property Trust II, Inc. |
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Attn: Investor Relations |
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2555 East Camelback Road |
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Suite 400 |
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Phoenix, Arizona 85016 |
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(866) 341-2653 |
One of our affiliates maintains an Internet site at
http://www.colecapital.com, at which there is additional
information about us. The contents of that site are not
incorporated by reference in, or otherwise a part of, this
prospectus.
This prospectus does not contain all of the information set
forth in the registration statement and the exhibits related
thereto as filed with the Securities and Exchange Commission,
reference to which is hereby made.
You can read our registration statement and the exhibits thereto
and our future Securities and Exchange Commission filings over
the Internet at www.sec.gov. You may also read and copy
any document we file with the Securities and Exchange Commission
at its Public Reference Room at 450 Fifth Street, N.W.,
Washington, D.C. 20549. You may also obtain copies of the
documents at prescribed rates by writing to the Public Reference
Section of the Securities and Exchange Commission at
450 Fifth Street, N.W., Washington, D.C. 20549. Please
call the Securities and Exchange Commission at 1-800-SEC-0330 or
e-mail at publicinfo@sec.gov for further information on
the operation of the public reference facilities.
136
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
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Page | |
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Report of Independent Registered Public Accounting Firm
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F-2 |
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Consolidated Balance Sheets
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F-3 |
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Consolidated Statements of Stockholders Equity
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F-4 |
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Consolidated Statements of Cash Flows
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F-5 |
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Notes to Consolidated Financial Statements
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F-6 |
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F-1
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholder of
Cole Credit Property Trust II, Inc.
Phoenix, Arizona
We have audited the accompanying consolidated balance sheets of
Cole Credit Property Trust II, Inc. (a development stage
company) and its subsidiary (the Company) as of
March 31, 2005 and December 31, 2004, and the related
consolidated statements of stockholders equity for the
period September 29, 2004 (date of inception) to
March 31, 2005, and cash flows for the three months ended
March 31, 2005 and for the period September 29, 2004
(date of inception) to December 31, 2004. These financial
statements are the responsibility of the Companys
management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are
free of material misstatement. The Company is not required to
have, nor were we engaged to perform, an audit of its internal
control over financial reporting. Our audits included
consideration of internal control over financial reporting as a
basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion
on the effectiveness of the Companys internal control over
financial reporting. Accordingly, we express no such opinion. An
audit also includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present
fairly, in all material respects, the financial position of Cole
Credit Property Trust II, Inc. (a development stage
company) and its subsidiary, as of March 31, 2005 and
December 31, 2004, and the results of their cash flows for
the three months ended March 31, 2005 and for the period
September 29, 2004 (date of inception) to December 31,
2004, in conformity with accounting principles generally
accepted in the United States of America.
/s/ Deloitte & Touche LLP
Phoenix, Arizona
June 1, 2005
F-2
COLE CREDIT PROPERTY TRUST II, INC.
(A Development Stage Company)
CONSOLIDATED BALANCE SHEETS
As of March 31, 2005 and December 31, 2004
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March 31, 2005 | |
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December 31, 2004 | |
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ASSETS |
Cash and cash equivalents
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$ |
200,000 |
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$ |
200,000 |
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Total Assets
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|
$ |
200,000 |
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$ |
200,000 |
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LIABILITIES AND STOCKHOLDERS EQUITY |
Stockholders equity:
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Preferred stock, $.01 par value, 10,000,000 shares
authorized, none issued and outstanding
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$ |
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$ |
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|
Common stock, $.01 par value; 90,000,000 shares
authorized, 20,000 shares issued and outstanding
|
|
|
200 |
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|
200 |
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Capital in excess of par value
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|
199,800 |
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|
199,800 |
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Total Liabilities and Stockholders Equity
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|
$ |
200,000 |
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|
$ |
200,000 |
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See accompanying notes to consolidated financial statements.
F-3
COLE CREDIT PROPERTY TRUST II, INC.
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
For the Three Months Ended March 31, 2005
and for the Period September 29, 2004 (Date of
Inception) to December 31, 2004
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|
Common Stock | |
|
|
|
|
|
|
| |
|
Capital in | |
|
Total | |
|
|
Number of | |
|
|
|
Excess of | |
|
Stockholders | |
|
|
Shares | |
|
Par Value | |
|
Par Value | |
|
Equity | |
|
|
| |
|
| |
|
| |
|
| |
Balance, September 29, 2004 (Date of Inception)
|
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Cash received from sale of common stock to Cole Holdings
Corporation
|
|
|
20,000 |
|
|
|
200 |
|
|
|
199,800 |
|
|
|
200,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, March 31, 2005 and December 31, 2004
|
|
|
20,000 |
|
|
$ |
200 |
|
|
$ |
199,800 |
|
|
$ |
200,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to consolidated financial statements.
F-4
COLE CREDIT PROPERTY TRUST II, INC.
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Three Months Ended March 31, 2005
and for the Period September 29, 2004 (Date of
Inception) to December 31, 2004
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Period Ended | |
|
|
March 31, 2005 |
|
December 31, 2004 | |
|
|
|
|
| |
CASH FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
Proceeds from issuance of common stock and cash and cash
equivalents end of period
|
|
$ |
|
|
|
$ |
200,000 |
|
|
|
|
|
|
|
|
See accompanying notes to consolidated financial statements.
F-5
COLE CREDIT PROPERTY TRUST II, INC.
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Three Months Ended March 31, 2005
and for the Period from September 29, 2004 (Date of
Inception) to December 31, 2004
|
|
1. |
Organization and Significant Accounting Policies: |
Cole Credit Property Trust II, Inc. (the
Company) was organized as a corporation in Maryland
on September 29, 2004. The Company is the sole general
partner of and owns a 99.9% partnership interest in Cole
Operating Partnership II, LP (Cole OP II).
Cole REIT Advisors II, LLC (the Advisor), the
affiliated advisor to the Company, is the sole limited partner
and owner of 0.1% of the partnership interests of Cole
OP II. At March 31, 2005 and December 31, 2004,
Cole OP II had no assets, liabilities or equity. The
Company intends to file a registration statement on
Form S-11 with the Securities and Exchange Commission with
respect to a public offering (the Offering) of
50,000,000 shares of common stock.
A maximum of 45,000,000 shares may be sold to the public.
In addition, the Company plans to register an additional
5,000,000 shares that will be available only to
stockholders who elect to participate in the Companys
distribution reinvestment plan.
The Company intends to use substantially all of the net proceeds
from this offering to acquire and operate commercial real estate
primarily consisting of high quality, freestanding,
single-tenant retail properties net leased to creditworthy
tenants located throughout the United States.
The Company is in the development stage and has not begun
operations. The consolidated statements include the accounts of
the Company and its majority-owned subsidiary.
|
|
|
Cash and Cash Equivalents |
Cash and cash equivalents consist of all highly liquid,
non-interest bearing, investments with a maturity of three
months or less when purchased.
|
|
|
Organization and Offering Expenses |
The Advisor funds all of the organization and offering costs on
the Companys behalf and may be reimbursed for such costs
up to 1.5% of the cumulative capital raised by the Company in
the Offering. As of March 31, 2005 and December 31,
2004, the Advisor had incurred organization and offering costs
of approximately $595,000 and $463,000, respectively, on behalf
of the Company. These costs are not included in the financial
statements of the Company because such costs are not a liability
of the Company until the subscriptions for the minimum number of
shares of common stock are received and accepted by the Company.
When recorded by the Company, organization costs will be
expensed as incurred. Offering costs include items such as legal
and accounting fees, marketing, promotional and printing costs.
All offering costs will be recorded as a reduction of capital in
excess of par value.
The Company intends to make an election to be taxed as a real
estate investment trust (REIT) under
Sections 856 through 860 of the Internal Revenue Code
commencing with its taxable year ending December 31, 2005.
If the Company qualifies for taxation as a REIT, the Company
generally will not be subject to federal corporate income tax to
the extent it distributes its REIT taxable income to its
stockholders, and so long as it distributes at least 90% of its
REIT taxable income. REITs are subject to a number of other
organizational and operational requirements. Even if the Company
qualifies for taxation as a REIT, it may be subject to certain
state and local taxes on its income and property, and federal
income and excise taxes on its undistributed income.
F-6
COLE CREDIT PROPERTY TRUST II, INC.
(A Development Stage Company)
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS (Continued)
For the Three Months Ended March 31, 2005
and for the Period from September 29, 2004 (Date of
Inception) to December 31, 2004
At March 31, 2005 and December 31, 2004, the Company
was authorized to issue 90,000,000 shares of common stock
and 10,000,000 shares of preferred stock. All shares of
such stock have a par value of $.01 per share. On
September 29, 2004 (date of inception), the Company sold
20,000 shares of common stock, at $10 per share, to
Cole Holdings Corporation, the indirect owner of limited
liability company interests of the Advisor. The Companys
board of directors may authorize additional shares of capital
stock and amend their terms without obtaining stockholder
approval.
|
|
4. |
Concentration of Credit Risk: |
At March 31, 2005 and December 31, 2004, the Company
had cash on deposit in one financial institution in excess of
federally insured levels; however, the Company has not
experienced any losses in such account. The Company limits
investment of cash investments to financial institutions with
high credit standing; therefore, the Company believes it is not
exposed to any significant credit risk on cash.
|
|
5. |
Related Party Arrangements: |
Certain affiliates of the Company will receive fees and
compensation in connection with the Offering, and the
acquisition, management and sale of the assets of the Company.
Cole Capital Corporation (Cole Capital), the
affiliated dealer-manager, will receive a commission of up to 7%
of gross offering proceeds before reallowance of commissions
earned by participating broker-dealers. Cole Capital intends to
reallow 100% of commissions earned to participating
broker-dealers. In addition, up to 1.5% of gross proceeds before
reallowance to participating broker-dealers, will be paid to
Cole Capital as a dealer-manager fee. Cole Capital in its sole
discretion, may reallow a portion of its dealer-manager fee to
such participating broker-dealers as a marketing and due
diligence expense reimbursement, based on such factors as the
volume of shares sold by such participating broker-dealers and
marketing support incurred as compared to those of the other
participating broker-dealers.
The Advisor, or its affiliates, may receive up to 1.5% of gross
offering proceeds for reimbursement of organization and offering
expenses upon the execution of the advisory agreement. All
organization and offering expenses (excluding selling
commissions and the dealer-manager fee) are being paid for by
the Advisor or its affiliates. The Advisor or its affiliates
also will receive acquisition and advisory fees of up to 2% of
the contract purchase price of each asset for the acquisition,
development or construction of real property and will be
reimbursed for acquisition expenses incurred in the process of
acquiring properties. The Company expects the acquisition
expenses to be approximately 0.5% of the purchase price of each
property.
If the Advisor provides services, as determined by the
independent directors, in connection with the origination or
refinancing of any debt financing obtained by the Company that
is used to acquire properties or to make other permitted
investments, the Company will pay the Advisor a financing
coordination fee equal to 1% of the amount available under such
financing; provided, however, that the Advisor shall not be
entitled to a financing coordination fee in connection with the
refinancing of any loan secured by any particular property that
was previously subject to a refinancing in which the Advisor
received such a fee. Financing coordination fees payable from
loan proceeds from permanent financing will be paid to the
Advisor as the Company acquires such permanent financing.
However, no acquisition fees will be paid on loan proceeds from
any line of credit until such time as all net offering proceeds
have been invested by the Company.
F-7
COLE CREDIT PROPERTY TRUST II, INC.
(A Development Stage Company)
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS (Continued)
For the Three Months Ended March 31, 2005
and for the Period from September 29, 2004 (Date of
Inception) to December 31, 2004
The Company expects to pay Fund Realty Advisors, Inc.
(Fund Realty), its property manager, fees for
the management and leasing of the Companys properties.
Such fees are expected to equal 2% of gross revenues plus
leasing commissions at prevailing market rates; provided
however, that the aggregate of all property management and
leasing fees paid to affiliates plus all payments to third
parties will not exceed the amount that other nonaffiliated
management and leasing companies generally charge for similar
services in the same geographic location. Fund Realty may
subcontract its duties for a fee that may be less than the fee
provided for in the property management agreement.
The Company will pay the Advisor an annual advisor asset
management fee of 0.25% of aggregate asset value (the
Asset Management Fee). The fee will be payable
monthly in an amount equal to 0.02083% of aggregate asset value
as of the last day of the immediately preceding month.
If the Advisor or its affiliates provides a substantial amount
of services, as determined by the Companys independent
directors, in connection with the sale of one or more
properties, the Company will pay the Advisor up to one-half of
the brokerage commission paid, but in no event to exceed an
amount equal to 2% of the sales price of each property sold. In
no event will the combined real estate commission paid to the
Advisor, its affiliates and unaffiliated third parties exceed 6%
of the contract sales price. In addition, after investors have
received a return on their net capital contributions and an 8%
annual cumulative, non-compounded return, then the Advisor is
entitled to receive 10% of remaining net sale proceeds.
Upon listing of the Companys common stock on a national
securities exchange or included for quotation on The Nasdaq
National Market, a fee equal to 10% of the amount by which the
market value of the Companys outstanding stock plus all
distributions paid by the Company prior to listing, exceeds the
sum of the total amount of capital raised from investors and the
amount of cash flow necessary to generate an 8% annual
cumulative, non-compounded return to investors will be paid to
the Advisor (the Subordinated Incentive Listing Fee).
Upon termination of the advisory agreement with the Advisor,
other than termination by the Company because of a material
breach of the advisory agreement by the Advisor, a performance
fee of 10% of the amount, if any, by which (i) the
appraised asset value at the time of such termination plus total
distributions paid to stockholders through the termination date
exceeds (ii) the aggregate capital contribution contributed
by investors less distributions from sale proceeds plus payment
to investors of an 8% annual, cumulative, non-compounded return
on capital. No subordinated performance fee will be paid if the
Company has already paid or become obligated to pay the Advisor
a Subordinated Incentive Listing Fee.
The Company will reimburse the Advisor for all expenses it paid
or incurred in connection with the services provided to the
Company, subject to the limitation that the Company will not
reimburse for any amount by which its operating expenses
(including the Asset Management Fee) at the end of the four
preceding fiscal quarters exceeds the greater of (i) 2% of
average invested assets, or (ii) 25% of net income other
than any additions to reserves for depreciation, bad debts or
other similar non-cash reserves and excluding any gain from the
sale of assets for that period. The Company will not reimburse
for personnel costs in connection with services for which the
Advisor receives acquisition fees or real estate commissions.
F-8
COLE CREDIT PROPERTY TRUST II, INC.
(A Development Stage Company)
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS (Continued)
For the Three Months Ended March 31, 2005
and for the Period from September 29, 2004 (Date of
Inception) to December 31, 2004
|
|
6. |
Independent Directors Stock Option Plan: |
The Company has a stock option plan (the 2004 Independent
Directors Stock Option Plan or the
IDSOP), which authorizes the grant of non-qualified
stock options to the Companys independent directors,
subject to the absolute discretion of the board and the
applicable limitations of the plan. The Company intends to grant
options under the IDSOP to each qualifying director annually.
The exercise price for the options granted under the IDSOP
initially will be $9.15 per share (or greater, if such
higher price as is necessary so that such options shall not be
considered a nonqualified deferred compensation plan
under Section 409A of the Internal Revenue Code of 1986, as
amended). It is intended that the exercise price for future
options granted under the Companys independent director
stock option plan will be at least 100.0% of the fair market
value of the Companys common stock as of the date that the
option is granted. As of March 31, 2005 and
December 31, 2004, no options had been granted under the
IDSOP. On May 2, 2005, options to purchase 10,000 shares at
$9.15 per share were granted under the IDSOP. A total of
1,000,000 shares have been authorized and reserved for
issuance under the IDSOP.
F-9
APPENDIX A
PRIOR PERFORMANCE TABLES
The prior performance tables that follow present certain
information regarding private real estate programs previously
sponsored by related entities. Twenty-four partnerships formed
from January 1, 1995 through March 31, 2005 have
similar investment objectives to ours and purchased
20 retail centers aggregating approximately
1,743,000 square feet, one garden office building
aggregating approximately 30,000 square feet and
23 single tenant retail properties aggregating
approximately 544,000 square feet. One partnership
purchased two land parcels for development aggregating
approximately 452,000 square feet. The prior performance
tables also include the activity of Cole Credit Property Trust,
Inc. (CCPT), Cole Collateralized Senior Notes, LLC (CCSN), Cole
Collateralized Senior Notes II, LLC (CCSN II), Cole
Collateralized Senior Notes III, LLC (CCSN III) and
the various offerings related to Cole Capital Partners
tenant-in-common program.
As of March 31, 2005, CCPT had raised approximately
$46.1 million and had acquired thirteen single-tenant
commercial properties aggregating approximately
413,000 square feet.
As of March 31, 2005, Cole Credit Property
Fund Limited Partnership had raised $25.0 million and
had acquired 14 single-tenant commercial properties or interests
therein aggregating approximately 247,000 square feet. As
of March 31, 2005, Cole Credit Property Fund II
Limited Partnership had raised approximately $24.5 million
and had acquired ten single-tenant commercial properties or
interests therein aggregating approximately 297,000 square
feet.
As of March 31, 2005, CCSN had issued approximately
$28.0 million in Series A Notes and acquired 40
single-tenant commercial properties, aggregating approximately
426,000 square feet. As of March 31, 2005, CCSN had
sold twenty-four properties, three of which were sold as part of
Cole Capital Partners tenant-in-common program and three
properties were sold to CCPT.
As of March 31, 2005, CCSN II has issued approximately
$28.7 million in Series B Notes and acquired
twenty-three single-tenant commercial properties aggregating
approximately 475,000 square feet. As of March 31,
2005, CCSN II had sold nine properties, six of which were sold
as part of Cole Capital Partners tenant-in-common program
and three were sold to CCPT.
As of March 31, 2005, CCSN III had issued
approximately $6.6 million in Series C Notes and had
not acquired any properties.
Cole Partnerships, Inc., an entity affiliated with the officers
of Cole Capital Advisors, has raised $5 million in a debt
offering for general corporate purposes, including investments
in joint ventures with affiliates, which has been repaid. This
program is not considered to have similar investment objectives
to this offering.
In addition, Cole Capital Partners, through affiliated entities,
offers properties to Section 1031 exchange investors in the
form of the sale of tenant-in-common ownership interests in such
properties. As of March 31, 2005, aggregate ownership
interests of $39.8 million had been sold in sixteen private
offerings of properties located in twelve states. In addition,
there are three other private offerings of tenant-in-common
interests with an aggregate offering amount of approximately
$17.4 million for which no amounts have been raised as of
March 31, 2005.
The investment objectives of previous private real estate
programs formed from 1979 through 1992 are not similar to the
investment objectives of the above programs due to the fact that
those properties have been held for capital appreciation in the
value of the underlying land.
These tables contain information that may aid a potential
investor in evaluating the program presented. However, the
information contained in these tables does not relate to any
properties we may purchase and the purchase of our shares will
not create any ownership interest in the programs included in
Past performance is not necessarily indicative of future
results
A-1
these tables. We intend to purchase properties as
income-producing properties, with returns anticipated from
income and any increase in the value of the properties.
These tables are presented on a tax basis rather than on a GAAP
basis. Tax basis accounting does not take certain income or
expense accruals into consideration at the end of each fiscal
year. Income may be understated in the tables, as GAAP
accounting would require certain amortization or leveling of
rental revenue, the amount of which is undetermined at this
time. Expenses may be understated by monthly operating expenses,
which are typically paid in arrears.
Past performance is not necessarily indicative of future
results
A-2
TABLE I
EXPERIENCE IN RAISING AND INVESTING FUNDS (UNAUDITED)
This table provides a summary of the experience of the sponsor
and its affiliates in investing and raising funds in Prior Real
Estate Programs for which the offerings have been initiated
since January 1, 2002. Information is provided with regard
to the manner in which the proceeds of the offerings have been
applied. Also set forth below is information pertaining to the
timing and length of these offerings and the time period over
which the proceeds have been invested in the properties. All
amounts are as of March 31, 2005.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cole Boulevard | |
|
Cole Santa Fe | |
|
Cole Credit | |
|
|
Square Investors LP | |
|
Investors LP | |
|
Property Fund LP | |
|
|
| |
|
| |
|
| |
Dollar amount offered
|
|
$ |
10,700,000 |
|
|
$ |
6,180,000 |
|
|
$ |
25,000,000 |
|
Dollar amount raised
|
|
|
10,000,000 |
|
|
|
6,180,000 |
|
|
|
25,000,000 |
|
Less offering expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling commissions and discounts retained by affiliates
|
|
|
797,200 |
|
|
|
494,400 |
|
|
|
2,000,000 |
|
|
Organizational expenses(4)
|
|
|
340,641 |
|
|
|
129,040 |
|
|
|
478,170 |
|
|
Other
|
|
|
|
|
|
|
|
|
|
|
|
|
Reserves
|
|
|
340,840 |
|
|
|
976,862 |
|
|
|
429,858 |
|
Percent available for investment
|
|
|
89 |
% |
|
|
90 |
% |
|
|
90 |
% |
Acquisition costs:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Prepaid items and fees related to purchase of property
|
|
|
15,371 |
|
|
|
24,628 |
|
|
|
384,288 |
|
|
Cash down payment
|
|
|
6,930,000 |
|
|
|
3,937,098 |
|
|
|
19,315,693 |
|
|
Acquisition fees(5)
|
|
|
1,039,500 |
|
|
|
386,400 |
|
|
|
2,151,522 |
|
|
Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total acquisition cost
|
|
|
7,984,871 |
|
|
|
4,348,126 |
|
|
|
21,851,503 |
|
Percent leverage
|
|
|
80 |
% |
|
|
80 |
% |
|
|
66 |
% |
Date offering began
|
|
|
05/15/02 |
|
|
|
09/04/02 |
|
|
|
11/15/02 |
|
Length of offering (in months)
|
|
|
7 |
|
|
|
3 |
|
|
|
9 |
|
Months to invest 90% of amount available for investment
|
|
|
2 |
|
|
|
1 |
|
|
|
10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cole Credit | |
|
Cole Collateralized | |
|
Cole Collateralized | |
|
|
Property Fund II LP | |
|
Senior Notes, LLC(6) | |
|
Senior Notes II, LLC(6) | |
|
|
| |
|
| |
|
| |
Dollar amount offered
|
|
$ |
25,000,000 |
|
|
$ |
28,750,000 |
(1) |
|
$ |
28,750,000 |
(1) |
Dollar amount raised
|
|
|
24,494,500 |
|
|
|
28,038,500 |
|
|
|
28,750,000 |
|
Less offering expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling commissions and discounts retained by affiliates
|
|
|
1,961,560 |
|
|
|
1,401,925 |
|
|
|
1,437,500 |
|
|
Organizational expenses(4)
|
|
|
449,873 |
|
|
|
660,585 |
|
|
|
645,882 |
|
|
Other
|
|
|
|
|
|
|
|
|
|
|
|
|
Reserves
|
|
|
451,175 |
|
|
|
5,668,960 |
|
|
|
3,784,574 |
|
Percent available for investment
|
|
|
90 |
% |
|
|
93 |
% |
|
|
93 |
% |
Acquisition costs:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Prepaid items and fees related to purchase of property
|
|
|
213,578 |
|
|
|
537,738 |
|
|
|
501,369 |
|
|
Cash down payment
|
|
|
20,273,063 |
|
|
|
22,306,921 |
|
|
|
19,485,354 |
|
|
Acquisition fees(5)
|
|
|
1,137,801 |
|
|
|
1,317,486 |
|
|
|
1,716,968 |
|
|
Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total acquisition cost
|
|
|
21,624,442 |
|
|
|
24,162,145 |
|
|
|
21,703,691 |
|
Percent leverage
|
|
|
65 |
% |
|
|
65 |
% |
|
|
50 |
% |
Date offering began
|
|
|
07/01/03 |
|
|
|
09/15/03 |
|
|
|
02/01/04 |
|
Length of offering (months)
|
|
|
9 |
|
|
|
9 |
|
|
|
12 |
|
Months to invest 90% of amount available for investment
|
|
|
15 |
|
|
|
5 |
|
|
|
7 |
|
Past performance is not necessarily indicative of future
results
A-3
TABLE I
EXPERIENCE IN RAISING AND INVESTING FUNDS
(UNAUDITED) (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cole Collateralized | |
|
Cole Credit | |
|
Staples in | |
|
|
Senior Notes III, LLC(6) | |
|
Property Trust, Inc. | |
|
Tulsa, OK(2)(3) | |
|
|
| |
|
| |
|
| |
Dollar amount offered
|
|
$ |
28,750,000 |
|
|
$ |
100,000,000 |
|
|
$ |
4,136,000 |
|
Dollar amount raised
|
|
|
6,555,000 |
|
|
|
46,100,250 |
|
|
|
4,136,000 |
|
Less offering expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling commissions and discounts retained by affiliates
|
|
|
327,750 |
|
|
|
3,227,018 |
|
|
|
248,160 |
|
|
Organizational expenses(4)
|
|
|
250,019 |
|
|
|
1,655,313 |
|
|
|
41,360 |
|
|
Other
|
|
|
|
|
|
|
|
|
|
|
|
|
Reserves
|
|
|
4,877,323 |
|
|
|
13,914,308 |
|
|
|
26,957 |
|
Percent available for investment
|
|
|
91 |
% |
|
|
89 |
% |
|
|
93 |
% |
Acquisition costs:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Prepaid items and fees related to purchase of property
|
|
|
|
|
|
|
779,713 |
|
|
|
30,000 |
|
|
Cash down payment
|
|
|
|
|
|
|
24,611,542 |
|
|
|
3,760,640 |
|
|
Acquisition fees(5)
|
|
|
|
|
|
|
1,007,535 |
|
|
|
55,840 |
|
|
Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total acquisition cost
|
|
|
|
|
|
|
26,398,790 |
|
|
|
3,846,480 |
|
Percent leverage
|
|
|
0 |
% |
|
|
55 |
% |
|
|
0 |
% |
Date offering began
|
|
|
01/03/05 |
|
|
|
04/06/04 |
|
|
|
02/13/04 |
|
Length of offering (in months)
|
|
|
Ongoing |
|
|
|
Ongoing |
|
|
|
7 |
|
Months to invest 90% of amount available for investment
|
|
|
N/A |
|
|
|
N/A |
|
|
|
4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mimis Café in | |
|
Walgreens in | |
|
Walgreens in | |
|
|
Lone Tree, CO(2)(3) | |
|
Windsor, CO(2)(3) | |
|
Goldsboro, NC(2)(3) | |
|
|
| |
|
| |
|
| |
Dollar amount offered
|
|
$ |
2,446,000 |
|
|
$ |
2,669,000 |
|
|
$ |
2,570,000 |
|
Dollar amount raised
|
|
|
2,446,000 |
|
|
|
2,669,000 |
|
|
|
2,570,000 |
|
Less offering expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling commissions and discounts retained by affiliates
|
|
|
146,760 |
|
|
|
160,140 |
|
|
|
154,200 |
|
|
Organizational expenses(4)
|
|
|
24,460 |
|
|
|
26,690 |
|
|
|
25,700 |
|
|
Other
|
|
|
|
|
|
|
|
|
|
|
|
|
Reserves
|
|
|
14,698 |
|
|
|
40,667 |
|
|
|
18,589 |
|
Percent available for investment
|
|
|
93 |
% |
|
|
93 |
% |
|
|
93 |
% |
Acquisition costs:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Prepaid items and fees related to purchase of property
|
|
|
60,280 |
|
|
|
60,000 |
|
|
|
60,000 |
|
|
Cash down payment
|
|
|
2,150,000 |
|
|
|
2,393,460 |
|
|
|
2,303,985 |
|
|
Acquisition fees(5)
|
|
|
64,500 |
|
|
|
|
|
|
|
|
|
|
Other
|
|
|
|
|
|
|
28,710 |
|
|
|
26,115 |
|
|
|
|
|
|
|
|
|
|
|
Total acquisition cost
|
|
|
2,274,780 |
|
|
|
2,482,170 |
|
|
|
2,390,100 |
|
Percent leverage
|
|
|
0 |
% |
|
|
52 |
% |
|
|
50 |
% |
Date offering began
|
|
|
04/20/04 |
|
|
|
06/03/04 |
|
|
|
06/30/04 |
|
Length of offering (in months)
|
|
|
4 |
|
|
|
3 |
|
|
|
3 |
|
Months to invest 90% of amount available for investment
|
|
|
3 |
|
|
|
3 |
|
|
|
3 |
|
Past performance is not necessarily indicative of future
results
A-4
TABLE I
EXPERIENCE IN RAISING AND INVESTING FUNDS
(UNAUDITED) (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Walgreens in | |
|
Walgreens in | |
|
Walgreens in | |
|
|
Hamilton, OH(2)(3) | |
|
Carlsbad, NM(2)(3) | |
|
Willimantic, CT(2)(3) | |
|
|
| |
|
| |
|
| |
Dollar amount offered
|
|
$ |
2,966,000 |
|
|
$ |
2,289,739 |
|
|
$ |
2,746,000 |
|
Dollar amount raised
|
|
|
2,966,000 |
|
|
|
2,289,739 |
|
|
|
2,746,000 |
|
Less offering expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling commissions and discounts retained by affiliates
|
|
|
177,960 |
|
|
|
137,384 |
|
|
|
164,760 |
|
|
Organizational expenses(4)
|
|
|
29,660 |
|
|
|
22,898 |
|
|
|
27,460 |
|
|
Other
|
|
|
|
|
|
|
|
|
|
|
|
|
Reserves
|
|
|
29,573 |
|
|
|
24,005 |
|
|
|
37,601 |
|
Percent available for investment
|
|
|
93 |
% |
|
|
93 |
% |
|
|
93 |
% |
Acquisition costs:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Prepaid items and fees related to purchase of property
|
|
|
60,000 |
|
|
|
60,000 |
|
|
|
60,000 |
|
|
Cash down payment
|
|
|
2,668,047 |
|
|
|
2,046,107 |
|
|
|
2,466,690 |
|
|
Acquisition fees(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
|
|
|
30,333 |
|
|
|
23,350 |
|
|
|
27,090 |
|
|
|
|
|
|
|
|
|
|
|
Total acquisition cost
|
|
|
2,758,380 |
|
|
|
2,129,457 |
|
|
|
2,553,780 |
|
Percent leverage
|
|
|
51 |
% |
|
|
50 |
% |
|
|
50 |
% |
Date offering began
|
|
|
07/01/04 |
|
|
|
07/13/04 |
|
|
|
09/15/04 |
|
Length of offering (in months)
|
|
|
4 |
|
|
|
5 |
|
|
|
2 |
|
Months to invest 90% of amount available for investment
|
|
|
3 |
|
|
|
3 |
|
|
|
2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Walgreens in | |
|
Walgreens in | |
|
Walgreens in | |
|
|
Edgewood, NM(2)(3) | |
|
Fairborn, OH(2)(3) | |
|
Slidell, LA(2)(3) | |
|
|
| |
|
| |
|
| |
Dollar amount offered
|
|
$ |
2,134,000 |
|
|
$ |
2,644,000 |
|
|
$ |
2,212,000 |
|
Dollar amount raised
|
|
|
2,134,000 |
|
|
|
2,644,000 |
|
|
|
1,683,000 |
|
Less offering expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling commissions and discounts retained by affiliates
|
|
|
128,040 |
|
|
|
158,640 |
|
|
|
100,980 |
|
|
Organizational expenses(4)
|
|
|
21,340 |
|
|
|
26,440 |
|
|
|
16,830 |
|
|
Other
|
|
|
|
|
|
|
|
|
|
|
|
|
Reserves
|
|
|
19,940 |
|
|
|
26,668 |
|
|
|
19,891 |
|
Percent available for investment
|
|
|
93 |
% |
|
|
93 |
% |
|
|
93 |
% |
Acquisition costs:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Prepaid items and fees related to purchase of property
|
|
|
60,000 |
|
|
|
60,000 |
|
|
|
45,651 |
|
|
Cash down payment
|
|
|
1,903,340 |
|
|
|
2,372,750 |
|
|
|
1,502,861 |
|
|
Acquisition fees(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
|
|
|
21,280 |
|
|
|
26,170 |
|
|
|
16,678 |
|
|
|
|
|
|
|
|
|
|
|
Total acquisition cost
|
|
|
1,984,620 |
|
|
|
2,458,920 |
|
|
|
1,565,190 |
|
Percent leverage
|
|
|
50 |
% |
|
|
50 |
% |
|
|
50 |
% |
Date offering began
|
|
|
09/15/04 |
|
|
|
09/30/04 |
|
|
|
11/02/04 |
|
Length of offering (in months)
|
|
|
4 |
|
|
|
2 |
|
|
|
Ongoing |
|
Months to invest 90% of amount available for investment
|
|
|
3 |
|
|
|
2 |
|
|
|
N/A |
|
Past performance is not necessarily indicative of future
results
A-5
TABLE I
EXPERIENCE IN RAISING AND INVESTING FUNDS
(UNAUDITED) (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Walgreens in | |
|
Walgreens in | |
|
Walgreens in | |
|
|
Westheimer, TX(2)(3) | |
|
Richmond, OH(2)(3) | |
|
Spokane, WA(2)(3) | |
|
|
| |
|
| |
|
| |
Dollar amount offered
|
|
$ |
3,900,000 |
|
|
$ |
3,388,000 |
|
|
$ |
11,532,000 |
|
Dollar amount raised
|
|
|
3,900,000 |
|
|
|
2,993,000 |
|
|
|
4,044,000 |
|
Less offering expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling commissions and discounts retained by affiliates
|
|
|
234,000 |
|
|
|
179,580 |
|
|
|
242,640 |
|
|
Organizational expenses(4)
|
|
|
39,000 |
|
|
|
29,930 |
|
|
|
40,440 |
|
|
Other
|
|
|
|
|
|
|
|
|
|
|
|
|
Reserves
|
|
|
34,827 |
|
|
|
29,596 |
|
|
|
|
|
Percent available for investment
|
|
|
93 |
% |
|
|
93 |
% |
|
|
93 |
% |
Acquisition costs:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Prepaid items and fees related to purchase of property
|
|
|
60,000 |
|
|
|
21,205 |
|
|
|
150,808 |
|
|
Cash down payment
|
|
|
3,526,680 |
|
|
|
2,700,564 |
|
|
|
3,606,093 |
|
|
Acquisition fees(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
|
|
|
40,320 |
|
|
|
29,921 |
|
|
|
4,019 |
|
|
|
|
|
|
|
|
|
|
|
Total acquisition cost
|
|
|
3,627,000 |
|
|
|
2,751,690 |
|
|
|
3,760,920 |
|
Percent leverage
|
|
|
51 |
% |
|
|
50 |
% |
|
|
50 |
% |
Date offering began
|
|
|
10/15/04 |
|
|
|
10/26/04 |
|
|
|
11/09/04 |
|
Length of offering (in months)
|
|
|
3 |
|
|
|
Ongoing |
|
|
|
Ongoing |
|
Months to invest 90% of amount available for investment
|
|
|
2 |
|
|
|
2 |
|
|
|
N/A |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Walgreens in | |
|
Walgreens in | |
|
Walgreens in | |
|
|
Covington, TN(2)(3) | |
|
Orlando, FL(2)(3) | |
|
Glen Burnie, MD(2)(3) | |
|
|
| |
|
| |
|
| |
Dollar amount offered
|
|
$ |
2,141,000 |
|
|
$ |
2,486,000 |
|
|
$ |
3,485,000 |
|
Dollar amount raised
|
|
|
470,000 |
|
|
|
787,000 |
|
|
|
1,328,000 |
|
Less offering expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling commissions and discounts retained by affiliates
|
|
|
28,200 |
|
|
|
47,220 |
|
|
|
79,680 |
|
|
Organizational expenses(4)
|
|
|
4,700 |
|
|
|
7,870 |
|
|
|
13,280 |
|
|
Other
|
|
|
|
|
|
|
|
|
|
|
|
|
Reserves
|
|
|
29,359 |
|
|
|
|
|
|
|
|
|
Percent available for investment
|
|
|
93 |
% |
|
|
93 |
% |
|
|
93 |
% |
Acquisition costs:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Prepaid items and fees related to purchase of property
|
|
|
13,171 |
|
|
|
29,125 |
|
|
|
76,473 |
|
|
Cash down payment
|
|
|
419,328 |
|
|
|
695,134 |
|
|
|
1,145,729 |
|
|
Acquisition fees(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
|
|
|
4,601 |
|
|
|
7,652 |
|
|
|
12,838 |
|
|
|
|
|
|
|
|
|
|
|
Total acquisition cost
|
|
|
437,100 |
|
|
|
731,911 |
|
|
|
1,235,040 |
|
Percent leverage
|
|
|
50 |
% |
|
|
50 |
% |
|
|
50 |
% |
Date offering began
|
|
|
11/19/04 |
|
|
|
11/30/04 |
|
|
|
12/01/04 |
|
Length of offering (in months)
|
|
|
Ongoing |
|
|
|
Ongoing |
|
|
|
Ongoing |
|
Months to invest 90% of amount available for investment
|
|
|
N/A |
|
|
|
N/A |
|
|
|
N/A |
|
Past performance is not necessarily indicative of future
results
A-6
TABLE I
EXPERIENCE IN RAISING AND INVESTING FUNDS
(UNAUDITED) (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Walgreens in | |
|
Walgreens in | |
|
Home Depot in | |
|
|
Garfield Heights, OH(2)(3) | |
|
Ponca City(2)(3) | |
|
Tacoma, WA(2)(3) | |
|
|
| |
|
| |
|
| |
Dollar amount offered
|
|
$ |
2,887,000 |
|
|
$ |
2,327,000 |
|
|
$ |
12,175,000 |
|
Dollar amount raised
|
|
|
|
|
|
|
|
|
|
|
|
|
Less offering expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling commissions and discounts retained by affiliates
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Organizational expenses(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
|
|
|
|
|
|
|
|
|
|
|
|
|
Reserves
|
|
|
|
|
|
|
|
|
|
|
|
|
Percent available for investment
|
|
|
N/A |
|
|
|
N/A |
|
|
|
N/A |
|
Acquisition costs:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Prepaid items and fees related to purchase of property
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash down payment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition fees(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total acquisition cost
|
|
|
|
|
|
|
|
|
|
|
|
|
Percent leverage
|
|
|
0 |
% |
|
|
0 |
% |
|
|
0 |
% |
Date offering began
|
|
|
12/09/04 |
|
|
|
12/10/04 |
|
|
|
02/08/05 |
|
Length of offering (in months)
|
|
|
Ongoing |
|
|
|
Ongoing |
|
|
|
Ongoing |
|
Months to invest 90% of amount available for investment
|
|
|
N/A |
|
|
|
N/A |
|
|
|
N/A |
|
Past performance is not necessarily indicative of future
results
A-7
NOTES TO TABLE I
|
|
(1) |
Amount includes an over allotment of $3,750,000 available under
the offering. |
|
(2) |
The Offering is a Tenant-in-Common Program sponsored by Cole
Capital Partners which consists of the sale of tenant in common
interests in properties owned by subsidiaries of Cole
Collateralized Senior Notes, LLC or Cole Collateralized Senior
Notes II, LLC. |
|
(3) |
Acquisition cost amounts represent the costs paid by the
tenant-in-common investors to acquire interest in the properties. |
|
(4) |
Organizational expenses include legal, accounting, printing,
escrow, filing, recording and other related expenses associated
with the formation and original organization of the Program and
also includes fees paid to the sponsor and to affiliates. |
|
(5) |
Acquisition fees include fees paid to the sponsor or affiliates
based upon the terms of the memorandum. |
|
(6) |
Amounts herein relate to initial investments of capital raised
and do not include any properties acquired through reinvested
amounts. |
Past performance is not necessarily indicative of future
results
A-8
TABLE II
COMPENSATION TO SPONSOR AND AFFILIATES (UNAUDITED)
This table sets forth the compensation paid to the sponsor and
its affiliates during the three years and three months ended
March 31, 2005. Prior Real Estate programs whose offerings
have closed since January 1, 2002 are shown separately and
all other programs have been aggregated. The table includes
compensation paid out of the offering proceeds and compensation
paid in connection with the ongoing operations of Prior Real
Estate Programs. Each of the Prior Real Estate Programs for
which information is presented below has similar or identical
investment objectives to this program. All amounts are as of
March 31, 2005.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cole Boulevard | |
|
Cole Santa Fe | |
|
Cole Credit | |
|
|
Square Investors LP | |
|
Investors LP | |
|
Property Fund LP | |
|
|
| |
|
| |
|
| |
Date offering commenced
|
|
|
05/15/02 |
|
|
|
09/04/02 |
|
|
|
11/15/02 |
|
Dollar amount raised
|
|
$ |
10,000,000 |
|
|
$ |
6,180,000 |
|
|
$ |
25,000,000 |
|
Amount paid to sponsor from proceeds of offering:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Underwriting fees
|
|
|
238,718 |
|
|
|
142,020 |
|
|
|
297,820 |
|
|
Acquisition fees(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate commissions
|
|
|
1,039,500 |
|
|
|
386,400 |
|
|
|
2,151,522 |
|
|
|
Advisory fees
|
|
|
50,000 |
|
|
|
25,000 |
|
|
|
|
|
|
Other(2)
|
|
|
116,476 |
|
|
|
69,000 |
|
|
|
|
|
Dollar amount of cash generated from operations before deducting
payments to sponsor
|
|
|
2,526,466 |
|
|
|
1,796,845 |
|
|
|
5,790,594 |
|
Amount paid to sponsor from operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property management fees
|
|
|
108,181 |
|
|
|
319,193 |
|
|
|
120,882 |
|
|
Partnership management fees
|
|
|
257,532 |
|
|
|
162,500 |
|
|
|
|
|
|
Reimbursements
|
|
|
9,223 |
|
|
|
10,620 |
|
|
|
2,992 |
|
|
Leasing commissions
|
|
|
26,593 |
|
|
|
131,650 |
|
|
|
|
|
|
Other(3)
|
|
|
104,552 |
|
|
|
45,271 |
|
|
|
|
|
Dollar amount of property sales and refinancing before deducting
payments to sponsor
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount paid to sponsor from property sales and refinancing
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive fees
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate commissions
|
|
|
976,500 |
|
|
|
7,795 |
|
|
|
|
|
|
Other(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
Past performance is not necessarily indicative of future
results
A-9
TABLE II
COMPENSATION TO SPONSOR AND
AFFILIATES (UNAUDITED) (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cole Credit | |
|
Cole Collateralized | |
|
Cole Collateralized | |
|
Cole Collateralized | |
|
|
Property Fund II LP | |
|
Senior Notes, LLC | |
|
Senior Notes II, LLC | |
|
Senior Notes III, LLC | |
|
|
| |
|
| |
|
| |
|
| |
Date offering commenced
|
|
|
07/01/03 |
|
|
|
09/15/03 |
|
|
|
2/1/04 |
|
|
|
01/03/05 |
|
Dollar amount raised
|
|
$ |
24,494,500 |
|
|
$ |
28,038,500 |
|
|
$ |
28,750,000 |
|
|
$ |
6,555,000 |
|
Amount paid to sponsor from proceeds of offering:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Underwriting fees
|
|
|
163,043 |
|
|
|
499,153 |
|
|
|
477,487 |
|
|
|
74,575 |
|
|
Acquisition fees(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate commissions
|
|
|
1,137,801 |
|
|
|
3,690,061 |
|
|
|
3,912,688 |
|
|
|
|
|
|
|
Advisory fees
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dollar amount of cash generated from operations before deducting
payments to sponsor
|
|
|
3,114,306 |
|
|
|
822,323 |
|
|
|
(965,513 |
) |
|
|
(24,072 |
) |
Amount paid to sponsor from operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property management fees
|
|
|
77,817 |
|
|
|
284,815 |
|
|
|
128,684 |
|
|
|
|
|
|
Partnership management fees
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reimbursements
|
|
|
207 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Leasing commissions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dollar amount of property sales and refinancing before deducting
payments to sponsor
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount paid to sponsor from property sales and refinancing
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive fees
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate commissions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Past performance is not necessarily indicative of future
results
A-10
TABLE II
COMPENSATION TO SPONSOR AND
AFFILIATES (UNAUDITED) (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cole Credit Property | |
|
Staples in | |
|
Mimis in | |
|
Walgreens in | |
|
|
Trust, Inc. | |
|
Tulsa, OK | |
|
Lone Tree, CO | |
|
Windsor, CO | |
|
|
| |
|
| |
|
| |
|
| |
Date offering commenced
|
|
|
04/06/04 |
|
|
|
02/13/04 |
|
|
|
04/20/04 |
|
|
|
06/03/04 |
|
Dollar amount raised
|
|
$ |
46,100,250 |
|
|
$ |
4,136,000 |
|
|
$ |
2,446,000 |
|
|
$ |
2,669,000 |
|
Amount paid to sponsor from proceeds of offering:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Underwriting fees
|
|
|
893,357 |
|
|
|
41,360 |
|
|
|
24,460 |
|
|
|
26,690 |
|
|
Acquisition fees(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate commissions
|
|
|
1,007,535 |
|
|
|
55,840 |
|
|
|
64,500 |
|
|
|
|
|
|
|
Advisory fees
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
28,710 |
|
Dollar amount of cash generated from operations before deducting
payments to sponsor
|
|
|
1,501,169 |
|
|
|
263,497 |
|
|
|
142,889 |
|
|
|
130,472 |
|
Amount paid to sponsor from operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property management fees
|
|
|
69,690 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Partnership management fees
|
|
|
211,717 |
|
|
|
2,204 |
|
|
|
2,800 |
|
|
|
2,284 |
|
|
Reimbursements
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Leasing commissions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dollar amount of property sales and refinancing before deducting
payments to sponsor
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount paid to sponsor from property sales and refinancing
Incentive fees
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate commissions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Past performance is not necessarily indicative of future
results
A-11
TABLE II
COMPENSATION TO SPONSOR AND
AFFILIATES (UNAUDITED) (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Walgreens in | |
|
Walgreens in | |
|
Walgreens in | |
|
Walgreens in | |
|
|
Goldsboro, NC | |
|
Hamilton, OH | |
|
Carlsbad, NM | |
|
Willimantic, CT | |
|
|
| |
|
| |
|
| |
|
| |
Date offering commenced
|
|
|
06/30/04 |
|
|
|
07/01/04 |
|
|
|
07/13/04 |
|
|
|
09/15/04 |
|
Dollar amount raised
|
|
$ |
2,570,000 |
|
|
$ |
2,966,000 |
|
|
$ |
2,289,739 |
|
|
$ |
2,746,000 |
|
Amount paid to sponsor from proceeds of offering:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Underwriting fees
|
|
|
25,700 |
|
|
|
29,660 |
|
|
|
22,898 |
|
|
|
27,460 |
|
|
Acquisition fees(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate commissions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Advisory fees
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other(2)
|
|
|
26,115 |
|
|
|
30,333 |
|
|
|
23,350 |
|
|
|
27,090 |
|
Dollar amount of cash generated from operations before deducting
payments to sponsor
|
|
|
111,075 |
|
|
|
134,890 |
|
|
|
89,612 |
|
|
|
89,766 |
|
Amount paid to sponsor from operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property management fees
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Partnership management fees
|
|
|
2,010 |
|
|
|
4,767 |
|
|
|
4,624 |
|
|
|
5,040 |
|
|
Reimbursements
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Leasing commissions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dollar amount of property sales and refinancing before deducting
payments to sponsor
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount paid to sponsor from property sales and refinancing
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive fees
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate commissions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Past performance is not necessarily indicative of future
results
A-12
TABLE II
COMPENSATION TO SPONSOR AND
AFFILIATES (UNAUDITED) (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Walgreens in | |
|
Walgreens in | |
|
Walgreens in | |
|
Walgreens in | |
|
|
Edgewood, NM | |
|
Fairborn, OH | |
|
Slidell, LA | |
|
Westheimer, TX | |
|
|
| |
|
| |
|
| |
|
| |
Date offering commenced
|
|
|
09/15/04 |
|
|
|
09/30/04 |
|
|
|
11/02/04 |
|
|
|
10/15/04 |
|
Dollar amount raised
|
|
$ |
2,134,000 |
|
|
$ |
2,644,000 |
|
|
$ |
1,683,000 |
|
|
$ |
3,900,000 |
|
Amount paid to sponsor from proceeds of offering:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Underwriting fees
|
|
|
21,340 |
|
|
|
26,440 |
|
|
|
16,830 |
|
|
|
39,000 |
|
|
Acquisition fees(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate commissions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Advisory fees
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other(2)
|
|
|
21,280 |
|
|
|
26,170 |
|
|
|
16,678 |
|
|
|
40,320 |
|
Dollar amount of cash generated from operations before deducting
payments to sponsor
|
|
|
62,102 |
|
|
|
73,203 |
|
|
|
28,391 |
|
|
|
89,944 |
|
Amount paid to sponsor from operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property management fees
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Partnership management fees
|
|
|
4,233 |
|
|
|
6,350 |
|
|
|
1,410 |
|
|
|
5,228 |
|
|
Reimbursements
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Leasing commissions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dollar amount of property sales and refinancing before deducting
payments to sponsor
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount paid to sponsor from property sales and refinancing
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive fees
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate commissions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Past performance is not necessarily indicative of future
results
A-13
TABLE II
COMPENSATION TO SPONSOR AND
AFFILIATES (UNAUDITED) (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Walgreens in | |
|
Home Depot in | |
|
Walgreens in | |
|
Walgreens in | |
|
|
Richmond Heights, OH | |
|
Spokane, WA | |
|
Covington, TN | |
|
Orlando, FL | |
|
|
| |
|
| |
|
| |
|
| |
Date offering commenced
|
|
|
10/26/04 |
|
|
|
11/09/04 |
|
|
|
11/19/04 |
|
|
|
11/30/04 |
|
Dollar amount raised
|
|
$ |
2,993,000 |
|
|
$ |
4,044,000 |
|
|
$ |
470,000 |
|
|
$ |
787,000 |
|
Amount paid to sponsor from proceeds of offering:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Underwriting fees
|
|
|
29,930 |
|
|
|
40,440 |
|
|
|
4,700 |
|
|
|
7,870 |
|
|
Acquisition fees(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate commissions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Advisory fees
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other(2)
|
|
|
29,921 |
|
|
|
4,019 |
|
|
|
4,601 |
|
|
|
7,652 |
|
Dollar amount of cash generated from operations before deducting
payments to sponsor
|
|
|
72,212 |
|
|
|
|
|
|
|
30,933 |
|
|
|
|
|
Amount paid to sponsor from operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property management fees
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Partnership management fees
|
|
|
4,103 |
|
|
|
|
|
|
|
1,575 |
|
|
|
|
|
|
Reimbursements
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Leasing commissions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dollar amount of property sales and refinancing before deducting
payments to sponsor
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount paid to sponsor from property sales and refinancing
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive fees
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate commissions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Past performance is not necessarily indicative of future
results
A-14
TABLE II
COMPENSATION TO SPONSOR AND
AFFILIATES (UNAUDITED) (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Walgreens in | |
|
Walgreens in | |
|
Walgreens in | |
|
Home Depot in | |
|
|
Glen Burnie, MD | |
|
Garfield Heights, OH | |
|
Ponca City, OK | |
|
Tacoma, WA | |
|
|
| |
|
| |
|
| |
|
| |
Date offering commenced
|
|
|
12/01/04 |
|
|
|
12/09/04 |
|
|
|
12/10/04 |
|
|
|
02/08/05 |
|
Dollar amount raised
|
|
$ |
1,328,000 |
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Amount paid to sponsor from proceeds of offering:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Underwriting fees
|
|
|
13,280 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition fees(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate commissions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Advisory fees
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other(2)
|
|
|
12,838 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Dollar amount of cash generated from operations before deducting
payments to sponsor
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount paid to sponsor from operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property management fees
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Partnership management fees
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reimbursements
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Leasing commissions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dollar amount of property sales and refinancing before deducting
payments to sponsor
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount paid to sponsor from property sales and refinancing
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive fees
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate commissions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Past performance is not necessarily indicative of future
results
A-15
TABLE II
COMPENSATION TO SPONSOR AND
AFFILIATES (UNAUDITED) (Continued)
|
|
|
|
|
|
|
|
|
20 Other | |
|
|
Programs (5) | |
|
|
| |
Date offering commenced
|
|
|
|
|
Dollar amount raised
|
|
$ |
|
|
Amount paid to sponsor from proceeds of offering:
|
|
|
|
|
|
Underwriting fees
|
|
|
|
|
|
Acquisition fees(1)
|
|
|
|
|
|
|
Real estate commissions
|
|
|
3,509 |
|
|
|
Advisory fees
|
|
|
|
|
|
Other(2)
|
|
|
|
|
Dollar amount of cash generated from operations before deducting
payments to sponsor
|
|
|
4,270,666 |
|
Amount paid to sponsor from operations:
|
|
|
|
|
|
Property management fees
|
|
|
740,294 |
|
|
Partnership management fees
|
|
|
1,057,241 |
|
|
Reimbursements
|
|
|
94,483 |
|
|
Leasing commissions
|
|
|
158,638 |
|
|
Other(3)
|
|
|
202,351 |
|
Dollar amount of property sales and refinancing before deducting
payments to sponsor
|
|
|
|
|
|
Cash
|
|
|
79,492,235 |
|
|
Notes
|
|
|
4,175,000 |
|
Amount paid to sponsor from property sales and refinancing
|
|
|
|
|
|
Incentive fees
|
|
|
|
|
|
Real estate commissions
|
|
|
3,772,330 |
|
|
Other(4)
|
|
|
719,028 |
|
Past performance is not necessarily indicative of future
results
A-16
NOTES TO TABLE II
|
|
(1) |
Properties are acquired with a combination of funds from
offering proceeds and debt. The acquisition and development fees
and the leasing commissions reported in this table include the
total amount of fees paid to the sponsor or its affiliates
regardless of the funding source for these costs. |
|
(2) |
Amounts primarily relate to loan coordination fees, a
development fee, and reimbursement of certain offering costs
paid by the sponsor. |
|
(3) |
Amounts primarily relate to construction management fees. |
|
(4) |
Amounts primarily relate to asset management fees. |
|
(5) |
The offerings of the prior programs aggregated herein were not
closed within the past three years and therefore do not include
any amounts raised or underwriting fees. The programs have
similar investment objectives to Cole Credit Property
Trust II, Inc. |
Past performance is not necessarily indicative of future
results
A-17
TABLE III
ANNUAL OPERATING RESULTS OF PRIOR REAL ESTATE PROGRAMS
(UNAUDITED)
The following sets forth the unaudited operating results of
Prior Real Estate Programs sponsored by affiliates of the
sponsor of this program, the offerings of which have been closed
since January 1, 2000. The information relates only to
programs with investment objectives similar to this program. All
amounts are as of December 31 of the year indicated, except
as noted.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Santa Fe Square Investors LP (Sold) | |
|
|
June 1999 | |
|
|
| |
|
|
2000 | |
|
2001 | |
|
2002 | |
|
2003 |
|
2004 |
|
2005 | |
|
|
| |
|
| |
|
| |
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
(As of 3/31/05) | |
Gross revenues
|
|
$ |
2,259,295 |
|
|
$ |
2,398,989 |
|
|
$ |
1,272,655 |
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Profit (loss) on sale of properties
|
|
|
|
|
|
|
|
|
|
|
5,547,845 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Less:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses(4)
|
|
|
800,797 |
|
|
|
818,962 |
|
|
|
876,085 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
262,446 |
|
|
|
257,632 |
|
|
|
203,924 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation(3)
|
|
|
254,345 |
|
|
|
287,320 |
|
|
|
203,285 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) Tax basis(6)
|
|
$ |
941,707 |
|
|
$ |
1,035,075 |
|
|
$ |
5,537,206 |
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxable income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operations
|
|
$ |
941,707 |
|
|
$ |
1,035,075 |
|
|
$ |
(10,639 |
) |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
from gain on sale
|
|
|
|
|
|
|
|
|
|
|
5,547,845 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operations(5)
|
|
|
1,196,052 |
|
|
|
1,322,395 |
|
|
|
192,646 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from sales
|
|
|
|
|
|
|
|
|
|
|
3,451,259 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from refinancing
|
|
|
|
|
|
|
|
|
|
|
11,531,507 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated from operations, sales and refinancing
|
|
|
1,196,052 |
|
|
|
1,322,395 |
|
|
|
15,175,412 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Cash distributions to investors
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operating cash flow
|
|
|
842,777 |
|
|
|
880,000 |
|
|
|
696,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from sales and refinancing
|
|
|
|
|
|
|
|
|
|
|
13,502,268 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated (deficiency) after cash distributions
|
|
|
353,275 |
|
|
|
442,395 |
|
|
|
977,144 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Special items (not including sales and refinancing)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated (deficiency) after cash distributions and
special items
|
|
$ |
353,275 |
|
|
$ |
442,395 |
|
|
$ |
977,144 |
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax and Distribution Data Per $1,000 Invested
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal income tax results:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary income (loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operations
|
|
$ |
87.20 |
|
|
$ |
95.84 |
|
|
$ |
(0.99 |
) |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
|
from recapture
|
|
|
|
|
|
|
|
|
|
|
68.92 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital gain (loss)
|
|
|
|
|
|
|
|
|
|
|
444.77 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash distributions to investors:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Source (on tax basis)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
investment income
|
|
|
78.03 |
|
|
|
81.48 |
|
|
|
314.65 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
return of capital
|
|
|
|
|
|
|
|
|
|
|
1,000.00 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Source (on cash basis)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
sales
|
|
|
|
|
|
|
|
|
|
|
1,250.21 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
refinancing
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
operations
|
|
|
78.03 |
|
|
|
81.48 |
|
|
|
64.44 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount (in percentage terms) remaining invested in program
properties at the end of last year reported in the table
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0 |
% |
Past performance is not necessarily indicative of future
results
A-18
TABLE III
ANNUAL OPERATING RESULTS OF PRIOR REAL ESTATE PROGRAMS
(UNAUDITED) (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cole Southwest Opportunity Fund LP | |
|
|
April 2000 | |
|
|
| |
|
|
2000 | |
|
2001 | |
|
2002 | |
|
2003 | |
|
2004 | |
|
2005 | |
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
(As of 3/31/05) | |
Gross revenues
|
|
$ |
111,878 |
|
|
$ |
99,913 |
|
|
$ |
21,844 |
|
|
$ |
5,025 |
|
|
$ |
2,223 |
|
|
$ |
700 |
|
Profit (loss) on sale of properties
|
|
|
|
|
|
|
|
|
|
|
(579,289 |
) |
|
|
|
|
|
|
398,081 |
|
|
|
|
|
Less:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses(4)
|
|
|
452 |
|
|
|
30,885 |
|
|
|
452,248 |
|
|
|
390,459 |
|
|
|
259,940 |
|
|
|
90,469 |
|
|
Interest expense
|
|
|
|
|
|
|
|
|
|
|
206,664 |
|
|
|
110,938 |
|
|
|
49,563 |
|
|
|
9,178 |
|
|
Depreciation(3)
|
|
|
1,213 |
|
|
|
3,638 |
|
|
|
1,436,399 |
|
|
|
1,112,258 |
|
|
|
545,576 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) Tax basis(6)
|
|
$ |
110,213 |
|
|
$ |
65,390 |
|
|
$ |
(2,652,756 |
) |
|
$ |
(1,608,630 |
) |
|
$ |
(454,775 |
) |
|
$ |
(98,947 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxable income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operations
|
|
$ |
110,213 |
|
|
$ |
65,390 |
|
|
$ |
(2,073,467 |
) |
|
$ |
(1,608,630 |
) |
|
$ |
(852,856 |
) |
|
|
(98,947 |
) |
|
|
from gain on sale
|
|
|
|
|
|
|
|
|
|
|
(579,289 |
) |
|
|
|
|
|
|
398,081 |
|
|
|
|
|
Cash generated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operations(5)
|
|
|
111,426 |
|
|
|
69,028 |
|
|
|
(637,068 |
) |
|
|
(496,372 |
) |
|
|
(307,280 |
) |
|
|
(98,947 |
) |
|
|
from sales
|
|
|
|
|
|
|
|
|
|
|
2,393,644 |
|
|
|
|
|
|
|
1,211,546 |
|
|
|
|
|
|
|
from refinancing
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated from operations, sales and refinancing
|
|
|
111,426 |
|
|
|
69,028 |
|
|
|
1,756,576 |
|
|
|
(496,372 |
) |
|
|
904,266 |
|
|
|
(98,947 |
) |
Less: Cash distributions to investors
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operating cash flow
|
|
|
16,598 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from sales and refinancing
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated (deficiency) after cash distributions
|
|
|
94,828 |
|
|
|
69,028 |
|
|
|
1,756,576 |
|
|
|
(496,372 |
) |
|
|
904,266 |
|
|
|
(98,947 |
) |
Less: Special items (not including sales and refinancing)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated (deficiency) after cash distributions and
special items
|
|
$ |
94,828 |
|
|
$ |
69,028 |
|
|
$ |
1,756,576 |
|
|
$ |
(496,372 |
) |
|
$ |
904,266 |
|
|
$ |
(98,947 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax and Distribution Data Per $1,000 Invested
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal income tax results:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary income (loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operations
|
|
$ |
12.35 |
|
|
$ |
4.70 |
|
|
$ |
(149.11 |
) |
|
$ |
(115.68 |
) |
|
$ |
(61.33 |
) |
|
$ |
(7.12 |
) |
|
|
from recapture
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital gain (loss)
|
|
|
|
|
|
|
|
|
|
|
(41.66 |
) |
|
|
|
|
|
|
28.63 |
|
|
|
|
|
Cash distributions to investors:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Source (on tax basis)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
investment income
|
|
|
1.86 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
return of capital
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Source (on cash basis)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
sales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
refinancing
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
operations
|
|
|
1.86 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount (in percentage terms) remaining invested in program
properties at the end of last year reported in the table
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100 |
% |
Past performance is not necessarily indicative of future
results
A-19
TABLE III
ANNUAL OPERATING RESULTS OF PRIOR REAL ESTATE PROGRAMS
(UNAUDITED) (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cole Desert Palms Power Center LP (Sold) | |
|
|
November 2001 | |
|
|
| |
|
|
2001 | |
|
2002 | |
|
2003 | |
|
2004 | |
|
2005 | |
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
|
|
|
|
|
|
|
|
(As of 3/31/05) | |
Gross revenues
|
|
$ |
317,225 |
|
|
$ |
3,412,505 |
|
|
$ |
3,412,222 |
|
|
$ |
11,505 |
|
|
$ |
(8,029 |
) |
Profit (loss) on sale of properties
|
|
|
|
|
|
|
|
|
|
|
4,321,425 |
|
|
|
87,537 |
|
|
|
|
|
Less:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses(4)
|
|
|
97,390 |
|
|
|
954,504 |
|
|
|
1,151,491 |
|
|
|
116,733 |
|
|
|
1,152 |
|
|
Interest expense
|
|
|
148,106 |
|
|
|
1,638,384 |
|
|
|
1,612,813 |
|
|
|
|
|
|
|
|
|
|
Depreciation(3)
|
|
|
53,595 |
|
|
|
1,011,006 |
|
|
|
815,795 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) Tax basis(6)
|
|
$ |
18,134 |
|
|
$ |
(191,389 |
) |
|
$ |
4,153,548 |
|
|
$ |
(17,691 |
) |
|
$ |
(9,181 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxable income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operations
|
|
$ |
18,134 |
|
|
$ |
(191,389 |
) |
|
$ |
(167,877 |
) |
|
$ |
(105,228 |
) |
|
|
(9,181 |
) |
|
from gain on sale
|
|
|
|
|
|
|
|
|
|
|
4,321,425 |
|
|
|
87,537 |
|
|
|
|
|
Cash generated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operations(5)
|
|
|
71,729 |
|
|
|
819,617 |
|
|
|
647,918 |
|
|
|
(105,228 |
) |
|
|
(9,181 |
) |
|
from sales
|
|
|
|
|
|
|
|
|
|
|
9,219,079 |
|
|
|
|
|
|
|
|
|
|
from refinancing
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated from operations, sales and refinancing
|
|
|
71,729 |
|
|
|
819,617 |
|
|
|
9,866,997 |
|
|
|
(105,228 |
) |
|
|
(9,181 |
) |
Less: Cash distributions to investors
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operating cash flow
|
|
|
576 |
|
|
|
459,561 |
|
|
|
599,375 |
|
|
|
306,250 |
|
|
|
|
|
|
from sales and refinancing
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,082,375 |
|
|
|
|
|
|
from other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated (deficiency) after cash distributions
|
|
|
71,153 |
|
|
|
360,056 |
|
|
|
9,267,622 |
|
|
|
(8,493,853 |
) |
|
|
(9,181 |
) |
Less: Special items (not including sales and refinancing)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated (deficiency) after cash distributions and
special items
|
|
$ |
71,153 |
|
|
$ |
360,056 |
|
|
$ |
9,267,622 |
|
|
$ |
(8,493,853 |
)(1) |
|
$ |
(9,181 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax and Distribution Data Per $1,000 Invested
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal income tax results:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary income (loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operations
|
|
$ |
2.59 |
|
|
$ |
(27.34 |
) |
|
$ |
(23.98 |
) |
|
$ |
(15.03 |
) |
|
$ |
(1.31 |
) |
|
|
from recapture
|
|
|
|
|
|
|
|
|
|
|
215.86 |
|
|
|
|
|
|
|
|
|
|
Capital gain (loss)
|
|
|
|
|
|
|
|
|
|
|
401.49 |
|
|
|
12.51 |
|
|
|
|
|
Cash distributions to investors:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Source (on tax basis)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
investment income
|
|
|
0.08 |
|
|
|
65.65 |
|
|
|
85.63 |
|
|
|
43.75 |
|
|
|
|
|
|
|
return of capital
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Source (on cash basis)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
sales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,154.63 |
|
|
|
|
|
|
|
refinancing
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
operations
|
|
|
0.08 |
|
|
|
65.65 |
|
|
|
85.63 |
|
|
|
43.75 |
|
|
|
|
|
|
|
other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount (in percentage terms) remaining invested in program
properties at the end of last year reported in the table
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0 |
% |
Past performance is not necessarily indicative of future
results
A-20
TABLE III
ANNUAL OPERATING RESULTS OF PRIOR REAL ESTATE PROGRAMS
(UNAUDITED) (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cole Blvd. Sq. Investors LP (Sold) | |
|
|
May 2002 | |
|
|
| |
|
|
2002 | |
|
2003 | |
|
2004 | |
|
2005 | |
|
|
| |
|
| |
|
| |
|
| |
|
|
|
|
|
|
|
|
(As of 3/31/05) | |
Gross revenues
|
|
$ |
1,885,886 |
|
|
$ |
4,404,802 |
|
|
$ |
3,444,830 |
|
|
$ |
31,247 |
|
Profit (loss) on sale of properties
|
|
|
|
|
|
|
|
|
|
|
8,521,296 |
|
|
|
|
|
Less:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses(4)
|
|
|
686,067 |
|
|
|
1,511,374 |
|
|
|
1,204,787 |
|
|
|
12,446 |
|
|
Interest expense
|
|
|
912,735 |
|
|
|
2,028,457 |
|
|
|
1,390,517 |
|
|
|
|
|
|
Depreciation(3)
|
|
|
486,358 |
|
|
|
1,354,613 |
|
|
|
1,236,383 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) Tax basis(6)
|
|
$ |
(199,274 |
) |
|
$ |
(489,642 |
) |
|
$ |
8,134,439 |
|
|
$ |
18,801 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxable income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operations
|
|
$ |
(199,274 |
) |
|
$ |
(489,642 |
) |
|
$ |
(386,857 |
) |
|
|
18,801 |
|
|
from gain on sale
|
|
|
|
|
|
|
|
|
|
|
8,521,296 |
|
|
|
|
|
Cash generated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operations(5)
|
|
|
287,084 |
|
|
|
864,971 |
|
|
|
849,526 |
|
|
|
18,801 |
|
|
from sales
|
|
|
|
|
|
|
|
|
|
|
14,423,979 |
|
|
|
|
|
|
from refinancing
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated from operations, sales and refinancing
|
|
|
287,084 |
|
|
|
864,971 |
|
|
|
15,273,505 |
|
|
|
18,801 |
|
Less: Cash distributions to investors
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operating cash flow
|
|
|
102,209 |
|
|
|
1,057,611 |
|
|
|
850,000 |
|
|
|
|
|
|
from sales and refinancing
|
|
|
|
|
|
|
|
|
|
|
12,837,500 |
|
|
|
|
|
|
from other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated (deficiency) after cash distributions
|
|
|
184,875 |
|
|
|
(192,640 |
) |
|
|
1,586,005 |
|
|
|
18,801 |
|
Less: Special items (not including sales and refinancing)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated (deficiency) after cash distributions and
special items
|
|
$ |
184,875 |
|
|
$ |
(192,640 |
) |
|
$ |
1,586,005 |
|
|
$ |
18,801 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax and Distribution Data Per $1,000 Invested
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal income tax results:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary income (loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operations
|
|
$ |
(19.93 |
) |
|
$ |
(48.96 |
) |
|
$ |
(38.69 |
) |
|
$ |
1.88 |
|
|
|
from recapture
|
|
|
|
|
|
|
|
|
|
|
246.21 |
|
|
|
|
|
|
Capital gain (loss)
|
|
|
|
|
|
|
|
|
|
|
605.92 |
|
|
|
|
|
Cash distributions to investors:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Source (on tax basis)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
investment income
|
|
|
10.22 |
|
|
|
105.76 |
|
|
|
85.00 |
|
|
|
|
|
|
|
return of capital
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Source (on cash basis)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
sales
|
|
|
|
|
|
|
|
|
|
|
1,283.75 |
|
|
|
|
|
|
|
refinancing
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
operations
|
|
|
10.22 |
|
|
|
105.76 |
|
|
|
85.00 |
|
|
|
|
|
|
|
other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount (in percentage terms) remaining invested in program
properties at the end of last year reported in the table
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0 |
% |
Past performance is not necessarily indicative of future
results
A-21
TABLE III
ANNUAL OPERATING RESULTS OF PRIOR REAL ESTATE PROGRAMS
(UNAUDITED) (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cole Santa Fe Investors LP | |
|
|
September 2002 | |
|
|
| |
|
|
2002 | |
|
2003 | |
|
2004 | |
|
2005 | |
|
|
| |
|
| |
|
| |
|
| |
|
|
|
|
|
|
|
|
(As of 3/31/05) | |
Gross revenues
|
|
$ |
1,293,152 |
|
|
$ |
2,545,914 |
|
|
$ |
2,252,104 |
|
|
$ |
569,585 |
|
Profit (loss) on sale of properties
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses(4)
|
|
|
431,161 |
|
|
|
883,118 |
|
|
|
839,177 |
|
|
|
232,241 |
|
|
Interest expense
|
|
|
581,968 |
|
|
|
1,144,762 |
|
|
|
1,142,336 |
|
|
|
278,381 |
|
|
Depreciation(3)
|
|
|
247,530 |
|
|
|
895,291 |
|
|
|
758,595 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) Tax basis(6)
|
|
$ |
32,493 |
|
|
$ |
(377,257 |
) |
|
$ |
(488,004 |
) |
|
$ |
58,963 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxable income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operations
|
|
$ |
32,493 |
|
|
$ |
(377,257 |
) |
|
$ |
(488,004 |
) |
|
|
58,963 |
|
|
from gain on sale
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operations(5)
|
|
|
280,023 |
|
|
|
518,034 |
|
|
|
270,591 |
|
|
|
58,963 |
|
|
from sales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from refinancing
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated from operations, sales and refinancing
|
|
|
280,023 |
|
|
|
518,034 |
|
|
|
270,591 |
|
|
|
58,963 |
|
Less: Cash distributions to investors
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operating cash flow
|
|
|
6,253 |
|
|
|
568,574 |
|
|
|
|
|
|
|
|
|
|
from sales and refinancing
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated (deficiency) after cash distributions
|
|
|
273,770 |
|
|
|
(50,540 |
) |
|
|
270,591 |
|
|
|
58,963 |
|
Less: Special items (not including sales and refinancing)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated (deficiency) after cash distributions and
special items
|
|
$ |
273,770 |
|
|
$ |
(50,540 |
) |
|
$ |
270,591 |
|
|
$ |
58,963 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax and Distribution Data Per $1,000 Invested
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal income tax results:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary income (loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operations
|
|
$ |
5.26 |
|
|
$ |
(61.04 |
) |
|
$ |
(78.97 |
) |
|
$ |
9.54 |
|
|
|
from recapture
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital gain (loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash distributions to investors:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Source (on tax basis)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
investment income
|
|
|
1.01 |
|
|
|
92.00 |
|
|
|
|
|
|
|
|
|
|
|
return of capital
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Source (on cash basis)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
sales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
refinancing
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
operations
|
|
|
1.01 |
|
|
|
92.00 |
|
|
|
|
|
|
|
|
|
|
|
other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount (in percentage terms) remaining invested in program
properties at the end of last year reported in the table
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100% |
|
Past performance is not necessarily indicative of future
results
A-22
TABLE III
ANNUAL OPERATING RESULTS OF PRIOR REAL ESTATE PROGRAMS
(UNAUDITED) (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cole Credit Property Fund LP | |
|
|
November 2002 | |
|
|
| |
|
|
2002 | |
|
2003 | |
|
2004 | |
|
2005 | |
|
|
| |
|
| |
|
| |
|
| |
|
|
|
|
|
|
|
|
(As of 3/31/05) | |
Gross revenues
|
|
$ |
|
|
|
$ |
3,360,284 |
|
|
$ |
4,457,358 |
|
|
$ |
1,131,513 |
|
Profit (loss) on sale of properties
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses(4)
|
|
|
762 |
|
|
|
222,734 |
|
|
|
289,925 |
|
|
|
75,715 |
|
|
Interest expense
|
|
|
|
|
|
|
849,115 |
|
|
|
1,470,906 |
|
|
|
373,278 |
|
|
Depreciation(3)
|
|
|
|
|
|
|
1,351,646 |
|
|
|
1,805,318 |
|
|
|
374,847 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) Tax basis(6)
|
|
$ |
(762 |
) |
|
$ |
936,789 |
|
|
$ |
891,209 |
|
|
$ |
307,673 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxable income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operations
|
|
$ |
(762 |
) |
|
$ |
936,789 |
|
|
$ |
891,209 |
|
|
|
307,673 |
|
|
from gain on sale
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operations(5)
|
|
|
(762 |
) |
|
|
2,288,435 |
|
|
|
2,696,527 |
|
|
|
682,520 |
|
|
from sales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from refinancing
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated from operations, sales and refinancing
|
|
|
(762 |
) |
|
|
2,288,435 |
|
|
|
2,696,527 |
|
|
|
682,520 |
|
Less: Cash distributions to investors
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operating cash flow
|
|
|
|
|
|
|
1,400,125 |
|
|
|
2,187,497 |
|
|
|
552,398 |
|
|
from sales and refinancing
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated (deficiency) after cash distributions
|
|
|
(762 |
) |
|
|
888,310 |
|
|
|
509,030 |
|
|
|
130,122 |
|
Less: Special items (not including sales and refinancing)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated (deficiency) after cash distributions and
special items
|
|
$ |
(762 |
) |
|
$ |
888,310 |
|
|
$ |
509,030 |
|
|
$ |
130,122 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax and Distribution Data Per $1,000 Invested
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal income tax results:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary income (loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operations
|
|
$ |
(0.47 |
) |
|
$ |
37.47 |
|
|
$ |
35.65 |
|
|
$ |
12.31 |
|
|
|
from recapture
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital gain (loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash distributions to investors:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Source (on tax basis)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
investment income
|
|
|
|
|
|
|
56.01 |
|
|
|
87.50 |
|
|
|
22.10 |
|
|
|
return of capital
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Source (on cash basis)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
sales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
refinancing
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
operations
|
|
|
|
|
|
|
56.01 |
|
|
|
87.50 |
|
|
|
22.10 |
|
|
|
other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount (in percentage terms) remaining invested in
program properties at the end of last year reported in
the table
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100% |
|
Past performance is not necessarily indicative of future
results
A-23
TABLE III
ANNUAL OPERATING RESULTS OF PRIOR REAL ESTATE PROGRAMS
(UNAUDITED) (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cole Credit Property | |
|
Cole Collateralized | |
|
|
Fund II LP | |
|
Senior Notes, LLC | |
|
|
July 2003 | |
|
September 2003 | |
|
|
| |
|
| |
|
|
2003 | |
|
2004 | |
|
2005 | |
|
2003 | |
|
2004 | |
|
2005 | |
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
|
|
|
|
(As of 3/31/05) | |
|
(2) | |
|
(2) | |
|
(As of 3/31/05) | |
Gross revenues
|
|
$ |
128,655 |
|
|
$ |
3,758,639 |
|
|
$ |
1,201,904 |
|
|
$ |
162,409 |
|
|
$ |
5,087,274 |
|
|
$ |
1,248,366 |
|
Profit (loss) on sale of properties
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,332,735 |
|
|
|
439,222 |
|
Less:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses(4)
|
|
|
8,574 |
|
|
|
165,315 |
|
|
|
55,109 |
|
|
|
7,327 |
|
|
|
304,377 |
|
|
|
58,745 |
|
|
Interest expense
|
|
|
6,438 |
|
|
|
1,345,798 |
|
|
|
471,682 |
|
|
|
248,806 |
|
|
|
4,128,321 |
|
|
|
1,212,965 |
|
|
Depreciation(3)
|
|
|
21,234 |
|
|
|
1,667,189 |
|
|
|
381,931 |
|
|
|
52,656 |
|
|
|
1,574,516 |
|
|
|
263,492 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) Tax basis(6)
|
|
$ |
92,409 |
|
|
$ |
580,337 |
|
|
$ |
293,182 |
|
|
$ |
(146,380 |
) |
|
$ |
5,412,795 |
|
|
$ |
152,386 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxable income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operations
|
|
$ |
92,409 |
|
|
$ |
580,337 |
|
|
$ |
293,182 |
|
|
$ |
(146,380 |
) |
|
$ |
(919,940 |
) |
|
$ |
(286,836 |
) |
|
from gain on sale
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,332,735 |
|
|
|
439,222 |
|
Cash generated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operations(5)
|
|
|
113,643 |
|
|
|
2,247,526 |
|
|
|
675,113 |
|
|
|
(93,724 |
) |
|
|
654,576 |
|
|
|
(23,344 |
) |
|
from sales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,913,341 |
|
|
|
|
|
|
from refinancing
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated from operations, sales and refinancing
|
|
|
113,643 |
|
|
|
2,247,526 |
|
|
|
675,113 |
|
|
|
(93,724 |
) |
|
|
26,567,917 |
|
|
|
(23,344 |
) |
Less: Cash distributions to investors
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operating cash flow
|
|
|
18,795 |
|
|
|
1,567,247 |
|
|
|
1,020,603 |
|
|
|
|
|
|
|
|
|
|
|
|
(2) |
|
from sales and refinancing
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated (deficiency) after cash distributions
|
|
|
94,848 |
|
|
|
680,279 |
|
|
|
(345,490 |
) |
|
|
(93,724 |
) |
|
|
26,567,917 |
|
|
|
(23,344 |
) |
Less: Special items (not including sales and refinancing)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated (deficiency) after cash distributions and
special items
|
|
$ |
94,848 |
|
|
$ |
680,279 |
|
|
$ |
(345,490 |
) |
|
$ |
(93,724 |
) |
|
$ |
26,567,917 |
|
|
$ |
(23,344 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax and Distribution Data Per $1,000 Invested
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal income tax results:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary income (loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operations
|
|
$ |
6.56 |
|
|
$ |
23.69 |
|
|
$ |
11.97 |
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
(2) |
|
|
from recapture
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital gain (loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash distributions to investors:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Source (on tax basis)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
investment income
|
|
|
1.33 |
|
|
|
63.98 |
|
|
|
41.67 |
|
|
|
|
|
|
|
|
|
|
|
|
(2) |
|
|
return of capital
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Source (on cash basis)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
sales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
refinancing
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
operations
|
|
|
1.33 |
|
|
|
63.98 |
|
|
|
41.67 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount (in percentage terms) remaining invested in program
properties at the end of last year reported in the table
|
|
|
|
|
|
|
|
|
|
|
100 |
% |
|
|
|
|
|
|
|
|
|
|
100 |
% |
Past performance is not necessarily indicative of future
results
A-24
TABLE III
ANNUAL OPERATING RESULTS OF PRIOR REAL ESTATE PROGRAMS
(UNAUDITED) (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cole Collateralized | |
|
Cole Collateralized | |
|
Cole Credit Property | |
|
|
Senior Notes II, LLC | |
|
Senior Notes III, LLC | |
|
Trust, Inc. | |
|
|
February 2004 | |
|
January 2005 | |
|
April 2004 | |
|
|
| |
|
| |
|
| |
|
|
2004 | |
|
2005 | |
|
2005 | |
|
2004 | |
|
2005 | |
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
(2) | |
|
(As of 3/31/05) | |
|
(As of 3/31/05) | |
|
|
|
(As of 3/31/05) | |
Gross revenues
|
|
$ |
1,822,545 |
|
|
$ |
1,083,409 |
|
|
$ |
|
|
|
$ |
961,150 |
|
|
$ |
1,387,653 |
|
Profit (loss) on sale of properties
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses(4)
|
|
|
98,921 |
|
|
|
711,661 |
|
|
|
37 |
|
|
|
126,681 |
|
|
|
180,877 |
|
|
Interest expense
|
|
|
2,095,747 |
|
|
|
1,093,822 |
|
|
|
24,035 |
|
|
|
287,849 |
|
|
|
533,634 |
|
|
Depreciation(3)
|
|
|
379,572 |
|
|
|
135,264 |
|
|
|
|
|
|
|
279,010 |
|
|
|
432,202 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) Tax basis(6)
|
|
$ |
(751,695 |
) |
|
$ |
(857,338 |
) |
|
$ |
(24,072 |
) |
|
$ |
267,610 |
|
|
$ |
240,940 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxable income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operations
|
|
$ |
(751,695 |
) |
|
$ |
(857,338 |
) |
|
$ |
(24,072 |
) |
|
$ |
267,610 |
|
|
$ |
240,940 |
|
|
from gain on sale
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operations(5)
|
|
|
(372,123 |
) |
|
|
(722,074 |
) |
|
|
(24,072 |
) |
|
|
546,620 |
|
|
|
673,142 |
|
|
from sales
|
|
|
16,927,937 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from refinancing
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated from operations, sales and refinancing
|
|
|
16,555,814 |
|
|
|
(722,074 |
) |
|
|
(24,072 |
) |
|
|
546,620 |
|
|
|
673,142 |
|
Less: Cash distributions to investors
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operating cash flow
|
|
|
|
|
|
|
|
(2) |
|
|
|
(2) |
|
|
132,344 |
|
|
|
379,252 |
|
|
from sales and refinancing
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated (deficiency) after cash distributions
|
|
|
16,555,814 |
|
|
|
(722,074 |
) |
|
|
(24,072 |
) |
|
|
414,276 |
|
|
|
293,890 |
|
Less: Special items (not including sales and refinancing)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated (deficiency) after cash distributions and
special items
|
|
$ |
16,555,814 |
|
|
$ |
(722,074 |
) |
|
$ |
(24,072 |
) |
|
$ |
414,276 |
|
|
$ |
293,890 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax and Distribution Data Per $1,000 Invested
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal income tax results:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary income (loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operations
|
|
$ |
|
|
|
$ |
|
(2) |
|
$ |
|
(2) |
|
$ |
9.42 |
|
|
$ |
8.48 |
|
|
|
from recapture
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital gain (loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash distributions to investors:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Source (on tax basis)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
investment income
|
|
|
|
|
|
|
|
(2) |
|
|
|
(2) |
|
|
4.66 |
|
|
|
13.34 |
|
|
|
return of capital
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Source (on cash basis)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
sales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
refinancing
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4.66 |
|
|
|
13.34 |
|
|
|
other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount (in percentage terms) remaining invested in program
properties at the end of last year reported in the table
|
|
|
|
|
|
|
100 |
% |
|
|
N/A |
|
|
|
|
|
|
|
72 |
% |
Past performance is not necessarily indicative of future
results
A-25
TABLE III
ANNUAL OPERATING RESULTS OF PRIOR REAL ESTATE PROGRAMS
(UNAUDITED) (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Staples- | |
|
Mimis Café- | |
|
Walgreens- | |
|
|
Tulsa, OK | |
|
Lone Tree, CO | |
|
Windsor, CO | |
|
|
February 2004 | |
|
April 2004 | |
|
June 2004 | |
|
|
| |
|
| |
|
| |
|
|
2004 | |
|
2005 | |
|
2004 | |
|
2005 | |
|
2004 | |
|
2005 | |
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
|
|
(As of 3/31/05) | |
|
|
|
(As of 3/31/05) | |
|
|
|
(As of 3/31/05) | |
Gross revenues
|
|
$ |
189,058 |
|
|
$ |
74,819 |
|
|
$ |
92,614 |
|
|
$ |
50,275 |
|
|
$ |
135,696 |
|
|
$ |
88,250 |
|
Profit (loss) on sale of properties
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses(4)
|
|
|
1,579 |
|
|
|
1,005 |
|
|
|
1,900 |
|
|
|
900 |
|
|
|
1,684 |
|
|
|
1,125 |
|
|
Interest expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
53,114 |
|
|
|
39,835 |
|
|
Depreciation(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) Tax basis(6)
|
|
$ |
187,479 |
|
|
$ |
73,814 |
|
|
$ |
90,714 |
|
|
$ |
49,375 |
|
|
$ |
80,898 |
|
|
$ |
47,290 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxable income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operations
|
|
$ |
187,479 |
|
|
$ |
73,814 |
|
|
$ |
90,714 |
|
|
$ |
49,375 |
|
|
$ |
80,898 |
|
|
$ |
47,290 |
|
|
from gain on sale
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operations(5)
|
|
|
187,479 |
|
|
|
73,814 |
|
|
|
90,714 |
|
|
|
49,375 |
|
|
|
80,898 |
|
|
|
47,290 |
|
|
from sales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from refinancing
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated from operations, sales and refinancing
|
|
|
187,479 |
|
|
|
73,814 |
|
|
|
90,714 |
|
|
|
49,375 |
|
|
|
80,898 |
|
|
|
47,290 |
|
Less: Cash distributions to investors
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operating cash flow
|
|
|
158,709 |
|
|
|
72,381 |
|
|
|
76,045 |
|
|
|
42,813 |
|
|
|
56,436 |
|
|
|
46,710 |
|
|
from sales and refinancing
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated (deficiency) after cash distributions
|
|
|
28,770 |
|
|
|
1,433 |
|
|
|
14,669 |
|
|
|
6,562 |
|
|
|
24,462 |
|
|
|
580 |
|
Less: Special items (not including sales and refinancing)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated (deficiency) after cash distributions and
special items
|
|
$ |
28,770 |
|
|
$ |
1,433 |
|
|
$ |
14,669 |
|
|
$ |
6,562 |
|
|
$ |
24,462 |
|
|
$ |
580 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax and Distribution Data Per $1,000 Invested
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal income tax results:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary income (loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operations
|
|
$ |
45.33 |
|
|
$ |
17.85 |
|
|
$ |
37.09 |
|
|
$ |
20.19 |
|
|
$ |
30.31 |
|
|
$ |
17.72 |
|
|
|
from recapture
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital gain (loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash distributions to investors:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Source (on tax basis)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
investment income
|
|
|
38.37 |
|
|
|
17.50 |
|
|
|
31.09 |
|
|
|
17.50 |
|
|
|
21.14 |
|
|
|
17.50 |
|
|
|
return of capital
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Source (on cash basis)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
sales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
refinancing
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
operations
|
|
|
38.37 |
|
|
|
17.50 |
|
|
|
31.09 |
|
|
|
17.50 |
|
|
|
21.14 |
|
|
|
17.50 |
|
|
|
other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount (in percentage terms) remaining invested in program
properties at the end of last year reported in the table
|
|
|
|
|
|
|
100% |
|
|
|
|
|
|
|
100% |
|
|
|
|
|
|
|
100% |
|
Past performance is not necessarily indicative of future
results
A-26
TABLE III
ANNUAL OPERATING RESULTS OF PRIOR REAL ESTATE PROGRAMS
(UNAUDITED) (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Walgreens- | |
|
Walgreens- | |
|
Walgreens- | |
|
|
Goldsboro, NC | |
|
Hamilton, OH | |
|
Carlsbad, NM | |
|
|
June 2004 | |
|
July 2004 | |
|
July 2004 | |
|
|
| |
|
| |
|
| |
|
|
2004 | |
|
2005 | |
|
2004 | |
|
2005 | |
|
2004 | |
|
2005 | |
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
|
|
(As of 3/31/05) | |
|
|
|
(As of 3/31/05) | |
|
|
|
(As of 3/31/05) | |
Gross revenues
|
|
$ |
101,750 |
|
|
$ |
82,500 |
|
|
$ |
126,522 |
|
|
$ |
96,500 |
|
|
$ |
73,750 |
|
|
$ |
73,750 |
|
Profit (loss) on sale of properties
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses(4)
|
|
|
1,416 |
|
|
|
1,155 |
|
|
|
3,060 |
|
|
|
2,254 |
|
|
|
2,537 |
|
|
|
2,541 |
|
|
Interest expense
|
|
|
36,706 |
|
|
|
35,908 |
|
|
|
45,878 |
|
|
|
41,707 |
|
|
|
25,328 |
|
|
|
32,106 |
|
|
Depreciation(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) Tax basis(6)
|
|
$ |
63,628 |
|
|
$ |
45,437 |
|
|
$ |
77,584 |
|
|
$ |
52,539 |
|
|
$ |
45,885 |
|
|
$ |
39,103 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxable income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operations
|
|
$ |
63,628 |
|
|
$ |
45,437 |
|
|
$ |
77,584 |
|
|
$ |
52,539 |
|
|
$ |
45,885 |
|
|
|
39,103 |
|
|
from gain on sale
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operations(5)
|
|
|
63,628 |
|
|
|
45,437 |
|
|
|
77,584 |
|
|
|
52,539 |
|
|
|
45,885 |
|
|
|
39,103 |
|
|
from sales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from refinancing
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated from operations, sales and refinancing
|
|
|
63,628 |
|
|
|
45,437 |
|
|
|
77,584 |
|
|
|
52,539 |
|
|
|
45,885 |
|
|
|
39,103 |
|
Less: Cash distributions to investors
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operating cash flow
|
|
|
40,334 |
|
|
|
44,973 |
|
|
|
34,958 |
|
|
|
51,906 |
|
|
|
26,006 |
|
|
|
38,640 |
|
|
from sales and refinancing
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated (deficiency) after cash distributions
|
|
|
23,294 |
|
|
|
464 |
|
|
|
42,626 |
|
|
|
633 |
|
|
|
19,879 |
|
|
|
463 |
|
Less: Special items (not including sales and refinancing)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated (deficiency) after cash distributions and
special items
|
|
$ |
23,294 |
|
|
$ |
464 |
|
|
$ |
42,626 |
|
|
$ |
633 |
|
|
$ |
19,879 |
|
|
$ |
463 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax and Distribution Data Per $1,000 Invested
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal income tax results:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary income (loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operations
|
|
$ |
24.76 |
|
|
$ |
17.68 |
|
|
$ |
26.16 |
|
|
$ |
17.71 |
|
|
$ |
20.04 |
|
|
$ |
17.08 |
|
|
|
from recapture
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital gain (loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash distributions to investors:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Source (on tax basis)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
investment income
|
|
|
15.69 |
|
|
|
17.50 |
|
|
|
11.79 |
|
|
|
17.50 |
|
|
|
11.36 |
|
|
|
16.88 |
|
|
|
return of capital
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Source (on cash basis)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
sales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
refinancing
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
operations
|
|
|
15.69 |
|
|
|
17.50 |
|
|
|
11.79 |
|
|
|
17.50 |
|
|
|
11.36 |
|
|
|
16.88 |
|
|
|
other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount (in percentage terms) remaining invested in program
properties at the end of last year reported in the table
|
|
|
|
|
|
|
100% |
|
|
|
|
|
|
|
100% |
|
|
|
|
|
|
|
100% |
|
Past performance is not necessarily indicative of future
results
A-27
TABLE III
ANNUAL OPERATING RESULTS OF PRIOR REAL ESTATE PROGRAMS
(UNAUDITED) (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Walgreens- | |
|
Walgreens- | |
|
Walgreens- | |
|
|
Willimantic, CT | |
|
Edgewood, NM | |
|
Fairborn, OH | |
|
|
September 2004 | |
|
September 2004 | |
|
September 2004 | |
|
|
| |
|
| |
|
| |
|
|
2004 | |
|
2005 | |
|
2004 | |
|
2005 | |
|
2004 | |
|
2005 | |
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
|
|
(As of 3/31/05) | |
|
|
|
(As of 3/31/05) | |
|
|
|
(As of 3/31/05) | |
Gross revenues
|
|
$ |
55,160 |
|
|
$ |
88,650 |
|
|
$ |
28,330 |
|
|
|
68,910 |
|
|
$ |
30,209 |
|
|
$ |
86,125 |
|
Profit (loss) on sale of properties
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses(4)
|
|
|
2,660 |
|
|
|
4,275 |
|
|
|
1,326 |
|
|
|
3,258 |
|
|
|
1,943 |
|
|
|
4,757 |
|
|
Interest expense
|
|
|
14,900 |
|
|
|
37,249 |
|
|
|
5,527 |
|
|
|
29,260 |
|
|
|
6,797 |
|
|
|
35,984 |
|
|
Depreciation(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) Tax basis(6)
|
|
$ |
37,600 |
|
|
$ |
47,126 |
|
|
$ |
21,477 |
|
|
$ |
36,392 |
|
|
$ |
21,469 |
|
|
$ |
45,384 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxable income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operations
|
|
$ |
37,600 |
|
|
|
47,126 |
|
|
$ |
21,477 |
|
|
|
36,392 |
|
|
$ |
21,469 |
|
|
$ |
45,384 |
|
|
from gain on sale
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operations(5)
|
|
|
37,600 |
|
|
|
47,126 |
|
|
|
21,477 |
|
|
|
36,392 |
|
|
|
21,469 |
|
|
|
45,384 |
|
|
from sales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from refinancing
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated from operations, sales and refinancing
|
|
|
37,600 |
|
|
|
47,126 |
|
|
|
21,477 |
|
|
|
36,392 |
|
|
|
21,469 |
|
|
|
45,384 |
|
Less: Cash distributions to investors
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operating cash flow
|
|
|
|
|
|
|
59,547 |
|
|
|
|
|
|
|
27,189 |
|
|
|
|
|
|
|
48,043 |
|
|
from sales and refinancing
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated (deficiency) after cash distributions
|
|
|
37,600 |
|
|
|
(12,421 |
) |
|
|
21,477 |
|
|
|
9,203 |
|
|
|
21,469 |
|
|
|
(2,659 |
) |
Less: Special items (not including sales and refinancing)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated (deficiency) after cash distributions and
special items
|
|
$ |
37,600 |
|
|
$ |
(12,421 |
) |
|
$ |
21,477 |
|
|
$ |
9,203 |
|
|
$ |
21,469 |
|
|
$ |
(2,659 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax and Distribution Data Per $1,000 Invested
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal income tax results:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary income (loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operations
|
|
$ |
13.69 |
|
|
$ |
17.16 |
|
|
$ |
11.64 |
|
|
$ |
17.05 |
|
|
$ |
8.12 |
|
|
$ |
17.16 |
|
|
from recapture
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital gain (loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash distributions to investors:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Source (on tax basis)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
investment income
|
|
|
|
|
|
|
21.68 |
|
|
|
|
|
|
|
12.74 |
|
|
|
|
|
|
$ |
18.17 |
|
|
return of capital
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Source (on cash basis)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
sales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
refinancing
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
operations
|
|
|
|
|
|
|
21.68 |
|
|
|
|
|
|
|
12.74 |
|
|
|
|
|
|
|
18.17 |
|
|
other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount (in percentage terms) remaining invested in program
properties at the end of last year reported in the table
|
|
|
|
|
|
|
100 |
% |
|
|
|
|
|
|
100 |
% |
|
|
|
|
|
|
100 |
% |
Past performance is not necessarily indicative of future
results
A-28
TABLE III
ANNUAL OPERATING RESULTS OF PRIOR REAL ESTATE PROGRAMS
(UNAUDITED) (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Walgreens- | |
|
Walgreens- | |
|
Walgreens- | |
|
|
Slidell, LA | |
|
Westheimer, TX | |
|
Richmond Heights, OH | |
|
|
November 2004 | |
|
October 2004 | |
|
October 2004 | |
|
|
| |
|
| |
|
| |
|
|
2004 |
|
2005 | |
|
2004 | |
|
2005 | |
|
2004 |
|
2005 | |
|
|
|
|
| |
|
| |
|
| |
|
|
|
| |
|
|
|
|
(As of 3/31/05) | |
|
|
|
(As of 3/31/05) | |
|
|
|
(As of 3/31/05) | |
Gross revenues
|
|
$ |
|
|
|
$ |
37,649 |
|
|
$ |
14,637 |
|
|
$ |
123,750 |
|
|
$ |
|
|
|
$ |
108,387 |
|
Profit (loss) on sale of properties
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses(4)
|
|
|
|
|
|
|
1,547 |
|
|
|
580 |
|
|
|
4,931 |
|
|
|
|
|
|
|
4,376 |
|
|
Interest expense
|
|
|
|
|
|
|
9,121 |
|
|
|
|
|
|
|
48,160 |
|
|
|
|
|
|
|
35,902 |
|
|
Depreciation(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) Tax basis(6)
|
|
$ |
|
|
|
$ |
26,981 |
|
|
$ |
14,057 |
|
|
$ |
70,659 |
|
|
$ |
|
|
|
$ |
68,109 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxable income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operations
|
|
$ |
|
|
|
$ |
26,981 |
|
|
$ |
14,057 |
|
|
$ |
70,659 |
|
|
$ |
|
|
|
$ |
68,109 |
|
|
from gain on sale
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operations(5)
|
|
|
|
|
|
|
26,981 |
|
|
|
14,057 |
|
|
|
70,659 |
|
|
|
|
|
|
|
68,109 |
|
|
from sales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from refinancing
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated from operations, sales and refinancing
|
|
|
|
|
|
|
26,981 |
|
|
|
14,057 |
|
|
|
70,659 |
|
|
|
|
|
|
|
68,109 |
|
Less: Cash distributions to investors
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operating cash flow
|
|
|
|
|
|
|
7,091 |
|
|
|
|
|
|
|
49,889 |
|
|
|
|
|
|
|
48,501 |
|
|
from sales and refinancing
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated (deficiency) after cash distributions
|
|
|
|
|
|
|
19,890 |
|
|
|
14,057 |
|
|
|
20,770 |
|
|
|
|
|
|
|
19,608 |
|
Less: Special items (not including sales and refinancing)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated (deficiency) after
cash distributions and special
items
|
|
$ |
|
|
|
$ |
19,890 |
|
|
$ |
14,057 |
|
|
$ |
20,770 |
|
|
$ |
|
|
|
$ |
19,608 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax and Distribution Data Per $1,000 Invested
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal income tax results:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary income (loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operations
|
|
$ |
|
|
|
$ |
16.03 |
|
|
$ |
4.11 |
|
|
$ |
18.12 |
|
|
$ |
|
|
|
$ |
22.76 |
|
|
from recapture
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital gain (loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash distributions to investors:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Source (on tax basis)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
investment income
|
|
|
|
|
|
|
4.21 |
|
|
|
|
|
|
|
12.79 |
|
|
|
|
|
|
|
16.20 |
|
|
return of capital
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Source (on cash basis)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
sales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
refinancing
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
operations
|
|
|
|
|
|
|
4.21 |
|
|
|
|
|
|
|
12.79 |
|
|
|
|
|
|
|
16.20 |
|
|
other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount (in percentage terms)
remaining invested in program
properties at the end of last year
reported in the table
|
|
|
|
|
|
|
100 |
% |
|
|
|
|
|
|
100 |
% |
|
|
|
|
|
|
100 |
% |
Past performance is not necessarily indicative of future
results
A-29
TABLE III
ANNUAL OPERATING RESULTS OF PRIOR REAL ESTATE PROGRAMS
(UNAUDITED) (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Home Depot- | |
|
Walgreens- | |
|
Walgreens- | |
|
|
Spokane, WA | |
|
Orlando, FL | |
|
Glen Burnie, MD | |
|
|
November 2004 | |
|
November 2004 | |
|
November 2004 | |
|
|
| |
|
| |
|
| |
|
|
2004 |
|
|
2005 | |
|
2004 |
|
|
2005 | |
|
2004 |
|
|
2005 | |
|
|
|
|
| |
|
|
|
| |
|
|
|
| |
|
|
|
|
(As of 3/31/05) | |
|
|
|
(As of 3/31/05) | |
|
|
|
(As of 3/31/05) | |
Gross revenues
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Profit (loss) on sale of properties
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) Tax basis(6)
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxable income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operations
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
from gain on sale
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operations(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from sales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from refinancing
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated from operations, sales and refinancing
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Cash distributions to investors
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operating cash flow
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from sales and refinancing
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated (deficiency) after cash distributions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Special items (not including sales and refinancing)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated (deficiency) after cash distributions and
special items
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax and Distribution Data Per $1,000 Invested
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal income tax results:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary income (loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operations
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
from recapture
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital gain (loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash distributions to investors:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Source (on tax basis)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
investment income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
return of capital
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Source (on cash basis)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
sales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
refinancing
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount (in percentage terms) remaining invested in program
properties at the end of last year reported in the table
|
|
|
|
|
|
|
100 |
% |
|
|
|
|
|
|
100 |
% |
|
|
|
|
|
|
100 |
% |
Past performance is not necessarily indicative of future
results
A-30
TABLE III
ANNUAL OPERATING RESULTS OF PRIOR REAL ESTATE PROGRAMS
(UNAUDITED) (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Walgreens- | |
|
Walgreens- | |
|
Walgreens- | |
|
Home Depot- | |
|
|
Covington, TN | |
|
Garfield Heights, OH | |
|
Ponca City, OK | |
|
Tacoma, WA | |
|
|
December 2004 | |
|
December 2004 | |
|
December 2004 | |
|
February 2005 | |
|
|
| |
|
| |
|
| |
|
| |
|
|
2004 |
|
|
2005 | |
|
2004 |
|
|
2005 | |
|
2004 |
|
|
2005 | |
|
2005 | |
|
|
|
|
| |
|
|
|
| |
|
|
|
| |
|
| |
|
|
|
|
(As of 3/31/05) | |
|
|
|
(As of 3/31/05) | |
|
|
|
(As of 3/31/05) | |
|
(As of 3/31/05) | |
Gross revenues
|
|
$ |
|
|
|
$ |
41,946 |
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Profit (loss) on sale of properties
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses(4)
|
|
|
|
|
|
|
1,731 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
|
|
|
|
10,857 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) Tax basis(6)
|
|
$ |
|
|
|
$ |
29,358 |
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxable income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operations
|
|
$ |
|
|
|
$ |
29,358 |
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
from gain on sale
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operations(5)
|
|
|
|
|
|
|
29,358 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from sales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from refinancing
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated from operations, sales and refinancing
|
|
|
|
|
|
|
29,358 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Cash distributions to investors
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operating cash flow
|
|
|
|
|
|
|
9,913 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from sales and refinancing
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated (deficiency) after cash distributions
|
|
|
|
|
|
|
19,445 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Special items (not including sales and refinancing)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated (deficiency) after cash distributions and
special items
|
|
$ |
|
|
|
$ |
19,445 |
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax and Distribution Data Per $1,000 Invested
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal income tax results:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary income (loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operations
|
|
$ |
|
|
|
$ |
62.46 |
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
from recapture
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital gain (loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash distributions to investors:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Source (on tax basis)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
investment income
|
|
|
|
|
|
|
21.09 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
return of capital
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Source (on cash basis)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
sales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
refinancing
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
operations
|
|
|
|
|
|
|
21.09 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount (in percentage terms) remaining invested in program
properties at the end of last year reported in the table
|
|
|
|
|
|
|
100 |
% |
|
|
|
|
|
|
0 |
% |
|
|
|
|
|
|
0 |
% |
|
|
0 |
% |
Past performance is not necessarily indicative of future
results
A-31
NOTES TO TABLE III
|
|
(1) |
The liquidating distribution of cash from the sale and
4th quarter operating results was made in 2004. |
|
(2) |
Investors in this program receive interest at
91/4% per
annum, which is included in interest expense. Therefore, tax and
cash distribution data per $1,000 invested is not applicable. |
|
(3) |
Amortization of organizational costs is computed over a period
of 60 months. Depreciation of commercial real property is
determined on the straight-line method over an estimated useful
life of 39 years. Leasehold interests are amortized over
the life of the lease. |
|
(4) |
Operating expenses include management fees paid to affiliates
for such services as accounting, property supervision, etc. |
|
(5) |
Cash generated from operations generally includes net income
plus depreciation and amortization plus any decreases in
accounts receivable and accrued rental income or increases in
accounts payable minus any increases in accounts receivable and
accrued rental income or decreases in accounts payable. In
addition, cash generated from operations is reduced for any
property costs related to development projects and is increased
by proceeds when the project is sold (usually in less than
twelve months). |
|
(6) |
The partnerships maintain their books on a tax basis of
accounting rather than a GAAP basis. There are several potential
differences in tax and GAAP basis, including, among others;
(a) tax basis accounting does not take certain income or
expense accruals into consideration at the end of each fiscal
year, (b) rental income is recorded on a tax basis, as it
is received where it is accrued on a straight-line basis over
the life of the lease for GAAP, and (c) all properties are
recorded at cost and depreciated over their estimated useful
life on a tax basis even if they qualify as a direct financing
lease for GAAP purposes. These differences generally result in
timing differences between fiscal years but total operating
income over the life of the partnership will not be
significantly different between the two basis of accounting. |
A-32
TABLE IV
RESULTS OF COMPLETED PROGRAMS (UNAUDITED)
The following table presents summary information on the results
of Prior Real Estate Programs that completed operations since
January 1, 2000 and that had similar or identical
investment objectives to those of their program. All amounts are
from the inception of the program to the date the program was
completed.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiesta Plaza | |
|
Palm Lane | |
|
Alta Mesa | |
|
Thunderbird | |
|
McRay | |
|
|
Vista Plaza | |
|
Income | |
|
Office Income | |
|
Retail Income | |
|
Plaza Value | |
|
Plaza | |
Program Name |
|
Investors LP | |
|
Investors LP | |
|
Investors LP | |
|
Investors LP | |
|
Enhancement LP | |
|
Investors LP | |
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
Dollar amount raised
|
|
$ |
900,000 |
|
|
$ |
2,425,000 |
|
|
$ |
475,000 |
|
|
$ |
2,575,000 |
|
|
$ |
3,025,000 |
|
|
$ |
2,275,000 |
|
Number of properties purchased
|
|
|
1 |
|
|
|
1 |
|
|
|
1 |
|
|
|
1 |
|
|
|
1 |
|
|
|
1 |
|
Date of closing of offering
|
|
|
10/5/95 |
|
|
|
04/16/96 |
|
|
|
03/16/94 |
|
|
|
02/25/97 |
|
|
|
11/24/97 |
|
|
|
03/13/96 |
|
Date of first sale of property
|
|
|
11/22/99 |
|
|
|
12/22/99 |
|
|
|
06/12/00 |
|
|
|
02/06/01 |
|
|
|
03/28/01 |
|
|
|
04/11/01 |
|
Date of final sale of property
|
|
|
11/22/99 |
|
|
|
12/22/99 |
|
|
|
06/12/00 |
|
|
|
02/06/01 |
|
|
|
03/28/01 |
|
|
|
04/11/01 |
|
|
Tax and Distribution Data Per $1,000 Investment Through
3/31/05
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal income tax results:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary income (loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operations
|
|
|
381 |
|
|
|
370 |
|
|
|
(245 |
) |
|
|
301 |
|
|
|
193 |
|
|
|
496 |
|
|
from recapture
|
|
|
75 |
|
|
|
66 |
|
|
|
250 |
|
|
|
68 |
|
|
|
132 |
|
|
|
237 |
|
Capital gain (loss)
|
|
|
457 |
|
|
|
299 |
|
|
|
1,124 |
|
|
|
233 |
|
|
|
478 |
|
|
|
438 |
|
|
Deferred gain
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash distributions to investors
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Source (on Tax Basis)(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment income
|
|
|
667,952 |
|
|
|
1,421,698 |
|
|
|
407,883 |
|
|
|
1,223,459 |
|
|
|
1,927,417 |
|
|
|
2,140,048 |
|
|
|
Return of capital
|
|
|
900,000 |
|
|
|
2,425,000 |
|
|
|
475,000 |
|
|
|
2,575,000 |
|
|
|
3,025,000 |
|
|
|
2,275,000 |
|
|
|
Source (on cash basis)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales
|
|
|
1,115,027 |
|
|
|
2,878,718 |
|
|
|
616,075 |
|
|
|
2,720,301 |
|
|
|
2,817,910 |
|
|
|
3,074,119 |
|
|
|
Refinancing
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,650,000 |
|
|
|
|
|
|
|
Operations
|
|
|
452,925 |
|
|
|
967,980 |
|
|
|
266,808 |
|
|
|
1,078,158 |
|
|
|
484,507 |
|
|
|
1,340,929 |
|
|
|
Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Receivable on net purchase money financing
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Past performance is not necessarily indicative of future
results
A-33
TABLE IV
RESULTS OF COMPLETED PROGRAMS
(UNAUDITED) (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
McCormick | |
|
|
|
Sun City | |
|
|
|
|
|
Regal Square | |
|
|
|
|
Ranch Office | |
|
Cole Arizona | |
|
Grand Retail | |
|
3001 East | |
|
Mesa Retail | |
|
Value | |
|
|
Fiesta Palms | |
|
Income | |
|
Retail Income | |
|
Income | |
|
Camelback | |
|
Income | |
|
Enhancement | |
Program Name |
|
Investors LP | |
|
Investors LP | |
|
Investors LP | |
|
Investors LP | |
|
Investors LP | |
|
Investors LP | |
|
Investors LP | |
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
Dollar amount raised
|
|
$ |
700,000 |
|
|
$ |
735,000 |
|
|
$ |
3,200,000 |
|
|
$ |
2,750,000 |
|
|
$ |
600,000 |
|
|
$ |
1,100,000 |
|
|
$ |
2,300,000 |
|
Number of properties purchased
|
|
|
1 |
|
|
|
1 |
|
|
|
2 |
|
|
|
1 |
|
|
|
1 |
|
|
|
1 |
|
|
|
1 |
|
Date of closing of offering
|
|
|
01/05/95 |
|
|
|
12/16/94 |
|
|
|
09/02/97 |
|
|
|
01/15/98 |
|
|
|
11/04/94 |
|
|
|
04/26/96 |
|
|
|
05/19/97 |
|
Date of first sale of property
|
|
|
06/12/01 |
|
|
|
06/29/01 |
|
|
|
03/23/01 |
|
|
|
01/29/02 |
|
|
|
02/05/02 |
|
|
|
05/31/02 |
|
|
|
06/19/02 |
|
Date of final sale of property
|
|
|
06/12/01 |
|
|
|
06/29/01 |
|
|
|
07/11/01 |
|
|
|
01/29/02 |
|
|
|
02/05/02 |
|
|
|
05/31/02 |
|
|
|
06/19/02 |
|
Tax and Distribution Data Per $1,000 Investment Through
3/31/05
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal income tax results:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary income (loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operations
|
|
|
(229 |
) |
|
|
337 |
|
|
|
261 |
|
|
|
325 |
|
|
|
(162 |
) |
|
|
366 |
|
|
|
419 |
|
|
from recapture
|
|
|
347 |
|
|
|
279 |
|
|
|
63 |
|
|
|
71 |
|
|
|
420 |
|
|
|
102 |
|
|
|
90 |
|
Capital gain (loss)
|
|
|
782 |
|
|
|
1,981 |
|
|
|
493 |
|
|
|
309 |
|
|
|
1,284 |
|
|
|
504 |
|
|
|
485 |
|
|
Deferred gain
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash distributions to investors
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Source (on Tax Basis)(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment income
|
|
|
660,604 |
|
|
|
1,464,634 |
|
|
|
1,973,564 |
|
|
|
1,495,964 |
|
|
|
786,060 |
|
|
|
874,280 |
|
|
|
1,788,779 |
|
|
|
Return of capital
|
|
|
700,000 |
|
|
|
735,000 |
|
|
|
3,200,000 |
|
|
|
2,750,000 |
|
|
|
600,000 |
|
|
|
1,100,000 |
|
|
|
2,300,000 |
|
|
|
Source (on cash basis)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales
|
|
|
856,030 |
|
|
|
1,636,551 |
|
|
|
4,014,352 |
|
|
|
3,164,836 |
|
|
|
1,021,266 |
|
|
|
1,246,616 |
|
|
|
2,873,330 |
|
|
|
Refinancing
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operations
|
|
|
504,574 |
|
|
|
563,083 |
|
|
|
1,159,212 |
|
|
|
1,081,128 |
|
|
|
364,794 |
|
|
|
727,664 |
|
|
|
1,215,449 |
|
|
|
Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Receivable on net purchase money financing
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Past performance is not necessarily indicative of future
results
A-34
TABLE IV
RESULTS OF COMPLETED PROGRAMS
(UNAUDITED) (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sun Valley | |
|
|
|
Grand | |
|
North Phoenix | |
|
Arden Square | |
|
|
Scottsdale | |
|
Santa Fe | |
|
Value | |
|
Dobson | |
|
Canyon | |
|
Value | |
|
Value | |
|
|
Retail Income | |
|
Square | |
|
Enhancement | |
|
Square | |
|
Office | |
|
Enhancement | |
|
Enhancement | |
Program Name |
|
Investors LP | |
|
Investors LP | |
|
Investors LP | |
|
Investors LP | |
|
Investors LP | |
|
Investors LP | |
|
Investors LP | |
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
Dollar amount raised
|
|
$ |
6,500,000 |
|
|
$ |
10,800,000 |
|
|
$ |
2,500,000 |
|
|
$ |
1,800,000 |
|
|
$ |
1,070,000 |
|
|
$ |
2,050,000 |
|
|
$ |
2,000,000 |
|
Number of properties purchased
|
|
|
1 |
|
|
|
1 |
|
|
|
1 |
|
|
|
1 |
|
|
|
1 |
|
|
|
1 |
|
|
|
1 |
|
Date of closing of offering
|
|
|
01/07/97 |
|
|
|
06/14/00 |
|
|
|
01/11/99 |
|
|
|
09/25/95 |
|
|
|
10/12/95 |
|
|
|
02/28/97 |
|
|
|
08/25/97 |
|
Date of first sale of property
|
|
|
07/12/02 |
|
|
|
02/14/02 |
|
|
|
10/25/02 |
|
|
|
12/24/02 |
|
|
|
04/28/03 |
|
|
|
04/30/03 |
|
|
|
12/16/02 |
|
Date of final sale of property
|
|
|
07/12/02 |
|
|
|
09/26/02 |
|
|
|
12/30/02 |
|
|
|
12/24/02 |
|
|
|
04/28/03 |
|
|
|
04/30/03 |
|
|
|
12/16/02 |
|
Tax and Distribution Data Per $1,000 Investment Through
3/31/05
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal income tax results:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary income (loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operations
|
|
|
379 |
|
|
|
230 |
|
|
|
136 |
|
|
|
781 |
|
|
|
161 |
|
|
|
617 |
|
|
|
272 |
|
|
from recapture
|
|
|
105 |
|
|
|
69 |
|
|
|
59 |
|
|
|
136 |
|
|
|
338 |
|
|
|
103 |
|
|
|
106 |
|
Capital gain (loss)
|
|
|
221 |
|
|
|
445 |
|
|
|
480 |
|
|
|
851 |
|
|
|
1,454 |
|
|
|
381 |
|
|
|
370 |
|
|
Deferred gain
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash distributions to investors
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Source (on Tax Basis)(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment income
|
|
|
3,868,802 |
|
|
|
5,363,615 |
|
|
|
1,186,350 |
|
|
|
2,261,340 |
|
|
|
1,682,452 |
|
|
|
1,900,289 |
|
|
|
1,222,229 |
|
|
|
Return of capital
|
|
|
6,500,000 |
|
|
|
10,800,000 |
|
|
|
2,500,000 |
|
|
|
1,800,000 |
|
|
|
1,070,000 |
|
|
|
2,050,000 |
|
|
|
2,000,000 |
|
|
|
Source (on cash basis)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales
|
|
|
6,500,000 |
|
|
|
13,502,268 |
|
|
|
3,167,600 |
|
|
|
2,592,864 |
|
|
|
2,088,640 |
|
|
|
2,409,980 |
|
|
|
2,189,600 |
|
|
|
Refinancing
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operations
|
|
|
3,868,802 |
|
|
|
2,661,347 |
|
|
|
518,750 |
|
|
|
1,468,476 |
|
|
|
663,812 |
|
|
|
1,540,309 |
|
|
|
1,032,629 |
|
|
|
Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Receivable on net purchase money financing
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Past performance is not necessarily indicative of future
results
A-35
TABLE IV
RESULTS OF COMPLETED PROGRAMS
(UNAUDITED) (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cole | |
|
|
Cole Desert | |
|
Siete Square | |
|
Boulevard | |
|
|
Palms Power | |
|
Retail Income | |
|
Square | |
Program Name |
|
Center LP | |
|
Investors LP | |
|
Investors LP | |
|
|
| |
|
| |
|
| |
Dollar amount raised
|
|
$ |
7,500,000 |
|
|
$ |
1,875,000 |
|
|
$ |
10,000,000 |
|
Number of properties purchased
|
|
|
1 |
|
|
|
1 |
|
|
|
1 |
|
Date of closing of offering
|
|
|
12/31/01 |
|
|
|
09/14/98 |
|
|
|
11/25/02 |
|
Date of first sale of property
|
|
|
12/30/03 |
|
|
|
02/20/04 |
|
|
|
09/10/04 |
|
Date of final sale of property
|
|
|
12/30/03 |
|
|
|
02/20/04 |
|
|
|
09/10/04 |
|
|
Tax and Distribution Data Per $1,000 Investment Through
3/31/05
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal income tax results:
|
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary income (loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operations
|
|
|
(71 |
) |
|
|
(154 |
) |
|
|
(108 |
) |
|
from recapture
|
|
|
216 |
|
|
|
1,313 |
|
|
|
246 |
|
Capital gain (loss)
|
|
|
422 |
|
|
|
(578 |
) |
|
|
606 |
|
|
Deferred gain
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash distributions to investors
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Source (on Tax Basis)(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment income
|
|
|
1,948,137 |
|
|
|
837,544 |
|
|
|
4,847,320 |
|
|
|
Return of capital
|
|
|
7,500,000 |
|
|
|
1,875,000 |
|
|
|
10,000,000 |
|
|
|
Source (on cash basis)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales
|
|
|
8,082,375 |
|
|
|
1,899,975 |
|
|
|
12,837,500 |
|
|
|
Refinancing
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operations
|
|
|
1,365,762 |
|
|
|
812,569 |
|
|
|
2,009,820 |
|
|
|
Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Receivable on net purchase money financing
|
|
|
|
|
|
|
|
|
|
|
|
|
Past performance is not necessarily indicative of future
results
A-36
TABLE IV
RESULTS OF COMPLETED PROGRAMS
(UNAUDITED) (Continued)
NOTES TO TABLE IV
|
|
(1) |
The partnerships maintain their books on a tax basis of
accounting rather than on a GAAP basis. There are potential
differences in accounting for cash distributions on a tax basis
and GAAP basis, the most significant of which is that
partnership syndication costs, which includes securities
commissions and other costs, would be recorded as a reduction of
capital for GAAP purposes, which would result in lower return of
capital and higher investment income amounts on a GAAP basis
than on a tax basis. |
A-37
TABLE V
RESULTS OF SALES OR DISPOSALS OF PROPERTIES (UNAUDITED)
This table provides summary information on the results of sales
or disposals of properties since January 1, 2002 by Prior
Real Estate Programs having similar investment objectives to
those of this program. All amounts are through March 31,
2005.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling Price, Net of Closing Costs and GAAP Adjustments | |
|
|
|
|
|
|
| |
|
|
|
|
|
|
Cash | |
|
|
|
Purchase Money | |
|
Adjustments |
|
|
|
|
|
|
|
|
Received Net | |
|
Mortgage | |
|
Mortgage Taken | |
|
Resulting from |
|
|
|
|
Date | |
|
Date | |
|
of Closing | |
|
Balance at | |
|
Back by | |
|
Application of |
|
|
Property |
|
Acquired | |
|
of Sale | |
|
Costs | |
|
Time of Sale | |
|
Program | |
|
GAAP(7) |
|
Total(4) | |
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
|
| |
Sun City Grand Retail Income Investors LP
|
|
|
11/97 |
|
|
|
1/02 |
|
|
$ |
3,197,902 |
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
3,197,902 |
|
3001 East Camelback Investors LP
|
|
|
9/94 |
|
|
|
2/02 |
|
|
|
1,051,213 |
|
|
|
1,454,550 |
|
|
|
|
|
|
|
|
|
|
|
2,505,763 |
|
Santa Fe Square Investors LP Pad Sales
|
|
|
3/99 |
|
|
|
2/02 |
|
|
|
648,733 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
648,733 |
|
Mesa Retail Income Investors LP
|
|
|
5/96 |
|
|
|
5/02 |
|
|
|
1,523,302 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,523,302 |
|
Regal Square Value Enhancement Investors LP
|
|
|
4/97 |
|
|
|
6/02 |
|
|
|
3,227,211 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,227,211 |
|
Scottsdale Retail Income Investors LP
|
|
|
9/96 |
|
|
|
7/02 |
|
|
|
6,806,510 |
|
|
|
450,748 |
|
|
|
|
|
|
|
|
|
|
|
7,257,258 |
|
Cole Southwest Opportunity Fund LP Las Vegas
Land
|
|
|
9/00 |
|
|
|
6/02 |
|
|
|
2,393,644 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,393,644 |
(8) |
Santa Fe Square Investors LP
|
|
|
7/99 |
|
|
|
9/02 |
(1) |
|
|
2,802,526 |
|
|
|
15,382,902 |
|
|
|
|
|
|
|
|
|
|
|
18,185,428 |
|
Sun Valley Value Enhancement Investors LP
|
|
|
12/98 |
|
|
|
10/02 |
|
|
|
408,989 |
|
|
|
|
|
|
|
2,400,000 |
(2) |
|
|
|
|
|
|
2,808,989 |
|
Sun Valley Value Enhancement Investors LP Pad Sale
|
|
|
12/98 |
|
|
|
12/02 |
|
|
|
400,635 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
400,635 |
|
Dobson Square Investors LP
|
|
|
8/95 |
|
|
|
12/02 |
|
|
|
3,026,237 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,026,237 |
|
Arden Square Value Enhancement Investors LP
|
|
|
6/97 |
|
|
|
12/02 |
|
|
|
719,493 |
|
|
|
|
|
|
|
1,775,000 |
(3) |
|
|
|
|
|
|
2,494,493 |
|
Grand Canyon Office Investors LP
|
|
|
3/95 |
|
|
|
4/03 |
|
|
|
1,629,802 |
|
|
|
1,824,070 |
|
|
|
|
|
|
|
|
|
|
|
3,453,872 |
|
North Phoenix Value Enhancement Investors LP
|
|
|
11/96 |
|
|
|
4/03 |
|
|
|
2,282,924 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,282,924 |
|
Cole Desert Palms Power Center LP
|
|
|
11/01 |
|
|
|
12/03 |
|
|
|
9,219,079 |
|
|
|
21,041,765 |
|
|
|
|
|
|
|
|
|
|
|
30,260,844 |
|
Cole Southwest Opportunity Fund LP Las Vegas
Telecom Land Sale
|
|
|
11/00 |
|
|
|
1/04 |
|
|
|
702,856 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
702,856 |
(9) |
Siete Square Retail Income Investors LP
|
|
|
7/98 |
|
|
|
2/04 |
|
|
|
2,825,034 |
|
|
|
1,632,235 |
|
|
|
|
|
|
|
|
|
|
|
4,457,269 |
|
Cole Boulevard Square Investors LP
|
|
|
7/02 |
|
|
|
9/04 |
|
|
|
14,423,979 |
|
|
|
27,205,776 |
|
|
|
|
|
|
|
|
|
|
|
41,629,755 |
|
Cole Southwest Opportunity Fund LP Las Vegas Telecom
Land Sale
|
|
|
11/00 |
|
|
|
10/04 |
|
|
|
508,690 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
508,690 |
(15) |
Cole Collateralized Senior Notes, LLC
Restaurant sales(6)
|
|
|
12/03 |
|
|
|
6/04-3/05 |
|
|
|
24,238,139 |
|
|
|
9,648,121 |
|
|
|
|
|
|
|
|
|
|
|
33,886,260 |
(10) |
|
TIC interests in Staples in Tulsa, OK
|
|
|
12/03 |
|
|
|
6/04 |
|
|
|
773,335 |
|
|
|
2,800,000 |
|
|
|
|
|
|
|
|
|
|
|
3,573,335 |
(11) |
|
TIC interests in Mimis Café Lone Tree, CO
|
|
|
12/03 |
|
|
|
6/04 |
|
|
|
278,141 |
|
|
|
1,361,168 |
|
|
|
|
|
|
|
|
|
|
|
1,639,309 |
(11) |
|
TIC interests in Walgreens Windsor, CO
|
|
|
6/04 |
|
|
|
9/04 |
|
|
|
2,393,460 |
|
|
|
2,871,000 |
|
|
|
|
|
|
|
|
|
|
|
5,264,460 |
(11) |
Past performance is not necessarily indicative of future
results
A-38
TABLE V
RESULTS OF SALES OR DISPOSALS OF PROPERTIES
(UNAUDITED) (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of Properties Including Closing and Soft Costs | |
|
|
|
|
| |
|
Excess (Deficiency) of | |
|
|
Original | |
|
Total Acquisition Cost, | |
|
|
|
Property Operating | |
|
|
Mortgage | |
|
Capital Improvements, | |
|
|
|
Cash Receipts Over | |
Property |
|
Financing | |
|
Closing and Soft Costs(5) | |
|
Total | |
|
Cash Expenditures | |
|
|
| |
|
| |
|
| |
|
| |
Sun City Grand Retail Income Investors LP
|
|
$ |
|
|
|
$ |
2,411,259 |
|
|
$ |
2,411,259 |
|
|
$ |
1,186,097 |
|
3001 East Camelback Investors LP
|
|
|
1,000,000 |
|
|
|
822,276 |
|
|
|
1,822,276 |
|
|
|
355,878 |
|
Santa Fe Square Investors LP Pad Sales
|
|
|
|
|
|
|
150,000 |
|
|
|
150,000 |
|
|
|
|
|
Mesa Retail Income Investors LP
|
|
|
|
|
|
|
1,053,310 |
|
|
|
1,053,310 |
|
|
|
611,815 |
|
Regal Square Value Enhancement Investors LP
|
|
|
|
|
|
|
1,980,952 |
|
|
|
1,980,952 |
|
|
|
1,469,388 |
|
Scottsdale Retail Income Investors LP
|
|
|
|
|
|
|
5,943,802 |
|
|
|
5,943,802 |
|
|
|
3,322,176 |
|
Cole Southwest Opportunity Fund LP Las Vegas
Land
|
|
|
|
|
|
|
3,212,377 |
|
|
|
3,212,377 |
|
|
|
(69,830 |
) |
Santa Fe Square Investors LP
|
|
|
3,443,065 |
|
|
|
10,381,619 |
|
|
|
13,824,684 |
|
|
|
3,343,964 |
|
Sun Valley Value Enhancement Investors LP
|
|
|
|
|
|
|
1,974,822 |
|
|
|
1,974,822 |
|
|
|
714,301 |
|
Sun Valley Value Enhancement Investors LP Pad Sale
|
|
|
|
|
|
|
100,000 |
|
|
|
100,000 |
|
|
|
|
|
Dobson Square Investors LP
|
|
|
|
|
|
|
1,693,969 |
|
|
|
1,693,969 |
|
|
|
1,765,005 |
|
Arden Square Value Enhancement Investors LP
|
|
|
|
|
|
|
1,779,561 |
|
|
|
1,779,561 |
|
|
|
873,311 |
|
Grand Canyon Office Investors LP
|
|
|
|
|
|
|
2,314,208 |
|
|
|
2,314,208 |
|
|
|
898,878 |
|
North Phoenix Value Enhancement Investors LP
|
|
|
|
|
|
|
1,640,448 |
|
|
|
1,640,448 |
|
|
|
1,551,353 |
|
Cole Desert Palms Power Center LP
|
|
|
21,400,000 |
|
|
|
6,468,210 |
|
|
|
27,868,210 |
|
|
|
1,380,074 |
|
Cole Southwest Opportunity Fund LP
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Las Vegas Telecom Land Sale
|
|
|
|
|
|
|
554,072 |
|
|
|
554,072 |
|
|
|
(11,742 |
) |
Siete Square Retail Income Investors LP
|
|
|
1,800,000 |
|
|
|
1,659,816 |
|
|
|
3,459,816 |
|
|
|
410,455 |
|
Cole Boulevard Square Investors LP
|
|
|
27,720,000 |
|
|
|
7,984,871 |
|
|
|
35,704,871 |
|
|
|
2,001,581 |
|
Cole Southwest Opportunity Fund LP
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Las Vegas Telecom Land Sale
|
|
|
|
|
|
|
400,973 |
|
|
|
400,973 |
|
|
|
7,668 |
|
Cole Collateralized Senior Notes, LLC
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restaurant sales(6)
|
|
|
18,587,181 |
|
|
|
8,527,344 |
|
|
|
27,114,525 |
|
|
|
1,307,972 |
|
|
TIC interests in Staples in Tulsa, OK
|
|
|
2,800,000 |
|
|
|
773,335 |
|
|
|
3,573,335 |
|
|
|
87,156 |
|
|
TIC interests in Mimis Café Lone Tree, CO
|
|
|
1,361,168 |
|
|
|
278,141 |
|
|
|
1,639,309 |
|
|
|
56,390 |
|
|
TIC interests in Walgreens Windsor, CO
|
|
|
3,900,000 |
|
|
|
1,364,460 |
|
|
|
5,264,460 |
|
|
|
48,793 |
|
Past performance is not necessarily indicative of future
results
A-39
TABLE V
RESULTS OF SALES OR DISPOSALS OF PROPERTIES
(UNAUDITED) (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling Price, Net of Closing Costs and GAAP Adjustments | |
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
Purchase | |
|
|
|
|
|
|
|
|
Cash | |
|
|
|
Money | |
|
Adjustments | |
|
|
|
|
|
|
|
|
Received Net | |
|
Mortgage | |
|
Mortgage Taken | |
|
Resulting from | |
|
|
|
|
Date | |
|
Date | |
|
of Closing | |
|
Balance at | |
|
Back by | |
|
Application of | |
|
|
Property |
|
Acquired | |
|
of Sale | |
|
Costs | |
|
Time of Sale | |
|
Program | |
|
GAAP(7) | |
|
Total(4) | |
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
Cole Collateralized Senior Notes, LLC
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TIC interests in Walgreens
Goldsboro, NC
|
|
|
06/04 |
|
|
|
11/04 |
|
|
|
2,303,985 |
|
|
|
2,611,510 |
|
|
|
|
|
|
|
|
|
|
|
4,915,495 |
(11) |
|
TIC interests in Walgreens
Hamilton, OH
|
|
|
07/04 |
|
|
|
10/04 |
|
|
|
2,668,047 |
|
|
|
3,033,250 |
|
|
|
|
|
|
|
|
|
|
|
5,701,297 |
(11) |
|
TIC interests in Walgreens
Carlsbad, NM
|
|
|
07/04 |
|
|
|
12/04 |
|
|
|
2,046,107 |
|
|
|
2,335,000 |
|
|
|
|
|
|
|
|
|
|
|
4,381,107 |
(11) |
|
TIC interests in Walgreens
Willimantic, CN
|
|
|
09/04 |
|
|
|
11/04 |
|
|
|
2,466,690 |
|
|
|
2,709,000 |
|
|
|
|
|
|
|
|
|
|
|
5,175,690 |
(11) |
|
TIC interests in Walgreens
Fairborn, OH
|
|
|
09/04 |
|
|
|
11/04 |
|
|
|
2,372,750 |
|
|
|
2,617,000 |
|
|
|
|
|
|
|
|
|
|
|
4,989,750 |
(11) |
|
TIC interests in Walgreens
Edgewood, NM
|
|
|
09/04 |
|
|
|
3/05 |
|
|
|
1,903,340 |
|
|
|
2,128,000 |
|
|
|
|
|
|
|
|
|
|
|
4,031,340 |
(11) |
|
TIC interests in Walgreens
Richmond, OH(12)
|
|
|
10/04 |
|
|
|
3/05 |
|
|
|
2,700,564 |
|
|
|
2,992,117 |
|
|
|
|
|
|
|
|
|
|
|
5,692,681 |
(11) |
|
TIC interests in Walgreens
Westheimer, TX
|
|
|
10/04 |
|
|
|
3/05 |
|
|
|
3,526,680 |
|
|
|
4,032,000 |
|
|
|
|
|
|
|
|
|
|
|
7,558,680 |
(11) |
|
TIC interests in Walgreens
Slidell, LA(13)
|
|
|
10/04 |
|
|
|
2/05 |
|
|
|
1,502,861 |
|
|
|
1,667,783 |
|
|
|
|
|
|
|
|
|
|
|
3,170,644 |
(11) |
|
TIC interests in Home Depot
Spokane, WA(14)
|
|
|
10/04 |
|
|
|
3/05 |
|
|
|
3,606,093 |
|
|
|
4,018,751 |
|
|
|
|
|
|
|
|
|
|
|
7,624,844 |
(11) |
|
TIC interests in Walgreens
Covington, TN(16)
|
|
|
10/04 |
|
|
|
2/05 |
|
|
|
419,328 |
|
|
|
460,122 |
|
|
|
|
|
|
|
|
|
|
|
879,450 |
(11) |
|
TIC interests in Walgreens
Orlando, FL(17)
|
|
|
10/04 |
|
|
|
3/05 |
|
|
|
695,134 |
|
|
|
765,156 |
|
|
|
|
|
|
|
|
|
|
|
1,460,290 |
(11) |
|
TIC interests in Walgreens
Glen Burnie, MD(18)
|
|
|
11/04 |
|
|
|
3/05 |
|
|
|
1,145,729 |
|
|
|
1,283,797 |
|
|
|
|
|
|
|
|
|
|
|
2,429,526 |
(11) |
Past performance is not necessarily indicative of future
results
A-40
TABLE V
RESULTS OF SALES OR DISPOSALS OF PROPERTIES
(UNAUDITED) (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of Properties Including Closing and Soft Costs | |
|
|
|
|
| |
|
|
|
|
Original | |
|
Total Acquisition Cost, | |
|
|
|
Excess (Deficiency) of | |
|
|
Mortgage | |
|
Capital Improvements, | |
|
|
|
Property Operating Cash | |
Property |
|
Financing | |
|
Closing and Soft Costs(5) | |
|
Total | |
|
Receipts Over Cash Expenditures | |
|
|
| |
|
| |
|
| |
|
| |
Cole Collateralized Senior
Notes, LLC
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TIC interests in Walgreens Goldsboro, NC
|
|
|
3,691,000 |
|
|
|
1,224,495 |
|
|
|
4,915,495 |
|
|
|
41,197 |
|
|
TIC interests in Walgreens Hamilton, OH
|
|
|
4,321,000 |
|
|
|
1,380,298 |
|
|
|
5,701,298 |
|
|
|
49,394 |
|
|
TIC interests in Walgreens Carlsbad, NM
|
|
|
3,298,000 |
|
|
|
1,083,107 |
|
|
|
4,381,107 |
|
|
|
39,608 |
|
|
TIC interests in Walgreens Willimantic, CN
|
|
|
4,000,000 |
|
|
|
1,175,689 |
|
|
|
5,175,689 |
|
|
|
35,170 |
|
|
TIC interests in Walgreens Fairborn, OH
|
|
|
3,944,000 |
|
|
|
1,045,750 |
|
|
|
4,989,750 |
|
|
|
37,949 |
|
|
TIC interests in Walgreens Edgewood, NM
|
|
|
3,200,000 |
|
|
|
831,340 |
|
|
|
4,031,340 |
|
|
|
36,744 |
|
|
TIC interests in Walgreens Richmond, OH(12)
|
|
|
4,800,000 |
|
|
|
1,643,970 |
|
|
|
6,443,970 |
|
|
|
68,176 |
|
|
TIC interests in Walgreens Westheimer, TX
|
|
|
5,800,000 |
|
|
|
1,758,679 |
|
|
|
7,558,679 |
|
|
|
61,184 |
|
|
TIC interests in Walgreens
Slidell, LA(13)
|
|
|
3,200,000 |
|
|
|
967,240 |
|
|
|
4,167,240 |
|
|
|
13,619 |
|
|
TIC interests in Home Depot
Spokane, WA(14)
|
|
|
16,760,000 |
|
|
|
4,983,250 |
|
|
|
21,743,250 |
|
|
|
132,832 |
|
|
TIC interests in Walgreens
Covington, TN(16)
|
|
|
3,064,000 |
|
|
|
942,170 |
|
|
|
4,006,170 |
|
|
|
6,253 |
|
|
TIC interests in Walgreens
Orlando, FL(17)
|
|
|
3,490,709 |
|
|
|
1,122,101 |
|
|
|
4,612,810 |
|
|
|
43,657 |
|
|
TIC interests in Walgreens
Glen Burnie, MD(18)
|
|
|
3,369,000 |
|
|
|
3,006,675 |
|
|
|
6,375,675 |
|
|
|
60,717 |
|
Past performance is not necessarily indicative of future
results
A-41
NOTES TO TABLE V
|
|
|
|
(1) |
The property was sold to Cole Santa Fe Investors, LP, a new
limited partnership sponsored by Cole. |
|
|
(2) |
Amount is shown at face value and does not represent the
discounted current value. The interest rate on the note was
8% per annum, with monthly interest only payments and
principal due in December 2002. The seller note was paid in full
in December 2002. |
|
|
(3) |
Amount is shown at face value and does not represent the
discounted current value. The interest rate on the note was
8% per annum, with monthly interest only payments and
principal due in June 2003. The seller note was paid in full in
June 2003. |
|
|
(4) |
None of the amounts are being reported for tax purposes on the
installment basis. See Table IV for allocation of the
taxable gains between ordinary and capital income for all sales
except as noted in footnotes (8), (9), (10), and (11). |
|
|
(5) |
The amounts shown do not include a pro rata share of the
original offering costs. There were no carried interests
received in lieu of commissions in connection with the
acquisition of the property. |
|
|
(6) |
Amounts represent the combined amounts of eighteen restaurants
sold in separate transactions. |
|
|
(7) |
As the financial statements are prepared on an income tax basis,
there are no GAAP adjustments included herein. |
|
|
(8) |
The sale resulted in no ordinary income and a capital gain of
approximately $579,000. |
|
|
(9) |
The sale resulted in no ordinary income and a capital gain of
approximately $291,000. |
|
|
(10) |
The sales resulted in no ordinary income and capital gains
totaling approximately $6,333,000. |
|
(11) |
Amounts herein relate to the sale of tenant-in-common interests
in a single-tenant commercial property. There was no gain or
loss related to the sales as the interests in the property were
sold at cost, with each purchaser acquiring their interest with
cash and the assumption of a pro-rata portion of any existing
loan on the property. |
|
(12) |
Amounts relate to the sale of an aggregate 84% interest in the
property to various tenant-in-common investors through the Cole
Capital Partners Tenant-in-Common Program. |
|
(13) |
Amounts relate to the sale of an aggregate 72% interest in the
property to various tenant-in-common investors through the Cole
Capital Partners Tenant-in-Common Program. |
|
(14) |
Amounts relate to the sale of an aggregate 33% interest in the
property to various tenant-in-common investors through the Cole
Capital Partners Tenant-in-Common Program. |
|
(15) |
The sale resulted in no ordinary income and a capital gain of
approximately $107,000. |
|
(16) |
Amounts relate to the sale of an aggregate 21% interest in the
property to various tenant-in-common investors through the Cole
Capital Partners Tenant-in-Common Program. |
|
(17) |
Amounts relate to the sale of an aggregate 30% interest in the
property to various tenant-in-common investors through the Cole
Capital Partners Tenant-in-Common Program. |
|
(18) |
Amounts relate to the sale of an aggregate 35% interest in the
property to various tenant-in-common investors through the Cole
Capital Partners Tenant-in-Common Program. |
A-42
APPENDIX B
COLE CREDIT PROPERTY TRUST II, INC.
SUBSCRIPTION AGREEMENT
INSTRUCTIONS TO SUBSCRIBERS
Any person desiring to subscribe for our common shares should
carefully read and review the Prospectus, as supplemented to
date, and if he or she desires to subscribe for shares, complete
the Subscription Agreement/Signature Page that follows these
instructions. Follow the appropriate instructions listed below
for the items indicated. Please print in ballpoint pen or type
the information.
|
|
|
A INVESTMENT |
|
|
Enter the dollars and cents amount of the purchase and the
number of shares to be purchased. Minimum purchase $2,500. Check
the box to indicate whether this is an initial or an additional
investment. The Additional Investment box must be
checked in order for this subscription to be combined with
another subscription for purposes of a volume discount. A
completed Subscription Agreement is required for each initial
and additional investment. |
|
|
Check the box to indicate if the Registered Representative
chooses to purchase common stock net of selling commissions. |
|
B TYPE OF OWNERSHIP |
|
|
FOR NON-CUSTODIAL OWNERSHIP ACCOUNTS, please mail the properly
completed and executed Subscription Agreement/Signature Page and
your check made payable to WELLS FARGO BANK, N.A.,
ESCROW AGENT FOR COLE CREDIT PROPERTY TRUST II to:
Cole Capital Corporation, 2555 East Camelback Road,
Suite 400, Phoenix, AZ 85016, Attn: Investor Services. If
you have questions, please call 866-341-2653. FOR CUSTODIAL
OWNERSHIP ACCOUNTS, checks should be made payable to the
CUSTODIAN and sent along with this properly completed and
executed form to the Custodian. |
|
|
Check the appropriate box to indicate the type of entity that is
subscribing. (Entities for non-custodial ownership accounts
appear on the left side; entities for custodial ownership
accounts appear on the right side.) If this is an additional
purchase, this should be completed exactly the same as a
previous investment. If the entity is a pension or profit
sharing plan, indicate whether it is taxable or exempt from
taxation under Section 501A of the Internal Revenue Code.
Note: Pension or Profit Sharing Plan appears under
non-custodial ownership as well as custodial ownership
check non-custodial ownership if the plan has a trustee;
custodial ownership if the plan has a custodian. If you check
the Individual Ownership box and you wish to designate a
Transfer on Death beneficiary, you may check the TOD
box and you must fill out the Transfer on Death Form in order to
effect the designation. |
|
|
Enter the exact name of the custodian or trustee and mailing
address. If this is an additional purchase by a qualified
plan, please use the same exact plan name as previously used. |
|
|
The custodian must complete this box by entering its custodian
Tax ID number (for tax purposes), custodial account number and
its telephone number. |
|
C SUBSCRIBER INFORMATION |
|
|
For non-custodial ownership accounts, enter the exact name in
which the shares are to be held. For co-subscribers enter the
names of all subscribers. For custodial ownership accounts,
enter FBO the name of the subscriber. |
|
|
Enter mailing address, city, state, and zip code of the
subscriber. Note: The custodian or trustee of custodial
ownership accounts is the mailing address or address of record
completed in Section B. |
|
|
Enter home telephone, business telephone and e-mail address. |
|
|
Enter birth date of subscriber and co-subscriber, if applicable,
or date of incorporation. |
B-1
|
|
|
|
|
Enter the Social Security number of subscriber and
co-subscriber, if applicable. The subscriber is certifying that
this number is correct. For custodial ownership accounts, enter
the subscribers Social Security number (for identification
purposes). Enter Tax ID number, if applicable. |
|
|
Check the appropriate box. If the subscriber is a non-resident
alien, he must apply to the United States Internal Revenue
Service for an identification number via Form SS-4 for an
individual or SS-5 for a corporation, and supply the number to
the Company as soon as it is available. |
|
|
Check this box if the subscriber is an employee of Cole or an
individual who has been continuously affiliated with Cole as an
independent contractor. |
|
D DISTRIBUTION OPTIONS |
|
|
CHECK THE APPROPRIATE BOX TO INDICATE DISTRIBUTIONS OPTIONS FOR
NON-CUSTODIAL OWNERSHIP ACCOUNTS. |
|
|
Check if you desire distributions to be mailed to address of
record in Section C, above. |
|
|
Check if you desire to participate in the Distribution
Reinvestment Program. |
|
|
If a subscriber desires direct deposit of his/her cash
distributions to an account or address other than as set forth
in the Subscription Agreement/ Signature Page, check the
preferred option and complete the required information. For ACH,
indicate whether it is a checking or savings account, and enter
the name of the institution/individual, mailing address, ABA
number, and account number. A VOIDED CHECK MUST BE ENCLOSED, if
applicable. CHECK THE APPROPRIATE BOX TO INDICATE DISTRIBUTION
OPTIONS FOR CUSTODIAL OWNERSHIP ACCOUNTS. |
|
|
Check if you desire distributions to be mailed to a custodian. |
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Check if you desire to participate in the Distribution
Reinvestment Program. |
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E SIGNATURE |
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The Subscription Agreement/Signature Page must be executed
by the subscriber(s), and if applicable, the trustee or
custodian. |
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F BROKER/DEALER REGISTERED REPRESENTATIVE |
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Enter the Registered Representatives name, address,
Broker/Dealer Representative ID number, telephone number, and
e-mail address. Also, enter the name of the broker/dealer,
home/office address, and Broker/Dealer Client Account number. By
executing the Subscription Agreement/Signature Page, the
Registered Representative substantiates compliance with the
conduct rules of the NASD, by certifying that the Registered
Representative has reasonable grounds to believe, based on
information obtained from the investor concerning his, her or
its investment objectives, other investments, financial
situation and needs and any other information known by such
Registered Representative, that investment in the Company is
suitable for such investor in light of his, her or its financial
position, net worth and other suitability characteristics and
that the Registered Representative has informed the investor of
all pertinent facts relating to the liability, liquidity and
marketability of an investment in the Company during its term.
The Registered Representative (authorized signature) should sign
where provided. |
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Check the box to indicate whether the Registered Representative
chooses to purchase common stock net of selling commissions. |
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G REGISTERED INVESTMENT ADVISOR (RIA) |
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Check the box to indicate whether this subscription was
solicited or recommended by an investment advisor/broker/dealer
whose agreement with the subscriber includes a fixed or
wrap fee feature for advisory and related brokerage
services, and, accordingly, may not charge the regular selling
commission. No sales commissions are paid on these
accounts. This box must be checked in order for such
subscriber(s) to purchase shares net of the selling commissions. |
B-2
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SUBMISSION OF SUBSCRIPTION |
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FOR NON-CUSTODIAL OWNERSHIP ACCOUNTS, the properly completed and
executed Subscription Agreement/Signature Page together with a
check made payable to WELLS FARGO BANK, N.A., ESCROW AGENT
FOR COLE CREDIT PROPERTY TRUST II should be mailed to:
Cole Capital Corporation, 2555 East Camelback Road,
Suite 400, Phoenix, AZ 85016, Attn: Investor Services.
FOR CUSTODIAL OWNERSHIP ACCOUNTS, checks should be made payable
to the CUSTODIAN and sent, along with this properly completed
and executed form, to the Custodian. |
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NOTE: If a person other than the person in whose name the
shares will be held is reporting the income received from the
Company, you must notify the Company in writing of that
persons name, address and Social Security number. |
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ALL INVESTORS AND THEIR REGISTERED REPRESENTATIVES MUST SIGN THE
SUBSCRIPTION AGREEMENT/SIGNATURE PAGE PRIOR TO TENDERING ANY
FUNDS FOR INVESTMENT IN SHARES. |
B-3
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COLE CREDIT PROPERTY TRUST II, INC. |
For Prospectus dated June 27, 2005 |
Subscription Agreement for the Purchase of Common Stock of Cole
Credit Property Trust II, Inc.
Please read this Subscription Agreement/Signature Page and the
Terms and Conditions before signing. Subscriber must read the
Subscription Instructions.
A - INVESTMENT
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Purchase of Cole Credit Property Trust II, Inc. Shares
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o Initial Subscription (Minimum $2,500) |
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o Check Enclosed
for Subscription Amount |
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o Additional
Subscription (Minimum $1,000) |
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o REGISTERED
REPRESENTATIVE PURCHASE |
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o Subscription
Amount Wired |
Total $
Invested = # of
Shares × $10
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A completed Subscription Agreement is required for
each initial and additional investment. |
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B - TYPE OF OWNERSHIP
NON-CUSTODIAL OWNERSHIP (Make Check Payable To: Wells
Fargo Bank, N.A., Escrow Agent for Cole Credit Property Trust II)
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o Individual Ownership
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o Corporate Ownership |
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o Uniform Gifts to
Minors Act: State of |
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o Joint Tenants with
Right of Survivorship
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o Partnership Ownership |
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Custodian
for |
o Community Property
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o LLC Ownership |
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o Pension or Profit
Sharing Plan |
o Tenants-in-Common
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o TOD (Fill out TOD Form
to effect designation) |
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o Taxableo Exempt
under §501A |
o Trust (Specify, i.e.,
Family, Living, Revocable, etc.)
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o Other (specify) |
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oame of
Trustee/Other Administrator |
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o Taxableo Grantor
A or B
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Date Trust Established
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Name of Trustee/Other Administrator
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CUSTODIAL OWNERSHIP (Make check payable to
the custodian listed and send ALL paperwork directly to the
custodian.)
o Traditional IRA
o Roth IRA
o Simplified Employee
Pension/Trust (S.E.P.)
o KEOGH
o Pension or Profit
Sharing
Plan o Taxable o Exempt
under §501A
Name of Trustee/Other
Administrator o Other
(specify) ------------------------
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CUSTODIAN INFORMATION
o Sterling Trust
Company (set up fee waived and annual fees discounted)
or
o oame
of Custodian or
Trustee Mailing
Address City
State
Zip Custodian
Taxpayer ID
# o o o - o o - o o o
Custodian Account
# o o o o o o o o o o o o o o o o o o
Custodian Telephone
No. o o o - o o o - o o o o
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C - SUBSCRIBER INFORMATION
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Subscriber Name
------------------------ o Mr.o Mrs.o Ms.
Social Security # or Taxpayer ID
# o o o - o o - o o o
Date of Birth/Date of
Incorporation o o - o o - o o o o
Mailing
Address City ----------------------State ----------Zip Home
Telephone
No. o o o - o o o - o o o o
Business Telephone
No. o o o - o o o - o o o o
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Co- Subscriber
------------------------ o Mr.o Mrs.o Ms.
Social Security
# o o o - o o - o o o
Date of
Birth o o - o o - o o o o
(Co-Subscriber)
Residence Address (if different from mailing
address) City ----------------------State ----------Zip E-mail
Address Please
Indicate Citizenship
Status o U.S.
Citizeno Resident
Alieno Non-Resident
Alien
o Employee or Affiliate |
INTERESTED PARTY (Optional)
If you would like a duplicate copy of all communications the
Company sends to you to be sent to an additional party (such as
your accountant or financial advisor), please complete the
following.
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Name of Interested
Party Street
Address or P.O.
Box City
State
Zip E-mail
Address (optional) |
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Name of
Firm --------------------------------------------
Business Telephone
No. o o o - o o o - o o o o
Facsimile Telephone
No. o o o - o o o - o o o o
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COLE CREDIT PROPERTY TRUST II, INC. |
2555 East Camelback Road, Suite 400 Phoenix, Arizona 85016 |
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© 2005 Cole Companies, CCPT2-AGMI-01 |
Phone 866-341-2653 |
(CONTINUED ON REVERSE SIDE)
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D |
DISTRIBUTION OPTIONS : NON-CUSTODIAL OWNERSHIP
ACCOUNTS |
o Mail to Address of
Record
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Distribution Reinvestment Program: Subscriber elects to
participate in the Distribution Reinvestment Program described
in the Prospectus. |
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Distributions directed to: |
o Via Mail (complete
information below)
o Via Electronic Deposit
(ACH complete information below)
o Checking o Savings
o Brokerage
MUST ENCLOSE VOIDED CHECK
Name of Bank, Brokerage Firm or
Individual
Bank ABA # (for ACH
only)
Account # (MUST BE FILLED
IN)
DISTRIBUTION OPTIONS: CUSTODIAL OWNERSHIP ACCOUNTS
o Mail to Custodial
Account
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o |
Distribution Reinvestment Program: Subscriber elects to
participate in the Distribution Reinvestment Program described
in the Prospectus |
I (we) hereby authorize Cole Credit Property Trust II, Inc.
(Company) to deposit distributions from my (our)
interest in stock of the Company into the account at the
financial institution as indicated in this Section D. I
further authorize the Company to debit this account in the event
that the Company erroneously deposits additional funds to which
I am not entitled, provided that such debit shall not exceed the
original amount of the erroneous deposit. In the event that I
withdraw funds erroneously deposited into my account before the
Company reverses such deposit, I agree that the Company has the
right to retain any future distributions that I am entitled
until the erroneously deposited amounts are recovered by the
Company.
This authorization is to remain in full force and effect until
the Company has received written notice from me of the
termination of this authorization in time to allow reasonable
opportunity to act on it, or until the Company has sent me
written notice of termination of this authorization.
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E |
SUBSCRIBER SIGNATURES |
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I hereby acknowledge and/or represent (or in the case of
fiduciary accounts, the person authorized to sign on my behalf)
the following: |
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Owner |
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Joint Owner |
a.
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I have received the prospectus relating to the shares, wherein
the terms and conditions of the offering of the shares are
described. |
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a. Initials |
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Initials |
b.
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I (we) either: (i) have a net worth (excluding home, home
furnishings and automobiles) of at least $45,000 and had during
the last year or estimate that I (we) will have in the current
year gross income of at least $45,000; or (ii) have a net
worth (excluding home, home furnishings and automobiles) of at
least $150,000, or that I (we) meet such higher suitability
requirements as may be required by my state of residence and set
forth in the prospectus under Suitability Standards.
In the case of sales to fiduciary accounts, the suitability
standards must be met by the beneficiary, the fiduciary account
or by the donor or grantor who directly or indirectly supplies
the funds for the purchase of the shares. |
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b. Initials |
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Initials |
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c.
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If I am a resident of Arizona, California, Iowa, Michigan or
Tennessee, I have either (i) a net worth of at least
$225,000 or (ii) a gross annual income of at least $60,000
and a net worth of at least $60,000. |
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c. Initials |
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Initials |
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d.
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If I am a resident of Maine, I have either (i) a net worth
of at least $200,000 or (ii) a gross annual income of at
least $50,000 and a net worth of at least $60,000. |
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d. Initials |
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Initials |
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e.
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If I am a resident of Kansas, I acknowledge that it is
recommended that I should invest no more than 10% of my liquid
net worth in the Shares and the securities of other real estate
investment trusts. |
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e. Initials |
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Initials |
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f.
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If I am a resident of Ohio, Massachusetts or Pennsylvania, I
have either (i) a net worth of at least $250,000 or
(ii) a minimum gross annual income of at least $70,000 and
a minimum net worth of at least $70,000 and my maximum
investment in the Company and its affiliates will not exceed 10%
of my net worth. |
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f. Initials |
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Initials |
g.
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I am purchasing the shares for my own account or if I am (we
are) purchasing shares on behalf of a trust or other entity of
which I am (we are) trustee(s) or authorized agent(s) I
(we) have due authority to execute the Subscription
Agreement/ Signature Page and do hereby legally bind the trust
or other entity of which I am (we are) trustee(s) or authorized
agent(s). |
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g. Initials |
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Initials |
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h.
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I acknowledge that the shares are not liquid. |
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h. Initials |
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Initials |
SUBSTITUTE W-9: I HEREBY CERTIFY under penalty of perjury
(i) that the taxpayer identification number shown on the
Subscription Agreement/Signature Page is true, correct and
complete, (ii) that I am not subject to backup withholding
either because I have not been notified that I am subject to
backup withholding as a result of a failure to report all
interest or distributions, or the Internal Revenue Service has
notified me that I am no longer subject to backup withholding,
and (iii) I am a U.S. person.
NOTICE IS HEREBY GIVEN TO EACH SUBSCRIBER THAT BY EXECUTING
THIS AGREEMENT YOU ARE NOT WAIVING ANY RIGHTS YOU MAY HAVE UNDER
THE SECURITIES ACT OF 1933 AND ANY STATE SECURITIES LAWS.
A SALE OF THE SHARES MAY NOT BE COMPLETED UNTIL AT LEAST FIVE
BUSINESS DAYS AFTER THE DATE THE SUBSCRIBER RECEIVES THE
PROSPECTUS.
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Signature of Subscriber |
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Signature of Co-Subscriber, if applicable |
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Authorized Signature (Custodian or Trustee, if applicable) |
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Date |
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F |
BROKER/DEALER: REGISTERED REPRESENTATIVE
Broker/Dealer Data
Completed by selling Registered Representative (please use
representatives address not home office)
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o Mr. o Mrs. o Ms.
Name of Registered
Representative
Home Office Mailing
Address
Broker/Dealer Client Account
#
Broker/Dealer Representative ID
#
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Registered Representatives Telephone
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Registered Representatives
E-mail
Have You Changed Broker/Dealer (since last
purchase)? o Yes o No
Signature Registered Representative
Signature Broker/ Dealer (if applicable)
G REGISTERED INVESTMENT ADVISOR (RIA)
REGISTERED INVESTMENT ADVISOR (RIA) NO SALES COMMISSIONS ARE
PAID ON THESE ACCOUNTS.
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Check only if subscription is made through the RIA in its
capacity as an RIA and not in its capacity as a Registered
Representative, if applicable, whose agreement with the
subscriber includes a fixed or wrap fee feature for
advisory and related brokerage services. If an owner or
principal or any member of the RIA firm is an NASD licensed
Registered Representative affiliated with a broker/dealer, the
transaction should be conducted through that broker/dealer, not
through the RIA. |
APPENDIX C
DISTRIBUTION REINVESTMENT PLAN
COLE CREDIT PROPERTY TRUST II, INC.
Cole Credit Property Trust II, Inc., a Maryland corporation
(the Company), has adopted this Distribution
Reinvestment Plan (the Plan), to be administered by
the Company or an unaffiliated third party (the
Administrator) as agent for participants in the Plan
(Participants), on the terms and conditions set
forth below.
1. Election to Participate. Any purchaser of shares
of common stock of the Company, par value $.01 per share
(the Shares), may become a Participant by making a
written election to participate on such purchasers
subscription agreement at the time of subscription for Shares.
Any stockholder who has not previously elected to participate in
the Plan, and subject to Section 8(b) herein, any
participant in any previous or subsequent publicly offered
limited partnership, real estate investment trust or other real
estate program sponsored by the Company or its affiliates (an
Affiliated Program), may so elect at any time by
completing and executing an authorization form obtained from the
Administrator or any other appropriate documentation as may be
acceptable to the Administrator. Participants in the Plan
generally are required to have the full amount of their cash
distributions (other than Excluded Distributions as
defined below) with respect to all Shares or shares of stock or
units of limited partnership interest of an Affiliated Program
(collectively Securities) owned by them reinvested
pursuant to the Plan. However, the Administrator shall have the
sole discretion, upon the request of a Participant, to
accommodate a Participants request for less than all of
the Participants Securities to be subject to participation
in the Plan.
2. Distribution Reinvestment. The Administrator will
receive all cash distributions (other than Excluded
Distributions) paid by the Company or an Affiliated Participant
with respect to Securities of Participants (collectively, the
Distributions). Participation will commence with the
next Distribution payable after receipt of the
Participants election pursuant to Paragraph 1 hereof,
provided it is received at least ten (10) days prior to the
last day of the period to which such Distribution relates.
Subject to the preceding sentence, regardless of the date of
such election, a holder of Securities will become a Participant
in the Plan effective on the first day of the period following
such election, and the election will apply to all Distributions
attributable to such period and to all periods thereafter. As
used in this Plan, the term Excluded Distributions
shall mean those cash or other distributions designated as
Excluded Distributions by the Board of the Company or the board
or general partner of an Affiliated Program, as applicable.
3. General Terms of Plan Investments.
(a) The Company intends to offer Shares pursuant to the
Plan at the higher of $91.5% of the estimated value of one share
as estimated by the Companys board of directors or
$9.15 per share. A stockholder may not participate in the
Plan through distribution channels that would be eligible to
purchase shares in the public offering of shares pursuant to the
Companys prospectus outside of the Plan at prices below
$9.15 per share.
(b) Selling commissions will not be paid for the Shares
purchased pursuant to the Plan.
(c) Dealer manager fees will not be paid for the Shares
purchased pursuant to the Plan.
(d) For each Participant, the Administrator will maintain
an account which shall reflect for each period in which
Distributions are paid (a Distribution Period) the
Distributions received by the Administrator on behalf of such
Participant. A Participants account shall be reduced as
purchases of Shares are made on behalf of such Participant.
(e) Distributions shall be invested in Shares by the
Administrator promptly following the payment date with respect
to such Distributions to the extent Shares are available for
purchase under the Plan. If sufficient Shares are not available,
any such funds that have not been invested in Shares within
30 days after receipt by the Administrator and, in any
event, by the end of the fiscal quarter in which they are
C-1
received, will be distributed to Participants. Any interest
earned on such accounts will be paid to the Company and will
become property of the Company.
(f) Participants may acquire fractional Shares so that 100%
of the Distributions will be used to acquire Shares. The
ownership of the Shares shall be reflected on the books of the
Company or its transfer agent.
4. Absence of Liability. Neither the Company nor the
Administrator shall have any responsibility or liability as to
the value of the Shares or any change in the value of the Shares
acquired for the Participants account. Neither the Company
nor the Administrator shall be liable for any act done in good
faith, or for any good faith omission to act hereunder.
5. Suitability. Each Participant shall notify the
Administrator in the event that, at any time during his
participation in the Plan, there is any material change in the
Participants financial condition or inaccuracy of any
representation under the Subscription Agreement for the
Participants initial purchase of Shares. A material change
shall include any anticipated or actual decrease in net worth or
annual gross income or any other change in circumstances that
would cause the Participant to fail to meet the suitability
standards set forth in the Companys prospectus for the
Participants initial purchase of Shares.
6. Reports to Participants. Within ninety
(90) days after the end of each calendar year, the
Administrator will mail to each Participant a statement of
account describing, as to such Participant, the Distributions
received, the number of Shares purchased and the per Share
purchase price for such Shares pursuant to the Plan during the
prior year. Each statement also shall advise the Participant
that, in accordance with Section 5 hereof, the Participant
is required to notify the Administrator in the event there is
any material change in the Participants financial
condition or if any representation made by the Participant under
the subscription agreement for the Participants initial
purchase of Securities becomes inaccurate. Tax information
regarding a Participants participation in the Plan will be
sent to each Participant by the Company or the Administrator at
least annually.
7. Taxes. Taxable Participants may incur a tax
liability for Distributions even though they have elected not to
receive their Distributions in cash but rather to have their
Distributions reinvested in Shares under the Plan.
8. Reinvestment in Subsequent Programs.
(a) After the termination of the Companys initial
public offering of Shares pursuant to the Companys
prospectus dated June 27, 2005 (the Initial
Offering), the Company may determine, in its sole
discretion, to cause the Administrator to provide to each
Participant notice of the opportunity to have some or all of
such Participants Distributions (at the discretion of the
Administrator and, if applicable, the Participant) invested
through the Plan in any publicly offered limited partnership,
real estate investment trust or other real estate program
sponsored by the Company or an Affiliated Program (a
Subsequent Program). If the Company makes such an
election, Participants may invest Distributions in equity
securities issued by such Subsequent Program through the Plan
only if the following conditions are satisfied:
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(i) prior to the time of such reinvestment, the Participant
has received the final prospectus and any supplements thereto
offering interests in the Subsequent Program and such prospectus
allows investment pursuant to a distribution reinvestment plan; |
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(ii) a registration statement covering the interests in the
Subsequent Program has been declared effective under the
Securities Act of 1933, as amended; |
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(iii) the offering and sale of such interests are qualified
for sale under the applicable state securities laws; |
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(iv) the Participant executes the subscription agreement
included with the prospectus for the Subsequent Program; and |
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(v) the Participant qualifies under applicable investor
suitability standards as contained in the prospectus for the
Subsequent Program. |
C-2
(b) The Company may determine, in its sole discretion, to
cause the Administrator to allow one or more participants of an
Affiliated Program to become a Participant. If the
Company makes such an election, such Participants may invest
distributions received from the Affiliated Program in Shares
through this Plan, if the following conditions are satisfied:
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(i) prior to the time of such reinvestment, the Participant
has received the final prospectus and any supplements thereto
offering interests in the Subsequent Program and such prospectus
allows investment pursuant to a distribution reinvestment plan; |
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(ii) a registration statement covering the interests in the
Subsequent Program has been declared effective under the
Securities Act of 1933, as amended; |
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(iii) the offering and sale of such interests are qualified
for sale under the applicable state securities laws; |
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(iv) the Participant executes the subscription agreement
included with the prospectus for the Subsequent Program; and |
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(v) the Participant qualifies under applicable investor
suitability standards as contained in the prospectus for the
Subsequent Program. |
9. Termination.
(a) A Participant may terminate or modify his participation
in the Plan at any time by written notice to the Administrator.
To be effective for any Distribution, such notice must be
received by the Administrator at least ten (10) days prior
to the last day of the Distribution Period to which it relates.
(b) Prior to the listing of the Shares on a national
securities exchange or inclusion of the Shares for quotation on
The Nasdaq National Market, a Participants transfer of
Shares will terminate participation in the Plan with respect to
such transferred Shares as of the first day of the Distribution
Period in which such transfer is effective, unless the
transferee of such Shares in connection with such transfer
demonstrates to the Administrator that such transferee meets the
requirements for participation hereunder and affirmatively
elects participation by delivering an executed authorization
form or other instrument required by the Administrator.
10. State Regulatory Restrictions. The Administrator is
authorized to deny participation in the Plan to residents of any
state or foreign jurisdiction that imposes restrictions on
participation in the Plan that conflict with the general terms
and provisions of this Plan, including, without limitation, any
general prohibition on the payment of broker-dealer commissions
for purchases under the Plan.
11. Amendment or Termination by Company.
(a) The terms and conditions of this Plan may be amended by
the Company at any time, including but not limited to an
amendment to the Plan to substitute a new Administrator to act
as agent for the Participants, by mailing an appropriate notice
at least ten (10) days prior to the effective date thereof
to each Participant.
(b) The Administrator may terminate a Participants
individual participation in the Plan and the Company may
terminate the Plan itself, at any time by providing ten
(10) days prior written notice to a Participant, or
to all Participants, as the case may be.
(c) After termination of the Plan or termination of a
Participants participation in the Plan, the Administrator
will send to each Participant a check for the amount of any
Distributions in the Participations account that have not
been invested in Shares. Any future Distributions with respect
to such former Participants Shares made after the
effective date of the termination of the Participants
participation will be sent directly to the former Participant.
12. Participation by Limited Partners of Cole Operating
Partnership II, LP. For purposes of this Plan,
stockholders shall be deemed to include limited
partners of Cole Operating Partnership II, LP (the
Partnership), Participants shall be
deemed to include limited partners of the Partnership that elect
to
C-3
participate in the Plan, and Distribution, when used
with respect to a limited partner of the Partnership, shall mean
cash distributions on limited partnership interests held by such
limited partner.
13. Governing Law. This Plan and the
Participants election to participate in the Plan shall be
governed by the laws of the State of Maryland.
14. Notice. Any notice or other communication
required or permitted to be given by any provision of this Plan
shall be in writing and, if to the Administrator, addressed to
Investor Services Department, 2555 East Camelback Road,
Suite 400, Phoenix, Arizona 85016, or such other address as
may be specified by the Administrator by written notice to all
Participants. Notices to a Participant may be given by letter
addressed to the Participant at the Participants last
address of record with the Administrator. Each Participant shall
notify the Administrator promptly in writing of any changes of
address.
C-4
Cole Credit Property Trust II, Inc.
Prospectus
Up to 50,000,000 Shares of Common Stock
Offered to the Public
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ALPHABETICAL INDEX |
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Page | |
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Cautionary Note Regarding Forward-Looking Statements
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42 |
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Conflicts of Interest
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65 |
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Description of Shares
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112 |
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Estimated Use of Proceeds
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43 |
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Experts
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135 |
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Federal Income Tax Considerations
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90 |
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Financial Information
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F-1 |
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How to Subscribe
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134 |
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Investment by Tax-Exempt Entities and ERISA Considerations
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106 |
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Investment Objectives and Policies
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70 |
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Legal Matters
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135 |
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Management
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45 |
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Management Compensation
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59 |
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Our Operating Partnership Agreement
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126 |
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Plan of Operation
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84 |
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Plan of Distribution
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130 |
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Prior Performance Summary
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87 |
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Prior Performance Tables
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A-1 |
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Prospectus Summary
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6 |
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Questions and Answers About This Offering
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1 |
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Risk Factors
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18 |
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Stock Ownership
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64 |
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Suitability Standards
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i |
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Summary of Distribution Reinvestment Plan
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123 |
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Supplemental Sales Material
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135 |
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Where You Can Find More Information
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135 |
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Until September 26, 2005 (90 days after the
effective date of this offering), all dealers that affect
transactions in these securities, whether or not participating
in this offering, may be required to deliver a prospectus. This
is in addition to the obligation of dealers to deliver a
prospectus when acting as soliciting dealers.
We have not authorized any dealer, salesperson or other
individual to give any information or to make any
representations that are not contained in this prospectus. If
any such information or statements are given or made, you should
not rely upon such information or representation. This
prospectus does not constitute an offer to sell any securities
other than those to which this prospectus relates, or an offer
to sell, or a solicitation of an offer to buy, to any person in
any jurisdiction where such an offer or solicitation would be
unlawful. This prospectus speaks as of the date set forth below.
You should not assume that the delivery of this prospectus or
that any sale made pursuant to this prospectus implies that the
information contained in this prospectus will remain fully
accurate and correct as of any time subsequent to the date of
this prospectus.
Cole Capital Corporation
June 27, 2005
COLE CREDIT PROPERTY TRUST II, INC.
SUPPLEMENT NO. 13 DATED DECEMBER 20, 2006
TO THE PROSPECTUS DATED JUNE 27, 2005
This document supplements, and should be read in conjunction with, the prospectus of Cole
Credit Property Trust II, Inc. dated June 27, 2005. This Supplement No. 13 supersedes and replaces
all prior supplements to the prospectus. Unless otherwise defined in this supplement, capitalized
terms used in this supplement shall have the same meanings as set forth in the prospectus.
The purpose of this supplement is to describe the following:
|
(1) |
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the status of the offering of shares in Cole Credit Property Trust II, Inc.; |
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(2) |
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all material items that have been previously disclosed by supplement to the prospectus; |
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(3) |
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a revision to the biography of one of our directors; |
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(4) |
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a Managements Discussion and Analysis of Financial condition and Results of Operations section
similar to that which was filed in the Quarterly Report on Form 10-Q, dated November 14, 2006; |
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(5) |
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the acquisition of a single-tenant, net leased commercial retail property, containing approximately
25,000 rentable square feet in La Grange, Texas; |
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(6) |
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the acquisition of a single-tenant, net leased commercial retail property, containing approximately
24,000 rentable square feet in Peru, Illinois; |
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(7) |
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the acquisition of a single-tenant, net leased commercial property, containing approximately 24,000
rentable square feet in Council Bluffs, Iowa; |
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(8) |
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the acquisition of a single-tenant, net leased commercial property, containing approximately 156,000
rentable square feet in Edwardsville, Kansas; |
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(9) |
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the acquisition of a single-tenant, net leased commercial retail property, containing approximately
13,000 rentable square feet in Glenville Scotia, New York; |
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(10) |
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the acquisition of a single-tenant, net leased commercial retail property, containing approximately
7,000 rentable square feet in Ashland, Kentucky; |
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(11) |
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the acquisition of a single-tenant, net leased commercial retail property, containing approximately
7,000 rentable square feet in Jackson, Ohio; |
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(12) |
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the acquisition of a single-tenant, net leased commercial retail property, containing approximately
7,000 rentable square feet in New Boston, Ohio; |
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(13) |
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the acquisition of a single-tenant, net leased commercial retail property, containing approximately
7,000 rentable square feet in Scottsburg, Indiana; |
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(14) |
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the acquisition of a single-tenant, net leased commercial retail property, containing approximately
25,000 rentable square feet in Livingston, Texas; |
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(15) |
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the acquisition of a single-tenant, net leased commercial retail property, containing approximately
25,000 rentable square feet in New Braunfels, Texas; |
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(16) |
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the acquisition of a single-tenant, net leased commercial retail property, containing approximately
21,000 rentable square feet in Benton, Arkansas; |
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(17) |
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the acquisition of a single-tenant, net leased commercial retail property, containing approximately
98,000 rentable square feet in Fairview Heights, Illinois; |
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(18) |
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the acquisition of a single-tenant, net leased commercial retail property, containing approximately
21,000 rentable square feet in Davie, Florida; |
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(19) |
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the acquisition of a single-tenant, net leased commercial retail property, containing approximately
25,000 rentable square feet in Crockett, Texas; |
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(20) |
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the acquisition of a single-tenant, net leased commercial retail property, containing approximately
20,000 rentable square feet in Oxford, Mississippi; |
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(21) |
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the acquisition of a single-tenant, net leased commercial property, containing approximately 42,000
rentable square feet in Atlanta, Georgia; |
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(22) |
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the potential acquisition of a single-tenant, net leased commercial retail property, containing
approximately 21,000 rentable square feet in Newington, Connecticut; |
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(23) |
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the potential acquisition of a single-tenant, net leased commercial retail property, containing
approximately 79,000 rentable square feet in Cincinnati, Ohio; |
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(24) |
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the potential acquisition of a single-tenant, net leased commercial retail property, containing
approximately 20,000 rentable square feet in Clarksville, Indiana; |
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(25) |
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the potential acquisition of a single-tenant, net leased commercial retail property, containing
approximately 20,000 rentable square feet in Enterprise, Alabama; and |
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(26) |
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updated financial information regarding Cole Credit Property Trust II, Inc. and the acquired properties. |
Status of the Offering
We commenced our initial public offering of shares of our common stock on June 27, 2005. We
have accepted investors subscriptions received through December 15, 2006, and have issued an
aggregate of approximately 29.3 million shares of our common stock to stockholders, with gross
proceeds of approximately $292.3 million distributed to us. For additional information, see the
Plan of Distribution Subscription Process section of the prospectus beginning on page 133.
Distribution Policy
The following information replaces the third paragraph of the section of our prospectus
captioned Prospectus Summary Distribution Policy beginning on page 14 of the prospectus:
To maintain our qualification as a REIT, we are required to make aggregate annual
distributions to our stockholders of at least 90.0% of our annual taxable income (which does not
necessarily equal net income as calculated in accordance with generally accepted accounting
principles in the United States (GAAP)). Our board of directors may authorize distributions in
excess of those required for us to maintain REIT status depending on our financial condition and
such other factors as our board of directors deems relevant. We have not established a minimum
distribution level. Distributions will be paid to our stockholders as of the record date or dates
selected by our board of directors. We expect to declare and pay distributions at least quarterly.
We expect that such distributions will begin no later than the third quarter after the
commencement of this offering. However, there can be no assurance as to when, or if, we will begin
to generate sufficient cash flow for distribution to our stockholders. In the event we do not have
enough cash to make distributions, we may borrow, use proceeds from this offering, issue additional
securities or sell assets in order to fund distributions. Until we are generating operating cash
flow sufficient to make distributions to our stockholders, we intend to pay all or a substantial
portion of our distributions from the proceeds of this offering or from borrowings, including
possible borrowings from our advisor or its affiliates, in anticipation of future cash flow, which
may reduce the amount of capital we ultimately invest in properties, and negatively impact the
value of your investment.
The following information replaces the section of our prospectus captioned Risk Factors
Risks Related to an Investment in Cole Credit Property Trust II, Inc. If we, through Cole
Advisors II, are unable to find suitable investments, then we may not be able to achieve our
investment objectives or pay distributions on page 19 of the prospectus:
If we, through Cole Advisors II, are unable to find suitable investments, then we may not be
able to achieve our investment objectives or pay distributions.
Our ability to achieve our investment objectives and to pay distributions is dependent upon
the performance of Cole Advisors II, our advisor, in acquiring of our investments, selecting
tenants for our properties and securing independent financing arrangements. We currently do not
own any properties or have any operations, financing or investments. Except for investors who
purchase shares in this offering after such time as this prospectus is supplemented to describe one
or more identified investments, you will have no opportunity to evaluate the terms of transactions
or other economic or financial data concerning our investments. You must rely entirely on the
management ability of Cole Advisors II and the oversight of our board of directors. We cannot be
sure that Cole Advisors II will be successful in obtaining suitable investments on financially
attractive terms or that, if it makes investments on our behalf, our objectives will be achieved.
In either event, our ability to pay distributions to our stockholders would be adversely affected.
If Cole Advisors II is unable to obtain suitable investments, we will hold the proceeds of this
offering in an interest-bearing account or invest the proceeds in short-term, investment-grade
investments. If we cannot invest proceeds from this offering within a reasonable amount of time,
or if our board of directors determines it is in the best interests of our stockholders, we will
return the uninvested proceeds to investors. We believe that one year after we reach our minimum
offering and accept subscriptions is a reasonable period of time for us to obtain one or more
suitable investments.
Limited Liability and Indemnification of Directors, Officers, Employees and Other Agents
The following information replaces the section of our prospectus captioned Risk Factors
Risks Related to an Investment in Cole Credit Property Trust II, Inc. Our rights and the rights
of our stockholders to recover claims against our officers, directors and our advisor are limited,
which could reduce your and our recovery against them if they cause us to incur losses on page 21
of the prospectus:
- 2 -
Our rights and the rights of our stockholders to recover claims against our officers, directors
and our advisor are limited, which could reduce your and our recovery against them if they cause
us to incur losses.
Maryland law provides that a director has no liability in that capacity if he or she performs
his or her duties in good faith, in a manner he or she reasonably believes to be in the
corporations best interests and with the care that an ordinarily prudent person in a like position
would use under similar circumstances. Our charter, in the case of our directors, officers,
employees and agents, and the advisory agreement, in the case of our advisor, require us to
indemnify our directors, officers, employees and agents and our advisor and its affiliates for
actions taken by them in good faith and without negligence or misconduct. Additionally, our
charter limits the liability of our directors and officers for monetary damages subject to the
limitations of Maryland law and the Statement of Policy Regarding Real Estate Investment Trusts
published by the North American Securities Administrators Associations, also known as the NASAA
REIT Guidelines. Although our charter does not allow us to exonerate and indemnify our directors
and officers to a greater extent than permitted under Maryland law and the NASAA REIT Guidelines,
we and our stockholders may have more limited rights against our directors, officers, employees and
agents, and our advisor and its affiliates, than might otherwise exist under common law, which
could reduce your and our recovery against them. In addition, we may be obligated to fund the
defense costs incurred by our directors, officers, employees and agents or our advisor in some
cases which would decrease the cash otherwise available for distribution to you. See the section
captioned Management Limited Liability and Indemnification of Directors, Officers, Employees and
Other Agents elsewhere herein.
The following information replaces the second paragraph of the section of our prospectus
captioned Management Limited Liability and Indemnification of Directors, Officers, Employees and
Other Agents beginning on page 51 of the prospectus:
Our charter contains a provision that eliminates directors and officers liability subject to
the limitations of Maryland law and the NASAA REIT Guidelines. However, both Maryland law and the
NASAA REIT Guidelines limit our ability to exonerate and indemnify our directors and officers, as
set forth in our charter. Maryland law permits us to include in our charter a provision limiting
the liability of our directors and officers to our stockholders and us for money damages, except
for liability resulting from (i) actual receipt of an improper benefit or profit in money, property
or services or (ii) active and deliberate dishonesty established by a final judgment and that is
material to the cause of action.
Management Compensation
The section captioned Management Compensation of Directors beginning on page 48 of the
prospectus is supplemented with the following information:
We pay each of our independent directors a retainer of $25,000 per year plus $2,000 for each
board or board committee meeting the director attends in person ($2,500 for attendance by the
chairperson of the audit committee at each meeting of the audit committee) and $250 for each
meeting the director attends by telephone. In the event there are multiple meetings of the board
and one or more committees in a single day, the fees will be limited to $2,500 per day ($3,000 for
the chairperson of the audit committee if there is a meeting of such committee). In addition, we
have reserved 1,000,000 shares of common stock for future issuance upon the exercise of stock
options that may be granted to our independent directors pursuant to our stock option plan
(described below). We granted to each of our independent directors an option to purchase 5,000
shares of common stock at an exercise price equal to $9.15 per share (or greater, if such higher
price is necessary so that such option shall not be considered a nonqualified deferred
compensation plan under Section 409A of the Internal Revenue Code) as of the date each independent
director was elected as a director. We expect that the independent directors will receive an
additional 5,000-share option grant on the date of each annual meeting of stockholders, each with
an exercise price equal to $9.15 per share during such time as we are offering shares to the public
at $10.00 per share and thereafter at 100.0% of the then-current fair market value per share. All
directors receive reimbursement of reasonable out-of-pocket expenses incurred in connection with
attendance at meetings of our board of directors. If a director is also an employee of Cole REIT
II or Cole Advisors II or their affiliates, we do not pay compensation for services rendered as a
director. As of May 9, 2005, we had not paid compensation to any of our directors in their
capacity as a member of our board of directors, other than granting options.
Compensation Committee
The following information replaces the section of our prospectus captioned Questions and
Answers About This Offering What is the experience of your officers and directors? beginning on
page 1 of the prospectus:
Marcus E. Bromley is a member of our board of directors, chairman of its compensation
committee and a member of its audit committee. From December 1993 through 2005, Mr. Bromley served
as a member of the board of trustees of Gables Residential Trust, a multi-family residential REIT
listed on the New York Stock Exchange. From December 1993 until June 2000, Mr. Bromley also served
as the chief executive officer of Gables Residential Trust. Prior to joining Gables Residential
Trust, Mr. Bromley was a division partner of Trammell Crow Residential.
The following information replaces the fourth paragraph of the section of our prospectus
captioned Management -Executive Officers and Directors beginning on page 47 of the prospectus:
Marcus E. Bromley has been a member of our board of directors, chairman of our boards
compensation committee and a member of our boards audit committee since May 2005. From 1993
through 2005, Mr. Bromley served as a member of the board of trustees of Gables Residential Trust,
a $2 billion multi-family residential REIT with operations in Texas, Atlanta, South Florida,
Washington, D.C. and Southern California that was listed on the New York Stock Exchange prior to
its sale in 2005. From December 1993 until June 2000, Mr. Bromley also served as the chief
executive officer of Gables Residential Trust. Prior to joining Gables Residential Trust, Mr.
Bromley was a division partner of Trammell Crow Residential from 1982 until 1993. Mr. Bromley also
serves on the board of Private Bank of Buckhead (Atlanta), a community bank and the board of Nancy
Creek Capital Partners, a private equity firm. Mr. Bromley holds a B.S. in Economics from
Washington & Lee University and a M.B.A. from the University of North Carolina.
- 3 -
The Advisor
The section captioned Management Affiliated Companies The Advisor beginning on page 53
of the prospectus is supplemented by removing John H. Lotka from the list of current officers of
Cole REIT Advisors II, LLC, as he is no longer an officer or employee of our advisor.
Prior Performance Summary
The following information replaces the information in the section captioned Prospectus
Summary Prior Offering Summary on page 11 of the prospectus:
Since January 1, 1996, our chairman, chief executive officer and president, Christopher H.
Cole, through entities he directly or indirectly controls, has previously sponsored 65 privately
offered real estate programs, including 19 limited partnerships, four debt offerings, 22
tenant-in-common programs, and 17 Delaware statutory trust (DST) program offerings and is
currently sponsoring Cole Credit Property Trust II, Inc. (Cole REIT II), a privately offered
REIT. As of March 31, 2006, such programs have raised an aggregate of approximately $608.1 million
from over approximately 6,800 investors, and have owned and operated a total of 182 commercial real
estate properties. Neither Mr. Cole, nor any of our other affiliates, has previously sponsored or
organized a publicly offered REIT. The Prior Performance Summary section of this prospectus
contains a discussion of the programs sponsored by Mr. Cole since January 1, 1996. Certain
financial results and information relating to such programs with investment objectives similar to
ours is also provided in the Prior Performance Tables included as Appendix A to this prospectus.
The prior performance of the programs previously sponsored by Mr. Cole is not necessarily
indicative of the results that we will achieve. Therefore, you should not assume that you will
experience returns, if any, comparable to those experienced by investors in such prior real estate
programs.
The following information replaces the information in the section captioned Prior Performance
Summary beginning on page 87 of the prospectus:
Prior Investment Programs
The information presented in this section represents the historical experience of certain real
estate programs managed over the last ten years by Cole Capital Advisors, Cole Capital Partners and
other affiliates of our advisor, including certain officers and directors of our advisor. Investors
should not assume that they will experience returns, if any, comparable to those experienced by
investors in such prior real estate programs.
During the period from January 1, 1996 to December 31, 2005, affiliates of our advisor have
sponsored 65 privately offered prior programs including 19 limited partnerships, a real estate
investment trust (Cole REIT I), four debt offerings, 22 tenant-in-common programs and 17 DST
program offerings. As of March 31, 2006, such prior programs have raised approximately $608.1
million from approximately 6,800 investors. Each of the 19 limited partnerships, the real estate
investment trust, three of the debt offerings, the 22 tenant-in-common programs and the 17 DST
program offerings have investment objectives and policies similar to that of this program. See
Tables I and II of the Prior Performance Tables for more detailed information about the experience
of our affiliates in raising and investing funds for offerings initiated over the last four years
and compensation paid to the sponsors of these programs.
We intend to conduct this offering in conjunction with future offerings by one or more public
and private real estate entities sponsored by Cole Capital Advisors, Cole Capital Partners and
their affiliates. To the extent that such entities have the same or similar objectives as ours or
involve similar or nearby properties, such entities may be in competition with the properties
acquired by us. See the Conflicts of Interest section of this prospectus for additional
information.
The information in this section and in the Prior Performance Tables attached to this
prospectus as Appendix A provides relevant summary information concerning real estate programs
sponsored by our affiliates. The Prior Performance Tables set forth information as of the dates
indicated regarding certain of these prior programs as to (1) experience in raising and investing
funds (Table I); (2) compensation to the sponsor and its affiliates (Table II); (3) annual
operating results of prior real estate programs (Table III); (4) results of completed programs
(Table IV); and (5) results of sales or disposals of properties (Table V). Additionally, Table VI,
which is contained in Part II of the registration statement for this offering and which is not part
of the prospectus, contains certain additional information relating to properties acquired by the
prior real estate programs. We will furnish copies of such table to any prospective investor upon
request and without charge. The purpose of this prior performance information is to enable you to
evaluate accurately the experience of our advisor and its affiliates in sponsoring like programs.
The following discussion is intended to summarize briefly the objectives and performance of the
prior real estate programs and to disclose any material adverse business developments sustained by
them.
- 4 -
Summary Information
During the period from January 1, 1996 to December 31, 2005, affiliates of our advisor have
been general partners in 19 limited partnerships with similar objectives to our program, involving
the sale of limited partnership interests to 3,000 investors, raising approximately $130.0 million
of capital. The foregoing partnerships have purchased in the aggregate 42 properties for an
approximate acquisition cost of $246.3 million, of which 50.2% is attributable to 16 shopping
centers, 47.6% is attributable to 23 single-tenant commercial properties, 1.1% is attributable to
one data center and 1.1% is attributable to two unimproved or partially-improved land parcels
intended for high-rise/data center development. Twenty-one of the properties are located in the
Phoenix metropolitan area, one is located in northern Arizona and 25 are located in 18 other
states. The properties have been purchased on terms varying from all cash to market rate financing.
To date, 22 of the properties have been sold.
Of the above, two limited partnerships that acquired commercial properties, have been
sponsored in the three years since January 1, 2003. CCP, through wholly owned subsidiaries, serves
as the general partner of Cole Credit Property Fund Limited Partnership (CCPF) and Cole Credit
Property Fund II Limited Partnership (CCPF II). As of December 31, 2005, CCPF has raised $25.0
million and acquired 14 properties or an interest therein in 12 states across the United States for
an aggregate acquisition cost of approximately $56.2 million. All of such properties are
single-tenant commercial properties that were net leased to investment grade tenants as of the date
of acquisition. Subsequent to the acquisition by CCPF, the tenants at two properties representing
less than 7.5% of the funds invested equity have been downgraded below investment grade, one of
which has filed for Chapter 11 bankruptcy protection. As of December 31, 2005, CCPF II had raised
approximately $24.5 million and had acquired 10 properties or an interest therein (including one
property co-owned with CCPF) in 7 states for an aggregate acquisition cost of approximately $61.3
million.
In addition to the partnerships described above, as of December 31, 2005, Cole Collateralized
Senior Notes, LLC (CCSN), a subsidiary of Cole Capital Advisors, had issued approximately $28.0
million in Series A Notes, and had acquired 25 restaurants and 20 single-tenant retail properties
located in 20 states for an aggregate acquisition cost of approximately $188.7 million. As of
December 31, 2005, CCSN had sold 43 properties, of which 13 were sold as part of Cole Capital
Partners tenant-in-common program and three were sold to Cole REIT I.
In addition to the partnerships described above, as of December 31, 2005, Cole Collateralized
Senior Notes II, LLC (CCSN II), a subsidiary of Cole Capital Advisors, had issued approximately
$28.7 million in Series B Notes and had acquired 34 single-tenant retail properties in 16 states
for an aggregate acquisition cost of approximately $238.8 million. As of December 31, 2005, CCSN II
had sold 31 properties, of which 17 were sold as part of Cole Capital Partners tenant-in-common
program and five were sold to Cole REIT I.
In addition to the partnerships described above, as of December 31, 2005, Cole Collateralized
Senior Notes III, LLC (CCSN III), a subsidiary of Cole Capital Advisors, had issued approximately
$28.7 million in Series C Notes and acquired 13 single-tenant retail properties in six states for
an aggregate acquisition cost of approximately $64.5 million. As of December 31, 2005, CCSN III had
sold 10 properties, of which nine were sold as part of Cole Capital Partners tenant-in-common
program.
In addition to the partnerships described above, as of December 31, 2005, Cole Collateralized
Senior Notes IV, LLC (CCSN IV), a subsidiary of Cole Capital Advisors, had issued approximately
$26.9 million in Series D Notes and had acquired three single-tenant retail properties in three
states for an aggregate acquisition cost of approximately $11.9 million.
In addition, CCSN, CCSN II, CCSN III, and CCSN IV each own interests in three single-tenant
retail properties through a joint venture. The properties aggregate approximately 345,000 square
feet.
Furthermore, as of December 31, 2005, Cole REIT I, had raised approximately $100.9 million
through a private offering of common stock, and had acquired 41 single-tenant retail properties in
19 states for an aggregate acquisition cost of approximately $195 million.
Moreover, the Cole Exchange Entities offer properties to Section 1031 of the Internal Revenue
Code of 1986, as amended (the Code), exchange investors in the form of the sale of
tenant-in-common ownership interests in such properties. As of December 31, 2005, aggregate
ownership interests of $103.1 million had been sold in 22 private offerings of properties located
in 13 states. In addition, as of December 31, 2005, two other tenant-in-common programs were
ongoing with an aggregate offering amount of approximately $61.6 million for which no amounts had
been raised as of such date. In addition, the Cole Exchange Entities offer properties through the
DST program whereby beneficial interests are offered in trusts that acquire real property. As of
December 31, 2005, aggregate ownership interests of approximately $79.0 million had been sold in 20
private offerings of properties located in 12 states. See the Prior Performance Tables attached to
this memorandum as Appendix A for additional information regarding the foregoing programs.
The following table shows a breakdown of the aggregate amount of the acquisition and
development costs of the properties purchased by the prior real estate programs of our affiliates
as of December 31, 2005:
- 5 -
|
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|
|
|
|
|
|
Type of Property |
|
New |
|
Used |
|
Construction |
Retail |
|
|
1.0 |
% |
|
|
99.0 |
% |
|
|
|
|
Office buildings |
|
|
|
|
|
|
100 |
% |
|
|
|
|
Land |
|
|
|
|
|
|
100 |
% |
|
|
|
|
Data Center |
|
|
|
|
|
|
|
|
|
|
100 |
|
These programs have sold 83 of the total of 182 properties, or 45.6% of such properties. The
original purchase price of the properties that were sold was $158.8 million, and the aggregate
sales price of such properties was $195.1 million. See Tables III, IV and V of the Prior
Performance Tables for more detailed information as to the operating results of such programs whose
offerings closed in the last five years, results of such programs that have completed their
operations over the last five years and the sales or other disposals of properties with investment
objectives similar to ours over the last three years.
An entity affiliated with the officers of Cole Partnerships, Inc. raised $5 million in a debt
offering for general corporate purposes, including investments in joint ventures with its
affiliates. The entity has repaid the debt instruments sold in the offering.
The prior programs sponsored by our affiliates have occasionally been adversely affected by
the cyclical nature of the real estate market. They have experienced, and may in the future
experience, decreases in net income when economic conditions decline. For example, one of these
programs, Cole Santa Fe Investors, LP owns an approximately 262,000 square foot shopping center
property. One of the tenants of the property, which leases approximately 50,000 square feet
(approximately 19% of the leasable space), has filed for bankruptcy protection and discontinued
making rent payments. Distributions to investors in that program have been suspended indefinitely
beginning with the quarter ended December 31, 2003. A continued vacancy in the property owned by
Cole Santa Fe Investors, LP could adversely affect the ultimate performance of this prior program.
In addition, Cole Southwest Opportunity Fund, LP completed development of a Phoenix, Arizona
facility in August 2001 through a joint venture and was unable to lease the facility as a result of
the severe downturn in the telecommunications industry. On April 6, 2005, the Phoenix facility was
sold for $16.3 million. Vacant land parcels in Las Vegas, Nevada, formerly owned by a wholly-owned
subsidiary of Cole Southwest Opportunity Fund, LP were previously sold. As a result of these sale
transactions, the sponsor estimates that investors will receive approximately 81% of their original
investment upon liquidation of the limited partnership. See Table III of the Prior Performance
Tables.
Dealer Manager
The section captioned Management Affiliated Companies Dealer Manager beginning on page
56 of the prospectus is deleted in its entirety and replaced as follows:
Cole Capital Corporation, our dealer manager, is a member firm of the National Association of
Securities Dealers, Inc. (NASD). Cole Capital Corporation was organized in December 1992 for the
purpose of participating in and facilitating the distribution of securities of real estate programs
sponsored by Cole Capital Partners, its affiliates and its predecessors.
Cole Capital Corporation provides certain wholesaling, sales, promotional and marketing
assistance services to us in connection with the distribution of the shares offered pursuant to
this prospectus. It may also sell a limited number of shares at the retail level.
Cole Capital Corporation is wholly owned by Cole Capital Advisors which, in turn, is wholly
owned by Cole Holdings Corporation, which is wholly owned by Christopher H. Cole. Cole Capital
Corporation is an affiliate of both our advisor and the property manager. See Conflicts of
Interest.
The current officers of Cole Capital Corporation are:
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Name |
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Age |
|
Position(s) |
Blair D. Koblenz
|
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|
48 |
|
|
President and Secretary |
Christopher H. Cole
|
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|
54 |
|
|
Executive Vice President and Treasurer |
The backgrounds of Messrs. Koblenz and Cole are described in the Management Executive
Officers and Directors section of this prospectus.
Registration of Additional Shares for Offering in our Primary Offering and Distribution
Reinvestment Plan
The following information replaces the second paragraph on the cover of our prospectus:
We are offering up to a maximum of 49,390,000 shares of our common stock in our primary
offering for $10.00 per share, with discounts available for certain categories of purchasers. We
also are offering up to 5,952,000 shares pursuant to our distribution
- 6 -
reinvestment plan at a purchase price during this offering of $9.50 per share. We will offer
these shares until June 27, 2007, which is two years after the effective date of this offering,
unless the offering is extended.
The following information replaces the table on the cover of our prospectus:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Price |
|
Selling |
|
Dealer |
|
Net Proceeds |
|
|
to Public |
|
Commissions |
|
Manager Fee |
|
(Before Expenses) |
Primary Offering |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per Share |
|
$ |
10.00 |
|
|
$ |
0.70 |
|
|
$ |
0.15 |
|
|
$ |
9.15 |
|
Total Minimum |
|
$ |
2,500,000 |
|
|
$ |
175,000 |
|
|
$ |
37,500 |
|
|
$ |
2,287,500 |
|
Total Maximum |
|
$ |
493,900,000 |
|
|
$ |
34,573,000 |
|
|
$ |
7,408,500 |
|
|
$ |
451,918,500 |
|
Distribution Reinvestment Plan |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per Share |
|
$ |
9.50 |
|
|
$ |
|
|
|
$ |
|
|
|
$ |
9.50 |
|
Total Maximum |
|
$ |
56,544,000 |
|
|
$ |
|
|
|
$ |
|
|
|
$ |
56,544,000 |
|
The following information replaces the section of our prospectus captioned Prospectus Summary
Estimated Use of Proceeds of This Offering on page 8 of the prospectus:
Depending primarily on the number of shares we sell in this offering and assuming all shares
sold under our distribution reinvestment plan are sold at $9.50 per share, we estimate for each
share sold in this offering that approximately $8.87 will be available for the purchase of real
estate. We will use the remainder of the offering proceeds to pay the costs of the offering,
including selling commissions and the dealer manager fee, and to pay a fee to our advisor for its
services in connection with the selection and acquisition of properties. We will not pay selling
commissions or a dealer manager fee on shares sold under our distribution reinvestment plan. The
table below sets forth our estimated use of proceeds from this offering:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Minimum Offering |
|
|
Maximum Offering |
|
|
|
Amount |
|
|
Percent |
|
|
Amount |
|
|
Percent |
|
Gross Offering Proceeds |
|
$ |
2,500,000 |
|
|
|
100.0 |
% |
|
$ |
550,444,000 |
|
|
|
100.0 |
% |
Less Public Offering Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling Commissions and Dealer Manager Fee |
|
|
212,500 |
|
|
|
8.5 |
% |
|
|
41,981,500 |
|
|
|
7.6 |
% |
Organization and Offering Expenses |
|
|
37,500 |
|
|
|
1.5 |
% |
|
|
8,256,660 |
|
|
|
1.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount Available for Investment |
|
$ |
2,250,000 |
|
|
|
90.0 |
% |
|
$ |
500,205,840 |
|
|
|
90.9 |
% |
Acquisition and Development: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition and Advisory Fees |
|
|
43,902 |
|
|
|
1.8 |
% |
|
|
9,760,114 |
|
|
|
1.8 |
% |
Acquisition Expenses |
|
|
10,976 |
|
|
|
0.4 |
% |
|
|
2,440,029 |
|
|
|
0.4 |
% |
Initial Working Capital Reserve |
|
|
|
|
|
|
0 |
% |
|
|
|
|
|
|
0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount Invested in Properties |
|
$ |
2,195,122 |
|
|
|
87.8 |
% |
|
$ |
488,005,697 |
|
|
|
88.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
We have adopted the Amended and Restated Distribution Reinvestment Plan attached as Appendix C
to this Supplement effective as of December 31, 2005. As a result, effective as of December 31,
2005, the Amended and Restated Distribution Reinvestment Plan attached as Appendix C to this
Supplement replaces the Distribution Reinvestment Plan attached as Appendix C to our prospectus.
The following information replaces the first paragraph of the section of our prospectus
captioned Prospectus Summary The Offering on page 11 of the prospectus:
We are offering an aggregate of 49,390,000 shares of common stock in our primary offering on a
best-efforts basis at $10.00 per share. Discounts are available for certain categories of
purchasers as described in the Plan of Distribution section of this prospectus. We are also
offering 5,952,000 shares of common stock under our distribution reinvestment plan at $9.50 per
share, subject to certain limitations, as described in the Distribution Reinvestment Plan section
of this prospectus. We will offer shares of common stock in our primary offering until the earlier
of June 27, 2007, which is two years from the effective date of this offering, unless the offering
is extended, or the date we sell 49,390,000 shares. We may sell shares under the distribution
reinvestment plan beyond the termination of our primary offering until we have sold 5,952,000
shares through the reinvestment of distributions, but only if there is an effective registration
statement with respect to the shares. Under the Securities Act of 1933, as amended (Securities
Act), and in some states, we may not be able to continue the offering for these periods without
filing a new registration statement, or in the case of shares sold under the distribution
reinvestment plan, renew or extend the registration statement in such state. We may terminate this
offering at any time prior to the stated termination date.
The following information replaces the section of our prospectus captioned Prospectus Summary
Compensation to Cole Advisors II and its Affiliates beginning on page 11 of the prospectus:
Cole Advisors II and its affiliates will receive compensation and reimbursement for services
relating to this offering and the investment and management of our assets. The most significant
items of compensation are included in the table below. The selling commissions and dealer manager
fee may vary for different categories of purchasers. See the Plan of Distribution section of this
prospectus. The table below assumes the shares are sold through distribution channels associated
with the highest possible selling
- 7 -
commissions and dealer manager fees and accounts for the fact
that shares are sold through our distribution reinvestment plan at $9.50 per share with no selling
commissions and no dealer manager fee.
|
|
|
|
|
|
|
|
|
Estimated Amount for |
|
|
|
|
Minimum Offering |
|
|
|
|
(250,000 shares)/Maximum |
|
|
|
|
Offering |
Type of Compensation |
|
Determination of Amount |
|
(55,342,000 shares) |
|
|
Offering Stage |
|
|
|
|
|
|
|
Selling Commissions
|
|
We will pay to Cole
Capital Corporation 7.0%
of gross proceeds of our
primary offering; we will
not pay any selling
commissions on sales
of shares under our
distribution reinvestment
plan; Cole Capital
Corporation will reallow
all selling commissions
to participating
broker-dealers.
|
|
$175,000/$34,573,000 |
|
|
|
|
|
Dealer Manager Fee
|
|
We will pay to Cole
Capital Corporation 1.5%
of gross proceeds of our
primary offering; we will
not pay a dealer manager
fee with respect to sales
under our distribution
reinvestment plan.
|
|
$37,500/$7,408,500 |
|
|
|
|
|
Other Organization and
Offering Expenses
|
|
We will reimburse Cole
Advisors II up to 1.5% of
gross offering proceeds
for organization and
offering expenses.
|
|
$37,500/$8,256,660 |
|
|
|
|
|
|
|
Operational Stage |
|
|
|
|
|
|
|
Acquisition and Advisory Fees
|
|
We will pay Cole Advisors
II 2.0% of the contract
purchase price of each
property acquired.
|
|
$43,902/$9,760,114 |
|
|
|
|
|
Acquisition Expenses
|
|
We will reimburse Cole
Advisors II for
acquisition expenses
incurred in acquiring
property. We expect these
fees to be approximately
0.5% of the purchase
price of each property.
In no event will the
total of all acquisition
and advisory fees and
acquisition expenses
payable with respect to a
particular investment
exceed 4% of the contract
purchase price.
|
|
Actual amounts are dependent
upon the actual expenses
incurred in acquiring a
property or asset, and
therefore cannot be
determined at this time. |
|
|
|
|
|
Asset Management Fees
|
|
We will pay Cole Advisors
II a monthly fee equal to
0.02083%, which is
one-twelfth of 0.25%, of
the aggregate assets
value plus costs and
expenses incurred by the
advisor in providing
asset management
services.
|
|
Not determinable at this
time. Because the fee is
based on a fixed percentage
of aggregate asset value
there is no maximum dollar
amount of this fee. |
|
|
|
|
|
Property Management and
Leasing Fees
|
|
For the management and
leasing of our
properties, we will pay
Cole Realty Advisors, an
affiliate of our advisor,
a property management fee
equal to 2.0% of gross
revenues plus
market-based leasing
commissions applicable to
the geographic location
of the property. We also
will reimburse Cole
Realty Advisors costs of
managing the properties.
Cole Realty Advisors or
its affiliates
|
|
Not determinable at this
time. Because the fee is
based on a fixed percentage
of gross revenue and/or
market rates, there is no
maximum dollar amount of this
fee |
- 8 -
|
|
|
|
|
|
|
|
|
Estimated Amount for |
|
|
|
|
Minimum Offering |
|
|
|
|
(250,000 shares)/Maximum |
|
|
|
|
Offering |
Type of Compensation |
|
Determination of Amount |
|
(55,342,000 shares) |
|
|
may also
receive a fee for the
initial leasing of newly
constructed properties,
which would generally
equal one months rent.
The aggregate of all
property management and
leasing fees paid to our
affiliates plus all
payments to third parties
for such fees will not
exceed the amount that
other nonaffiliated
management and leasing
companies generally
charge for similar
services in the same
geographic location as
determined by a survey of
brokers and agents in
such area. |
|
|
|
|
|
|
|
Operating Expenses
|
|
We will reimburse our
advisors costs of
providing administrative
services, subject to the
limitation that we will
not reimburse our advisor
for any amount by which
our operating expenses
(including the asset
management fee) at the
end of the four preceding
fiscal quarters exceeds
the greater of (i) 2% of
average invested assets,
or (ii) 25% of net income
other than any additions
to reserves for
depreciation, bad debt or
other similar non-cash
reserves and excluding
any gain from the sale of
assets for that period.
Additionally, we will not
reimburse our advisor for
personnel costs in
connection with services
for which the advisor
receives acquisition fees
or real estate
commissions.
|
|
Not determinable at this time. |
|
|
|
|
|
Financing Coordination Fee
|
|
If our advisor provides
services in connection
the origination or
refinancing of any debt
that we obtain, and use
to acquire properties or
to make other permitted
investments, or that is
assumed, directly or
indirectly, in connection
with the acquisition of
properties, we will pay
the advisor a financing
coordination fee equal to
1% of the amount
available and/or
outstanding under such
financing, subject to
certain limitations.
|
|
Not determinable at this
time. Because the fee is
based on a fixed percentage
of any debt financing, there
is no maximum dollar amount
of this fee. |
|
|
|
|
|
|
|
Liquidation/ Listing Stage |
|
|
|
|
|
|
|
Real Estate Commissions
|
|
Up to one-half of the
brokerage commission paid
on the sale of property,
not to exceed 2.0% of the
contract price for
property sold, in each
case, payable to our
advisor if our advisor or
its affiliates, as
determined by a majority
of the independent
directors, provided a
substantial amount of
services in connection
with the sale.
|
|
Not determinable at this
time. Because the commission
is based on a fixed
percentage of the contract
price for a sold property,
there is no maximum dollar
amount of these commissions. |
|
|
|
|
|
Subordinated Participation
in Net Sale Proceeds
(payable only if we are not
listed on an exchange)
|
|
10.0% of remaining net
sale proceeds after
return of capital plus
payment to investors of
an 8.0% cumulative,
non-compounded return on
the capital contributed
by investors. We cannot
assure you that we will
provide this 8.0%
|
|
Not determinable at this
time. There is no maximum
amount of these payments. |
- 9 -
|
|
|
|
|
|
|
|
|
Estimated Amount for |
|
|
|
|
Minimum Offering |
|
|
|
|
(250,000 shares)/Maximum |
|
|
|
|
Offering |
Type of Compensation |
|
Determination of Amount |
|
(55,342,000 shares) |
|
|
return,
which we have disclosed
solely as a measure for
our advisors incentive
compensation.
|
|
|
|
|
|
|
|
Subordinated Incentive
Listing Fee (payable only if
we are listed on an
exchange, which we have no
intent to do at this time)
|
|
10.0% of the amount by
which our adjusted market
value plus distributions
exceeds the aggregate
capital contributed by
investors plus an amount
equal to an 8.0%
cumulative,
non-compounded annual
return to investors. We
cannot assure you that we
will provide this 8.0%
return, which we have
disclosed solely as a
measure for our advisors
incentive compensation.
|
|
Not determinable at this
time. There is no maximum
amount of this fee. |
The following information replaces the section of our prospectus captioned Prospectus Summary
Distribution Reinvestment Plan on page 15 of the prospectus:
Under our distribution reinvestment plan, you may have the distributions you receive
reinvested in additional shares of our common stock. The purchase price per share under our
distribution reinvestment plan will be the higher of 95% of the fair market value per share as
determined by our board of directors and $9.50 per share. No sales commissions or dealer manager
fees will be paid on shares sold under the distribution reinvestment plan. If you participate in
the distribution reinvestment plan, you will not receive the cash from your distributions, other
than special distributions that are designated by our board of directors. As a result, you may have
a tax liability with respect to your share of our taxable income, but you will not receive cash
distributions to pay such liability. We may terminate the distribution reinvestment plan at our
discretion at any time upon ten days prior written notice to you. Additionally, we will be required
to discontinue sales of shares under the distribution reinvestment plan on the earlier of June 27,
2007, which is two years from the effective date of this offering, unless the offering is extended,
or the date we sell 5,952,000 shares under the plan, unless we file a new registration statement
with the Securities and Exchange Commission and applicable states.
Estimated Use of Proceeds
The following information replaces the section of our prospectus captioned Estimated Use of
Proceeds beginning on page 43 of the prospectus:
The following table sets forth information about how we intend to use the proceeds raised in
this offering, assuming that we sell either the minimum offering of 250,000 shares, or the maximum
offering of 550,440,000 of shares, respectively, of common stock pursuant to this offering. Many of
the figures set forth below represent managements best estimate since they cannot be precisely
calculated at this time. Assuming a maximum offering we expect that approximately 88.7% of the
money that stockholders invest will be used to buy real estate or make other investments, while the
remaining approximately 11.3% will be used for working capital, including reserves for working
capital, and to pay expenses and fees including the payment of fees to Cole Advisors II, our
advisor, and Cole Capital Corporation, our dealer manager.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Minimum Offering |
|
|
Maximum Offering |
|
|
|
Amount (1) |
|
|
Percent |
|
|
Amount (2) |
|
|
Percent |
|
Gross Offering Proceeds |
|
$ |
2,500,000 |
|
|
|
100.0 |
% |
|
$ |
550,444,000 |
|
|
|
100.0 |
% |
Less Public Offering Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling Commissions and Dealer
Manager Fee (3) |
|
|
212,500 |
|
|
|
8.5 |
% |
|
|
41,981,500 |
|
|
|
7.6 |
% |
Organization and Offering Expenses (4) |
|
|
37,500 |
|
|
|
1.5 |
% |
|
|
8,256,660 |
|
|
|
1.5 |
% |
Amount Available for Investment (5) |
|
$ |
2,250,000 |
|
|
|
90.0 |
% |
|
$ |
500,205,840 |
|
|
|
90.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition and Development: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition and Advisory Fees (6) |
|
|
43,902 |
|
|
|
1.8 |
% |
|
|
9,760,114 |
|
|
|
1.8 |
% |
Acquisition Expenses (7) |
|
|
10,976 |
|
|
|
0.4 |
% |
|
|
2,440,029 |
|
|
|
0.4 |
% |
Initial Working Capital Reserve (8) |
|
|
|
|
|
|
0 |
% |
|
|
|
|
|
|
0 |
% |
Amount Invested in Properties (9) |
|
$ |
2,195,122 |
|
|
|
87.8 |
% |
|
$ |
488,005,697 |
|
|
|
88.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Assumes the minimum offering of 250,000 shares are sold in this offering. |
- 10 -
|
|
|
(2) |
|
Assumes the maximum offering is sold, which includes 49,390,000 shares offered to the public
at $10.00 per share and 5,952,000 shares offered pursuant to our distribution reinvestment
plan at $9.50 per share. |
|
(3) |
|
Includes selling commissions equal to 7.0% of aggregate gross offering proceeds, which
commissions may be reduced under certain circumstances, and a dealer manager fee equal to 1.5%
of aggregate gross offering proceeds, both of which are payable to the dealer manager, an
affiliate of our advisor. The dealer manager, in its sole discretion, may reallow selling
commissions of up to 7.0% of gross offering proceeds to other broker dealers participating in
this offering attributable to the units sold by them and may reallow its dealer manager fee up
to 1.5% of gross offering proceeds in marketing fees and due diligence expenses to broker
dealers participating in this offering based on such factors including the participating
broker dealers level of marketing support, level of due diligence review and success of its
sales efforts, each as compared to those of the other participating broker dealers.
Additionally, we will not pay a selling commission or a dealer manager fee on shares purchased
pursuant to our distribution reinvestment plan. The amount of selling commissions may be
reduced under certain circumstances for volume discounts. See the Plan of Distribution
section of this prospectus for a description of such provisions. |
|
(4) |
|
Organization and offering expenses consist of reimbursement of actual legal, accounting,
printing and other accountable offering expenses, including amounts to reimburse Cole Advisors
II, our advisor, for marketing, salaries and direct expenses of its employees while engaged in
registering and marketing the shares and other marketing and organization costs, other than
selling commissions and the dealer manager fee. Cole Advisors II and its affiliates will be
responsible for the payment of organization and offering expenses, other than selling
commissions and the dealer manager fee, to the extent they exceed 1.5% of gross offering
proceeds without recourse against or reimbursement by us, provided, however, that in no event
will we pay or reimburse organization or offering expenses in excess of 10% of the gross
offering proceeds. We currently estimate that approximately $8,256,660 of organization and
offering costs will be incurred if the maximum offering of 55,342,000 (approximately
$550,444,000) shares is sold. |
|
(5) |
|
Until required in connection with the acquisition and development of properties,
substantially all of the net proceeds of the offering and, thereafter, any working capital
reserves we may have may be invested in short-term, highly-liquid investments including
government obligations, bank certificates of deposit, short-term debt obligations and
interest-bearing accounts. |
|
(6) |
|
Acquisition and advisory fees are defined generally as fees and commissions paid by any party
to any person in connection with identifying, reviewing, evaluating, investing in and the
purchase, development or construction of properties. We will pay our advisor, acquisition and
advisory fees up to a maximum amount of 2.0% of the contract purchase price of each property
acquired, which for purposes of this table we have assumed is an aggregate amount equal to our
estimated amount invested in properties. Acquisition and advisory fees do not include
acquisition expenses. For purposes of this table, we have assumed that no financing is used to
acquire properties or other real estate assets. |
|
(7) |
|
Acquisition expenses include legal fees and expenses, travel expenses, costs of appraisals,
nonrefundable option payments on property not acquired, accounting fees and expenses, title
insurance premiums and other closing costs and miscellaneous expenses relating to the
selection, acquisition and development of real estate properties. For purposes of this table,
we have assumed expenses of 0.5% of average invested assets, which for purposes of this table
we have assumed is our estimated amount invested in properties; however, expenses on a
particular acquisition may be higher. Notwithstanding the foregoing, pursuant to our charter,
the total of all acquisition expenses and acquisition fees payable with respect to a
particular property or investment shall be reasonable, and shall not exceed an amount equal to
4% of the contract price of the property, or in the case of a mortgage loan 4% of the funds
advanced, unless a majority of our directors (including a majority of our independent
directors) not otherwise interested in the transaction approve fees and expenses in excess of
the limit and determine the transaction to be commercially competitive, fair and reasonable to
us. |
|
(8) |
|
Working capital reserves typically are utilized for extraordinary expenses that are not
covered by revenue generation of the property, such as tenant improvements, leasing
commissions and major capital expenditures. Alternatively, a lender may require its own
formula for escrow of working capital reserves. We do not expect to maintain working capital
reserves. |
|
(9) |
|
Includes amounts anticipated to be invested in properties net of fees and expenses. |
The following replaces the section of our prospectus captioned Management Certain
Relationships Advisory Agreement beginning on page 57 of the prospectus:
We will enter into an Advisor Agreement with Cole Advisors II, whereby Cole Advisors II will
manage our day-to-day operations. In return, we will pay to Cole Advisors II a monthly asset
management fee equal to 0.02083% of the aggregate asset value of our assets. We also will pay to
Cole Advisors II 2.0% of the contract purchase price of each property or asset that we acquire,
along with reimbursement of acquisition expenses. We also will pay to Cole Advisors II a financing
coordination fee equal to 1.0% of the amount available and/or outstanding under any debt financing
that we obtain and use for the acquisition of properties and other investments or that is assumed,
directly or indirectly, in connection with the acquisition of properties. Additionally, we will be
required to pay to Cole Advisors II fees based on a percentage of proceeds or stock value upon our
sale of assets or the listing of out common stock on a national securities exchange or for
quotation on The Nasdaq National Market, but only if, in the case of our sale of assets, our
investors have received a return of their net capital invested and an 8.0% annual cumulative,
non-compounded return or, in the case of the listing or quotation of our common stock, the market
value of our common stock plus the distributions paid to our investors exceeds the sum of the total
amount of capital raised from investors plus the amount of cash flow necessary to generate an 8.0%
annual cumulative, non-compounded return to investors. Upon termination of the Advisory Agreement,
we may be required to pay to Cole Advisors II a similar performance fee if Cole Advisors II would
have been entitled to a subordinated participation in net sale proceeds had the portfolio been
liquidated (based on an independent appraised value of the portfolio) on the date of termination.
Christopher H. Cole, our chief executive officer, president and a member of our board of
directors, indirectly owns 100% of the ownership and voting interests of Cole Advisors II. Mr. Cole
also is the chief executive officer and president of Cole Advisors II. Blair D. Koblenz, our
executive vice president and chief financial officer is the executive vice president and chief
financial officer of Cole Advisors II. John M. Pons, our senior vice president, secretary and
general counsel is the senior vice president, secretary and general counsel of Cole Advisors II. For a further description of this agreement, see
Management The Advisory Agreement and Management Compensation. See also Conflicts of
Interest.
The following information replaces the section of our prospectus captioned Management
Compensation beginning on page 59 of the prospectus:
- 11 -
We have no paid employees. Cole Advisors II, our advisor, and its affiliates will manage our
day-to-day affairs. The following table summarizes all of the compensation and fees we will pay to
Cole Advisors II and its affiliates, including amounts to reimburse their costs in providing
services. The selling commissions may vary for different categories of purchasers. See Plan of
Distribution. This table assumes the shares are sold through distribution channels associated with
the highest possible selling commissions and dealer manager fee.
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Estimated Amount for |
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Minimum Offering |
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(250,000 shares)/Maximum |
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Offering |
Type of Compensation (1) |
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Determination of Amount |
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(55,342,000 shares) (2) |
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Offering Stage |
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Selling Commissions Cole
Capital Corporation(3)
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We will pay to Cole Capital Corporation 7.0%
of the gross offering proceeds before
reallowance of commissions earned by
participating broker-dealers, except that
no selling commission is payable on shares
sold under our distribution reinvestment
plan. Cole Capital Corporation, our dealer
manager, will reallow 100.0% of commissions
earned to participating broker-dealers.
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$175,000/$34,573,0000 |
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Dealer Manager Fee Cole Capital
Corporation(3)
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We will pay to Cole Capital Corporation
1.5% of the gross offering proceeds before
reallowance to participating
broker-dealers, except that no dealer
manager fee is payable on shares sold under
our distribution reinvestment plan. Cole
Capital Corporation will reallow a portion
of its dealer manager fee to participating
broker-dealers. See Plan of Distribution.
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$37,500/$7,408,500 |
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Reimbursement of Other
Organization and Offering
Expenses Cole Advisors II(4)
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We will reimburse Cole Advisors II up to
1.5% of our gross offering proceeds. Cole
Advisors II will incur or pay our
organization and offering expenses
(excluding selling commissions and the
dealer manager fee). We will then reimburse
Cole Advisors II for these amounts up to
1.5% of aggregate gross offering proceeds.
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$37,500/$8,256,660 |
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Acquisition and Operational Stage |
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Acquisition and Advisory Fees
Cole Advisors II(5)(6)
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We will pay to Cole Advisors II a 2.0% of
the contract purchase price of each
property or asset.
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$43,902/$9,760,114 |
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Acquisition Expenses Cole
Advisors II
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We will reimburse our advisor for
acquisition expenses incurred in the
process of acquiring property. We expect
these expenses to be approximately 0.5% of
the purchase price of each property. In no
event will the total of all fees and
acquisition expenses payable with respect
to a particular property or investment
exceed 4% of the contract purchase price.
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Actual amounts are
dependent upon the
expenses incurred in
acquiring a property or
asset, and therefore,
cannot be determined at
this time. |
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Asset Management Fee Cole
Advisors II(7)(8)
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We will pay to Cole Advisors II a monthly
fee equal to 0.02083%, which is one-twelfth
of 0.25%, of the aggregate asset value.
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Actual amounts are
dependent upon the
aggregate asset value
of our properties and,
therefore, cannot be
determined at the
present time. Because
the fee is based on a
fixed percentage of
aggregate asset value
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- 12 -
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Estimated Amount for |
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Minimum Offering |
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(250,000 shares)/Maximum |
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Offering |
Type of Compensation (1) |
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Determination of Amount |
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(55,342,000 shares) (2) |
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there is
no limit on the
aggregate amount of
these fees. |
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Property Management Fees Cole
Realty Advisors(8)
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We will pay to Cole Realty Advisors up to
2.0% of the gross revenues from the
properties plus reimbursement of Cole
Realty Advisors costs of managing the
properties.
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Actual amounts are
dependent upon the
gross revenues from
properties and,
therefore, cannot be
determined at the
present time. Because
the fee is based on a
fixed percentage of the
gross revenue and/or
market rates, there is
no limit on the
aggregate amount of
these fees. |
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Leasing Commissions Cole
Realty Advisors(8)
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We will pay to Cole Realty Advisors
prevailing market rates. Cole Realty
Advisors may also receive a fee for the
initial listing of newly constructed
properties, which generally would equal one
months rent.
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Actual amounts are
dependent upon
prevailing market rates
in the geographic
regions in which we
acquire property and,
therefore, cannot be
determined at the
present time. There is
no limit on the
aggregate amount of
these commissions. |
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Financing Coordination Fee
Cole Advisors II(6)
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For services in connection with the
origination or refinancing of any debt
financing obtained that we use to acquire
properties or to make other permitted
investments, or that is assumed, directly
or indirectly, in connection with the
acquisition of properties, we will pay our
advisor a financing coordination fee equal
to 1.0% of the amount available and/or
outstanding under such financing; provided,
however, that our advisor will not be
entitled to a financing coordination fee in
connection with the refinancing of any loan
secured by any particular property that was
previously subject to a refinancing in
which our advisor received such a fee.
Financing coordination fees payable from
loan proceeds from permanent financing will
be paid to our advisor as we acquire such
permanent financing. However, no
acquisition fees will be paid on the
investments of loan proceeds from any line
of credit until such time as we have
invested all net offering proceeds.
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Actual amounts are
dependent on the amount
of any debt financing
or refinancing and,
therefore, cannot be
determined at the
present time. Because
the fee is based on a
fixed percentage of any
debt financing, there
is no limit on the
aggregate amount of
these fees. |
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Operating Expenses
Cole Advisors II(9)
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We will reimburse the expenses incurred by
Cole Advisors II in connection with its
provision of administrative services,
including related personnel costs, subject
to the limitation that we will not
reimburse our advisor for any amount by
which the operating expenses (including the
asset management fee) at the end of the
four preceding fiscal quarters exceeds the
greater of (i) 2% of average invested
assets, or (ii) 25% of net income other
than any additions to reserves for
depreciation, bad debt or other similar
non-cash reserves and excluding any gain
from the sale of assets for that period.
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Actual amounts are
dependent upon the
expenses incurred and,
therefore, cannot be
determined at the
present time. |
- 13 -
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Estimated Amount for |
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|
|
Minimum Offering |
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|
(250,000 shares)/Maximum |
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|
Offering |
Type of Compensation (1) |
|
Determination of Amount |
|
(55,342,000 shares) (2) |
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Liquidation/ Listing Stage |
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Real Estate Commissions Cole
Advisors II or its Affiliates(10)
|
|
For substantial assistance in connection
with the sale of properties, we will pay
our advisor or its affiliates an amount
equal to up to one-half of the brokerage
commission paid on the sale of property,
not to exceed 2.0% of the contract price of
each property sold; provided, however, in
no event may the real estate commissions
paid to our advisor, its affiliates and
unaffiliated third parties exceed 6.0% of
the contract sales price.
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Actual amounts are
dependent upon the
contract price of
properties sold and,
therefore, cannot be
determined at the
present time. Because
the commission is based
on a fixed percentage
of the contract price
for a sold property,
there is no limit on
the aggregate amount of
these commissions. |
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Subordinated Participation in
Net Sale Proceeds
Cole Advisors II(11)
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After investors have received a return of
their net capital invested and an 8.0%
annual cumulative, non- compounded return,
then Cole Advisors II is entitled to
receive 10.0% of remaining net sale
proceeds. We cannot assure you that we will
provide this 8.0% return, which we have
disclosed solely as a measure for our
advisors incentive compensation.
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Actual amounts are
dependent upon results
of operations and,
therefore, cannot be
determined at the
present time. There is
no limit on the
aggregate amount of
these payments. |
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Offering Stage |
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Subordinated Incentive Listing
Fee Cole Advisors II(11)(12)
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Upon listing our common stock on a national
securities exchange or for quotation on The
Nasdaq National Market, our advisor is
entitled to a fee equal to 10.0% of the
amount, if any, by which (1) the market
value of our outstanding stock plus
distributions paid by us prior to listing,
exceeds (2) the sum of the total amount of
capital raised from investors and the
amount of cash flow necessary to generate
an 8.0% annual cumulative, non- compounded
return to investors. We have no intent to
list our shares at this time. We cannot
assure you that we will provide this 8.0%
return, which we have disclosed solely as a
measure for our advisors incentive
compensation.
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Actual amounts are
dependent upon total
equity and debt capital
we raise and results of
operations and,
therefore, cannot be
determined at the
present time. There is
no limit on the
aggregate amount of
this fee. |
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(1) |
|
We will pay all fees, commissions and expenses in cash, other than the subordinated
participation in net sales proceeds and incentive listing fees with respect to which we may
pay to Cole Advisors II in cash, common stock, a promissory note or any combination of the
foregoing, as we may determine in our discretion. |
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(2) |
|
The estimated maximum dollar amounts are based on the sale of a maximum of 49,390,000 shares
to the public at $10.00 per share and the sale of 5,952,000 shares at $9.50 per share pursuant
to our distribution reinvestment plan. |
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(3) |
|
Selling commissions and, in some cases, the dealer manager fee, will not be charged with
regard to shares sold to or for the account of certain categories of purchasers. See Plan of
Distribution. Selling commissions and the dealer manager fee will not be charged with regard
to shares purchased pursuant to our distribution reinvestment plan. |
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(4) |
|
These organization and offering expenses include all expenses (other than selling commissions
and the dealer manager fee) to be paid by us in connection with the offering, including our
legal, accounting, printing, mailing and filing fees, charges of our escrow holder, due
diligence expense reimbursements to participating broker-dealers and amounts to reimburse Cole
Advisors II for its portion of the salaries of the employees of its affiliates who provide
services to our advisor and other costs in connection with preparing supplemental sales materials, holding
educational conferences and attending retail seminars conducted by broker-dealers. Our advisor
will be responsible for the payment of all such organization and offering expenses to the extent
such expenses exceed 1.5% of the aggregate gross proceeds of this offering. |
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(5) |
|
This estimate assumes the amount of proceeds available for investment is equal to the gross
offering proceeds less the public offering expenses, and we have assumed that no financing is
used to acquire properties or other real estate assets. Our charter limits our ability to
purchase property if the total of all acquisition fees and expenses relating to the purchase
exceeds 4.0% of the contract purchase price unless a majority of our directors (including a
majority of our independent directors) not otherwise interested in the transaction approve
fees and expenses in excess of this limit and determine the transaction to be commercially
competitive, fair and reasonable to us. |
- 14 -
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(6) |
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Included in the computation of such fees will be any real estate commission, acquisition and
advisory fee, development fee, construction fee, non-recurring management fee, loan fees,
financing coordination fees or points or any fee of a similar nature. |
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(7) |
|
Aggregate asset value will be equal to the aggregate value of our assets (other than
investments in bank accounts, money markets funds or other current assets) at cost before
deducting depreciation, bad debts or other similar non-cash reserves and without reduction for
any debt relating to such assets at the date of measurement, except that during such periods
in which our board of directors is determining on a regular basis the current value of our net
assets for purposes of enabling fiduciaries of employee benefit plans stockholders to comply
with applicable Department of Labor reporting requirements, aggregate asset value is the
greater of (i) the amount determined pursuant to the foregoing or (ii) our assets aggregate
valuation most recently established by our board without reduction for depreciation, bad debts
or other similar non-cash reserves and without reduction for any debt secured by or relating
to such assets. |
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(8) |
|
The property management and leasing fees payable to Cole Realty Advisors are subject to the
limitation that the aggregate of all property management and leasing fees paid to Cole Realty
Advisors and its affiliates plus all payments to third parties for property management and
leasing services may not exceed the amount that other non-affiliated property management and
leasing companies generally charge for similar services in the same geographic location.
Additionally, all property management and leasing fees, including both those paid to Cole
Realty Advisors and third parties, are subject to the limit on total operating expenses as
described in footnote (5). Cole Realty Advisors may subcontract its duties for a fee that may
be less than the fee provided for in our property management agreement with Cole Realty
Advisors. |
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(9) |
|
We may reimburse our advisor in excess of that limit in the event that a majority of our
independent directors determine, based on unusual and non-recurring factors, that a higher
level of expense is justified. In such an event, we will send notice to each of our
stockholders within 60 days after the end of the fiscal quarter for which such determination
was made, along with an explanation of the factors our independent directors considered in
making such determination. We will not reimburse our advisor for personnel costs in connection
with services for which the advisor receives acquisition fees or real estate commissions. |
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We lease our office space from an affiliate of our advisor and share the space with other
Cole-related entities. The amount we will pay under the lease will be determined on a monthly
basis based upon on the allocation of the overall lease cost to the approximate percentage of
time, size of the area that we utilize and other resources allocated to us. |
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(10) |
|
Although we are most likely to pay real estate commissions to Cole Advisors II or an
affiliate in the event of our liquidation, these fees may also be earned during our
operational stage. |
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(11) |
|
Upon termination of the advisory agreement, Cole Advisors II may be entitled to a similar
performance fee if Cole Advisors II would have been entitled to a subordinated participation
in net sale proceeds had the portfolio been liquidated (based on an independent appraised
value of the portfolio) on the date of termination. Under our charter, we could not increase
these success-based fees without the approval of a majority of our independent directors, and
any increase in the subordinated participation in net sale proceeds would have to be
reasonable. Our charter provides that such incentive fee is presumptively reasonable if it
does not exceed 10.0% of the balance of such net proceeds remaining after investors have
received a return of their net capital contributions and an 8.0% per year cumulative,
non-compounded return. |
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|
Cole Advisors II cannot earn both the subordinated participation in net sale proceeds and
the subordinated incentive listing fee. The subordinated participation in net sale proceeds or
the subordinated listing fee, as the case may be, will be paid in the form of an interest
bearing promissory note that will be repaid from the net sale proceeds of each sale after the
date of the termination or listing. At the time of such sale, we may, however, at our
discretion, pay all or a portion of such promissory note with shares of our common stock. If
shares are used for payment, we do not anticipate that they will be registered under the
Securities Act and therefore, will be subject to restrictions on transferability. Any portion of
the subordinated participation in net sale proceeds that Cole Advisors II receives prior to our
listing will offset the amount otherwise due pursuant to the subordinated incentive listing fee.
In no event will the amount paid to Cole Advisors II under the promissory note, if any,
including interest thereon, exceed the amount considered preemptively reasonable by the NASAA
REIT Guidelines. |
|
(12) |
|
If at any time the shares become listed on a national securities exchange or included for
quotation on The Nasdaq National Market, we will negotiate in good faith with Cole Advisors II
a fee structure appropriate for an entity with a perpetual life. Our independent directors
must approve the new fee structure negotiated with Cole Advisors II. The market value of our
outstanding stock will be calculated based on the average market value of the shares issued
and outstanding at listing over the 30 trading days beginning 180 days after the shares are
first listed or included for quotation. We have the option to pay the subordinated incentive
listing fee in the form of stock, cash, a promissory note or any combination thereof. In the
event the subordinated incentive listing fee is earned by Cole Advisors II as a result of the
listing of the shares, any previous payments of the subordinated participation in net sale
proceeds will offset the amounts due pursuant to the subordinated incentive listing fee, and
we will not be required to pay Cole Advisors II any further subordinated participation in net
sale proceeds. |
At least a majority of our independent directors must determine, from time to time but at
least annually, that our total fees and expenses are reasonable in light of our investment
performance, net assets, net income and the fees and expenses of other comparable unaffiliated
REITs. Each such determination will be reflected in the minutes of our board of directors. Our
independent directors shall also supervise the performance of our advisor and the compensation that
we pay to it to determine that the provisions of our advisory agreement are being carried out.
Each such determination will be recorded in the minutes of our board of directors and based on
the factors set forth below and other factors that the independent directors deem relevant:
|
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the size of the advisory fee in relation to the size, composition and profitability of our portfolio; |
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the success of Cole Advisors II in generating opportunities that meet our investment objectives; |
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the rates charged to other REITs, especially similarly structured REITs, and to
investors other than REITs by advisors performing similar services; |
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additional revenues realized by Cole Advisors II through its relationship with us; |
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the quality and extent of service and advice furnished by Cole Advisors II; |
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the performance of our investment portfolio, including income, conservation or
appreciation of capital, frequency of problem investments and competence in dealing with
distress situations; and |
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the quality of our portfolio in relationship to the investments generated by Cole
Advisors II for the account of other clients. |
- 15 -
Since Cole Advisors II and its affiliates are entitled to differing levels of compensation for
undertaking different transactions on our behalf, such as the property management fees for
operating our properties and the subordinated participation in net sale proceeds, our advisor has
the ability to affect the nature of the compensation it receives by undertaking different
transactions. However, Cole Advisors II is obligated to exercise good faith and integrity in all
its dealings with respect to our affairs pursuant to the advisory agreement. See Management The
Advisory Agreement.
Share Redemption Program
The following information replaces the third paragraph of the section of our prospectus
captioned Prospectus Summary Share Redemption Program beginning on page 15 of the prospectus:
Upon receipt of a request for redemption, we will conduct a Uniform Commercial Code search to
ensure that no liens are held against the shares. For this Uniform Commercial Code search, we will
charge an administrative fee equal to the lesser of $250 or 4.0% of the original purchase price of
the shares to be redeemed to the stockholder, which will be deducted from the proceeds of the
redemption. If a lien exists, the fee will be charged to the stockholder, although no shares will
be redeemed. The administrative fee will be paid to us and any additional costs in conducting the
Uniform Commercial Code search will be borne by us. The payment of this administrative fee will be
waived if the redemption occurs upon the death of a stockholder or if our advisor, in its sole
discretion, determines that the redeeming stockholder has suffered an economic hardship.
Repurchases will be made quarterly. If funds are not available to redeem all requested redemptions
at the end of each quarter, the shares will be purchased on a pro rata basis and the unfulfilled
requests will be held until the next quarter, unless withdrawn. Our board of directors may amend,
suspend or terminate the share redemption program at any time upon 30 days prior written notice to
our stockholders.
The following information replaces the section of our prospectus captioned Share Redemption
Program beginning on page 119 of the prospectus:
Our board of directors has adopted a share redemption program that enables our stockholders to
sell their shares to us in limited circumstances. Our share redemption program permits you to sell
your shares back to us after you have held them for at least one year, subject to the significant
conditions and limitations described below.
Our common stock is currently not listed on a national securities exchange, or included for
quotation on a national securities market, and we will not seek to list our stock until such time
as our independent directors believe that the listing of our stock would be in the best interest of
our stockholders. In order to provide stockholders with the benefit of interim liquidity,
stockholders who have held their shares for at least one year may present all or a portion
consisting of at least 25%, of the holders shares to us for redemption at any time in accordance
with the procedures outlined below. At that time, we may, subject to the conditions and limitations
described below, redeem the shares presented for redemption for cash to the extent that we have
sufficient funds available to us to fund such redemption. We will not pay to our board of
directors, advisor or its affiliates any fees to complete any transactions under our share
redemption program.
During the term of this offering, the redemption price per share will depend on the length of
time you have held such shares as follows: after one year from the purchase date 92.5% of the
amount you paid for each share; after two years from the purchase date 95.0% of the amount you
paid for each share, after three years from the purchase date 97.5% of the amount you paid for
each share; and after four years from the purchase date 100.0% of the amount you paid for each
share (in each case, as adjusted for any stock dividends, combinations, splits, recapitalizations
and the like with respect to our common stock). At any time we are engaged in an offering of
shares, the per share price for shares purchased under our redemption plan will always be equal to
or lower than the applicable per share offering price. Thereafter the per share redemption price
will be based on the then-current net asset value of the shares (as adjusted for any stock
dividends, combinations, splits, recapitalizations and the like with respect to our common stock).
Our board of directors will announce any redemption price adjustment and the time period of its
effectiveness as a part of its regular communications with our stockholders. At any time the
redemption price is determined by any method other than the net asset value of the shares, if we
have sold property and have made one or more special distributions to our stockholders of all or a
portion of the net proceeds from such sales, the per share redemption price will be reduced by the
net sale proceeds per share distributed to investors prior to the redemption date as a result of
the sale of such property in the special distribution. Our board of directors will, in its sole
discretion, determine which distributions, if any, constitute a special distribution. While our
board of directors does not have specific criteria for determining a special distribution, we
expect that a special distribution will only occur upon the sale of a property and the subsequent
distribution of the net sale proceeds. Upon receipt of a request for redemption, we will conduct a
Uniform Commercial Code search to ensure that no liens are held against the shares. For this
Uniform Commercial Code search, we will charge an administrative fee equal to the lesser of $250 or
4.0% of the original purchase price of the shares to be redeemed to the
stockholder, which will be deducted from the proceeds of the redemption. For example, if a
stockholder wishes to redeem shares for which he paid an aggregate amount of $5,000, the
administrative fee that we will charge pursuant to such redemption will be $200, which is the
lesser of (i) $250 or (ii) 4.0% of the $5,000 aggregate purchase price paid by this stockholder.
If a lien exists, the fee will be charged to the stockholder, although no shares will be redeemed.
The administrative fee will be paid to us and any additional costs in conducting the Uniform
Commercial Code search will be borne by us. The payment of this administrative fee will be waived
if the
- 16 -
redemption occurs upon the death of a
stockholder or if our advisor, in its sole discretion, determines that the redeeming stockholder
has suffered an economic hardship. Subject to our waiver of the one-year holding period
requirement, shares required to be redeemed in connection with the death of a stockholder may be
repurchased without the one-year activity period requirement, at a purchase price equal to the
price actually paid for the shares.
During any calendar year, we will not redeem in excess of 3.0% of the weighted average number
of shares outstanding during the prior calendar year. The cash available for redemption will be
limited to the proceeds from the sale of shares pursuant to our distribution reinvestment plan.
We will redeem our shares on the last business day of the month following the end of each
quarter. Requests for redemption would have to be received on or prior to the end of the quarter in
order for us to repurchase the shares as of the end of the next month. You may withdraw your
request to have your shares redeemed at any time prior to the last day of the applicable quarter.
If we could not purchase all shares presented for redemption in any quarter, based upon
insufficient cash available and the limit on the number of shares we may redeem during any calendar
year, we would attempt to honor redemption requests on a pro rata basis. We would treat the
unsatisfied portion of the redemption request as a request for redemption the following quarter. At
such time, you may then (1) withdraw your request for redemption at any time prior to the last day
of the new quarter or (2) ask that we honor your request at such time, if, any, when sufficient
funds become available. Such pending requests will generally be honored on a pro rata basis. We
will determine whether we have sufficient funds available as soon as practicable after the end of
each quarter, but in any event prior to the applicable payment date.
Our board of directors may choose to amend, suspend or terminate our share redemption program
upon 30 days notice at any time. Additionally we will be required to discontinue sales of shares
under the distribution reinvestment plan on the earlier of June 27, 2007, which is two years from
the effective date of this offering, unless the offering is extended, or the date we sell 5,952,000
shares under the plan, unless we file a new registration statement with the Securities and Exchange
Commission and applicable states. Because the redemption of shares will be funded with the net
proceeds we receive from the sale of shares under the distribution reinvestment plan, the
discontinuance or termination of the distribution reinvestment plan will adversely affect our
ability to redeem shares under the share redemption program. We would notify you of such
developments (i) in the annual or quarterly reports mentioned above or (ii) by means of a separate
mailing to you, accompanied by disclosure in a current or periodic report under the Exchange Act.
During this offering, we would also include this information in a prospectus supplement or
post-effective amendment to the registration statement, as then required under federal securities
laws.
Our share redemption program is only intended to provide interim liquidity for stockholders
until a liquidity event occurs, such as the listing of the shares on a national securities
exchange, inclusion of the shares for on a national market system, or our merger with a listed
company. The share redemption program will be terminated if the shares become listed on a national
securities exchange or included for quotation on a national market system. We cannot guarantee that
a liquidity event will occur.
The shares we redeem under our share redemption program will be cancelled and return to the
status of unauthorized but unissued shares. We do not intend to resell such shares to the public
unless they are first registered with the Securities and Exchange Commission under the Securities
Act and under appropriate state securities laws or otherwise sold in compliance with such laws.
The following information replaces the first paragraph of the section of our prospectus
captioned Summary of Distribution Reinvestment Plan on page 123 of the prospectus:
We have adopted a distribution reinvestment plan pursuant to which our stockholders and,
subject to certain conditions set forth in our distribution reinvestment plan, any stockholder or
partner of any other publicly offered limited partnership, real estate investment trust or other
real estate program sponsored by our advisor or its affiliates, may participate in our distribution
reinvestment plan and elect to purchase shares of our common stock with our distributions or
distributions from such other programs. We are offering 5,952,000 shares for sale pursuant to our
distribution reinvestment plan. We intend to offer shares at the higher of 95% of the estimated
value of a share of our common stock, as estimated by our board of directors, or $9.50 per share.
The per share price for our distribution reinvestment plan was determined based in part upon
federal income tax considerations. The United States Internal Revenue Service has ruled that in
connection with a reinvestment plan, a REIT may give a discount of up to 5% on reinvested shares,
as a result of the savings to the REIT resulting from directly issuing the reinvestment plan
shares, but that a discount in excess of 5%
will be treated as a preferential, non-deductible dividend. We have the discretion to extend
the offering period for the shares being offered pursuant to this prospectus under our distribution
reinvestment plan beyond the termination of this offering until we have sold 5,952,000 shares
through the reinvestment of distributions. We may also offer shares pursuant to a new registration
statement.
The following information replaces the section of our prospectus captioned Summary of
Distribution Reinvestment Plan Federal Income Tax Considerations on page 125 of the prospectus:
- 17 -
Taxable participants will incur tax liability for partnership income allocated to them even
though they have elected not to receive their distributions in cash but rather to have their
distributions reinvested under our distributions reinvestment plan. See Risk Factors Federal
Income Tax Risks. In addition, to the extent you purchase shares through our distribution
reinvestment plan at a discount to their fair market value, you will be treated for tax purposes as
receiving an additional distribution equal to the amount of the discount. At least until our
offering stage is complete, we expect that (i) we will sell shares under the distribution
reinvestment plan at $9.50 per share, (ii) no secondary trading market for our shares will develop
and (iii) our advisor will estimate the fair market value of a share to be $10.00. Therefore, at
least until our offering stage is complete, participants in our distribution reinvestment plan will
be treated as having received a distribution of $10.00 for each $9.50 reinvested by them under our
distribution reinvestment plan. You will be taxed on the amount of such distribution as a dividend
to the extent such distribution is from current or accumulated earnings and profits, unless we have
designated all or a portion of the dividend as a capital gain dividend. Tax information regarding
each participants participation in the plan will be provided to each participant at least
annually.
The following information replaces the section of our prospectus captioned Plan of
Distribution The Offering on page 130 of the prospectus:
We are offering a maximum of 55,342,000 shares of our common stock to the public through Cole
Capital Corporation, our dealer manager, a registered broker-dealer affiliated with our advisor. Of
this amount, we are offering 49,390,000 shares in our primary offering at a price of $10.00 per
share, except as provided below. The shares are being offered on a best efforts basis, which
means generally that the dealer manager will be required to use only its best efforts to sell the
shares and it has no firm commitment or obligation to purchase any of the shares. We are also
offering 5,952,000 shares for sale pursuant to our distribution reinvestment plan. The purchase
price for shares sold under our distribution reinvestment plan will be equal to the higher of 95%
of the estimated value of a share of common stock, as estimated by our board of directors and $9.50
per share. The reduced purchase price for shares purchased pursuant to our distribution
reinvestment plan reflects that there will be no fees, commissions or expenses paid with respect to
these shares. The offering of shares of our common stock will terminate on or before June 27, 2007,
which is two years after the effective date of this offering, unless the offering is extended. At
the discretion of our board of directors, we may elect to extend the termination date of our
offering of shares reserved for issuance pursuant to our distribution reinvestment plan until we
have sold 5,952,000 shares through the reinvestment of distributions, in which case participants in
the plan will be notified. This offering must be registered in every state in which we offer or
sell shares. Generally, such registrations are for a period of one year. Thus, we may have to stop
selling shares in any state in which our registration is not renewed or otherwise extended
annually. We reserve the right to terminate this offering at any time prior to the stated
termination date.
The following information replaces the table in the section of our prospectus captioned Plan
of Distribution Compensation We Will Pay for the Sale of our Shares beginning on page 130 of
the prospectus:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
Total |
|
|
|
Per Share |
|
|
Minimum |
|
|
Maximum |
|
Primary Offering |
|
|
|
|
|
|
|
|
|
|
|
|
Price to Public |
|
$ |
10.00 |
|
|
$ |
2,500,000 |
|
|
$ |
493,900,000 |
|
Selling Commissions |
|
|
0.70 |
|
|
|
175,000 |
|
|
|
34,573,000 |
|
Dealer Manager fees |
|
|
0.15 |
|
|
|
37,500 |
|
|
|
7,408,500 |
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds to Cole REIT II |
|
$ |
9.15 |
|
|
$ |
2,287,500 |
|
|
$ |
451,918,500 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reinvestment Plan |
|
|
|
|
|
|
|
|
|
|
|
|
Price to Public |
|
$ |
9.50 |
|
|
|
|
|
|
$ |
56,544,000 |
|
Distribution Selling Commissions |
|
|
|
|
|
|
|
|
|
|
|
|
Dealer Manager Fees |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds to Cole REIT II |
|
$ |
9.50 |
|
|
|
|
|
|
$ |
56,544,000 |
|
|
|
|
|
|
|
|
|
|
|
Acquisition and Investment Policies
The following information replaces the section of the prospectus captioned Investment
Objectives and Policies Acquisition and Investment Policies beginning on page 70 of the
prospectus:
Types of Investments
We invest primarily in income-generating retail properties, net leased to investment grade and
other creditworthy tenants. Our investments may be direct investments in such properties or in
other entities that own or invest in, directly or indirectly, interests
- 18 -
in such properties. We seek
to acquire a portfolio of real estate that is diversified by geographical location and by type and
size of property. Currently, our portfolio consists primarily of freestanding, single-tenant
properties net leased for use as retail establishments. A portion of our portfolio also includes
multi-tenant retail properties and single-tenant properties leased to office and industrial
tenants. Although we expect our portfolio will continue to consist primarily of freestanding,
single-tenant properties, we expect to continue to invest in other property types, including office
and industrial properties, leased to one or more tenants. In addition, we expect to further
diversify our portfolio by investing in multi-tenant properties that compliment our overall
investment objectives and mortgage loans (See Making Loans and Investments in Mortgages).
Many of our properties will be leased to tenants in the chain or franchise retail industry,
including but not limited to convenience stores, drug stores and restaurant properties. Other
properties may be leased to large, national big box retailers, so-called power centers, which
are comprised of big box retailers and smaller retail establishments, and other multi-tenant
properties that compliment our overall investment objectives. Our advisor monitors industry trends
and invests in properties on our behalf that serve to provide a favorable return balanced with
risk. Our management primarily targets retail businesses with established track records. This
industry is highly property dependent, therefore our advisor believes it offers highly competitive
sale-leaseback investment opportunities.
We believe that our general focus on the acquisition of freestanding, retail properties net
leased to investment grade and other creditworthy tenants presents lower investment risks and
greater stability than other sectors of todays commercial real estate market. Unlike funds that
invest solely in multi-tenant properties, we plan to acquire a diversified portfolio comprised
primarily of single-tenant properties and a smaller number of multi-tenant properties that
compliment our overall investment objectives. By primarily acquiring single-tenant properties, we
believe that lower than expected results of operations from one or a few investments will not
necessarily preclude our ability to realize our investment objectives of cash flow and preservation
of capital from our overall portfolio. In addition, we believe that freestanding retail properties,
as compared to shopping centers, malls and other traditional retail complexes, offer a distinct
investment advantage since these properties generally require less management and operating
capital, have less recurring tenant turnover and generally offer superior locations that are less
dependent on the financial stability of adjoining tenants. In addition, since we intend to acquire
properties that are geographically diverse, we expect to minimize the potential adverse impact of
economic downturns in local markets. Our management believes that a portfolio consisting primarily
of freestanding, single-tenant retail properties, net leased to creditworthy tenants diversified
geographically and by brand and number of tenants will enhance our liquidity opportunities for
investors by making the sale of individual properties, multiple properties or our investment
portfolio as a whole attractive to institutional investors and by making a possible listing of our
shares attractive to the public investment community.
To the extent feasible, we will seek to achieve a well-balanced portfolio diversified by
geographic location, age of the property and lease maturity. We will pursue properties whose
tenants represent a variety of industries so as to avoid concentration in any one industry. We
expect these industries to include all types of retail establishments, such as big box retailers,
convenience stores, drug stores and restaurant properties. We expect that tenants of our properties
will also be diversified between national, regional and local brands. We will generally target
properties with lease terms in excess of ten years. We may acquire properties with shorter terms if
the property is in an attractive location, if the property is difficult to replace, or if the
property has other significant favorable attributes. We expect that these investments will provide
long-term value by virtue of their size, location, quality and condition and lease characteristics.
We currently expect all of our acquisitions will be in the United States, including U.S.
protectorates.
Many retail companies today are entering into sale-leaseback arrangements as a strategy for
applying more capital that would otherwise be applied to their real estate holdings to their core
operating businesses. We believe that our investment strategy will enable us to take advantage of
the increased emphasis on retailers core business operations in todays competitive corporate
environment as retailers attempt to divest from real estate assets.
There is no limitation on the number, size or type of properties that we may acquire or on the
percentage of net proceeds of this offering that may be invested in a single property. The number
and mix of properties will depend upon real estate market
conditions and other circumstances existing at the time of acquisition of properties and the
amount of proceeds raised in this offering. For a further description, see the section titled
Other Possible Investments below.
We intend to incur debt to acquire properties where our board determines that incurring such
debt is in our best interest. In addition, from time to time, we may acquire some properties
without financing and later incur mortgage debt secured by one or more of such properties if
favorable financing terms are available. We will use the proceeds from such loans to acquire
additional properties. See Borrowing Policies under this section for a more detailed
explanation of our borrowing intentions and limitations.
- 19 -
Investment Grade and Other Creditworthy Tenants
In evaluating potential property acquisitions consistent with our investment objectives, we
will apply credit underwriting criteria to the tenants of existing properties. Similarly, we will
apply credit underwriting criteria to possible new tenants when we are re-leasing properties in our
portfolio. Tenants of our properties frequently will be national or super-regional retail chains of
creditworthy entities having high net worth and operating income. Generally, these tenants must be
experienced multi-unit operators with a proven track record in order to meet the credit tests
applied by our advisor.
A tenant will be considered investment grade when the tenant has a debt rating by Moodys of
Baa3 or better or a credit rating by Standard & Poors of BBB- or better, or its payments are
guaranteed by a company with such rating. As of October 30, 2006, approximately 46% of all
scheduled lease payments were projected to be derived from tenants that maintain an investment
grade credit rating, while approximately 32% and 22% of scheduled lease payments were projected to
be derived from non-investment grade tenants and non-rated tenants, respectively. Changes in tenant
credit ratings, coupled with future acquisition and disposition activity, may increase or decrease
our concentration of investment grade tenants in the future.
Moodys ratings are opinions of future relative creditworthiness based on an evaluation of
franchise value, financial statement analysis and management quality. The rating given to a debt
obligation describes the level of risk associated with receiving full and timely payment of
principal and interest on that specific debt obligation and how that risk compares with that of all
other debt obligations. The rating, therefore, measures the ability of a company to generate cash
in the future.
A Moodys debt rating of Baa3, which is the lowest investment grade rating given by Moodys,
is assigned to companies with adequate financial security. However, certain protective elements may
be lacking or may be unreliable over any given period of time. A Moodys debt rating of Aaa, which
is the highest investment grade rating given by Moodys, is assigned to companies with exceptional
financial security. Thus, investment grade tenants will be judged by Moodys to have at least
adequate financial security, and will in some cases have exceptional financial security.
Standard & Poors assigns a credit rating to both companies as a whole and to each issuance or
class of a companys debt. A Standard & Poors credit rating of BBB-, which is the lowest
investment grade rating given by Standard & Poors, is assigned to companies that exhibit adequate
protection parameters. However, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity of the company to meet its financial commitments. A Standard
& Poors credit rating of AAA+, which is the highest investment grade rating given by Standard &
Poors, is assigned to companies or issuances with extremely strong capacities to meet their
financial commitments. Thus, investment grade tenants will be judged by Standard & Poors to have
at least adequate protection parameters, and will in some cases have extremely strong financial
positions.
Other creditworthy tenants are tenants with financial profiles that our advisor believes meet
our investment objectives. In evaluating the credit worthiness of a tenant or prospective tenant,
our advisor does not use specific quantifiable standards, but does consider many factors, including
the proposed terms of the acquisition. The factors our advisor considers include the financial
condition of the tenant and/or guarantor, the operating history of the property with such tenant or
tenants, the tenants or tenants market share and track record within its industry segment, the
general health and outlook of the tenants or tenants industry segment, and the lease length and
terms at the time of the acquisition.
Description of Leases
We typically purchase single-tenant properties with existing leases, and when spaces become
vacant or existing leases expire we anticipate entering into net leases. Net leases means
leases that typically require that tenants pay all or a majority of the operating expenses,
including real estate taxes, special assessments and sales and use taxes, utilities, insurance and
building repairs related to the property, in addition to the lease payments. There are various
forms of net leases, typically classified as triple net or double net. Triple net leases typically
require the tenant to pay all costs associated with a property in addition to the base rent and
percentage rent, if any. Double net leases typically have the landlord responsible for the roof and
structure, or other aspects of the property, while the tenant is responsible for all remaining
expenses associated with the property. In the event that we acquire multi-tenant properties, we
expect to have a variety of lease arrangements with the tenants of such properties. Since each
lease is an
individually negotiated contract between two or more parties, each contract will have
different obligations of both the landlord and tenant. Many large national tenants have standard
lease forms that generally do not vary from property to property, and we will have limited ability
to revise the terms of leases to those tenants.
We anticipate that a majority of our acquisitions will have lease terms of ten years or more
at the time of the acquisition. We may acquire properties under which the lease term has partially
run. We also may acquire properties with shorter lease terms if the property is in an attractive
location, if the property is difficult to replace, or if the property has other significant
favorable real estate attributes. Under most commercial leases, tenants are obligated to pay a
predetermined annual base rent. Some of the leases also will
- 20 -
contain provisions that increase the
amount of base rent payable at points during the lease term and/or percentage rent that can be
calculated by a number of factors. Under triple and double net leases, the tenants are generally
required to pay the real estate taxes, insurance, utilities and common area maintenance charges
associated with the properties. Generally, the leases require each tenant to procure, at its own
expense, commercial general liability insurance, as well as property insurance covering the
building for the full replacement value and naming the ownership entity and the lender, if
applicable, as the additional insured on the policy. As a precautionary measure, our advisor may
obtain, to the extent available, secondary liability insurance, as well as loss of rents insurance
that covers one year of annual rent in the event of a rental loss. The secondary insurance coverage
names the ownership entity as the named insured on the policy. The insurance coverage insures Cole
Holdings Corporation and any entity formed under Cole Holdings Corporation.
Some leases do require that the ownership entity procure the insurance for both commercial
general liability and property damage insurance; however, the premiums are fully reimbursable from
the tenant. In the event the ownership entity procures such insurance, the policy lists the
ownership entity as the named insured on the policy and the tenant as the additional insured.
Tenants are required to provide proof of insurance by furnishing a certificate of insurance to
our advisor on an annual basis. The insurance certificates are carefully tracked and reviewed for
compliance by our advisors property management department.
In general, leases may not be assigned or subleased without our prior written consent. The
original tenant generally will remain fully liable under the lease unless we release that tenant.
Other Possible Investments
Although we expect that most of our property acquisitions will be of the type described above,
we may make other investments. For example, we are not limited to investments in single-tenant
retail properties or properties leased to investment grade and other creditworthy tenants and
complimentary multi-tenant properties. We may invest in other commercial properties such as
business and industrial parks, manufacturing facilities, office buildings and warehouse and
distribution facilities, or in other entities that make such investments or own such properties, in
order to reduce overall portfolio risks or enhance overall portfolio returns if our advisor and
board of directors determine that it would be advantageous to do so. Further, to the extent that
our advisor and board of directors determine it is in our best interest, due to the state of the
real estate market, in order to diversify our investment portfolio or otherwise, we will make or
invest in mortgage loans secured by the same types of commercial properties that we intend to
acquire.
Our criteria for investing in mortgage loans will be substantially the same as those involved
in our investment in properties. We do not intend to make loans to other persons (other than
mortgage loans), to underwrite securities of other issuers or to engage in the purchase and sale of
any types of investments other than interests in real estate.
Investment Decisions
Cole Advisors II has substantial discretion with respect to the selection of specific
investments and the purchase and sale of our properties, subject to the approval of our board of
directors. In pursuing our investment objectives and making investment decisions for us, Cole
Advisors II evaluates the proposed terms of the purchase against all aspects of the transaction,
including the condition and financial performance of the property, the terms of existing leases and
the creditworthiness of the tenant, terms of the lease and property and location characteristics.
Because the factors considered, including the specific weight we place on each factor, will vary
for each potential investment, we do not, and are not able to, assign a specific weight or level of
importance to any particular factor.
In addition to procuring and reviewing an independent valuation estimate and property
condition report, our advisor also will, to the extent such information is available, consider the
following:
|
|
|
unit level store performance |
|
|
|
|
property location, visibility and access |
|
|
|
|
age of the property, physical condition and curb appeal |
|
|
|
|
neighboring property uses |
|
|
|
|
local market conditions including vacancy rates |
|
|
|
|
area demographics, including trade area population and average household income |
|
|
|
|
neighborhood growth patterns and economic conditions |
|
|
|
|
presence of nearby properties that may positively impact store sales at the subject property |
- 21 -
|
|
|
lease terms, including length of lease term, scope of landlord responsibilities,
presence and frequency of contractual rental increases, renewal option provisions,
exclusive and permitted use provisions, co-tenancy requirements and termination options. |
Our advisor will consider whether properties are leased by, or have leases guaranteed by,
companies that maintain an investment grade rating by either Standard and Poors or Moodys
Investor Services. Our advisor also will consider non-rated and non-investment grade rated tenants
that we consider creditworthy, as described in Investment Grade and Other Creditworthy Tenants
above.
Our advisor will carefully review the terms of each existing lease by considering various factors, including:
|
|
|
rent escalations |
|
|
|
|
remaining lease term |
|
|
|
|
renewal option terms |
|
|
|
|
tenant purchase options |
|
|
|
|
termination options |
|
|
|
|
scope of the landlords maintenance, repair and replacement requirements |
|
|
|
|
projected net cash flow yield |
|
|
|
|
projected internal rates of return. |
Conditions to Closing Our Acquisitions
Generally, we will condition our obligation to close the purchase of any investment on the
delivery and verification of certain documents from the seller or developer, including, where
appropriate:
|
|
|
plans and specifications |
|
|
|
|
surveys |
|
|
|
|
evidence of marketable title, subject to such liens and encumbrances as are acceptable to Cole Advisors II |
|
|
|
|
financial statements covering recent operations of properties having operating histories |
|
|
|
|
title and liability insurance policies |
|
|
|
|
tenant estoppel certificates. |
We generally will not purchase any property unless and until we also obtain what is generally
referred to as a Phase I environmental site assessment and are generally satisfied with the
environmental status of the property. However, we may purchase a property without obtaining such
assessment if our advisor determines it is not warranted. A Phase I environmental site assessment
basically consists of a visual survey of the building and the property in an attempt to identify
areas of potential environmental concerns, visually observing neighboring properties to asses
surface conditions or activities that may have an adverse environmental impact on the property, and
contacting local governmental agency personnel who perform a regulatory agency file search in an
attempt to determine any known environmental concerns in the immediate identity of the property. A
Phase I environmental site assessment does not generally include any sampling or testing of soil,
ground water or building materials from the property and may not reveal all environmental hazards
on a property.
We may enter into purchase and sale arrangements with a seller or developer of a suitable
property under development or construction. In such cases, we will be obligated to purchase the
property at the completion of construction, provided that the
construction conforms to definitive plans, specifications, and costs approved by us in
advance. In such cases, prior to our acquiring the property, we generally would receive a
certificate of an architect, engineer or other appropriate party, stating that the property
complies with all plans and specifications. If renovation or remodeling is required prior to the
purchase of a property, we expect to pay a negotiated maximum amount to the seller upon completion.
We do not currently intend to construct or develop properties or to render any services in
connection with such development or construction.
In determining whether to purchase a particular property, we may, in accordance with customary
practices, obtain an option on such property. The amount paid for an option, if any, is normally
surrendered if the property is not purchased and is normally credited against the purchase price if
the property is purchased.
- 22 -
In purchasing, leasing and developing properties, we will be subject to risks generally
incident to the ownership of real estate. See Risk Factors General Risks Related to Investments
in Real Estate.
Ownership Structure
Our investment in real estate generally takes the form of holding fee title or a long-term
leasehold estate. We acquire such interests either directly through our operating partnership, or
indirectly through limited liability companies, limited partnerships, or through investments in
joint ventures, partnerships, co-tenancies or other co-ownership arrangements with the developers
of the properties, affiliates of Cole Advisors II or other persons. See Our Operating Partnership
Agreement elsewhere in this prospectus and Joint Venture Investments sections below. In
addition, we may purchase properties and lease them back to the sellers of such properties. While
we will use our best efforts to structure any such sale-leaseback transaction so that the lease
will be characterized as a true lease and so that we will be treated as the owner of the property
for federal income tax purposes, we cannot assure you that the Internal Revenue Service will not
challenge this characterization. In the event that any sale-leaseback transaction is
re-characterized as a financing transaction for federal income tax purposes, deductions for
depreciation and cost recovery relating to such property would be disallowed. See Federal Income
Tax Considerations Sale-Leaseback Transactions.
Joint Venture Investments
We may enter into joint ventures, partnerships, co-tenancies and other co-ownership
arrangements with third parties as well as affiliated entities, including other real estate
programs sponsored by affiliates of our advisor for the acquisition, development or improvement of
properties with affiliates of our advisor, including other real estate programs sponsored by
affiliates of our advisor. We may also enter into such arrangements with real estate developers,
owners and other unaffiliated third parties for the purpose of developing, owning and operating
real properties. In determining whether to invest in a particular joint venture, Cole Advisors II
will evaluate the real property that such joint venture owns or is being formed to own under the
same criteria described above in Investment Decisions for the selection of our real estate
property investments.
Our general policy is to invest in joint ventures only when we will have a right of first
refusal to purchase the co-venturers interest in the joint venture if the co-venturer elects to
sell such interest. In the event that the co-venturer elects to sell property held in any such
joint venture, however, we may not have sufficient funds to exercise our right of first refusal to
buy the other co-venturers interest in the property held by the joint venture. In the event that
any joint venture with an affiliated entity holds interests in more than one property, the interest
in each such property may be specially allocated based upon the respective proportion of funds
invested by each co-venturer in each such property.
Cole Advisors II may have conflicts of interest in determining which Cole-sponsored program
should enter into any particular joint venture agreement. The co-venturer may have economic or
business interests or goals that are or may become inconsistent with our business interests or
goals. In addition, Cole Advisors II may face a conflict in structuring the terms of the
relationship between our interests and the interest of the affiliated co-venturer and in managing
the joint venture. Since Cole Advisors II and its affiliates will control both the affiliated
co-venturer and, to a certain extent, us, agreements and transactions between the co-venturers with
respect to any such joint venture will not have the benefit of arms-length negotiation of the type
normally conducted between unrelated co-venturers, which may result in the co-venturer receiving
benefits greater than the benefits that we receive. In addition, we may have liabilities that
exceed the percentage of our investment in the joint venture.
We may enter into joint ventures with other Cole real estate programs only if a majority of
our directors not otherwise interested in the transaction and a majority of our independent
directors approve the transaction as being fair and reasonable to us and on substantially the same
terms and conditions as those received by other joint venturers.
Borrowing Policies
Our advisor believes that utilizing borrowing is consistent with our investment objective of
maximizing the return to investors. By operating on a leveraged basis, we will have more funds
available for investment in properties. This will allow us to make more investments than would
otherwise be possible, resulting in a more diversified portfolio. Our use of leverage increases
the risk of default on the mortgage payments and a resulting foreclosure on a particular property,
as described in the Risk Factors General Risks Related to Investments in Real Estate section of
this prospectus. The number of properties that we can acquire will be affected by the amounts of
funds available to us. Accordingly, borrowing funds allows us to increase our diversification.
There is no limitation on the amount we may borrow against any single improved property. However,
under our charter, we are required to limit our borrowings to 60% of the greater of cost (before
deducting depreciation or other non-cash reserves) or fair market value of our gross assets, unless
excess borrowing is approved by a majority of the independent directors and disclosed to our
stockholders in the next quarterly report along with the justification for such excess borrowing.
In the event that we issue preferred stock that is entitled to a preference over the common stock
in respect of distributions or liquidation or is treated as debt under GAAP, we will include it in
- 23 -
the leverage restriction calculations, unless the issuance of the preferred stock is approved or
ratified by our stockholders. We expect that during the period of this offering we will request
that our independent directors approve borrowings in excess of this limitation since we will then
be in the process of raising our equity capital to acquire our portfolio. However, we anticipate
that our overall leverage following our offering stage will be within our charter limit. To the
extent that we do not obtain mortgage loans on our properties, our ability to acquire additional
properties will be restricted. As of September 30, 2006, we had an aggregate debt leverage ratio
of 52% of the aggregate original purchase price of our properties.
Our advisor will use its best efforts to obtain financing on the most favorable terms
available to us. All of our financing arrangements must be approved by a majority of our board
members including a majority of our independent directors. Lenders may have recourse to assets not
securing the repayment of the indebtedness. Our advisor may refinance properties during the term of
a loan only in limited circumstances, such as when a decline in interest rates makes it beneficial
to prepay an existing mortgage, when an existing mortgage matures or if an attractive investment
becomes available and the proceeds from the refinancing can be used to purchase such investment.
The benefits of the refinancing may include increased cash flow resulting from reduced debt service
requirements, an increase in dividend distributions from proceeds of the refinancing, if any, and
an increase in property ownership is some refinancing proceeds are reinvested in real estate.
Our ability to increase our diversification through borrowing may be adversely impacted if
banks and other lending institutions reduce the amount of funds available for loans secured by real
estate. When interest rates on mortgage loans are high or financing is otherwise unavailable on a
timely basis, we may purchase certain properties for cash with the intention of obtaining a
mortgage loan for a portion of the purchase price at a later time. To the extent that we do not
obtain mortgage loans on our properties, our ability to acquire additional properties will be
restricted.
We may not borrow money from any of our directors or from our advisor or its affiliates unless
such loan is approved by a majority of the directors not otherwise interested in the transaction
(including a majority of the independent directors) as fair, competitive and commercially
reasonable and no less favorable to us than a comparable loan between unaffiliated parties.
Investment Limitations
The following information replaces the section of the prospectus captioned Investment
Objectives and Policies Investment Limitations beginning on page 81 of the prospectus:
Our charter places numerous limitations on us with respect to the manner in which we may
invest our funds or issue securities. These limitations cannot be changed unless our charter is
amended, which requires approval of our stockholders. Unless our charter is amended, we will not:
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borrow in excess of 60% of the greater of the aggregate cost (before deducting
depreciation or other non-cash reserves) or fair market value of all assets owned by us,
unless approved by a majority of our independent directors and disclosed to our
stockholders in our next quarterly report along with the justification for such excess
borrowing; |
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make investments in unimproved property or mortgage loans on unimproved property in
excess of 10% of our total assets; |
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make or invest in mortgage loans unless an appraisal is obtained concerning the
underlying property, except for those mortgage loans insured or guaranteed by a
government or government agency; |
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make or invest in mortgage loans, including construction loans, on any one property
if the aggregate amount of all mortgage loans on such property would exceed an amount
equal to 85% of the appraised value of such property unless substantial justification
exists for exceeding such limit because of the presence of other underwriting criteria; |
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make an investment in a property or mortgage loan if the related acquisition fees and
acquisition expenses are unreasonable or exceed 6% of the purchase price of the property
or, in the case of a mortgage loan, 6% of the funds advanced; provided that the
investment may be made if a majority of our independent directors determines that the
transaction is commercially competitive, fair and reasonable to us; |
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invest in equity securities unless a majority of our independent directors approves
such investment as being fair, competitive and commercially reasonable; |
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invest in real estate contracts of sale, otherwise known as land sale contracts,
unless the contract is in recordable form and is appropriately recorded in the chain of
title; |
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invest in commodities or commodity futures contracts, except for futures contracts
when used solely for the purpose of hedging in connection with our ordinary business of
investing in real estate assets and mortgages; |
- 24 -
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issue equity securities on a deferred payment basis or other similar arrangement; |
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issue debt securities in the absence of adequate cash flow to cover debt service; |
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issue equity securities that are assessable after we have received the consideration
for which our board of directors authorized their issuance; or |
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issue equity securities redeemable solely at the option of the holder, which
restriction has no effect on our share redemption program or the ability of our
operating partnership to issue redeemable partnership interests. |
In addition, our charter includes many other investment limitations in connection with
transactions with affiliated entities or persons, which limitations are described above under
Conflicts of Interest. Our charter also includes restrictions on roll-up transactions, which are
described under Description of Shares below.
Increase in the Number of Shares Authorized Under our Charter
The following information replaces the risk factor under the risk captioned Our charter
permits our board of directors to issue stock with terms that may subordinate the rights of common
stockholders or discourage a third party from acquiring us in a manner that might result in a
premium price to our stockholders on page 24 of the prospectus:
Our charter permits our board of directors to issue up to 350,000,000 shares of stock. In
addition, our board of directors, without any action by our stockholders, may amend our charter
from time to time to increase or decrease the aggregate number of shares or the number of shares of
any class or series of stock that we have authority to issue. Our board of directors may classify
or reclassify any unissued common stock or preferred stock and establish the preferences,
conversion or other rights, voting powers, restrictions, limitations as to distributions,
qualifications and terms or conditions of redemption of any such stock. Thus, our board of
directors could authorize the issuance of preferred stock with terms and conditions that could have
a priority as to distributions and amounts payable upon liquidation over the rights of the holders
of our common stock. Preferred stock could also have the effect of delaying, deferring or
preventing a change in control of us, including an extraordinary transaction (such as a merger,
tender offer or sale of all or substantially all of our assets) that might provide a premium price
for holders of our common stock. See the Description of Shares Preferred Stock section of this
prospectus.
The following information replaces the risk factor under the risk captioned Your interest in
Cole REIT II will be diluted if we issue additional shares on page 27 of the prospectus:
Existing stockholders and potential investors in this offering do not have preemptive rights
to any shares issued by us in the future. Our charter currently has authorized 350,000,000 shares
of stock, of which 340,000,000 shares are designated as common stock and 10,000,000 are designated
as preferred stock. Subject to any limitations set forth under Maryland law, our board of directors
may increase the number of authorized shares of stock, increase or decrease the number of shares of
any class or series of stock designated, or reclassify any unissued shares without the necessity of
obtaining stockholder approval. All of such shares may be issued in the discretion of our board of
directors. Therefore, in the event that we (1) sell shares in this offering or sell additional
shares in the future, including those issued pursuant to our distribution reinvestment plan, (2)
sell securities that are convertible into shares of our common stock, (3) issue shares of our
common stock in a private offering of securities to institutional investors, (4) issue shares of
our common stock upon the exercise of the options granted to our independent directors, (5) issue
shares to our advisor, its successors or assigns, in payment of an outstanding fee obligation as
set forth under our advisory agreement, or (6) issue shares of our common stock to sellers of
properties acquired by us in connection with an exchange of limited partnership interests of Cole
OP II, existing stockholders and investors purchasing shares in this offering will likely
experience dilution of their equity investment in us. In addition, the partnership agreement for
Cole OP II contains provisions that would allow, under certain circumstances, other entities,
including other Cole-sponsored programs, to merge into or cause the exchange or conversion of their
interest for interests of Cole OP
II. Because the limited partnership interests of Cole OP II may, in the discretion of our
board of directors, be exchanged for shares of our common stock, any merger, exchange or conversion
between Cole OP II and another entity ultimately could result in the issuance of a substantial
number of shares of our common stock, thereby diluting the percentage ownership interest of other
stockholders. Because of these and other reasons described in this Risk Factors section, you
should not expect to be able to own a significant percentage of our shares.
The following replaces the information in the first sentence of the second paragraph under the
caption Description of Shares on page 112 of the prospectus:
Our charter authorizes us to issue up to 350,000,000 shares of stock, of which 340,000,000
shares are designated as common stock at $0.01 par value per share and 10,000,000 shares are
designated as preferred stock at $0.01 par value per share. Our board of directors may amend our
charter to increase or decrease the aggregate number of our authorized shares or the number of
shares of any class or series that we have authority to issue without any action by our
stockholders.
- 25 -
Managements Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis should be read in conjunction with our accompanying
consolidated financial statements and notes thereto.
The following discussion and analysis of our financial condition and results of operations
should be read in conjunction with our unaudited condensed consolidated financial statements, the
condensed notes thereto, and the other unaudited financial data included in our Quarterly Report on
Form 10-Q for the period ended September 30, 2006. The following discussion should also be read in
conjunction with our audited consolidated financial statements , and the notes thereto, and
Managements Discussion and Analysis of Financial Condition and Results of Operations included in
our Annual Report on Form 10-K for the year ended December 31, 2005.
Forward-Looking Statements
This section contains forward-looking statements, including discussion and analysis of the
financial condition of us and our subsidiary, our anticipated capital expenditures, amounts of
anticipated cash distributions to our stockholders in the future and other matters. These
forward-looking statements are not historical facts but are the intent, belief or current
expectations of our management based on their knowledge and understanding of our business and
industry. Words such as may, will, anticipates, expects, intends, plans, believes,
seeks, estimates, would, could, should and variations of these words and similar
expressions are intended to identify forward-looking statements. These statements are not
guarantees of future performance and are subject to risks, uncertainties and other factors, some of
which are beyond our control, are difficult to predict and could cause actual results to differ
materially from those expressed or forecasted in the forward-looking statements.
Forward-looking statements that were true at the time made may ultimately prove to be
incorrect or false. Investors are cautioned not to place undue reliance on forward-looking
statements, which reflect our managements view only as of the date of our Quarterly Report on Form
10-Q for the period ended September 30, 2006. We undertake no obligation to update or revise
forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events
or changes to future operating results. Factors that could cause actual results to differ
materially from any forward-looking statements made in this prospectus include changes in general
economic conditions, changes in real estate conditions, construction costs that may exceed
estimates, construction delays, increases in interest rates, lease-up risks, inability to obtain
new tenants upon the expiration of existing leases, and the potential need to fund tenant
improvements or other capital expenditures out of operating cash flows. The forward-looking
statements should be read in light of the risk factors identified in the Risk Factors section of
our Annual Report on Form 10-K for the year ended December 31, 2005 and the Risk Factors section
of this prospectus, relating to the Offering, each as filed with the Securities and Exchange
Commission.
Managements discussion and analysis of financial condition and results of operations are
based upon our consolidated financial statements, which have been prepared in accordance with
accounting principles generally accepted in the United States of America. The preparation of these
financial statements requires our management to make estimates and assumptions that affect the
reported amounts of assets, liabilities, revenues and expenses, and related disclosure of
contingent assets and liabilities. On a regular basis, we evaluate these estimates. These estimates
are based on managements historical industry experience and on various other assumptions that are
believed to be reasonable under the circumstances. Actual results may differ from these estimates.
Overview
We commenced our principal operations on September 23, 2005, when we issued the initial
486,000 shares of common stock in the Offering. Prior to such date, we were considered a
development stage company.
We derive a substantial portion of our revenue from our rental income. As a result, our
operating results and cash flows are primarily influenced by rental income from our commercial
properties and interest expense on our property acquisition indebtedness. Rental income accounted
for approximately 94% and 95% of total revenue during the three months and nine months ended
September 30, 2006, respectively. As 100% of our properties are under lease, with an average
remaining lease term of approximately 14.0 years, we believe our exposure to changes in commercial
rental rates on our portfolio is substantially mitigated. As of September 30, 2006, the debt
leverage ratio of our portfolio, which is the ratio of total real estate assets to mortgage notes
payable, was approximately 52%, with approximately 3% of the debt, or $5.3 million, subject to
variable interest rates. We intend to manage our interest rate risk by repaying approximately $4.6
million, of which approximately $1.4 million has been paid as of November 10, 2006, or 87%, of our
short-term variable rate debt as it matures during the quarter ending December 31, 2006. We expect
to fund the repayments with proceeds from our ongoing Offering. Additionally, as we continue to
raise capital under our Offering and invest the proceeds in commercial real estate, we will be
subject to changes in real estate prices and changes in interest rates on new indebtedness used to
acquire the properties. We may manage our risk of changes in real estate prices on future property
acquisitions by entering into purchase agreements and loan commitments simultaneously such that our
operating yield is determinable, by contracting with
- 26 -
developers for future delivery of properties,
or by entering into sale-leaseback transactions. We expect to manage our interest rate risk by
monitoring the interest rate environment in connection with our planned property acquisitions to
determine the appropriate acquisition financing, which may include fixed rate loans, variable rate
loans or interest rate hedges. If we are unable to acquire suitable properties or obtain suitable
financing for future acquisitions, our results of operations may be adversely affected.
Our management is not aware of any material trends or uncertainties, other than national
economic conditions affecting real estate generally (such as lower capitalization rates and
increasing interest rates, which lead to higher interest expense), that may reasonably be expected
to have a material impact, favorable or unfavorable, on revenues or income from the acquisition and
operations of real properties and mortgage loans, other than those referred to in our annual report
on Form 10-K for the year ended December 31, 2005.
As of September 30, 2006, we owned 62 single-tenant, freestanding retail properties, two
single-tenant freestanding commercial properties, and three multi-tenant retail properties, all of
which were 100% leased. During the three months ended September 30, 2006, we acquired 23
single-tenant, freestanding retail properties. During the nine months ended September 30, 2006, we
acquired 53 properties (see Notes 3 and 4 to the condensed consolidated financial statements
accompanying this prospectus supplement. Our results of operations are not indicative of those
expected in future periods as we expect that rental income, operating expenses, asset management
fees, depreciation expense, interest expense, and net income will each increase in the future as we
acquire additional properties and as our current properties are owned for an entire period.
Results of Operations
During the three months and nine months ended September 30, 2005, we owned one single-tenant
net-leased retail property which we acquired on September 26, 2005. Accordingly, the results of
operations for the three months and nine months ended September 30, 2006 are not comparable to the
prior year periods.
Three Months Ended September 30, 2006
Revenue for the three months ended September 30, 2006 totaled approximately $5.4 million.
Rental income accounted for approximately 94% of our revenue. During the three months ended
September 30, 2006, we owned an average of 52 properties.
Property operating expenses for the three months ended September 30, 2006 were approximately
$335,000, which included property taxes, maintenance costs, and utilities which are substantially
reimbursed by the tenant.
Property and asset management fees were approximately $262,000 and depreciation and
amortization expenses were approximately $1.8 million for the three months ended September 30,
2006. Property management fees and asset management fees and depreciation and amortization
expenses are directly related to the value of real estate owned by us or the rental income
generated by such assets. During the three months ended September 30, 2006, the average aggregate
book value of our real estate assets was approximately $276.3 million.
General and administrative expenses for the three months ended September 30, 2006 totaled
approximately $265,000, primarily relating to accounting and legal fees, independent directors
fees, stock compensation expense, and other organization costs. During the three months ended
September 30, 2006, we incurred amortization of deferred financing costs and interest expense of
approximately $2.3 million.
We had net income for the three months ended September 30, 2006 of approximately $549,000.
Net income per share for the three months ended September 30, 2006 was $0.04. With the acquisition
of new properties in future periods, we anticipate that
revenue, general and administrative expenses, net income, and earnings per share will
increase. However, we expect general and administrative expenses to decrease as a percentage of
total revenue.
Nine Months Ended September 30, 2006
Revenue for the nine months ended September 30, 2006 totaled approximately $11.7 million.
Rental income accounted for approximately 95% of our revenue. During the nine months ended
September 30, 2006 we owned an average of 39 properties.
Property operating expenses for the nine months ended September 30, 2006 were approximately
$629,000, which included costs such as property taxes, maintenance costs, and utilities which are
substantially reimbursed by the tenant.
Property and asset management fees were approximately $563,000 and depreciation and
amortization expenses were approximately $3.9 million for the nine months ended September 30, 2006.
Property management fees and asset management fees
- 27 -
and depreciation and amortization expenses are
directly related to the value of real estate owned by us or the rental income generated by such
assets. During the nine months ended September 30, 2006, the average aggregate book value of our
real estate assets was $208.3 million.
General and administrative expenses for the nine months ended September 30, 2006 totaled
approximately $806,000, primarily relating to accounting and legal fees, independent directors
fees, stock compensation expense, and other organization costs.
During the nine months ended September 30, 2006, we incurred amortization of deferred
financing costs and interest expense of approximately $5.8 million, which included approximately
$162,000 of expenses incurred to refinance a variable rate loan.
We had net income for the nine months ended September 30, 2006 of approximately $185,000. Net
income per share for the nine months ended September 30, 2006 was $0.02. With the acquisition of
new properties in future periods, we anticipate that revenue, general and administrative expenses,
net income, and earnings per share will increase. However, we expect general and administrative
expenses to decrease as a percentage of total revenue.
As of September 30, 2006, we had outstanding debt of approximately $167.0 million related to
real estate acquisitions, of which approximately $113.1 million was incurred and approximately
$35.3 million was assumed in the nine months ended September 30, 2006. Our debt financing costs in
future periods will vary based on our level of future borrowings, which will depend on the level of
investor proceeds raised, the cost of borrowings, and the opportunity to acquire real estate assets
meeting our investment objectives.
Funds From Operations
We believe that funds from operations (FFO) is a beneficial indicator of the performance of
a REIT. Because FFO calculations exclude such factors as depreciation and amortization of real
estate assets and gains or losses from sales of operating real estate assets (which can vary among
owners of identical assets in similar conditions based on historical cost accounting and
useful-life estimates), they facilitate comparisons of operating performance between periods and
between other REITs. Our management believes that accounting for real estate assets in accordance
with generally accepted accounting principles in the United States (GAAP) implicitly assumes that
the value of real estate assets diminishes predictability over time. Since real estate values have
historically risen or fallen with market conditions, many industry investors and analysts have
considered the presentation of operating results for real estate companies that use historical cost
accounting to be insufficient by themselves. As a result, we believe that the use of FFO, together
with the required GAAP presentations, provide a more complete understanding of our performance
relative to our competitors and a more informed and appropriate basis on which to make decisions
involving operating, financing, and investing activities. Other REITs may not define FFO in
accordance with the current National Association of Real Estate Investment Trusts (NAREIT)
definition (as we do) or may interpret the current NAREIT definition differently than we do.
FFO is a non-GAAP financial measure and does not represent net income as defined by GAAP. Net
income as defined by GAAP is the most relevant measure in determining our operating performance
because FFO includes adjustments that investors may deem subjective, such as adding back expenses
such as depreciation and amortization. Accordingly, FFO should not be considered as an alternative
to net income as an indicator of our operating performance.
Our calculation of FFO is presented in the following table for the periods ended as indicated:
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|
Three Months Ended |
|
|
Nine Months Ended |
|
|
|
September 30, |
|
|
September 30, |
|
|
September 30, |
|
|
September 30, |
|
|
|
2006 |
|
|
2005 |
|
|
2006 |
|
|
2005 |
|
Net Income (loss) |
|
$ |
548,942 |
|
|
$ |
(29,543 |
) |
|
$ |
184,507 |
|
|
$ |
(29,543 |
) |
Add: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation of real estate assets |
|
|
1,206,287 |
|
|
|
2,467 |
|
|
|
2,651,860 |
|
|
|
2,467 |
|
Amortization of lease related costs |
|
|
576,695 |
|
|
|
1,037 |
|
|
|
1,239,242 |
|
|
|
1,037 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FFO |
|
$ |
2,331,924 |
|
|
$ |
(26,039 |
) |
|
$ |
4,075,609 |
|
|
$ |
(26,039 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Set forth below is additional information (often considered in conjunction with FFO) that
may be helpful in assessing our operating results:
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In order to recognize revenues on a straight-line basis over the terms of the
respective leases, we recognized additional revenue by straight-lining rental revenue of
approximately $217,000 and $521,000 during the three months and nine months ended
September 30, 2006, respectively. |
- 28 -
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During the three months and nine months ended September 30, 2006, amortization of
deferred financing costs totaled approximately $161,000 and $343,000, respectively. |
Liquidity and Capital Resources
Overview
We expect to continue to raise capital through our ongoing Offering of common stock and to
utilize such funds and proceeds from secured or unsecured financings to complete future property
acquisitions. As of September 30, 2006, we had raised approximately $189.3 million in the Offering.
We expect to meet our short-term liquidity requirements through net cash provided by property
operations and proceeds from the Offering. Operating cash flows are expected to increase as
additional properties are added to our portfolio. The offering and organizational costs associated
with the Offering are initially paid by our Advisor, who will be reimbursed for such costs up to
1.5% of the capital raised by us in the Offering. As of September 30, 2006, our Advisor has paid
approximately $2.8 million of offering and organization costs and we have reimbursed the advisor
for approximately $2.4 million of such costs.
Subsequent to September 30, 2006, we completed the acquisition of three single-tenant retail
buildings and one multi-tenant specialty retail building, in separate transactions for an aggregate
purchase price of $27.0 million, exclusive of closing costs. The acquisitions were funded with
proceeds from the Offering, approximately $6.4 million in aggregate proceeds from two new loans and
the assumption of one loan aggregating approximately $7.4 million. In addition, subsequent to
September 30, 2006, we used available cash and proceeds from the Offering to repay an aggregate of
approximately $1.4 million of our variable rate short-term debt related to four loans.
On September 25, 2006, our board of directors authorized a daily distribution of $0.0017808
per share for stockholders of record as of the close of business on each day during the period
commencing on October 1, 2006 and ending on December 31, 2006. The payment date for each record
date in October 2006 will be in November 2006, the payment date for each record date in November
2006 will be in December 2006, and the payment date for each record date in December 2006 will be
in January 2006.
On a long-term basis, our principal demands for funds will be for property acquisitions,
either directly or through investment interests, for the payment of operating expenses and
distributions and for the payment of principal and accrued interest on our outstanding indebtedness
and other investments. Generally, cash needs for items other than property acquisitions will be met
from operations and property acquisitions from funding by the offering of our shares of common
stock and additional borrowings.
As of September 30, 2006, we had approximately $167.2 million of debt outstanding consisting
of approximately $162.0 million in fixed rate, term mortgage loans and approximately $5.3 million
in variable rate term mortgage loans. The weighted average interest rate at September 30, 2006
under the fixed rate term mortgage loans was approximately 5.51% and the variable rate term
mortgage interest rate is stated at LIBOR plus 2.0%. Additionally our debt leverage ratio was
approximately 52% and the weighted average years to maturity was 6.34 years at September 30, 2006.
Our contractual obligations as of September 30, 2006, were as follows:
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|
|
|
|
|
Less than |
|
|
|
|
|
|
|
|
|
|
More than |
|
|
|
|
|
|
1 year |
|
|
1-3 years |
|
|
4-5 years |
|
|
5 years |
|
|
Total |
|
Principal payments fixed rate debt |
|
$ |
|
|
|
$ |
9,749,838 |
|
|
$ |
51,637,000 |
|
|
$ |
100,572,000 |
|
|
$ |
161,958,838 |
|
Interest payments fixed rate debt |
|
|
9,196,011 |
|
|
|
17,779,851 |
|
|
|
15,570,289 |
|
|
|
28,679,404 |
|
|
|
71,225,555 |
|
Principal payments variable rate debt |
|
|
5,284,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,284,000 |
|
Interest payments variable rate debt (1) |
|
|
69,521 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
69,521 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
14,549,532 |
|
|
$ |
27,529,689 |
|
|
$ |
67,207,289 |
|
|
$ |
129,251,404 |
|
|
$ |
238,537,914 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
A rate of 7.38% was used to calculate the variable debt payment obligations in future
periods. This is the rate effective as of September 30, 2006. |
Cash Flow Analysis
Operating Activities
Net cash provided by operating activities was approximately $4.1 million for the nine months
ended September 30, 2006, primarily due to net income for the period of approximately $185,000 and
depreciation and amortization of approximately $4.3 million. This was offset by an increase in
rents and tenant receivables of approximately $1.1 million and a decrease in accounts
- 29 -
payable and
accrued expenses of approximately $1.0 million. See Results of Operations for a more complete
discussion of the factors impacting our operating performance.
Investing and Financing Activities
Net cash used in investing activities was approximately $202.1 million for the nine months
ended September 30, 2006, primarily due to approximately $197.7 million used on the acquisition of
53 properties and the associated acquisition costs and approximately $4.4 million in restricted
cash, which is held in escrow pending issuance of shares to investors in the Offering.
Net cash provided by financing activities was approximately $202.7 million for the nine months
ended September 30, 2006, primarily due to net proceeds from the issuance of common stock under the
Offering of approximately $143.5 million, net proceeds from the issuance of mortgage notes of
approximately $110.7 million in connection with the acquisition of 53 properties offset by
repayments of mortgage notes of approximately $52.4 million, and an approximately $4.4 million
liability related to investor proceeds, which are held in escrow pending issuance of shares to the
investors in the Offering.
During the three and nine months ended September 30, 2006, the Company declared distributions
of approximately $2.5 million and approximately $4.4 million, respectively, and paid distributions
of approximately $2.1 million and approximately $3.7 million, respectively.
Election as a REIT
We have made an election to be taxed as a REIT under Sections 856 through 860 of the Internal
Revenue Code commencing with our taxable year ended December 31, 2005. If we qualify for taxation
as a REIT, we generally will not be subject to federal corporate income tax to the extent we
distribute our REIT taxable income to our stockholders, and so long as we distribute at least 90%
of our REIT taxable income. REITs are subject to a number of other organizational and operational
requirements. Even if we qualify for taxation as a REIT, we may be subject to certain state and
local taxes on our income and property, and federal income and excise taxes on our undistributed
income. The Company believes it is organized and operating in such a manner as to qualify to be
taxed as a REIT for the taxable year ended December 31, 2006.
Inflation
The real estate market has not been affected significantly by inflation in the past several
years due to the relatively low inflation rate. However, in the event inflation does become a
factor, the leases on the real estate we may acquire may not include provisions that would protect
us from the impact of inflation.
Critical Accounting Policies and Estimates
Our accounting policies have been established to conform to GAAP. The preparation of financial
statements in conformity with GAAP requires us to use judgment in the application of accounting
policies, including making estimates and assumptions. These judgments affect the reported amounts
of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the
financial statements and the reported amounts of revenue and expenses during the reporting periods.
If our judgment or interpretation of the facts and circumstances relating to the various
transactions had been different, it is possible that different accounting policies would have been
applied, thus, resulting in a different presentation of the financial statements. Additionally,
other companies may utilize different estimates that may impact comparability of our results of
operations to those of companies in similar businesses. We consider our critical accounting
policies to be the following:
|
|
|
Investment in Real Estate Assets; |
|
|
|
|
Allocation of Purchase Price of Acquired Assets; |
|
|
|
|
Valuation of Real Estate Assets; |
|
|
|
|
Revenue Recognition, and |
|
|
|
|
Income Taxes. See Note 9 to our condensed consolidated financial statements on FASB Interpretation No. 48. |
A complete description of such policies and our considerations is contained in our Annual
Report on Form 10-K as of December 31, 2005. The information included in this prospectus should be
read in conjunction with our audited consolidated financial statements as of December 31, 2005, and
related notes thereto.
Commitments and Contingencies
- 30 -
We are subject to certain contingencies and commitments with regard to certain transactions.
Refer to Note 6 to our condensed consolidated financial statements for further explanations.
Related-Party Transactions and Agreements
We have entered into agreements with our Advisor and its affiliates, whereby we pay certain
fees or reimbursements to our Advisor or its affiliates for acquisition fees and expenses,
organization and offering costs, sales commissions, dealer manager fees, asset and property
management fees and reimbursement of operating costs. Additionally, we have entered into certain
transactions with affiliates of the Advisor, including transactions in which we have purchased
properties from such affiliates and in which we have borrowed money from such affiliates. See Note
7 to our condensed consolidated financial statements included in this prospectus supplement for a
discussion of the various related-party transactions, agreements and fees.
Subsequent Events
Certain events occurred subsequent to September 30, 2006 through the date of our Quarterly
Report on Form 10-Q for the period ended September 30, 2006. Refer to Note 11 to our condensed
consolidated financial statements for further explanation. Such events include:
|
|
|
Sale of shares of common stock; |
|
|
|
|
Acquisition of a property in Glassport Borough, Pennsylvania; |
|
|
|
|
Acquisition of a property in Topeka, Kansas; |
|
|
|
|
Acquisition of a property in Hanover Borough, Pennsylvania; |
|
|
|
|
Acquisition of a property in Peoria, Illinois; |
|
|
|
|
Acquisition of a property in La Grange, Texas; |
|
|
|
|
Mortgage notes payable incurred in connection with the acquisitions described above; |
|
|
|
|
Repayments on certain mortgage notes payable; and |
|
|
|
|
Execution of an extended rate lock agreement. |
Recent Accounting Pronouncements
Refer to Note 9 to our condensed consolidated financial statements for further explanation of
applicable recent accounting pronouncements.
- 31 -
Real Property Investments
The section captioned Prospectus Summary Description of Real Estate Investments beginning
on page 8 of the prospectus is supplemented with the following information:
Cole Advisors II, our advisor, is continually evaluating various potential property
investments and engaging in discussions and negotiations with sellers, developers and potential
tenants regarding the purchase and development of properties for us and other Cole-sponsored
programs. At such time while this offering is pending, if we believe that a reasonable probability
exists that we will acquire a specific property, this prospectus will be supplemented to disclose
the negotiations and pending acquisition of such property. We expect that this will normally occur
upon the signing of a purchase agreement for the acquisition of a specific property, but may occur
before or after such signing or upon the satisfaction or expiration of major contingencies in any
such purchase agreement, depending on the particular circumstances surrounding each potential
investment. A supplement to this prospectus will describe any improvements proposed to be
constructed thereon and other information that we consider appropriate for an understanding of the
transaction. Further data will be made available after any pending acquisition is consummated,
also by means of a supplement to this prospectus, if appropriate. YOU SHOULD UNDERSTAND THAT THE
DISCLOSURE OF ANY PROPOSED ACQUISITION CANNOT BE RELIED UPON AS AN ASSURANCE THAT WE WILL
ULTIMATELY CONSUMMATE SUCH ACQUISITION OR THAT THE INFORMATION PROVIDED CONCERNING THE PROPOSED
ACQUISITION WILL NOT CHANGE BETWEEN THE DATE OF THE SUPPLEMENT AND ANY ACTUAL PURCHASE.
As of November 30, 2006, we owned 85 properties, comprising approximately 2.8 million rentable
square feet of commercial space located in 26 states. Our properties as of November 30, 2006, are
listed below.
|
|
|
|
|
|
|
|
|
|
|
Rentable Square |
Property Description |
|
Tenant |
|
Feet |
|
Tractor Supply Parkersburg, WV
|
|
Tractor Supply Company
|
|
|
22,000 |
|
Walgreens Brainerd, MN
|
|
Walgreen Co.
|
|
|
15,000 |
|
Rite Aid Alliance, OH
|
|
Rite Aid of Ohio, Inc.
|
|
|
11,000 |
|
La-Z-Boy Glendale, AZ
|
|
EBCO, Inc.
|
|
|
23,000 |
|
Walgreens Florissant, MO
|
|
Walgreen Co.
|
|
|
15,000 |
|
Walgreens (Telegraph) St. Louis, MO
|
|
Walgreen Co.
|
|
|
15,000 |
|
Walgreens (Gravois) St. Louis, MO
|
|
Walgreen Co.
|
|
|
15,000 |
|
Walgreens Columbia, MO
|
|
Walgreen Co.
|
|
|
14,000 |
|
Walgreens Olivette, MO
|
|
Walgreen Co.
|
|
|
15,000 |
|
CVS Alpharetta, GA
|
|
Mayfield CVS, Inc.
|
|
|
10,000 |
|
Lowes Enterprise, AL
|
|
Lowes Home Centers, Inc.
|
|
|
95,000 |
|
CVS Richland Hills, TX
|
|
CVS EGL Grapevine N Richland Hills Texas, LP
|
|
|
11,000 |
|
FedEx Package Distribution Center Rockford, IL
|
|
FedEx Ground Package System, Inc.
|
|
|
67,000 |
|
Plastech Auburn Hills, MI
|
|
LDM Technologies, Inc.
|
|
|
112,000 |
|
Academy Sports Macon, GA
|
|
Academy, LTD
|
|
|
75,000 |
|
Davids Bridal Lenexa, KS
|
|
Davids Bridal, Inc.
|
|
|
12,000 |
|
Rite Aid Enterprise, AL
|
|
Harco, Inc.
|
|
|
15,000 |
|
Rite Aid Wauseon, OH
|
|
Rite Aid of Ohio, Inc.
|
|
|
15,000 |
|
Staples Crossville, TN
|
|
Staples the Office Superstore East, Inc.
|
|
|
24,000 |
|
Rite Aid Saco, ME
|
|
Rite Aid of Maine, Inc.
|
|
|
11,000 |
|
Wadsworth Boulevard Marketplace Denver, CO
|
|
Various
|
|
|
198,000 |
|
Mountainside Fitness Chandler, AZ
|
|
Mountainside Fitness Centers of Ocotillo,
LLC
|
|
|
31,000 |
|
Drexel Heritage Distribution Center Hickory, NC
|
|
Drexel Heritage Furniture Industries, Inc.
|
|
|
261,000 |
|
Rayford Square Spring, TX
|
|
Various
|
|
|
80,000 |
|
CVS (Scioto Trail) Portsmouth, OH
|
|
Revco Discount Drug Centers, Inc.
|
|
|
10,000 |
|
Wawa Hockessin, DE
|
|
Wawa, Inc.
|
|
|
5,000 |
|
Wawa Manahawkin, NJ
|
|
Wawa, Inc.
|
|
|
5,000 |
|
Wawa Narberth, PA
|
|
Wawa, Inc.
|
|
|
5,000 |
|
- 32 -
|
|
|
|
|
|
|
|
|
|
|
Rentable Square |
Property Description |
|
Tenant |
|
Feet |
|
CVS (Sublease) Lakewood, OH
|
|
Various
|
|
|
13,000 |
|
Rite Aid Cleveland, OH
|
|
Rite Aid of Ohio, Inc.
|
|
|
11,000 |
|
Rite Aid Fremont, OH
|
|
Rite Aid of Ohio, Inc.
|
|
|
11,001 |
|
Walgreens Knoxville, TN
|
|
Walgreen Co.
|
|
|
15,000 |
|
CVS Madison, MS
|
|
CVS EGL Highland Madison MS, Inc.
|
|
|
14,000 |
|
Rite Aid Defiance, OH
|
|
Rite Aid of Ohio, Inc.
|
|
|
15,000 |
|
Conns San Antonio, TX
|
|
CAI, LP
|
|
|
25,000 |
|
Dollar General Crossville, TN
|
|
Dolgencorp, Inc.
|
|
|
24,000 |
|
Dollar General Ardmore, TN
|
|
Dolgencorp, Inc.
|
|
|
24,000 |
|
Dollar General Livingston, TN
|
|
Dolgencorp, Inc.
|
|
|
24,000 |
|
Wehrenberg Theatre Arnold, MO
|
|
Wehrenberg, Inc.
|
|
|
50,000 |
|
Sportsmans Warehouse Wichita, KS
|
|
Sportsmans Warehouse, Inc.
|
|
|
50,000 |
|
CVS (Chillicothe) Portsmouth, OH
|
|
Revco DS, Inc.
|
|
|
11,000 |
|
Advance Auto Greenfield, IN
|
|
Advance Stores Company, Incorporated
|
|
|
7,000 |
|
Advance Auto Trenton, OH
|
|
Advance Stores Company, Incorporated
|
|
|
7,000 |
|
Rite Aid Lansing, MI
|
|
Rite Aid of Michigan, Inc.
|
|
|
12,000 |
|
Advance Auto Columbia Heights, MN
|
|
Advance Stores Company, Incorporated
|
|
|
7,000 |
|
Advance Auto Fergus Falls, MN
|
|
Advance Stores Company, Incorporated
|
|
|
7,000 |
|
CVS Okeechobee, FL
|
|
CVS EGL Parrott Okechobee FL, LLC
|
|
|
13,000 |
|
Office Depot Dayton, OH
|
|
Office Depot, Inc.
|
|
|
20,000 |
|
Advance Auto Holland, MI
|
|
Advance Stores Company, Incorporated
|
|
|
7,000 |
|
Advance Auto Holland Township, MI
|
|
Advance Stores Company, Incorporated
|
|
|
7,000 |
|
Advance Auto Zeeland, MI
|
|
Advance Stores Company, Incorporated
|
|
|
7,000 |
|
CVS Orlando, FL
|
|
CVS EGL Lake Pickett FL, LLC
|
|
|
14,000 |
|
Office Depot Greenville, MS
|
|
Office Depot, Inc.
|
|
|
25,000 |
|
Office Depot Warrensburg, MO
|
|
Office Depot, Inc.
|
|
|
20,000 |
|
CVS Gulfport, MS
|
|
CVS EGL East Pass Gulfport MS, LLC
|
|
|
11,000 |
|
Advance Auto Grand Forks, ND
|
|
Advance Stores Company, Incorporated
|
|
|
7,000 |
|
CVS Clinton, NY
|
|
CVS BDI, Inc.
|
|
|
10,000 |
|
Oxford Theatre Co Oxford, MS
|
|
Oxford Theatre Company, Inc.
|
|
|
35,000 |
|
Advance Auto Duluth, MN
|
|
Advance Stores Company, Incorporated
|
|
|
7,000 |
|
Walgreens Picayune, MS
|
|
Walgreen Co.
|
|
|
15,000 |
|
Kohls Wichita, KS
|
|
Kohls Department Stores, Inc.
|
|
|
87,000 |
|
Lowes Lubbock, TX
|
|
Lowes Home Centers, Inc.
|
|
|
130,000 |
|
Lowes Midland, TX
|
|
Lowes Home Centers, Inc.
|
|
|
130,000 |
|
Advance Auto Grand Bay, AL
|
|
Advance Stores Company, Incorporated
|
|
|
7,000 |
|
Advance Auto Hurley, MS
|
|
Advance Stores Company, Incorporated
|
|
|
7,000 |
|
Advance Auto Rainsville, AL
|
|
Advance Stores Company, Incorporated
|
|
|
7,000 |
|
Golds Gym OFallon, IL
|
|
Golds St. Louis, LLC
|
|
|
41,000 |
|
Rite Aid Glassport, PA
|
|
Rite Aid of Pennsylvania, Inc.
|
|
|
15,000 |
|
Rite Aid Hanover, PA
|
|
Rite Aid of Pennsylvania, Inc.
|
|
|
15,000 |
|
Davids Bridal & Radio Shack Topeka, KS
|
|
Federated Dept. Stores & Radio Shack Corp.
|
|
|
10,000 |
|
American T.V. Peoria, IL
|
|
American TV & Appliance of Madison, Inc.
|
|
|
127,000 |
|
Tractor Supply La Grange, TX
|
|
Tractor Supply Co. of Texas, LP
|
|
|
25,000 |
|
Staples Peru, IL
|
|
Staples the Office Superstore East, Inc.
|
|
|
24,000 |
|
FedEx Package Distribution Center Council
Bluffs, IA
|
|
Fedex Freight East, Inc.
|
|
|
24,000 |
|
FedEx Package Distribution Center Edwardsville, KS
|
|
Fedex Freight East, Inc.
|
|
|
156,000 |
|
CVS Glenville, Scotia, NY
|
|
CVS Mack Drug of New York, LLC
|
|
|
13,000 |
|
Advance Auto Ashland, KY
|
|
Advance Stores Company, Incorporated
|
|
|
7,000 |
|
Advance Auto Jackson, OH
|
|
Advance Stores Company, Incorporated
|
|
|
7,000 |
|
Advance Auto New Boston, OH
|
|
Advance Stores Company, Incorporated
|
|
|
7,000 |
|
Advance Auto Scottsburg, IN
|
|
Advance Stores Company, Incorporated
|
|
|
7,000 |
|
- 33 -
|
|
|
|
|
|
|
|
|
|
|
Rentable Square |
Property Description |
|
Tenant |
|
Feet |
Tractor Supply Livingston, TX |
|
Tractor Supply Co. of Texas, LP |
|
|
25,000 |
|
Tractor Supply New Braunfels, TX |
|
Tractor Supply Co. of Texas, LP |
|
|
25,000 |
|
Office Depot Benton, AR |
|
Office Depot, Inc. |
|
|
21,000 |
|
Old Time Pottery Fairview Heights, IL |
|
Old Time Pottery, Inc. |
|
|
98,000 |
|
Infiniti Davie, FL |
|
Warren Henry Automobiles, Inc. |
|
|
21,000 |
|
For additional information regarding our prior acquisitions, see the discussion below under
the caption Real Property Investments.
We expect to use substantially all of the net proceeds from this offering to acquire and
operate a portfolio of commercial real estate consisting primarily of freestanding, single-tenant
commercial properties net leased to investment grade tenants, which generally are companies that
have a debt rating by Moodys of Baa3 or better or a credit rating by Standard & Poors of BBB or
better, or are guaranteed by a company with such rating, and other creditworthy tenants located
throughout the United States. We also may invest in a smaller number of multi-tenant properties
that compliment our overall investment objectives. In addition, we may invest in entities that
make similar investments. If our advisor determines that, due to the state of the real estate
market or in order to diversify our investment portfolio, it would be advantageous to us, we also
may invest in mortgage loans secured by commercial properties similar to those in which we invest
directly. We intend to hold each property for eight to ten years.
Our advisor, Cole Advisors II, makes recommendations to our board of directors for our
investments. All acquisitions of commercial properties are evaluated for tenant creditworthiness
and the reliability and stability of their future income and capital appreciation potential. We
consider the risk profile, credit quality and reputation of potential tenants and the impact of
each particular acquisition as it relates to the portfolio as a whole. Our board of directors will
exercise its fiduciary duties to our stockholders in determining to approve or reject each of these
investment recommendations. See the section of this prospectus captioned Investment Objectives
and Policies Real Property Investments for a description of our properties as of the date of
this prospectus. As we acquire properties, we will supplement this prospectus to describe material
changes to our portfolio.
The section captioned Investment Objectives and Policies Real Property Investments
beginning on page 82 of the prospectus is replaced with the following information:
We engage in the acquisition and ownership of commercial real properties throughout the United
States. We invest primarily in income-generating retail properties, net leased to investment grade
and other creditworthy tenants. As of November 30, 2006, we owned 100% fee simple interest,
through our operating partnership and its wholly-owned subsidiaries, in 85 properties, comprising
approximately 2.8 million rentable square feet, located in 26 states.
The following table shows lease expirations of our portfolio as of November 30, 2006, during
each of the next ten years and thereafter, assuming no exercise of renewal options or termination
rights:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rentable |
|
|
|
|
|
|
Percentage of Total |
|
Year of
Lease |
|
Total Number |
|
|
Square Feet |
|
|
2006 Annualized |
|
|
2006 Annualized Gross |
|
Expiration |
|
of Leases |
|
|
Expiring |
|
|
Gross Base Rent |
|
|
Base Rent |
|
Vacant |
|
|
|
|
|
|
|
|
|
$ |
|
|
|
|
0 |
% |
2007 - 2015 |
|
|
11 |
|
|
|
702,147 |
|
|
|
3,717,956 |
|
|
|
12 |
% |
2016 |
|
|
8 |
|
|
|
295,164 |
|
|
|
2,948,241 |
|
|
|
9 |
% |
Thereafter |
|
|
66 |
|
|
|
1,748,329 |
|
|
|
24,767,391 |
|
|
|
79 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
85 |
|
|
|
2,745,640 |
|
|
|
31,433,589 |
|
|
|
100 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
As of September 30, 2006, we had incurred or assumed the following mortgage notes payable in
connection with our real estate acquisitions:
- 34 -
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed |
|
|
|
|
Variable Rate |
|
|
|
|
Total Loan |
|
|
|
|
|
Fixed Rate |
|
|
Interest |
|
|
|
|
Loan Amount |
|
|
|
|
at |
|
Property |
|
Location |
|
Loan Amount |
|
|
Rate |
|
|
Maturity Date |
|
(1) |
|
|
Maturity Date |
|
Acquisition |
|
Plastech automotive supply |
|
Auburn Hills, MI |
|
$ |
|
|
|
|
N/A |
|
|
N/A |
|
$ |
17,700,000 |
|
|
December 14, 2006 |
|
$ |
17,700,000 |
|
Lowes home improvement |
|
Enterprise, AL |
|
|
4,859,000 |
|
|
|
5.52 |
% |
|
December 11, 2010 |
|
|
1,121,000 |
(2) |
|
March 1, 2006 |
|
|
5,980,000 |
|
Walgreens drugstore |
|
Olivette, MO |
|
|
5,379,146 |
|
|
|
5.15 |
% |
|
July 11, 2008 |
|
|
|
|
|
N/A |
|
|
5,379,146 |
|
Walgreens (Gravois Rd)
drugstore |
|
Saint Louis, MO |
|
|
3,999,000 |
|
|
|
5.48 |
% |
|
November 11, 2015 |
|
|
923,000 |
(2) |
|
February 2, 2006 |
|
|
4,922,000 |
|
FedEx Ground distribution
center |
|
Rockford, IL |
|
|
3,998,000 |
|
|
|
5.61 |
% |
|
December 11, 2010 |
|
|
922,000 |
(2) |
|
March 10, 2006 |
|
|
4,920,000 |
|
La-Z-Boy furnishings store |
|
Glendale, AZ |
|
|
3,415,000 |
|
|
|
5.76 |
% |
|
November 11, 2010 |
|
|
1,138,000 |
(2) |
|
January 25, 2006 |
|
|
4,553,000 |
|
Walgreens drugstore |
|
Columbia, MO |
|
|
4,487,895 |
|
|
|
5.15 |
% |
|
July 11, 2008 |
|
|
|
|
|
N/A |
|
|
4,487,895 |
|
Related Party Note |
|
N/A |
|
|
|
|
|
|
N/A |
|
|
N/A |
|
|
4,453,000 |
(2) |
|
June 30, 2006 |
|
|
4,453,000 |
|
Walgreens drugstore |
|
Florissant, MO |
|
|
3,372,000 |
|
|
|
5.48 |
% |
|
November 11, 2015 |
|
|
778,000 |
(2) |
|
February 2, 2006 |
|
|
4,150,000 |
|
Walgreens (Telegraph Rd)
drugstore |
|
Saint Louis, MO |
|
|
3,289,000 |
|
|
|
5.48 |
% |
|
November 11, 2015 |
|
|
759,000 |
(2) |
|
February 2, 2006 |
|
|
4,048,000 |
|
Walgreens drugstore |
|
Brainerd, MN |
|
|
2,814,000 |
|
|
|
5.44 |
% |
|
October 11, 2015 |
|
|
649,000 |
(2) |
|
January 4, 2006 |
|
|
3,463,000 |
|
CVS drugstore |
|
Richland Hills, TX |
|
|
2,379,000 |
|
|
|
5.52 |
% |
|
November 11, 2010 |
|
|
549,000 |
(2) |
|
March 8, 2006 |
|
|
2,928,000 |
|
CVS drugstore |
|
Alpharetta, GA |
|
|
2,015,000 |
|
|
|
5.52 |
% |
|
December 11, 2010 |
|
|
465,000 |
(2) |
|
March 1, 2006 |
|
|
2,480,000 |
|
Tractor Supply specialty
retail |
|
Parkersburg, WV |
|
|
1,793,000 |
|
|
|
5.57 |
% |
|
October 11, 2015 |
|
|
|
|
|
N/A |
|
|
1,793,000 |
|
Academy Sports sporting
goods |
|
Macon, GA |
|
|
3,478,000 |
|
|
|
5.69 |
% |
|
January 11, 2016 |
|
|
802,000 |
(2) |
|
April 6, 2006 |
|
|
4,280,000 |
|
Davids Bridal specialty
retail |
|
Lenexa, KS |
|
|
1,799,000 |
|
|
|
5.86 |
% |
|
January 11, 2011 |
|
|
817,000 |
(2) |
|
April 11, 2006 |
|
|
2,616,000 |
|
Rite Aid drugstore |
|
Enterprise, AL |
|
|
2,043,000 |
|
|
|
5.80 |
% |
|
February 11, 2016 |
|
|
928,000 |
(2) |
|
April 26, 2006 |
|
|
2,971,000 |
|
Rite Aid drugstore |
|
Wauseon, OH |
|
|
2,142,000 |
|
|
|
5.80 |
% |
|
February 11, 2016 |
|
|
973,000 |
(2) |
|
April 26, 2006 |
|
|
3,115,000 |
|
Staples office supply |
|
Crossville, TN |
|
|
1,885,000 |
|
|
|
5.71 |
% |
|
February 11, 2011 |
|
|
435,000 |
(2) |
|
April 26, 2006 |
|
|
2,320,000 |
|
Rite Aid drugstore |
|
Saco, ME |
|
|
1,375,000 |
|
|
|
5.82 |
% |
|
February 11, 2011 |
|
|
625,000 |
(2) |
|
April 27, 2006 |
|
|
2,000,000 |
|
Wadsworth Boulevard
marketplace |
|
Denver, CO |
|
|
12,025,000 |
|
|
|
5.57 |
% |
|
March 1, 2011 |
|
|
2,275,000 |
(2) |
|
December 31, 2006 |
|
|
14,300,000 |
|
Mountainside Fitness
center |
|
Chandler, AZ |
|
|
|
|
|
|
N/A |
|
|
N/A |
|
|
4,690,400 |
(2) |
|
December 31, 2006 |
|
|
4,690,400 |
|
Drexel Heritage furniture
retail |
|
Hickory, NC |
|
|
2,763,000 |
|
|
|
5.80 |
% |
|
March 11, 2011 |
|
|
637,000 |
(2) |
|
May 24, 2006 |
|
|
3,400,000 |
|
Rayford Square retail
center |
|
Spring, TX |
|
|
5,940,000 |
|
|
|
5.64 |
% |
|
April 1, 2016 |
|
|
|
|
|
N/A |
|
|
5,940,000 |
|
CVS drugstore |
|
Portsmouth, OH |
|
|
1,424,000 |
|
|
|
5.67 |
% |
|
March 11, 2011 |
|
|
329,000 |
(2) |
|
June 8, 2006 |
|
|
1,753,000 |
|
Wawa convenience stores |
|
Various |
|
|
|
|
|
|
N/A |
|
|
N/A |
|
|
7,234,787 |
(3) |
|
February 26, 2010 |
|
|
7,234,787 |
|
CVS drugstore |
|
Lakewood, OH |
|
|
1,348,000 |
|
|
|
5.77 |
% |
|
May 11, 2011 |
|
|
612,000 |
(2) |
|
July 20, 2006 |
|
|
1,960,000 |
|
Rite Aid drugstore |
|
Cleveland, OH |
|
|
1,413,000 |
|
|
|
6.05 |
% |
|
May 11, 2011 |
|
|
642,000 |
(2) |
|
July 27, 2006 |
|
|
2,055,000 |
|
Rite Aid drugstore |
|
Fremont, OH |
|
|
1,388,000 |
|
|
|
6.05 |
% |
|
May 11, 2011 |
|
|
632,000 |
(2) |
|
July 27, 2006 |
|
|
2,020,000 |
|
Walgreens drugstore |
|
Knoxville, TN |
|
|
3,088,000 |
|
|
|
5.80 |
% |
|
May 11, 2011 |
|
|
712,000 |
(2) |
|
August 8, 2006 |
|
|
3,800,000 |
|
CVS drugstore |
|
Madison, MS |
|
|
2,809,000 |
|
|
|
5.60 |
% |
|
February 11, 2016 |
|
|
|
|
|
N/A |
|
|
2,809,000 |
|
Rite Aid drugstore |
|
Defiance, OH |
|
|
2,321,000 |
|
|
|
5.76 |
% |
|
January 11, 2016 |
|
|
|
|
|
N/A |
|
|
2,321,000 |
|
Conns appliance retailer |
|
San Antonio, TX |
|
|
2,461,000 |
|
|
|
5.86 |
% |
|
May 11, 2011 |
|
|
1,119,000 |
(2) |
|
July 25, 2006 |
|
|
3,580,000 |
|
Dollar General specialty
retailer |
|
Crossville, TN |
|
|
1,950,000 |
|
|
|
5.75 |
% |
|
June 11, 2016 |
|
|
450,000 |
(2) |
|
September 2, 2006 |
|
|
2,400,000 |
|
Dollar General specialty
retailer |
|
Ardmore, TN |
|
|
1,804,000 |
|
|
|
5.79 |
% |
|
June 11, 2016 |
|
|
416,000 |
|
|
October 10, 2006 |
|
|
2,220,000 |
|
Dollar General specialty
retailer |
|
Livingston, TN |
|
|
1,856,000 |
|
|
|
5.79 |
% |
|
July 11, 2016 |
|
|
429,000 |
|
|
October 12, 2006 |
|
|
2,285,000 |
|
Sportmans Warehouse
specialty retailer |
|
Wichita, KS |
|
|
|
|
|
|
N/A |
|
|
N/A |
|
|
6,173,250 |
(4)(2) |
|
December 27, 2006 |
|
|
6,173,250 |
|
Rite Aid drugstore |
|
Lansing, MI |
|
|
1,041,000 |
|
|
|
5.90 |
% |
|
July 1, 2016 |
|
|
|
|
|
N/A |
|
|
1,041,000 |
|
- 35 -
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed |
|
|
|
|
Variable Rate |
|
|
|
|
Total Loan |
|
|
|
|
|
Fixed Rate |
|
|
Interest |
|
|
|
|
Loan Amount |
|
|
|
|
at |
|
Property |
|
Location |
|
Loan Amount |
|
|
Rate |
|
|
Maturity Date |
|
(1) |
|
|
Maturity Date |
|
Acquisition |
|
Advance Auto specialty
retailer |
|
Columbia Heights, MN |
|
|
1,038,000 |
|
|
|
5.83 |
% |
|
July 11, 2016 |
|
|
346,000 |
|
|
October 6, 2006 |
|
|
1,384,000 |
|
Advance Auto specialty
retailer |
|
Fergus Falls, MN |
|
|
722,000 |
|
|
|
5.83 |
% |
|
July 11, 2016 |
|
|
241,000 |
|
|
October 6, 2006 |
|
|
963,000 |
|
CVS drugstore |
|
Okeechobee, FL |
|
|
4,076,000 |
|
|
|
5.60 |
% |
|
February 11, 2016 |
|
|
|
|
|
N/A |
|
|
4,076,000 |
|
Office Depot office supply |
|
Dayton, OH |
|
|
2,130,000 |
|
|
|
5.73 |
% |
|
February 11, 2016 |
|
|
|
|
|
N/A |
|
|
2,130,000 |
|
Advance Auto specialty
retailer |
|
Holland, MI |
|
|
1,193,000 |
|
|
|
5.83 |
% |
|
April 11, 2016 |
|
|
|
|
|
N/A |
|
|
1,193,000 |
|
Advance Auto specialty
retailer |
|
Holland Township, MI |
|
|
1,231,000 |
|
|
|
5.83 |
% |
|
April 11, 2016 |
|
|
|
|
|
N/A |
|
|
1,231,000 |
|
Advance Auto specialty
retailer |
|
Zeeland, MI |
|
|
1,057,000 |
|
|
|
5.83 |
% |
|
April 11, 2016 |
|
|
|
|
|
N/A |
|
|
1,057,000 |
|
CVS drugstore |
|
Orlando, FL |
|
|
3,016,000 |
|
|
|
5.68 |
% |
|
April 11, 2016 |
|
|
|
|
|
N/A |
|
|
3,016,000 |
|
Office Depot office supply |
|
Greenville, MS |
|
|
2,192,000 |
|
|
|
5.76 |
% |
|
March 11, 2011 |
|
|
|
|
|
N/A |
|
|
2,192,000 |
|
Office Depot office supply |
|
Warrensburg, MO |
|
|
1,810,000 |
|
|
|
5.85 |
% |
|
April 11, 2011 |
|
|
|
|
|
N/A |
|
|
1,810,000 |
|
CVS drugstore |
|
Gulfport, MS |
|
|
2,611,000 |
|
|
|
5.28 |
% |
|
April 11, 2016 |
|
|
|
|
|
N/A |
|
|
2,611,000 |
|
Advance Auto specialty
retailer |
|
Grand Forks, ND |
|
|
840,000 |
|
|
|
5.87 |
% |
|
September 11, 2016 |
|
|
280,000 |
|
|
November 15, 2006 |
|
|
1,120,000 |
|
CVS drugstore |
|
Clinton, NY |
|
|
1,983,000 |
|
|
|
5.74 |
% |
|
September 11, 2016 |
|
|
457,000 |
|
|
December 24, 2006 |
|
|
2,440,000 |
|
Oxford movie theatre |
|
Oxford, MS |
|
|
5,175,000 |
|
|
|
6.11 |
% |
|
September 1, 2016 |
|
|
|
|
|
N/A |
|
|
5,175,000 |
|
Advance Auto specialty
retailer |
|
Duluth, MN |
|
|
860,000 |
|
|
|
5.87 |
% |
|
October 11, 2016 |
|
|
286,000 |
|
|
December 22, 2006 |
|
|
1,146,000 |
|
Walgreens drugstore |
|
Picayune, MS |
|
|
2,766,000 |
|
|
|
5.53 |
% |
|
October 11, 2016 |
|
|
638,000 |
|
|
January 15, 2007 |
|
|
3,404,000 |
|
Kohls department store |
|
Wichita, KS |
|
|
5,200,000 |
|
|
|
6.11 |
% |
|
September 1, 2016 |
|
|
|
|
|
N/A |
|
|
5,200,000 |
|
Lowes home improvement |
|
Lubbock, TX |
|
|
7,150,000 |
|
|
|
6.11 |
% |
|
September 1, 2016 |
|
|
|
|
|
N/A |
|
|
7,150,000 |
|
Lowes home improvement |
|
Midland, TX |
|
|
7,475,000 |
|
|
|
6.11 |
% |
|
September 1, 2016 |
|
|
|
|
|
N/A |
|
|
7,475,000 |
|
Golds Gym |
|
OFallon, IL |
|
|
3,650,000 |
|
|
|
5.83 |
% |
|
October 11, 2016 |
|
|
2,190,000 |
|
|
December 27, 2006 |
|
|
5,840,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total indebtedness |
|
|
|
$ |
154,328,041 |
|
|
|
|
|
|
|
|
$ |
64,826,437 |
|
|
|
|
$ |
219,154,478 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
The variable rate mortgage notes bear interest at the one-month LIBOR rate plus 200 basis
points with interest only paid monthly. |
|
(2) |
|
The respective variable rate loan amounts were repaid prior to September 30, 2006. |
|
(3) |
|
The respective variable rate loan was refinanced on June 9, 2006 to a $7,748,000 term
mortgage loan with a fixed interest rate of 6.56% maturing on June 11, 2006. |
|
(4) |
|
The loan is a revolving credit facility secured by the respective property. |
|
(5) |
|
The respective variable rate loan was paid down to $1,000 as of September 30, 2006. |
The fixed rate debt mortgage notes require monthly interest-only payments with the
principal balance due July 2008 through December 2016. The variable rate debt mortgage notes bear
interest at the one-month LIBOR rate plus 200 basis points and require monthly interest-only
payments. Each of the mortgage notes are secured by the respective property. The mortgage notes
are generally non-recourse to us and Cole Op II, but both Cole Op II and we are liable for
customary non-recourse carveouts.
The weighted average interest rate relating to the fixed rate debt mortgage at September 30,
2006 was approximately 5.51%.
The section captioned Investment Objectives and Policies Real Property Investments
beginning on page 82 of the prospectus is supplemented with the following information:
Tractor Supply Parkersburg, WV
On September 26, 2005, Cole TS Parkersburg WV, LLC, a Delaware limited liability company and a
wholly-owned subsidiary of Cole OP II (TS Parkersburg), acquired a 100% fee simple interest in a
21,986 square foot single-tenant retail building (the TS Parkersburg Property), from C&F
Development Associates, LLC, which is not affiliated with us or our subsidiaries or affiliates. The
TS Parkersburg Property was constructed in 2005 on an approximately 2.97 acre site in Parkersburg,
West Virginia. The area surrounding the property within a three mile radius is shared with a mix of
big box retail, convenience retail and single family houses.
The purchase price of the TS Parkersburg Property was approximately $3.3 million, exclusive of
closing costs. The acquisition was funded by net proceeds from our ongoing public offering and an
approximately $2.6 million loan from
Wachovia Bank National Association (Wachovia) secured by the TS Parkersburg Property (the
TS Parkersburg Loan). In connection with the acquisition, we paid to an affiliate of our advisor
an acquisition fee of $65,185 and to our advisor a finance coordination fee of $17,930.
- 36 -
The TS Parkersburg Property is 100% leased to Tractor Supply Company (Tractor Supply)
subject to a net lease pursuant to which the tenant is required to pay substantially all operating
expenses and capital expenditures in addition to base rent. The initial annual rent is $228,147, or
$10.38 per square foot, through July 31, 2010. Thereafter, the annual base rent will increase by
10% every five years through the initial lease term, which expires July 31, 2020. The tenant has
four options to renew the lease, each for an additional five-year term, beginning on August 1,
2020. The rental rates during each renewal option period are fixed at approximately 10% increases
over the rent in place during the previous period.
Tractor Supply currently operates more than 550 retail stores in 34 states, employs more than
7,800 and is headquartered in Brentwood, Tennessee. Tractor Supplys common stock is traded on The
Nasdaq National Market under the symbol TSCO.
Cole Realty Advisors, Inc. f/k/a Fund Realty Advisors, Inc. (Cole Realty), has the sole and
exclusive right to manage, operate, lease and supervise the overall maintenance of the TS
Parkersburg Property and will receive a property management fee of 2.0% of the monthly gross
revenue from the property. We currently have no plans for any renovations, improvements or
development of the TS Parkersburg Property. We believe the TS Parkersburg Property is adequately
insured.
The TS Parkersburg Loan consists of an approximately $1.8 million fixed interest rate tranche
(the TS Parkersburg Fixed Rate Tranche) and an $814,000 variable interest rate tranche (the TS
Parkersburg Variable Rate Tranche). The Fixed Rate Tranche has a fixed interest rate of 5.57% per
annum with monthly interest-only payments and the outstanding principal and interest due on October
11, 2015 (the TS Parkersburg Maturity Date). The TS Parkersburg Variable Rate Tranche has a
variable interest rate based on the one-month LIBOR rate plus 200 basis points with monthly
interest-only payments and the outstanding principal and interest due on December 26, 2005. The TS
Parkersburg Loan is nonrecourse to TS Parkersburg and Cole OP II, but each is liable for customary
non-recourse carveouts.
The TS Parkersburg Loan may not be prepaid, in whole or in part, except under the following
circumstances: (i) full prepayment may be made on any of the three (3) monthly payment dates
occurring immediately prior to the TS Parkersburg Maturity Date, and (ii) partial prepayments
resulting from Wachovias election to apply insurance or condemnation proceeds to reduce the
outstanding principal balance of the TS Parkersburg Loan. Notwithstanding the prepayment
limitations, TS Parkersburg may sell the TS Parkersburg Property to a buyer that assumes the TS
Parkersburg Loan. The transfer shall be subject to Wachovias approval of the proposed buyer and
the payment of Wachovias costs and expenses associated with the sale of the TS Parkersburg
Property.
In the event the TS Parkersburg Loan is not paid off on the TS Parkersburg Maturity Date, the
TS Parkersburg Loan includes hyperamortization provisions. The TS Parkersburg Maturity Date,
pursuant to the hyperamortization provisions, will be extended by twenty (20) years. During such
period, Wachovia will apply 100% of the rents collected to (i) all payments due to Wachovia under
the TS Parkersburg Loan, including any payments to escrows or reserve accounts, (ii) any operating
expenses of the TS Parkersburg Property pursuant to an approved annual budget, (iii) any
extraordinary expenses and (iv) any accrued interest under the TS Parkersburg Loan. Any remaining
amount will be applied to the reduction of the principal balance of the TS Parkersburg Loan, until
paid in full. The interest rate during the hyperamortization period shall be the greater of (x) the
fixed interest rate of 5.57% plus two percent (2.0%) or (y) the Treasury Constant Maturity Yield
Index plus two percent (2.0%).
Walgreens Brainerd, MN
On October 6, 2005, Cole WG Brainerd MN, LLC, a Delaware limited liability company and a
wholly-owned subsidiary Cole OP II (WG Brainerd), acquired a 100% fee simple interest in a 15,076
square foot single-tenant retail building (the WG Brainerd Property), from Brainerd Drugstore,
LLC, which is not affiliated with the us, or our subsidiaries or affiliates. The WG Brainerd
Property was constructed in 2000 on an approximately 2.07 acre site in Brainerd, Minnesota. The
area surrounding the property within a three-mile radius is shared by multi-family housing and
commercial development.
The purchase price of the WG Brainerd Property was approximately $4.3 million, exclusive of
closing costs. The acquisition was funded by net proceeds from our ongoing public offering and an
approximately $3.5 million loan from Wachovia secured by the WG Brainerd Property (the WG Brainerd
Loan). In connection with the acquisition, we paid an affiliate of our advisor an acquisition fee
of $86,570 and our advisor a finance coordination fee of $28,140.
The WG Brainerd Property is 100% leased to Walgreen Co. (Walgreens) subject to a net lease
pursuant to which the tenant is required to pay substantially all operating expenses and capital
expenditures in addition to base rent. The annual base rent of $303,000, or $20.10 per square foot,
is fixed through the initial lease term, which expires July 31, 2020, and all renewal options. The
tenant has eight options to renew the lease, each for an additional five-year term, beginning on
August 1, 2020.
Walgreens has over 4,900 stores in 45 states and Puerto Rico. Walgreens has a Standard &
Poors credit rating of A+ and its stock is publicly traded on the New York Stock Exchange under
the ticker symbol WAG.
- 37 -
Cole Realty has the sole and exclusive right to manage, operate, lease and supervise the
overall maintenance of the WG Brainerd Property and will receive a property management fee of 2.0%
of the monthly gross revenue from the property. We currently have no plans for any renovations,
improvements or development of the WG Brainerd Property. We believe the WG Brainerd Property is
adequately insured.
The WG Brainerd Loan consists of an approximately $2.8 million fixed interest rate tranche
(the WG Brainerd Fixed Rate Tranche) and an approximately $649,000 variable interest rate tranche
(the WG Brainerd Variable Rate Tranche). The WG Brainerd Fixed Rate Tranche has a fixed interest
rate of 5.44% per annum with monthly interest-only payments and the outstanding principal and
interest due on October 11, 2015 (the WG Brainerd Maturity Date). The WG Brainerd Variable Rate
Tranche has a variable interest rate based on the one-month LIBOR rate plus 200 basis points with
monthly interest-only payments and the outstanding principal and interest due on January 4, 2006.
The WG Brainerd Loan is nonrecourse to the WG Brainerd and Cole OP II, but each is liable for
customary non-recourse carveouts.
The WG Brainerd Loan may not be prepaid, in whole or in part, except under the following
circumstances: (i) full prepayment may be made on any of the three (3) monthly payment dates
occurring immediately prior to the Maturity Date and (ii) partial prepayments resulting from
Wachovias election to apply insurance or condemnation proceeds to reduce the outstanding principal
balance of the WG Brainerd Loan. Notwithstanding the prepayment limitations, WG Brainerd may sell
the WG Brainerd Property to a buyer that assumes the WG Brainerd Loan. The transfer shall be
subject to Wachovias approval of the proposed buyer and the payment of Wachovias costs and
expenses associated with the sale of the WG Brainerd Property.
In the event the WG Brainerd Loan is not paid off on the WG Brainerd Maturity Date, the WG
Brainerd Loan includes hyperamortization provisions. The WG Brainerd Maturity Date, under the
hyperamortization period, will be extended by twenty (20) years. During such period, Wachovia will
apply 100% of the rents collected to (i) all payments due to Wachovia under the WG Brainerd Loan,
including any payments to escrows or reserve accounts, (ii) any operating expenses of the WG
Brainerd Property pursuant to an approved annual budget, (iii) any extraordinary expenses and, (iv)
any accrued interest under the WG Brainerd Loan. Any remaining amount will be applied to the
reduction of the principal balance of the WG Brainerd Loan, until paid in full. The interest rate
during the hyperamortization period shall be the greater of (x) the fixed interest rate of 5.44%
plus two percent (2.0%) or (y) the Treasury Constant Maturity Yield Index plus two percent (2.0%).
Rite Aid Alliance, OH
On October 20, 2005, Cole RA Alliance, LLC, a Delaware limited liability company and a
wholly-owned subsidiary Cole OP II (RA Alliance), acquired a 100% fee simple interest in a 11,325
square foot single-tenant retail building (the RA Alliance Property), from Monogram Development
XV, LTD., which is not affiliated with the us, or our subsidiaries or affiliates. The RA Alliance
Property was constructed in 1996 on an approximately 1.79 acre site in Alliance, Ohio. The area
surrounding the property within a three-mile radius is shares by retail, residential and commercial
development.
The purchase price of the RA Alliance Property was approximately $2.1 million, exclusive of
closing costs. The acquisition was funded by net proceeds from our ongoing public offering. In
connection with the acquisition, we paid an affiliate of our advisor an acquisition fee of $42,000.
The RA Alliance Property is 100% leased to Rite Aid of Ohio, Inc. (RA Ohio), a subsidiary of
Rite Aid Corporation (Rite Aid), which guarantees the lease. The RA Alliance Property is subject
to a net lease pursuant to which the tenant is required to pay substantially all operating expenses
and capital expenditures in addition to base rent. The annual base rent of $189,023, or $16.69 per
square foot, is fixed through the initial lease term, which expires April 30, 2017. The tenant has
six options to renew the lease, each for an additional five-year term, beginning on May 1, 2017,
with rental escalations descending from a range of 6.0% at the first renewal to 4.6% at the final
renewal option.
Rite Aid has over 3,300 stores in 28 states and Washington, DC. Rite Aid has a Standard &
Poors credit rating of B+ and its stock is publicly traded on the New York Stock Exchange under
the ticker symbol RAD.
Cole Realty has the sole and exclusive right to manage, operate, lease and supervise the
overall maintenance of the RA Alliance Property and will receive a property management fee of 2.0%
of the monthly gross revenue from the property. We currently have no plans for any renovations,
improvements or development of the RA Alliance Property. We believe the RA Alliance Property is
adequately insured.
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La-Z-Boy Glendale, Arizona
On October 25, 2005, Cole LZ Glendale AZ, LLC, a Delaware limited liability company (LZ
Glendale) and a wholly-owned subsidiary of Cole OP II, acquired a 100% fee simple interest in an
approximately 23,000 square foot single-tenant retail building (the LZ Glendale Property), from
E&R Bell Road, LLC, which is not affiliated with us, our subsidiaries or affiliates. The LZ
Glendale Property was constructed in 2001 on an approximately 3.18 acre site in Glendale, Arizona.
The area surrounding the property within a three-mile radius is shared by single-family residential
subdivisions with commercial development.
The purchase price of the LZ Glendale Property was approximately $5.7 million, exclusive of
closing costs. The acquisition was funded by net proceeds from our ongoing public offering and an
approximately $4.55 million loan from Wachovia secured by the LZ Glendale Property (the LZ
Glendale Loan). In connection with the acquisition, we paid an affiliate of our advisor an
acquisition fee of approximately $114,000 and our advisor a finance coordination fee of
approximately $34,000.
The LZ Glendale Property is 100% leased to EBCO, Inc. (EBCO), subject to a net lease
pursuant to which the tenant is required to pay substantially all operating expenses and capital
expenditures in addition to base rent. The initial annual rent is $419,750, or $18.25 per square
foot, with 2% yearly rental escalations through the remainder of the lease, which expires October
31, 2015. The tenant has three options to renew the lease, each for an additional five-year term,
beginning on November 1, 2015. The first renewal option has a 2% rental escalation for the entire
five-year term. The second and third renewal options both contain 10% rental escalations for each
five-year term respectively.
EBCO is a licensed La-Z-Boy franchise owner for Arizona and operates six La-Z-Boy furniture
galleries, selling residential furniture manufactured by La-Z-Boy Incorporated.
Cole Realty has the sole and exclusive right to manage, operate, lease and supervise the
overall maintenance of the LZ Glendale Property and will receive a property management fee of 2.0%
of the monthly gross revenue from the LZ Glendale Property. We currently have no plans for any
renovations, improvements or development of the LZ Glendale Property. We believe the LZ Glendale
Property is adequately insured.
The LZ Glendale Loan consists of an approximately $3.41 million fixed interest rate tranche
(the LZ Glendale Fixed Rate Tranche) and a $1.14 million variable interest rate tranche (the LZ
Glendale Variable Rate Tranche). The LZ Glendale Fixed Rate Tranche has a fixed interest rate of
5.76% per annum with monthly interest-only payments and the outstanding principal and interest due
on November 11, 2010 (the LZ Glendale Maturity Date). The LZ Glendale Variable Rate Tranche has a
variable interest rate based on the one-month LIBOR rate plus 200 basis points with monthly
interest-only payments and the outstanding principal and interest due on January 25, 2006. The LZ
Glendale Loan is nonrecourse to LZ Glendale and Cole OP II, but each is liable for customary
non-recourse carveouts.
The LZ Glendale Loan may not be prepaid, in whole or in part, except under the following
circumstances: (i) full prepayment may be made on any of the three (3) monthly payment dates
occurring immediately prior to the LZ Glendale Maturity Date and (ii) partial prepayments resulting
from Wachovias election to apply insurance or condemnation proceeds may be made to reduce the
outstanding principal balance of the LZ Glendale Loan. Notwithstanding the prepayment limitations,
LZ Glendale may sell the LZ Glendale Property to a buyer that assumes the LZ Glendale Loan. The
transfer shall be subject to Wachovias approval of the proposed buyer and the payment of
Wachovias costs and expenses associated with the sale of the LZ Glendale Property.
In the event the LZ Glendale Loan is not paid off on the LZ Glendale Maturity Date, the LZ
Glendale Loan includes hyperamortization provisions. The LZ Glendale Maturity Date, pursuant to the
hyperamortization provisions, will be extended by twenty (20) years. During such period, Wachovia
will apply 100% of the rents collected to (i) all payments due to Wachovia under the LZ Glendale
Loan, including any payments to escrows or reserve accounts, (ii) any operating expenses of the LZ
Glendale Property pursuant to an approved annual budget, (iii) any extraordinary expenses and (iv)
any accrued interest under the LZ Glendale Loan. Any remaining amount will be applied to the
reduction of the principal balance of the LZ Glendale Loan, until paid in full. The interest rate
during the hyperamortization period shall be the greater of (x) the fixed interest rate of 5.76%
plus two percent (2.0%) or (y) the Treasury Constant Maturity Yield Index plus two percent (2.0%).
Walgreens Portfolio Missouri
On November 2, 2005, WG St. Louis MO Portfolio, LLC, a Delaware limited liability company (WG
SL Portfolio) and a wholly-owned subsidiary of Cole OP II, acquired a 100% fee simple interest in
(i) an approximately 15,120 square foot single-tenant retail building on an approximately 2.11 acre
site located in St. Louis, Missouri (the Telegraph Property), (ii) an approximately 15,120 square
foot single-tenant retail building on an approximately 2.13 acre site located in St. Louis,
Missouri (the Gravois Property) and (iii) an approximately 15,120 square foot single-tenant
retail building on an approximately 1.82 acre site located in
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Florissant, Missouri (the
Howdershell Property) (collectively, the WG SL Properties), from Teachers Retirement System of
the State of Kentucky (TRSK), which is not affiliated with us, our subsidiaries or affiliates.
The WG SL Properties each were constructed in 2001. The area surrounding each of the WG SL
Properties within a three-mile radius is shared by multi-family housing and commercial development.
The purchase price of the WG SL Properties was approximately $16.40 million, exclusive of
closing costs. The acquisition was funded by net proceeds from our ongoing public offering and an
approximately $13.1 million loan from Wachovia secured by the WG SL Properties (the WG SL Loan).
In connection with the acquisition, we paid an affiliate of our advisor an acquisition fee of
approximately $246,000 and our advisor a finance coordination fee of approximately $107,000. TRSK
paid an affiliate of our advisor an acquisition fee of approximately $82,000.
The WG SL Properties are 100% leased to Walgreen Co. (Walgreens) subject to a net lease
pursuant to which the tenant is required to pay substantially all operating expenses and capital
expenditures in addition to base rent. The annual base rent for the Telegraph Property, the Gravois
Property, and the Howdershell Property is $335,500, $408,000 and $344,000, respectively, or $22.19,
$26.98 and $22.75 per square foot, respectively. The annual base rent for the Telegraph Property,
the Gravois Property and the Howdershell Property is fixed through the initial lease term, which
expires December 31, 2021, October 31, 2021 and February 28, 2021, respectively, and all renewal
options. The tenants of the Telegraph Property, the Gravois Property, and the Howdershell Property
each have eight options to renew the respective leases, with each option for an additional
five-year term, beginning on January 1, 2022, November 1, 2021, and March 1, 2021, respectively.
Walgreens operates over 4,900 stores in 45 states and Puerto Rico. Walgreens has a Standard &
Poors credit rating of A+ and the companys stock is publicly traded on the New York Stock
Exchange under the ticker symbol WAG.
Cole Realty has the sole and exclusive right to manage, operate, lease and supervise the
overall maintenance of the WG SL Properties and will receive a property management fee of 2.0% of
the monthly gross revenue from the WG SL Properties. We currently have no plans for any
renovations, improvements or development of the WG SL Properties. We believe the WG SL Properties
are adequately insured.
The WG SL Loan consists of an approximately $10.66 million fixed interest rate tranche (the
WG SL Fixed Rate Tranche) and an approximately $2.46 million variable interest rate tranche (the
WG SL Variable Rate Tranche). The WG SL Fixed Rate Tranche has a fixed interest rate of 5.48% per
annum with monthly interest-only payments and the outstanding principal and interest due on
November 11, 2015 (the WG SL Maturity Date). The WG SL Variable Rate Tranche has a variable
interest rate based on the one-month LIBOR rate plus 200 basis points with monthly interest-only
payments and the outstanding principal and interest due on February 2, 2006. The WG SL Loan is
nonrecourse to WG SL Portfolio and Cole OP II, but each is liable for customary non-recourse
carveouts.
The WG SL Loan may not be prepaid, in whole or in part, except under the following
circumstances: (i) full prepayment may be made on any of the three (3) monthly payment dates
occurring immediately prior to the WG SL Maturity Date and (ii) partial prepayments resulting from
Wachovias election to apply insurance or condemnation proceeds may be made to reduce the
outstanding principal balance of the WG SL Loan. Notwithstanding the prepayment limitations, WG SL
Portfolio may sell the WG SL Properties to a buyer that assumes the WG SL Loan. The transfer shall
be subject to Wachovias approval of the proposed buyer and the payment of Wachovias costs and
expenses associated with the sale of the WG SL Properties.
In the event the WG SL Loan is not paid off on the WG SL Maturity Date, the WG SL Loan
includes hyperamortization provisions. The WG SL Maturity Date, under the hyperamortization period,
will be extended by twenty (20) years. During such period, Wachovia will apply 100% of the rents
collected to (i) all payments due to Wachovia under the WG SL Loan, including any payments to
escrows or reserve accounts, (ii) any operating expenses of the WG SL Properties pursuant to an
approved annual budget, (iii) any extraordinary expenses, and (iv) any accrued interest under the
WG SL Loan. Any remaining amount will be applied to the reduction of the principal balance of the
WG SL Loan, until paid in full. The interest rate during the hyperamortization period shall be the
greater of (x) the fixed interest rate of 5.48% plus two percent (2.0%) or (y) the Treasury
Constant Maturity Yield Index plus two percent (2.0%).
Walgreens Olivette, Missouri
On November 22, 2005, Cole WG Olivette MO, LLC, a Delaware limited liability company (WG
Olivette) and a wholly-owned subsidiary of Cole OP II, acquired a 100% fee simple interest in an
approximately 15,030 square foot single-tenant retail building on an approximately 2.40 acre site
located in Olivette, Missouri (the WG Olivette Property), from ECM Olive, LLC (ECM Olive),
which is not affiliated with us, our subsidiaries or affiliates. The WG Olivette Property was
constructed in 2001. The area surrounding the WG Olivette Property within a three-mile radius is
shared by multi-family housing and commercial development.
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The purchase price of the WG Olivette Property was approximately $7.8 million, exclusive of
closing costs. The acquisition was funded by net proceeds from our ongoing public offering and an
approximately $5.4 million loan from Wachovia, which was assumed from ECM Olive and is secured by
the WG Olivette Property (the WG Olivette Loan). In connection with the acquisition, we paid an
affiliate of our advisor an acquisition fee of approximately $156,000.
The WG Olivette Property is 100% leased to Walgreens subject to a net lease pursuant to which
the tenant is required to pay substantially all operating expenses and capital expenditures in
addition to base rent. The annual base rent for the WG Olivette Property is $528,000 or $35.13 per
square foot, which is fixed through the initial lease term, which expires October 31, 2026, and all
renewal options. The tenant has ten options to renew the lease, with each option for an additional
five-year term, beginning on November 1, 2026.
Cole Realty has the sole and exclusive right to manage, operate, lease and supervise the
overall maintenance of the WG Olivette Property and will receive a property management fee of 2.0%
of the monthly gross revenue from the WG Olivette Property. We currently have no plans for any
renovations, improvements or development of the WG Olivette Property. We believe the WG Olivette
Property is adequately insured.
The WG Olivette Loan has a fixed interest rate of 5.15% per annum with monthly principal and
interest payments and the outstanding principal and interest due on July 11, 2008 (the WG Olivette
Maturity Date). The WG Olivette Loan is nonrecourse to WG Olivette and Cole OP II, but each is
liable for customary non-recourse carveouts.
The WG Olivette Loan may not be prepaid, in whole or in part, except under the following
circumstances: (i) full prepayment may be made at anytime after February 2007 and (ii) partial
prepayments resulting from Wachovias election to apply insurance or condemnation proceeds may be
made to reduce the outstanding principal balance of the WG Olivette Loan. Notwithstanding the
prepayment limitations, WG Olivette may sell the WG Olivette Property to a buyer that assumes the
WG Olivette Loan. The transfer shall be subject to Wachovias approval of the proposed buyer and
the payment of Wachovias costs and expenses associated with the sale of the WG Olivette Property.
In the event the WG Olivette Loan is not paid off on the WG Olivette Maturity Date, the WG
Olivette Loan includes hyperamortization provisions. The WG Olivette Maturity Date, under the
hyperamortization period, will be extended by twenty (20) years. During such period, Wachovia will
apply 100% of the rents collected to (i) all payments due to Wachovia under the WG Olivette Loan,
including any payments to escrows or reserve accounts, (ii) any operating expenses of the WG
Olivette Property pursuant to an approved annual budget, (iii) any extraordinary expenses, and (iv)
any accrued interest under the WG Olivette Loan. Any remaining amount will be applied to the
reduction of the principal balance of the WG Olivette Loan, until paid in full. The interest rate
during the hyperamortization period shall be the greater of (x) the fixed interest rate of 5.15%
plus two and one-half percent (2.5%) or (y) the Treasury Constant Maturity Yield Index plus two and
one-half percent (2.5%).
Walgreens Columbia, Missouri
On November 22, 2005, Cole WG Columbia MO, LLC, a Delaware limited liability company (WG
Columbia) and a wholly-owned subsidiary of Cole OP II, acquired a 100% fee simple interest in an
approximately 13,970 square foot single-tenant retail building on an approximately 1.03 acre site
located in Columbia, Missouri (the WG Columbia Property), from ECM Broadway, LLC (ECM
Broadway), which is not affiliated with us, our subsidiaries or affiliates. The WG Columbia
Property was constructed in 2002. The area surrounding the WG Columbia Property within a three-mile
radius is shared by multi-family housing and commercial development.
The purchase price of the WG Columbia Property was approximately $6.3 million, exclusive of
closing costs. The acquisition was funded by net proceeds from our ongoing public offering and an
approximately $4.5 million loan from Wachovia, which was assumed from ECM Broadway and is secured
by the WG Columbia Property (the WG Columbia Loan). In connection with the acquisition, we paid
an affiliate of our advisor an acquisition fee of approximately $125,000.
The WG Columbia Property is 100% leased to Walgreens subject to a net lease pursuant to which
the tenant is required to pay substantially all operating expenses and capital expenditures in
addition to base rent. The annual base rent for the WG Columbia Property is $427,300 or $30.58 per
square foot. The annual base rent for the WG Columbia Property is fixed through the initial lease
term, which expires June 30, 2022, and all renewal options. The tenant has eight options to renew
the lease, with each option for an additional five-year term, beginning on July 1, 2022.
Cole Realty has the sole and exclusive right to manage, operate, lease and supervise the
overall maintenance of the WG Columbia Property and will receive a property management fee of 2.0%
of the monthly gross revenue from the WG Columbia
- 41 -
Property. We currently have no plans for any
renovations, improvements or development of the WG Columbia Property. We believe the WG Columbia
Property is adequately insured.
The WG Columbia Loan has a fixed interest rate of 5.15% per annum with monthly principal and
interest payments and the outstanding principal and interest due on July 11, 2008 (the WG Columbia
Maturity Date). The WG Columbia Loan is nonrecourse to WG Columbia and Cole OP II, but each is
liable for customary non-recourse carveouts.
The WG Columbia Loan may not be prepaid, in whole or in part, except under the following
circumstances: (i) full prepayment may be made at anytime after February 2007 and (ii) partial
prepayments resulting from Wachovias election to apply insurance or condemnation proceeds may be
made to reduce the outstanding principal balance of the WG Columbia Loan. Notwithstanding the
prepayment limitations, WG Columbia may sell the WG Columbia Property to a buyer that assumes the
WG Columbia Loan. The transfer shall be subject to Wachovias approval of the proposed buyer and
the payment of Wachovias costs and expenses associated with the sale of the WG Columbia Property.
In the event the WG Columbia Loan is not paid off on the WG Columbia Maturity Date, the WG
Columbia Loan includes hyperamortization provisions. The WG Columbia Maturity Date, under the
hyperamortization period, will be extended by twenty (20) years. During such period, Wachovia will
apply 100% of the rents collected to (i) all payments due to Wachovia under the WG Columbia Loan,
including any payments to escrows or reserve accounts, (ii) any operating expenses of the WG
Columbia Property pursuant to an approved annual budget, (iii) any extraordinary expenses, and (iv)
any accrued interest under the WG Columbia Loan. Any remaining amount will be applied to the
reduction of the principal balance of the WG Columbia Loan, until paid in full. The interest rate
during the hyperamortization period shall be the greater of (x) the fixed interest rate of 5.15%
plus two and one-half percent (2.5%) or (y) the Treasury Constant Maturity Yield Index plus two and
one-half percent (2.5%).
Lowes Enterprise, Alabama
On December 1, 2005, Cole LO Enterprise AL, LLC, a Delaware limited liability company (LO
Enterprise) and a wholly-owned subsidiary of Cole OP II, acquired a 100% fee simple interest in an
approximately 95,170 square foot single-tenant retail building on an approximately 16.70 acre site
located in Enterprise, Alabama (the LO Enterprise Property), from Daniel Elstein, who is not
affiliated with us, our subsidiaries or affiliates. The LO Enterprise Property was constructed in
1995. The area surrounding the LO Enterprise Property within a three-mile radius is shared by
multi-family housing and commercial development.
The purchase price of the LO Enterprise Property was approximately $7.5 million, exclusive of
closing costs. The acquisition was funded by net proceeds from our ongoing public offering and an
approximately $6.0 million loan from Wachovia secured by the LO Enterprise Property (the LO
Enterprise Loan). In connection with the acquisition, we paid an affiliate of our advisor an
acquisition fee of approximately $135,000 and our advisor a finance coordination fee of
approximately $49,000.
The LO Enterprise Property is 100% leased to Lowes Home Centers, Inc., which is a
wholly-owned subsidiary of Lowes Companies, Inc. (Lowes), which guarantees the lease. The LO
Enterprise Property is subject to a net lease pursuant to which the tenant is required to pay
substantially all operating expenses and capital expenditures in addition to base rent. The annual
base rent for the LO Enterprise Property of $500,000, or $5.25 per square foot, is fixed through
the initial lease term, which expires April 30, 2015. The tenant has six options to renew the
lease, each for an additional five-year term beginning on May 1, 2015, with rental escalations
descending from a range of 10% at the first renewal option to 3% at the fifth renewal option, and
no escalation at the final renewal option.
Lowes operates over 1,150 stores in 49 states. Lowes has a Standard & Poors credit rating
of A+ and the companys stock is publicly traded on the New York Stock Exchange under the ticker
symbol LOW.
Cole Realty has the sole and exclusive right to manage, operate, lease and supervise the
overall maintenance of the LO Enterprise Property and will receive a property management fee of
2.0% of the monthly gross revenue from the LO Enterprise
Property. We currently have no plans for any renovations, improvements or development of the
LO Enterprise Property. We believe the LO Enterprise Property is adequately insured.
The LO Enterprise Loan consists of an approximately $4.9 million fixed interest rate tranche
(the LO Enterprise Fixed Rate Tranche) and a $1.1 million variable interest rate tranche (the LO
Enterprise Variable Rate Tranche). The LO Enterprise Fixed Rate Tranche has a fixed interest rate
of 5.52% per annum with monthly interest-only payments and the outstanding principal and interest
due on December 11, 2010 (the LO Enterprise Maturity Date). The LO Enterprise Variable Rate
Tranche has a variable interest rate based on the one-month LIBOR rate plus 200 basis points with
monthly interest-only payments and the outstanding principal and interest due on March 1, 2006. The
LO Enterprise Loan is nonrecourse to LO Enterprise and Cole OP II, but each is liable for customary
non-recourse carveouts.
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The LO Enterprise Loan may not be prepaid, in whole or in part, except under the following
circumstances: (i) full prepayment may be made on any of the three (3) monthly payment dates
occurring immediately prior to the LO Enterprise Maturity Date and (ii) partial prepayments
resulting from Wachovias election to apply insurance or condemnation proceeds may be made to
reduce the outstanding principal balance of the LO Enterprise Loan. Notwithstanding the prepayment
limitations, LO Enterprise may sell the LO Enterprise Property to a buyer that assumes the LO
Enterprise Loan. The transfer shall be subject to Wachovias approval of the proposed buyer and the
payment of Wachovias costs and expenses associated with the sale of the LO Enterprise Property.
In the event the LO Enterprise Loan is not paid off on the LO Enterprise Maturity Date, the LO
Enterprise Loan includes hyperamortization provisions. The LO Enterprise Maturity Date, pursuant to
the hyperamortization provisions, will be extended by twenty (20) years. During such period,
Wachovia will apply 100% of the rents collected to (i) all payments due to Wachovia under the LO
Enterprise Loan, including any payments to escrows or reserve accounts, (ii) any operating expenses
of the LO Enterprise Property pursuant to an approved annual budget, (iii) any extraordinary
expenses, and (iv) any accrued interest under the LO Enterprise Loan. Any remaining amount will be
applied to the reduction of the principal balance of the LO Enterprise Loan, until paid in full.
The interest rate during the hyperamortization period shall be the greater of (x) the fixed
interest rate of 5.52% plus two percent (2.0%) or (y) the Treasury Constant Maturity Yield Index
plus two percent (2.0%).
CVS Alpharetta, Georgia
On December 1, 2005, Cole CV Alpharetta GA, LLC, a Delaware limited liability company (CV
Alpharetta) and a wholly-owned subsidiary of Cole OP II, acquired a 100% fee simple interest in an
approximately 10,125 square foot single-tenant retail building on an approximately 1.19 acre site
located in Alpharetta, Georgia (the CV Alpharetta Property), from Thompson-Alpharetta, LLC, which
is not affiliated with us, our subsidiaries or affiliates. The CV Alpharetta Property was
constructed in 1998. The area surrounding the CV Alpharetta Property within a three-mile radius is
shared by multi-family housing and commercial development.
The purchase price of the CV Alpharetta Property was approximately $3.1 million, exclusive of
closing costs. The acquisition was funded by net proceeds from our ongoing public offering and an
approximately $2.5 million loan from Wachovia secured by the CV Alpharetta Property (the CV
Alpharetta Loan). In connection with the acquisition, we paid an affiliate of our advisor an
acquisition fee of approximately $62,000 and our advisor a finance coordination fee of
approximately $20,000.
The CVS Alpharetta Property is 100% leased to Mayfield CVS, Inc., which is a wholly-owned
subsidiary of CVS Corporation (CVS), which guarantees the lease. The CVS Alpharetta Property is
subject to a net lease, pursuant to which the tenant is required to pay substantially all operating
expenses and capital expenditures in addition to base rent. The lease has an annual base rent of
$206,600, or $20.40 per square foot, for the first year, with 6% rental escalations every five
years over the remaining lease term, which expires January 31, 2019, and all renewal options. The
tenant has three options to renew the lease, each for an additional five-year term beginning on
February 1, 2019.
CVS operates over 5,000 stores in 36 states. CVS has a Standard & Poors credit rating of A-
and the companys stock is publicly traded on the New York Stock Exchange under the ticker symbol
CVS.
Cole Realty has the sole and exclusive right to manage, operate, lease and supervise the
overall maintenance of the CV Alpharetta Property and will receive a property management fee of
2.0% of the monthly gross revenue from the CV Alpharetta Property. We currently have no plans for
any renovations, improvements or development of the CV Alpharetta Property. We believe the CV
Alpharetta Property is adequately insured.
The CV Alpharetta Loan consists of an approximately $2.0 million fixed interest rate tranche
(the CV Alpharetta Fixed Rate Tranche) and a $465,000 variable interest rate tranche (the CV
Alpharetta Variable Rate Tranche). The CV Alpharetta Fixed Rate Tranche has a fixed interest rate
of 5.52% per annum with monthly interest-only payments and the outstanding principal and interest
due on December 11, 2010 (the CV Alpharetta Maturity Date). The CV Alpharetta Variable Rate
Tranche has a variable interest rate based on the one-month LIBOR rate plus 200 basis points with
monthly interest-only payments and the outstanding principal and interest due on March 1, 2006. The
CV Alpharetta Loan is nonrecourse to CV Alpharetta and Cole OP II, but each is liable for customary
non-recourse carveouts.
The CV Alpharetta Loan may not be prepaid, in whole or in part, except under the following
circumstances: (i) full prepayment may be made on any of the three (3) monthly payment dates
occurring immediately prior to the CV Alpharetta Maturity Date and (ii) partial prepayments
resulting from Wachovias election to apply insurance or condemnation proceeds may be made to
reduce the outstanding principal balance of the CV Alpharetta Loan. Notwithstanding the prepayment
limitations, CV Alpharetta may sell the CV Alpharetta Property to a buyer that assumes the CV
Alpharetta Loan. The transfer shall be subject to Wachovias approval of the proposed buyer and the
payment of Wachovias costs and expenses associated with the sale of the CV Alpharetta Property.
- 43 -
In the event the CV Alpharetta Loan is not paid off on the CV Alpharetta Maturity Date, the CV
Alpharetta Loan includes hyperamortization provisions. The CV Alpharetta Maturity Date, pursuant to
the hyperamortization provisions, will be extended by twenty (20) years. During such period,
Wachovia will apply 100% of the rents collected to (i) all payments due to Wachovia under the CV
Alpharetta Loan, including any payments to escrows or reserve accounts, (ii) any operating expenses
of the CV Alpharetta Property pursuant to an approved annual budget, (iii) any extraordinary
expenses and (iv) any accrued interest under the CV Alpharetta Loan. Any remaining amount will be
applied to the reduction of the principal balance of the CV Alpharetta Loan, until paid in full.
The interest rate during the hyperamortization period shall be the greater of (x) the fixed
interest rate of 5.52% plus two percent (2.0%) or (y) the Treasury Constant Maturity Yield Index
plus two percent (2.0%).
CVS Richland Hills, Texas
On December 8, 2005, Cole CV Richland Hills TX, LP, a Delaware limited partnership (CV
Richland Hills) and a wholly-owned subsidiary of Cole OP II, our operating partnership, acquired a
100% fee simple interest in an approximately 10,908 square foot single-tenant retail building (the
CV RH Property), from Tradewind Associates, LP, which is not affiliated with us, our subsidiaries
or affiliates. The CV RH Property was constructed in 1997 on an approximately 1.41 acre site in
Richland Hills, Texas. The area surrounding the property within a three-mile radius is shared by
single-family residential subdivisions with commercial development.
The purchase price of the CV RH Property was approximately $3.7 million, exclusive of closing
costs. The acquisition was funded by net proceeds from our ongoing public offering and an
approximately $2.9 million loan from Wachovia secured by the CV RH Property (the CV RH Loan). In
connection with the acquisition, we paid an affiliate of our advisor an acquisition fee of
approximately $73,000 and paid our advisor a finance coordination fee of approximately $24,000.
The CV RH Property is 100% leased to CVS EGL Grapevine N Richland Hills Texas, LP, which is a
wholly-owned subsidiary of CVS Corporation (CVS), which guarantees the lease. The CV RH Property
is subject to a net lease pursuant to which the tenant is required to pay substantially all
operating expenses and capital expenditures in addition to base rent. The annual base rent of
$265,249, or $24.32 per square foot, is fixed through the first five years of the lease term, with
rental escalations of 2% every five years over the remaining term of the lease, which expires
August 28, 2017, and all renewal options. The tenant has four options to renew the lease, each for
an additional five-year term beginning on August 29, 2017.
CVS operates over 5,000 stores in 36 states. CVS has a Standard & Poors credit rating of A-
and the companys stock is publicly traded on the New York Stock Exchange under the ticker symbol
CVS.
Cole Realty has the sole and exclusive right to manage, operate, lease and supervise the
overall maintenance of the CV RH Property and will receive a property management fee of 2.0% of the
monthly gross revenue from the CV RH Property. We currently have no plans for any renovations,
improvements or development of the CV RH Property. We believe the CV RH Property is adequately
insured. In evaluating the CV RH Property as a potential acquisition and determining the
appropriate amount of consideration to be paid for our interest in the CV RH Property, a variety of
factors were considered, including our consideration of a property condition report; unit-level
store performance; property location, visibility and access; age of the property, physical
condition and curb appeal; neighboring property uses; local market conditions, including vacancy
rates; area demographics, including trade area population and average household income;
neighborhood growth patterns and economic conditions; and the presence of demand generators.
The CV RH Loan consists of an approximately $2.38 million fixed interest rate tranche (the CV
RH Fixed Rate Tranche) and a $0.55 million variable interest rate tranche (the CV Richland Hills
Variable Rate Tranche). The CV RH Fixed Rate Tranche has a fixed interest rate of 5.52% per annum
with monthly interest-only payments and the outstanding principal and interest due on December 11,
2010 (the CV RH Maturity Date). The CV RH Variable Rate Tranche has a variable interest rate
based on the one-month LIBOR rate plus 200 basis points with monthly interest-only payments and the
outstanding principal and interest due on March 8, 2006. The CV RH Loan is nonrecourse to CV
Richland Hills and Cole OP II, but each is liable for customary non-recourse carveouts.
The CV RH Loan may not be prepaid, in whole or in part, except under the following
circumstances: (i) full prepayment may be made on any of the three (3) monthly payment dates
occurring immediately prior to the CV RH Maturity Date and (ii) partial prepayments resulting from
Wachovias election to apply insurance or condemnation proceeds may be made to reduce the
outstanding principal balance of the CV Richland Hills Loan. Notwithstanding the prepayment
limitations, CV RH may sell the CV RH Property to a buyer that assumes the CV RH Loan. The transfer
shall be subject to Wachovias approval of the proposed buyer and the payment of Wachovias costs
and expenses associated with the sale of the CV RH Property.
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In the event the CV RH Loan is not paid off on the CV RH Maturity Date, the CV RH Loan
includes hyperamortization provisions. The CV RH Maturity Date, pursuant to the hyperamortization
provisions, will be extended by twenty (20) years. During such period, Wachovia will apply 100% of
the rents collected to (i) all payments due to Wachovia under the CV RH Loan, including any
payments to escrows or reserve accounts, (ii) any operating expenses of the CV RH Property pursuant
to an approved annual budget, (iii) any extraordinary expenses and (iv) any accrued interest under
the CV RH Loan. Any remaining amount will be applied to the reduction of the principal balance of
the CV RH Loan, until paid in full. The interest rate during the hyperamortization period shall be
the greater of (x) the fixed interest rate of 5.52% plus two percent (2.0%) or (y) the Treasury
Constant Maturity Yield Index plus two percent (2.0%).
FedEx Package Distribution Center Rockford, Illinois
On December 9, 2005, Cole FE Rockford IL, LLC, a Delaware limited liability company (FE
Rockford) and a wholly-owned subsidiary of Cole OP II, acquired a 100% fee simple interest in an
approximately 67,295 square foot single-tenant distribution facility (the FE Rockford Property),
from The Westmorland Company, Inc., which is not affiliated with us, our subsidiaries or
affiliates. The FE Rockford Property was constructed in 1994 on an approximately 8.55 acre site in
Rockford, Illinois. The area surrounding the FE Rockford Property within a three-mile radius is
shared by a trade, processing, and shipping hub of an extensive agricultural region as well as
several manufacturing facilities.
The purchase price of the FE Rockford Property was approximately $6.2 million, exclusive of
closing costs. The acquisition was funded by net proceeds from our ongoing public offering and an
approximately $4.9 million loan from Wachovia secured by the FE Rockford Property (the FE Rockford
Loan). In connection with the acquisition, we paid an affiliate of our advisor an acquisition fee
of approximately $109,000 and our advisor a finance coordination fee of approximately $40,000.
The FE Rockford Property is 100% leased to Fed Ex Ground Package System, Inc. (FDX Ground),
which is a wholly-owned subsidiary of Fed Ex Corporation (FDX). The FE Rockford Property is
subject to a net lease pursuant to which the tenant is required to pay substantially all operating
expenses and capital expenditures in addition to base rent. The annual base rent of $445,632, or
$6.62 per square foot, is fixed through the term of the initial lease, which expires September 30,
2015. The tenant has two options to renew the lease, each for an additional five-year term
beginning on October 1, 2015, with rental escalations of 10% and 5% at the beginning of the first
and second lease options, respectively.
FDX Ground specializes in small-package shipping, with 100-percent coverage to every business
address in the United States, Canada and Puerto Rico. FDX has a Standard & Poors credit rating of
BBB and the companys stock is publicly traded on the New York Stock Exchange under the ticker
symbol FDX.
Cole Realty has the sole and exclusive right to manage, operate, lease and supervise the
overall maintenance of the FE Rockford Property and will receive a property management fee of 2.0%
of the monthly gross revenue from the FE Rockford Property. We currently have no plans for any
renovations, improvements or development of the FE Rockford Property. We believe the FE Rockford
Property is adequately insured. In evaluating the FE Rockford Property as a potential acquisition
and determining the appropriate amount of consideration to be paid for our interest in the FE
Rockford Property, a variety of factors were considered, including our consideration of a property
condition report; property location, visibility and access; age of the property, physical condition
and curb appeal; neighboring property uses; local market conditions, including vacancy
rates; area demographics, including trade area population and average household income;
neighborhood growth patterns and economic conditions; and the presence of demand generators.
The FE Rockford Loan consists of an approximately $4.0 million fixed interest rate tranche
(the FE Rockford Fixed Rate Tranche) and a $0.9 million variable interest rate tranche (the FE
Rockford Variable Rate Tranche). The FE Rockford Fixed Rate Tranche has a fixed interest rate of
5.61% per annum with monthly interest-only payments and the outstanding principal and interest due
on December 11, 2010 (the FE Rockford Maturity Date). The FE Rockford Variable Rate Tranche has a
variable interest rate based on the one-month LIBOR rate plus 200 basis points with monthly
interest-only payments and the outstanding principal and interest due on March 10, 2006. The FE
Rockford Loan is nonrecourse to FE Rockford and Cole OP II, but each is liable for customary
non-recourse carveouts.
The FE Rockford Loan may not be prepaid, in whole or in part, except under the following
circumstances: (i) full prepayment may be made on any of the three (3) monthly payment dates
occurring immediately prior to the FE Rockford Maturity Date and (ii) partial prepayments resulting
from Wachovias election to apply insurance or condemnation proceeds may be made to reduce the
outstanding principal balance of the FE Rockford Loan. Notwithstanding the prepayment limitations,
FE Rockford may sell the FE Rockford Property to a buyer that assumes the FE Rockford Loan. The
transfer shall be subject to Wachovias approval of the proposed buyer and the payment of
Wachovias costs and expenses associated with the sale of the FE Rockford Property.
- 45 -
In the event the FE Rockford Loan is not paid off on the FE Rockford Maturity Date, the FE
Rockford Loan includes hyperamortization provisions. The FE Rockford Maturity Date, pursuant to the
hyperamortization provisions, will be extended by twenty (20) years. During such period, Wachovia
will apply 100% of the rents collected to (i) all payments due to Wachovia under the FE Rockford
Loan, including any payments to escrows or reserve accounts, (ii) any operating expenses of the FE
Rockford Property pursuant to an approved annual budget, (iii) any extraordinary expenses and (iv)
any accrued interest under the FE Rockford Loan. Any remaining amount will be applied to the
reduction of the principal balance of the FE Rockford Loan, until paid in full. The interest rate
during the hyperamortization period shall be the greater of (x) the fixed interest rate of 5.61%
plus two percent (2.0%) or (y) the Treasury Constant Maturity Yield Index plus two percent (2.0%).
Plastech Auburn Hills, Michigan
On December 15, 2005, Cole PT Auburn Hills MI, LLC, a Delaware limited liability company (PT
Auburn Hills) and a wholly-owned subsidiary of Cole OP II, acquired a 100% fee simple interest in
an approximately 111,881 square foot single-tenant research and development facility (the PT
Auburn Hills Property), from Metro Acquisitions Two, LLC (Metro), which is not affiliated with
us, our subsidiaries or affiliates. The PT Auburn Hills Property was constructed in 1995 on an
approximately 14.61 acre site in Auburn Hills, Michigan. The area surrounding the PT Auburn Hills
Property within a three-mile radius is shared by single-family residential subdivisions with
industrial and commercial development.
The purchase price of the PT Auburn Hills Property was approximately $23.6 million, exclusive
of closing costs. The acquisition was funded by net proceeds from our ongoing public offering and
an approximately $17.7 million loan from Wachovia Financial Services, Inc. (the Wachovia Financial
Services) secured by the PT Auburn Hills Property (the PT Auburn Hills Loan), an approximately
$2.5 million loan from Series C, LLC (the COP II Loan I), and an approximately $2.0 million loan
from Series C, LLC (the COP II Loan II). Both the COP II Loan I and the COP II Loan II were
obtained by executing a promissory note with Series C, LLC. In connection with the acquisition, we
paid an affiliate of our advisor an acquisition fee of approximately $472,000.
The PT Auburn Hills Property is 100% leased to LDM Technologies, Inc. (LDM), which is a
wholly-owned subsidiary of Plastech Engineered Products, Inc. (Plastech), which guarantees the
lease. The PT Auburn Hills Property is subject to a net lease which commenced on December 15, 2005.
Pursuant to the lease, the tenant is required to pay substantially all operating expenses and
capital expenditures in addition to base rent. The annual base rent of $1,790,100, or $16.00 per
square foot, is fixed through the first 13 months of the initial lease term, with a 2.5% rental
escalation beginning 14 months after the start of the initial lease term, and every 12 months
thereafter for the remaining term of the lease, which expires January 31, 2021. LDM has two options
to renew the lease, each for an additional five-year term beginning on February 1, 2021, with
rental escalations of 2.5% beginning 14 months after the first and second renewal options, and
every 12 months thereafter for the remaining term of each renewal option.
Plastech operates over 34 production facilities in the United States and Canada and
manufactures blow-molded and injection-molded plastic parts, primarily for the auto industry.
Plastech has a Standard & Poors credit rating of B+.
Cole Realty has the sole and exclusive right to manage, operate, lease and supervise the
overall maintenance of the PT Auburn Hills Property and will receive a property management fee of
2.0% of the monthly gross revenue from the PT Auburn Hills Property. We currently have no plans for
any renovations, improvements or development of the PT Auburn Hills Property. We believe the PT
Auburn Hills Property is adequately insured. In evaluating the PT Auburn Hills Property as a
potential acquisition and determining the appropriate amount of consideration to be paid for our
interest in the PT Auburn Hills Property, a variety of factors were considered, including our
consideration of a property condition report; unit-level store performance; property location,
visibility and access; age of the property, physical condition and curb appeal; neighboring
property uses; local market conditions, including vacancy rates; area demographics, including trade
area population and average household income; neighborhood growth patterns and economic conditions;
and the presence of demand generators.
The PT Auburn Hills Loan has a variable interest rate based on the one-month LIBOR rate plus
200 basis points with monthly interest-only payments (the PT Auburn Hills Interest Rate) and
approximately $4.7 million of the outstanding principal due on April 14, 2006, with the remaining
approximately $13.0 million outstanding principal and interest due and payable in full on December
14, 2006 (the PT Auburn Hills Maturity Date). The PT Auburn Hills Loan generally is non-recourse
to PT Auburn Hills and COP II, but both entities are liable for customary non-recourse carveouts.
The PT Auburn Hills Loan may be prepaid at any time without penalty or premium. In the event the PT
Auburn Hills Loan is not paid off on the PT Auburn Hills Maturity Date, the PT Auburn Hills Loan
includes default provisions. The default interest rate shall be the PT Auburn Hills Interest Rate
plus 4% on all outstanding principal due.
The COP II Loan I is secured by the membership interest held by COP II in Cole WG St. Louis
MO, LLC. The COP II Loan I has a variable interest rate based on the one-month LIBOR rate plus 200
basis points with monthly interest-only payments, and the outstanding principal and due and payable
interest payable in full on June 30, 2006. The COP II Loan I generally is non recourse to
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COP II.
The COP II Loan I may be prepaid at any time without penalty or premium. The terms of the COP II
Loan I are no less favorable to the Company than loans between unaffiliated third parties under the
same circumstances.
The COP II Loan II is secured by the membership interest held by COP II in Cole RA Alliance
OH, LLC. The COP II Loan II has a variable interest rate based on the one-month LIBOR rate plus 200
basis points with monthly interest-only payments, and the outstanding principal and due and payable
interest payable in full on June 30, 2006. The COP II Loan II generally is non recourse to COP II.
The COP II Loan II may be prepaid at any time without penalty or premium. The terms of the COP II
Loan II are no less favorable to the Company than loans between unaffiliated third parties under
the same circumstances.
Academy Sports Macon, Georgia
On January 6, 2006, Cole AS Macon GA, LLC, a Delaware limited liability company (AS Macon)
and a wholly-owned subsidiary of Cole OP II, acquired a 100% fee simple interest in an
approximately 74,532 square foot single-tenant retail building and surrounding property (the AS
Macon Property) from Academy, LTD, (Academy) which is not affiliated with us, our subsidiaries or
affiliates. The AS Macon Property was constructed in 2005 on an approximately 7.3 acre site in
Macon, Georgia. The area surrounding the AS Macon Property is shared by single-family residential
developments, commercial developments and vacant land.
The purchase price of the AS Macon Property was approximately $5.6 million, exclusive of
closing costs. The acquisition was funded by net proceeds from our ongoing public offering and an
approximately $4.3 million loan from Wachovia secured by the AS Macon Property (the AS Macon
Loan). In connection with the acquisition, we paid an affiliate of our advisor an acquisition fee
of approximately $112,000 and our advisor a finance coordination fee of approximately $36,000.
The AS Macon Property is 100% leased to Academy subject to a net lease pursuant to which, the
tenant is required to pay substantially all operating expenses and capital expenditures in addition
to base rent.
The initial annual base rent is $408,804, or $5.48 per square foot, with a 3% rental
escalation beginning five years after the start of the initial lease term, and every five years
thereafter for the remaining term of the lease, which expires January 31, 2026. The tenant has four
options to renew the lease, each for an additional five-year term, beginning on February 1, 2026.
Academy is a sporting goods retailer, operating over 80 stores across the southeastern United
States. In determining the creditworthiness of Academy we considered a variety of factors,
including historical financial information and financial performance, regional market position, and
the forecasted financial performance of Academy.
Cole Realty has the sole and exclusive right to manage, operate, lease and supervise the
overall maintenance of the AS Macon Property and will receive a property management fee of 2.0% of
the monthly gross revenue from the AS Macon Property. We currently have no plans for any
renovations, improvements or development of the AS Macon Property. We believe the AS Macon Property
is adequately insured.
The AS Macon Loan consists of an approximately $3.5 million fixed interest rate tranche (the
AS Macon Fixed Rate Tranche) and a $802,000 variable interest rate tranche (the AS Macon
Variable Rate Tranche). The AS Macon Fixed Rate Tranche has a fixed interest rate of 5.69% per
annum with monthly interest-only payments and the outstanding principal and any accrued and unpaid
interest due on January 11, 2016 (the AS Macon Maturity Date). The AS Macon Variable Rate Tranche
has a variable interest rate based on the one-month LIBOR rate plus 200 basis points with monthly
interest-only payments and the outstanding principal and any accrued and unpaid interest due on
April 6, 2006. The AS Macon Loan is non-recourse to AS Macon and Cole OP II, but each is liable for
customary non-recourse carveouts.
The AS Macon Loan may not be prepaid, in whole or in part, except under the following
circumstances: (i) full prepayment may be made on any of the three (3) monthly payment dates
occurring immediately prior to the AS Macon Maturity Date and (ii) partial prepayments resulting
from Wachovias election to apply insurance or condemnation proceeds may be made to reduce the
outstanding principal balance of the AS Macon Loan. Notwithstanding the prepayment limitations, AS
Macon may sell the AS Macon Property to a buyer that assumes the AS Macon Loan. The transfer shall
be subject to Wachovias approval of the proposed buyer and the payment of Wachovias costs and
expenses associated with the sale of the AS Macon Property.
In the event the AS Macon Loan is not paid off on the AS Macon Maturity Date, the AS Macon
Loan includes hyperamortization provisions. The AS Macon Maturity Date, pursuant to the
hyperamortization provisions, will be extended by twenty (20) years. During such period, Wachovia
will apply 100% of the rents collected to (i) all payments due to Wachovia under the AS Macon Loan,
including any payments to escrows or reserve accounts, (ii) any operating expenses of the AS Macon
Property pursuant to an approved annual budget, (iii) any extraordinary expenses and (iv) any
accrued interest under the AS Macon Loan. Any remaining amount will be applied to the reduction of
the principal balance of the AS Macon Loan, until paid in full. The interest rate
- 47 -
during the
hyperamortization period shall be the greater of (x) the fixed interest rate of 5.69% plus two
percent (2.0%) or (y) the Treasury Constant Maturity Yield Index plus two percent (2.0%).
Davids Bridal Lenexa, Kansas
On January 11, 2006, Cole DB Lenexa KS, LLC, a Delaware limited liability company (DB
Lenexa) and a wholly-owned subsidiary of Cole OP II, acquired a 100% fee simple interest in an
approximately 12,083 square foot single-tenant retail building and surrounding property (the DB
Lenexa Property) from DB-KS, LLC, which is not affiliated with us, our subsidiaries or affiliates.
The DB Lenexa Property was constructed in 2005 on an approximately 1.6 acre site in Lenexa, Kansas.
The area surrounding the DB Lenexa Property is shared by single-family residential and commercial
developments.
The purchase price of the DB Lenexa Property was approximately $3.3 million, exclusive of
closing costs. The acquisition was funded by net proceeds from our ongoing public offering and an
approximately $2.6 million loan from Wachovia secured by the DB Lenexa Property (the DB Lenexa
Loan). In connection with the acquisition, we paid an affiliate of our advisor an acquisition fee
of approximately $65,000 and our advisor a finance coordination fee of approximately $18,000.
The DB Lenexa Property is 100% leased to Davids Bridal, Inc. (Davids Bridal), subject to a
net lease pursuant to which the tenant is required to pay substantially all operating expenses and
capital expenditures in addition to base rent. The initial annual base rent of $235,200, or $19.47
per square foot, is fixed through the first five years of the lease term, with a 10% rental
escalation for the last five years of the initial lease term, which expires December 31, 2015.
Davids Bridal has two options to renew the lease, beginning on January 1, 2016 each for an
additional five-year term with a 10% rental escalation at the beginning of each additional
five-year term.
Davids Bridal is a bridal retailer, operating over 250 stores across the United States. In
determining the creditworthiness of Davids Bridal we considered a variety of factors, including
historical financial information and financial performance, regional market position, and the
forecasted financial performance of Davids Bridal.
Cole Realty has the sole and exclusive right to manage, operate, lease and supervise the
overall maintenance of the DB Lenexa Property and will receive a property management fee of 2.0% of
the monthly gross revenue from the DB Lenexa Property. We currently have no plans for any
renovations, improvements or development of the DB Lenexa Property. We believe the DB Lenexa
Property is adequately insured.
The DB Lenexa Loan consists of an approximately $1.8 million fixed interest rate tranche (the
DB Lenexa Fixed Rate Tranche) and an approximately $800,000 variable interest rate tranche (the
DB Lenexa Variable Rate Tranche). The DB Lenexa Fixed Rate Tranche has a fixed interest rate of
5.86% per annum with monthly interest-only payments and the outstanding principal and any accrued
and unpaid interest due on January 11, 2011 (the DB Lenexa Maturity Date). The DB Lenexa Variable
Rate Tranche has a variable interest rate based on the one-month LIBOR rate plus 200 basis points
with monthly interest-only payments and the outstanding principal and any accrued and unpaid
interest due on April 11, 2006. The DB Lenexa Loan is non-recourse to DB Lenexa and Cole OP II, but
each is liable for customary non-recourse carveouts.
The DB Lenexa Loan may not be prepaid, in whole or in part, except under the following
circumstances: (i) full prepayment may be made on any of the three (3) monthly payment dates
occurring immediately prior to the DB Lenexa Maturity Date and (ii) partial prepayments resulting
from Wachovias election to apply insurance or condemnation proceeds may be made to reduce the
outstanding principal balance of the DB Lenexa Loan. Notwithstanding the prepayment limitations, DB
Lenexa may sell the DB Lenexa Property to a buyer that assumes the DB Lenexa Loan. The transfer
shall be subject to Wachovias approval of the proposed buyer and the payment of Wachovias costs
and expenses associated with the sale of the DB Lenexa Property.
In the event the DB Lenexa Loan is not paid off on the DB Lenexa Maturity Date, the DB Lenexa
Loan includes hyperamortization provisions. The DB Lenexa Maturity Date, pursuant to the
hyperamortization provisions, will be extended by twenty (20) years. During such period, Wachovia
will apply 100% of the rents collected to (i) all payments due to Wachovia under the DB Lenexa
Loan, including any payments to escrows or reserve accounts, (ii) any operating expenses of the DB
Lenexa Property pursuant to an approved annual budget, (iii) any extraordinary expenses and (iv)
any accrued interest under the DB Lenexa Loan. Any remaining amount will be applied to the
reduction of the principal balance of the DB Lenexa Loan, until paid in full. The interest rate
during the hyperamortization period shall be the greater of (x) the fixed interest rate of 5.86%
plus two percent (2.0%) or (y) the Treasury Constant Maturity Yield Index plus two percent (2.0%).
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Rite-Aid Enterprise, Alabama
On January 26, 2006, Cole RA Enterprise AL, LLC, a Delaware limited liability company (RA
Enterprise) and a wholly-owned subsidiary of Cole OP II, acquired a 100% fee simple interest in an
approximately 14,564 square foot single-tenant retail building and surrounding property (the RA
Enterprise Property) from NOM Enterprise, LLC, which is not affiliated with us, our subsidiaries
or affiliates. The RA Enterprise Property was constructed in 2005 on an approximately 2.15 acre
site in Enterprise, Alabama. The area surrounding the RA Enterprise Property is shared by retail,
residential and commercial developments.
The purchase price of the RA Enterprise Property was approximately $3.7 million, exclusive of
closing costs. The acquisition was funded by net proceeds from our ongoing public offering and an
approximately $2.9 million loan from Wachovia secured by the RA Enterprise Property (the RA
Enterprise Loan). In connection with the acquisition, we paid an affiliate of our advisor an
acquisition fee of approximately $74,000 and our advisor a finance coordination fee of
approximately $20,000.
The RA Enterprise Property is 100% leased to Harco, Inc. a wholly-owned subsidiary of Rite Aid
Corporation (Rite Aid), which guarantees the lease. The RA Enterprise Property is subject to a
net lease. Pursuant to the lease, the tenant is required to pay substantially all operating
expenses and capital expenditures in addition to base rent. The initial annual base rent of
$289,629, or $19.89 per square foot, is fixed through the initial lease term, which expires January
31, 2026. The tenant has six options to renew the lease, beginning on February 1, 2026 each for an
additional five-year term with rental escalations descending in a range of 5% at the first renewal
option to 4% at the final renewal option.
Rite Aid operates over 3,300 drug stores in 28 states and Washington, DC. Rite Aid has a
Standard and Poors credit rating of B+ and its stock is publicly traded on the New York Stock
Exchange under the symbol RAD.
Cole Realty has the sole and exclusive right to manage, operate, lease and supervise the
overall maintenance of the RA Enterprise Property and will receive a property management fee of
2.0% of the monthly gross revenue from the RA Enterprise Property. We currently have no plans for
any renovations, improvements or development of the RA Enterprise Property. We believe the RA
Enterprise Property is adequately insured.
The RA Enterprise Loan consists of an approximately $2.0 million fixed interest rate tranche
(the RA Enterprise Fixed Rate Tranche) and an approximately $928,000 variable interest rate
tranche (the RA Enterprise Variable Rate Tranche). The RA Enterprise Fixed Rate Tranche has a
fixed interest rate of 5.80% per annum with monthly interest-only payments and the outstanding
principal and any accrued and unpaid interest due on February 11, 2016 (the RA Enterprise
Maturity Date). The RA Enterprise Variable Rate Tranche has a variable interest rate based on
the one-month LIBOR rate plus 200 basis points with monthly interest-only payments and the
outstanding principal and any accrued and unpaid interest due on April 24, 2006. The RA Enterprise
Loan is non-recourse to RA Enterprise and Cole OP II, but each is liable for customary non-recourse
carveouts.
The RA Enterprise Loan may not be prepaid, in whole or in part, except under the following
circumstances: (i) full prepayment may be made on any of the three (3) monthly payment dates
occurring immediately prior to the RA Enterprise Maturity Date and (ii) partial prepayments
resulting from Wachovias election to apply insurance or condemnation proceeds may be made to
reduce the outstanding principal balance of the RA Enterprise Loan. Notwithstanding the prepayment
limitations, RA Enterprise may sell the RA Enterprise Property to a buyer that assumes the RA
Enterprise Loan. The transfer shall be subject to Wachovias approval of the proposed buyer and the
payment of Wachovias costs and expenses associated with the sale of the RA Enterprise Property.
In the event the RA Enterprise Loan is not paid off on the RA Enterprise Maturity Date, the RA
Enterprise Loan includes hyperamortization provisions. The RA Enterprise Maturity Date, pursuant to
the hyperamortization provisions, will be extended by twenty (20) years. During such period,
Wachovia will apply 100% of the rents collected to (i) all payments due to Wachovia under the RA
Enterprise Loan, including any payments to escrows or reserve accounts, (ii) any operating expenses
of the RA Enterprise Property pursuant to an approved annual budget, (iii) any extraordinary
expenses and (iv) any accrued interest under the RA Enterprise Loan. Any remaining amount will be
applied to the reduction of the principal balance of the RA Enterprise Loan, until paid in full.
The interest rate during the hyperamortization period shall be the greater of (x) the fixed
interest rate of 5.80% plus two percent (2.0%) or (y) the Treasury Constant Maturity Yield Index
plus two percent (2.0%).
Rite-Aid Saco, Maine
On January 27, 2006, Cole RA Saco ME, LLC, a Delaware limited liability company (RA Saco)
and a wholly-owned subsidiary of Cole OP II, acquired a 100% fee simple interest in an
approximately 11,180 square foot single-tenant retail building and surrounding property (the RA
Saco Property) from Princeton-Saco, LLC, which is not affiliated with us, our subsidiaries or
affiliates. The RA Saco Property was constructed in 1997 on an approximately 2.24 acre site in
Saco, Maine. The area surrounding the RA Saco Property is shared by retail and residential
developments.
- 49 -
The purchase price of the RA Saco Property was approximately $2.5 million, exclusive of
closing costs. The acquisition was funded by net proceeds from our ongoing public offering and a
$2.0 million loan from Wachovia secured by the RA Saco Property (the RA Saco Loan). In connection
with the acquisition, we paid an affiliate of our advisor an acquisition fee of approximately
$50,000 and our advisor a finance coordination fee of approximately $14,000.
The RA Saco Property is 100% leased to Rite Aid of Maine, Inc., a wholly-owned subsidiary of
Rite Aid, which guarantees the lease. The RA Saco Property is subject to a net lease. Pursuant to
the lease, the tenant is required to pay substantially all operating expenses and capital
expenditures in addition to base rent. The initial annual base rent of $210,743, or $18.85 per
square foot, is fixed through the initial lease term, which expires February 28, 2017, and the
first renewal option. The tenant has four options to renew the lease, beginning on March 1, 2017
each for an additional five-year term with rental escalations descending in a range of 5.8% at the
second renewal option to 4.8% at the final renewal option.
Cole Realty has the sole and exclusive right to manage, operate, lease and supervise the
overall maintenance of the RA Saco Property and will receive a property management fee of 2.0% of
the monthly gross revenue from the RA Saco Property. We currently have no plans for any
renovations, improvements or development of the RA Saco Property. We believe the RA Saco Property
is adequately insured.
The RA Saco Loan consists of an approximately $1.4 million fixed interest rate tranche (the
RA Saco Fixed Rate Tranche) and an approximately $625,000 variable interest rate tranche (the RA
Saco Variable Rate Tranche). The RA Saco Fixed Rate Tranche has a fixed interest rate of 5.82% per
annum with monthly interest-only payments and the outstanding principal and any accrued and unpaid
interest due on February 11, 2011 (the RA Saco Maturity Date). The RA Saco Variable Rate Tranche
has a variable interest rate based on the one-month LIBOR rate plus 200 basis points with monthly
interest-only payments and the outstanding principal and any accrued and unpaid interest due on
April 27, 2006. The RA Saco Loan is non-recourse to RA Saco and Cole OP II, but each is liable for
customary non-recourse carveouts.
The RA Saco Loan may not be prepaid, in whole or in part, except under the following
circumstances: (i) full prepayment may be made on any of the three (3) monthly payment dates
occurring immediately prior to the RA Saco Maturity Date and (ii) partial prepayments resulting
from Wachovias election to apply insurance or condemnation proceeds may be made to reduce the
outstanding principal balance of the RA Saco Loan. Notwithstanding the prepayment limitations, RA
Saco
may sell the RA Saco Property to a buyer that assumes the RA Saco Loan. The transfer shall be
subject to Wachovias approval of the proposed buyer and the payment of Wachovias costs and
expenses associated with the sale of the RA Saco Property.
In the event the RA Saco Loan is not paid off on the RA Saco Maturity Date, the RA Saco Loan
includes hyperamortization provisions. The RA Saco Maturity Date, pursuant to the hyperamortization
provisions, will be extended by twenty (20) years. During such period, Wachovia will apply 100% of
the rents collected to (i) all payments due to Wachovia under the RA Saco Loan, including any
payments to escrows or reserve accounts, (ii) any operating expenses of the RA Saco Property
pursuant to an approved annual budget, (iii) any extraordinary expenses and (iv) any accrued
interest under the RA Saco Loan. Any remaining amount will be applied to the reduction of the
principal balance of the RA Saco Loan, until paid in full. The interest rate during the
hyperamortization period shall be the greater of (x) the fixed interest rate of 5.82% plus two
percent (2.0%) or (y) the Treasury Constant Maturity Yield Index plus two percent (2.0%).
Rite-Aid Wauseon, Ohio
On January 26, 2006, Cole RA Wauseon OH, LLC, a Delaware limited liability company (RA
Wauseon) and a wholly-owned subsidiary of Cole OP II, acquired a 100% fee simple interest in an
approximately 14,564 square foot single-tenant retail building and surrounding property (the RA
Wauseon Property) from NOM Wauseon, LLC, which is not affiliated with us, our subsidiaries or
affiliates. The RA Wauseon Property was constructed in 2005 on an approximately 2.09 acre site in
Wauseon, Ohio. The area surrounding the RA Wauseon Property is shared by retail, residential and
commercial development.
The purchase price of the RA Wauseon Property was approximately $3.9 million, exclusive of
closing costs. The acquisition was funded by net proceeds from our ongoing public offering and an
approximately $3.1 million loan from Wachovia secured by the RA Wauseon Property (the RA Wauseon
Loan). In connection with the acquisition, we paid an affiliate of our advisor an acquisition fee
of approximately $58,000 and our advisor a finance coordination fee of approximately $21,000.
The RA Wauseon Property is 100% leased to RA Ohio, a wholly-owned subsidiary of Rite Aid,
which guarantees the lease. The RA Wauseon Property is subject to a net lease. Pursuant to the
lease, the tenant is required to pay substantially all operating expenses and capital expenditures
in addition to base rent. The initial annual base rent of $311,720, or $21.40 per square foot, is
fixed through the initial lease term, which expires January 31, 2026. The tenant has six options to
renew the lease, beginning on February 1,
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2026 each for an additional five-year term with rental
escalations descending in a range of 4.7% at the first renewal option to 3.7% at the final renewal
option.
Cole Realty has the sole and exclusive right to manage, operate, lease and supervise the
overall maintenance of the RA Wauseon Property and will receive a property management fee of 2.0%
of the monthly gross revenue from the RA Wauseon Property. We currently have no plans for any
renovations, improvements or development of the RA Wauseon Property. We believe the RA Wauseon
Property is adequately insured.
The RA Wauseon Loan consists of an approximately $2.1 million fixed interest rate tranche (the
RA Wauseon Fixed Rate Tranche) and an approximately $973,000 variable interest rate tranche (the
RA Wauseon Variable Rate Tranche). The RA Wauseon Fixed Rate Tranche has a fixed interest rate of
5.80% per annum with monthly interest-only payments and the outstanding principal and any accrued
and unpaid interest due on February 11, 2016 (the RA Wauseon Maturity Date). The RA Wauseon
Variable Rate Tranche has a variable interest rate based on the one-month LIBOR rate plus 200 basis
points with monthly interest-only payments and the outstanding principal and any accrued and unpaid
interest due on April 25, 2006. The RA Wauseon Loan is non-recourse to RA Wauseon and Cole OP II,
but each is liable for customary non-recourse carveouts.
The RA Wauseon Loan may not be prepaid, in whole or in part, except under the following
circumstances: (i) full prepayment may be made on any of the three (3) monthly payment dates
occurring immediately prior to the RA Wauseon Maturity Date and (ii) partial prepayments resulting
from Wachovias election to apply insurance or condemnation proceeds may be made to reduce the
outstanding principal balance of the RA Wauseon Loan. Notwithstanding the prepayment limitations,
RA Wauseon may sell the RA Wauseon Property to a buyer that assumes the RA Wauseon Loan. The
transfer shall be subject to Wachovias approval of the proposed buyer and the payment of
Wachovias costs and expenses associated with the sale of the RA Wauseon Property.
In the event the RA Wauseon Loan is not paid off on the RA Wauseon Maturity Date, the RA
Wauseon Loan includes hyperamortization provisions. The RA Wauseon Maturity Date, pursuant to the
hyperamortization provisions, will be extended by twenty (20) years. During such period, Wachovia
will apply 100% of the rents collected to (i) all payments due to Wachovia under
the RA Wauseon Loan, including any payments to escrows or reserve accounts, (ii) any operating
expenses of the RA Wauseon Property pursuant to an approved annual budget, (iii) any extraordinary
expenses and (iv) any accrued interest under the RA Wauseon Loan. Any remaining amount will be
applied to the reduction of the principal balance of the RA Wauseon Loan, until paid in full. The
interest rate during the hyperamortization period shall be the greater of (x) the fixed interest
rate of 5.80% plus two percent (2.0%) or (y) the Treasury Constant Maturity Yield Index plus two
percent (2.0%).
Staples Crossville, Tennessee
On January 26, 2006, Cole ST Crossville TN, LLC, a Delaware limited liability company (ST
Crossville) and a wholly-owned subsidiary of Cole OP II, acquired a 100% fee simple interest in an
approximately 23,942 square foot single-tenant retail building and surrounding property (the ST
Crossville Property) from William F. Graham PTRS., which is not affiliated with us, our
subsidiaries or affiliates. The ST Crossville Property was constructed in 2001 on an approximately
2.31 acre site in Crossville, Tennessee. The area surrounding the ST Crossville Property is shared
by retail, residential and commercial developments.
The purchase price of the ST Crossville Property was approximately $2.9 million, exclusive of
closing costs. The acquisition was funded by net proceeds from our ongoing public offering and an
approximately $2.3 million loan from Wachovia secured by the ST Crossville Property (the ST
Crossville Loan). In connection with the acquisition, we paid an affiliate of our advisor an
acquisition fee of approximately $58,000 and our advisor a finance coordination fee of
approximately $19,000.
The ST Crossville Property is 100% leased to Staples the Office Superstore East, Inc.,
(Staples East) a wholly-owned subsidiary of Staples, Inc., (Staples) subject to a net lease
pursuant to which the tenant is required to pay substantially all operating expenses and capital
expenditures in addition to base rent. The initial annual base rent of $221,463, or $9.25 per
square foot, is fixed through the initial lease term, which expires June 30, 2016. The tenant has
three options to renew the lease, beginning on July 1, 2016 each for an additional five-year term
with rental escalations descending in a range of 10.8% at the first renewal option to 8.8% at the
final renewal option.
Staples East operates retail office superstores. In determining the creditworthiness of
Staples East we considered a variety of factors, including historical financial information and
financial performance, regional market position, and the financial position of its parent, Staples.
Staples operates over 1,700 office superstores in 21 countries throughout North and South America,
Europe and Asia. Staples has a Standard and Poors credit rating of BBB and its stock is publicly
traded on the Nasdaq Stock Market under the symbol SPLS.
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Cole Realty has the sole and exclusive right to manage, operate, lease and supervise the
overall maintenance of the ST Crossville Property and will receive a property management fee of
2.0% of the monthly gross revenue from the ST Crossville Property. We currently have no plans for
any renovations, improvements or development of the ST Crossville Property. We believe the ST
Crossville Property is adequately insured.
The ST Crossville Loan consists of an approximately $1.9 million fixed interest rate tranche
(the ST Crossville Fixed Rate Tranche) and an approximately $435,000 variable interest rate
tranche (the ST Crossville Variable Rate Tranche). The ST Crossville Fixed Rate Tranche has a
fixed interest rate of 5.71% per annum with monthly interest-only payments and the outstanding
principal and any accrued and unpaid interest due on January 11, 2011 (the ST Crossville Maturity
Date). The ST Crossville Variable Rate Tranche has a variable interest rate based on the one-month
LIBOR rate plus 200 basis points with monthly interest-only payments and the outstanding principal
and any accrued and unpaid interest due on April 11, 2006. The ST Crossville Loan is non-recourse
to ST Crossville, and Cole OP II, but each is liable for customary non-recourse carveouts.
The ST Crossville Loan may not be prepaid, in whole or in part, except under the following
circumstances: (i) full prepayment may be made on any of the three (3) monthly payment dates
occurring immediately prior to the ST Crossville Maturity Date and (ii) partial prepayments
resulting from Wachovias election to apply insurance or condemnation proceeds may be made to
reduce the outstanding principal balance of the ST Crossville Loan. Notwithstanding the prepayment
limitations, ST Crossville may sell the ST Crossville Property to a buyer that assumes the ST
Crossville Loan. The transfer shall be subject to Wachovias approval of the proposed buyer and the
payment of Wachovias costs and expenses associated with the sale of the ST Crossville Property.
In the event the ST Crossville Loan is not paid off on the ST Crossville Maturity Date, the ST
Crossville Loan includes hyperamortization provisions. The ST Crossville Maturity Date, pursuant to
the hyperamortization provisions, will be extended by twenty (20) years. During such period,
Wachovia will apply 100% of the rents collected to (i) all payments due to Wachovia under the ST
Crossville Loan, including any payments to escrows or reserve accounts, (ii) any operating expenses
of the ST Crossville
Property pursuant to an approved annual budget, (iii) any extraordinary expenses and (iv) any
accrued interest under the ST Crossville Loan. Any remaining amount will be applied to the
reduction of the principal balance of the ST Crossville Loan, until paid in full. The interest rate
during the hyperamortization period shall be the greater of (x) the fixed interest rate of 5.71%
plus two percent (2.0%) or (y) the Treasury Constant Maturity Yield Index plus two percent (2.0%).
Wadsworth Boulevard Marketplace Denver, Colorado
On February 6, 2006, Cole MT Denver CO, LLC, a Delaware limited liability company (MT
Denver), a wholly-owned subsidiary of COP II, acquired 100% fee simple interests in two
single-tenant retail buildings, totaling approximately 198,477 square feet (the MT Denver
Property), from Shadrall Associates, which is not affiliated with us, our subsidiaries or our
affiliates. The MT Denver Property was constructed in 1991 on an approximately 17.84 acre site
located in Denver, Colorado. The area surrounding the MT Denver Property is shared by residential
neighborhoods, undeveloped land parcels, commercial office and retail development.
The purchase price of the MT Denver Property was approximately $18.5 million, exclusive of
closing costs. The acquisition was funded by net proceeds from our ongoing public offering and an
approximately $12.0 million loan from Bear Stearns Commercial Mortgage, Inc. (Bear Stearns)
secured by the MT Denver Property (the MT Denver Loan) and an approximately $2.3 million loan
from Series C, LLC, which is secured by the membership interest held by COP II in MT Denver (the
MT Denver COP II Loan). In connection with the acquisition, we paid an affiliate of our advisor
an acquisition fee of approximately $370,000 and our advisor a finance coordination fee of
approximately $120,000.
The MT Denver Property is 100% leased to two tenants, Sams PW, Inc. (Sams Club), a
wholly-owned subsidiary of Wal-Mart Stores, Inc., and Hob-Lob Limited Partnership (Hobby Lobby),
a wholly-owned subsidiary of H.L. Management, Inc. Pursuant to the lease agreements the tenants are
required to pay substantially all operating expenses and capital expenditures in addition to base
rent. The Sams Club lease commenced on October 29, 1991, and was assigned and assumed by Sams
Club on January 12, 1994. The annual base rent of $820,245, is fixed through the initial lease
term, which expires on November 30, 2016. Sams Club has ten options to renew the lease, beginning
on December 1, 2016, each for an additional five-year term. In accordance with the Sams Club
lease, Sams Club pays additional percentage rent on sales exceeding a predetermined dollar amount.
The Hobby Lobby lease commenced on January 15, 1991, and was assigned and assumed by Hobby Lobby on
July 26, 2000. The annual base rent of $585,000, is fixed through the initial lease term, which
expires on November 30, 2016. Hobby Lobby has ten options to renew the lease, beginning on December
1, 2016, each for an additional five-year term.
Sams Club operates membership warehouse stores in 48 states across the United States. In
determining the creditworthiness of Sams Club, the Company considered a variety of factors,
including historical financial information and financial performance, and regional market position.
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Hobby Lobby operates retail arts and crafts stores in 28 states across the United States. In
determining the creditworthiness of Hobby Lobby, the Company considered a variety of factors,
including historical financial information and financial performance, and regional market position.
Cole Realty has the sole and exclusive right to manage, operate, lease and supervise the
overall maintenance of the MT Denver Property and will receive a property management fee of 2.0% of
the monthly gross revenue from the MT Denver Property. We currently have no plans for any
renovations, improvements or development of the MT Denver Property. We believe the MT Denver
Property is adequately insured.
The MT Denver Loan has a fixed interest rate of 5.57% per annum with monthly interest-only
payments and the outstanding principal and any accrued and unpaid interest is due on March 1, 2011
(the MT Denver Maturity Date).
The MT Denver Loan may not be prepaid, in whole or in part, except under the following
circumstances: (i) full prepayment may be made on any of the three (3) monthly payment dates
occurring immediately prior to the maturity date, and (ii) partial prepayments may be made as a
result of default for the application of insurance or condemnation proceeds to reduce the
outstanding principal balance of the MT Denver Loan. Notwithstanding the prepayment limitations, MT
Denver may sell the MT Denver Property to a buyer that assumes the MT Denver Loan. The transfer
would be subject to the conditions set forth in the MT Denver Loan documents, including without
limitation, the Bear Stearns approval of the proposed buyer and the payment of the Bear Stearns
fees, costs and expenses associated with the sale of the MT Denver Property and the assumption of
the MT Denver Loan.
In the event the MT Denver Loan is not paid off on the MT Denver Maturity Date, the MT Denver
Loan includes hyperamortization provisions. The interest rate during the hyperamortization period
shall be the fixed interest rate of the greater of (i) the Initial Interest Rate plus two percent
(2.0%) per annum, and (ii) the then current Ten Year Treasury Yield plus two percent (2.0%) per
annum, not to exceed the Initial Interest Rate plus five percent (5.0%) per annum. The MT Denver
Maturity Date, under the hyperamortization provisions, will be extended by twenty-five (25) years.
During such period, Bear Stearns will apply 100% of the rents collected to (i) all payments for
escrow or reserve accounts, (ii) payment of interest at the original fixed interest rate, (iii)
payments for the replacement reserve account, (iv) any other amounts due in accordance with the MT
Denver Loan other than any additional interest expense, (v) any operating expenses of the MT Denver
Property pursuant to an approved annual budget, (vi) any extraordinary expenses, (vii) payments to
be applied to the reduction of the principal balance of the MT Denver Loan, and (viii) any
additional interest expense. Any additional interest expense which is not paid will be added to the
principal balance of the MT Denver Loan.
The MT Denver COP II Loan was obtained on February 6, 2006, in connection with the acquisition
of the MT Denver Property, from Series C, LLC, which is an affiliate of us and our advisor. The MT
Denver COP II Loan has a variable interest rate based on the one-month LIBOR rate plus 200 basis
points with monthly interest-only payments, and the outstanding principal and any accrued and
unpaid interest is due on December 31, 2006 (the MT Denver COP II Maturity Date). The MT Denver
COP II Loan generally is non-recourse to COP II. The MT Denver COP II Loan may be prepaid at any
time without penalty or premium. The terms of the MT Denver COP II Loan are no less favorable to us
than loans from unaffiliated third parties under the same circumstances. In the event the MT Denver
COP II Loan is not paid off on the MT Denver COP II Maturity Date, the MT Denver COP II Loan
includes default provisions, including a default interest rate. The default interest rate shall be
the MT Denver COP II Interest Rate plus 4% on all outstanding principal due.
Mountainside Fitness Chandler, Arizona
On February 10, 2006, Cole MF Chandler AZ, LLC, a Delaware limited liability company (MF
Chandler), a wholly-owned subsidiary of COP II, acquired a 100% fee simple interest in an
approximately 31,063 square foot single-tenant retail building (the MF Chandler Property), from
Alma School Town Center, LLC, which is not affiliated with us, our subsidiaries or affiliates. The
MF Chandler Property was constructed in 2001 on an approximately 2.92 acre site in Chandler,
Arizona. The area surrounding the MF Chandler Property is shared by single-family residential
subdivisions with industrial and commercial development.
The purchase price of the MF Chandler Property was approximately $5.9 million, exclusive of
closing costs. The acquisition was funded by net proceeds from our ongoing public offering and an
approximately $4.7 million loan from Series C, LLC which is secured by COP IIs ownership interest
in MF Chandler (the MF Chandler Loan). In connection with the acquisition, we paid an affiliate
of our advisor an acquisition fee of approximately $117,000.
The MF Chandler Property is 100% leased to Mountainside Fitness Centers of Ocotillo, LLC.
(Mountainside), which is a wholly-owned subsidiary of Hatten Holdings, Inc., which guarantees the
Lease. The MF Chandler Property is subject to a net lease, which commenced on July 8, 2002,
pursuant to which the tenant is required to pay substantially all operating expenses and capital
expenditures in addition to base rent. The annual base rent of $469,051, is fixed through the first
five years of the initial lease term,
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with a 12% rental escalation beginning five years after the
start of the initial lease term, and every five years thereafter for the remaining term of the
lease, which expires July 18, 2022. Mountainside has two options to renew the lease, each for an
additional five-year term beginning on July 19, 2022, with rental escalations of 12% at the
beginning of each five-year renewal option.
Mountainside operates a chain of fitness centers in the state of Arizona. Currently there are
five locations in the Phoenix metro area. In determining the creditworthiness of Mountainside, the
Company considered a variety of factors, including historical financial information and financial
performance, and local market position.
Cole Realty has the sole and exclusive right to manage, operate, lease and supervise the
overall maintenance of the MF Chandler Property and will receive a property management fee of 2.0%
of the monthly gross revenue from the MF Chandler Property. We currently have no plans for any
renovations, improvements or development of the MF Chandler Property. We believe the MF Chandler
Property is adequately insured.
The MF Chandler Loan was obtained on February 9, 2006, in connection with the acquisition of
the MF Chandler Property, from Series B, LLC,
(Series B) which is an affiliate of us and our advisor, by
executing a promissory note. The MF Chandler Loan, which is secured by COP IIs ownership interest
in MF Chandler, has a variable interest rate based on the one-month LIBOR rate plus 200 basis
points (the MF Chandler Interest Rate) with monthly interest-only payments. The outstanding
principal and any accrued and unpaid interest is due December 31, 2006 (the MF Chandler Maturity
Date). The MF Chandler
Loan generally is non recourse to COP II. The MF Chandler Loan may be prepaid at any time
without penalty or premium. The terms of the MF Chandler Loan are no less favorable to us than
loans between unaffiliated third parties under the same circumstances.
In the event the MF Chandler Loan is not paid off on the MF Chandler Maturity Date, the MF
Chandler Loan includes default provisions, including a default interest rate. The default interest
rate shall be the MF Chandler Interest Rate plus 4% on all outstanding principal due.
Drexel Heritage Hickory, North Carolina
On February 24, 2006, Cole DH Hickory NC, LLC, a Delaware limited liability company (DH
Hickory), a wholly-owned subsidiary of COP II, acquired a 100% fee simple interest in an
approximately 261,057 square foot single-tenant distribution center (the DH Hickory Property),
from Hickory Business Park, LLC (Hickory), which is not affiliated with us, our subsidiaries or
affiliates. The DH Hickory Property was constructed in 1963 on an approximately 30.26 acre site in
Hickory, North Carolina. The area surrounding the DH Hickory Property consists of single-family
residential subdivisions.
The purchase price of the DH Hickory Property was approximately $4.3 million, exclusive of
closing costs. The acquisition was funded by net proceeds from our ongoing public offering and an
approximately $3.4 million loan from Wachovia secured by the DH Hickory Property (the DH Hickory
Loan). In connection with the acquisition, we paid an affiliate of our advisor an acquisition fee
of approximately $85,000 and our advisor a finance coordination fee of approximately $28,000.
The DH Hickory Property is 100% leased to Drexel Heritage Furniture Industries, Inc.
(Heritage), a wholly-owned subsidiary of Furniture Brands International, Inc. (Furniture
Brands), which is the guarantor under the lease. The DH Hickory Property is subject to a net
lease, which commenced on September 8, 2005. Pursuant to the lease, the tenant is required to pay
substantially all operating expenses and capital expenditures in addition to base rent. The annual
base rent of $338,078, is fixed through the first five years of the initial lease term, with a 15%
rental escalation beginning five years after the start of the initial lease term. The initial lease
term expires September 8, 2015. Heritage has three options to renew the lease, each for an
additional five-year term beginning on September 9, 2015, with rental escalations of 15% at the
beginning of each five-year renewal option.
Heritage operates a chain of furniture stores throughout the United States and
internationally. Heritage is a wholly owned subsidiary of Furniture Brands. Furniture Brands has a
Standard & Poors credit rating of BBB and is publicly traded on the New York Stock Exchange under
the symbol FBN.
Cole Realty has the sole and exclusive right to manage, operate, lease and supervise the
overall maintenance of the DH Hickory Property and will receive a property management fee of 2.0%
of the monthly gross revenue from the DH Hickory Property. We currently have no plans for any
renovations, improvements or development of the DH Hickory Property. We believe the DH Hickory
Property is adequately insured.
The DH Hickory Loan consists of an approximately $2.8 million fixed interest rate tranche (the
DH Hickory Fixed Rate Tranche) and a $637,000 variable interest rate tranche (the DH Hickory
Variable Rate Tranche). The DH Hickory Fixed Rate Tranche has a fixed interest rate of 5.80% per
annum with monthly interest-only payments. The outstanding principal and any accrued and unpaid
interest is due on March 11, 2011 (the DH Hickory Maturity Date). The DH Hickory Variable Rate
Tranche has a
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variable interest rate based on the one-month LIBOR rate plus 200 basis points with monthly
interest-only payments, and the outstanding principal and any accrued and unpaid interest is due on
May 24, 2006. The DH Hickory Loan is generally non-recourse to DH Hickory and COP II, but both are
liable for customary non-recourse carveouts.
The DH Hickory Loan may not be prepaid, in whole or in part, except under the following
circumstances: (i) full prepayment may be made on any of the three (3) monthly payment dates
occurring immediately prior to the DH Hickory Maturity Date and (ii) partial prepayments resulting
from Wachovias election to apply insurance or condemnation proceeds may be made to reduce the
outstanding principal balance of the DH Hickory Loan. Notwithstanding the prepayment limitations,
DH Hickory may sell the DH Hickory Property to a buyer that assumes the DH Hickory Loan. The
transfer shall be subject to Wachovias approval of the proposed buyer and the payment of
Wachovias costs and expenses associated with the sale of the DH Hickory Property.
In the event the DH Hickory Loan is not paid off on the DH Hickory Maturity Date, the DH
Hickory Loan includes hyperamortization provisions. The DH Hickory Maturity Date, pursuant to the
hyperamortization provisions, will be extended by twenty (20) years. During such period, Wachovia
will apply 100% of the rents collected to (i) all payments due to Wachovia under the DH Hickory
Loan, including any payments to escrows or reserve accounts, (ii) any operating expenses of the DH
Hickory Property pursuant to an approved annual budget, (iii) any extraordinary expenses and (iv)
any accrued interest under the DH Hickory Loan. Any remaining amount will be applied to the
reduction of the principal balance of the DH Hickory Loan, until paid in full. The interest rate
during the hyperamortization period shall be the greater of (x) the fixed interest rate of 5.80%
plus two percent (2.0%) or (y) the Treasury Constant Maturity Yield Index plus two percent (2.0%).
Rayford Square Spring, Texas
On March 2, 2006, Cole MT Spring TX, LP, a Delaware limited liability company (MT Spring), a
wholly-owned subsidiary of COP II, acquired a 100% fee simple interest in an approximately 80,000
square foot multi-tenant retail center (the MT Spring Property), from RPI Interests II, LTD.,
which is not affiliated with us, our subsidiaries or affiliates. The MT Spring Property was
constructed in 1973 on an approximately 5.6 acre site in Spring, Texas. The area surrounding the MT
Spring Property is shared by single & multi-family residential subdivisions along with retail
development.
The purchase price of the MT Spring Property was approximately $9.9 million, exclusive of
closing costs. The acquisition was funded by net proceeds from our ongoing public offering and an
approximately $5.9 million loan from Bear Stearns secured by the MT Spring Property (the MT Spring
Loan). In connection with the acquisition, we paid an affiliate of our advisor an acquisition fee
of approximately $198,000 and our advisor a finance coordination fee of approximately $59,000.
The MT Spring Property is 100% leased to five tenants, including, Academy Corp (Academy), CB
Jackson Co, d/b/a Specs Liquor (Specs), Hi-Lo Auto Supply, LP (Hi-Lo), Sherwin-Williams
Company, (Sherwin-Williams) and Jack in the Box Eastern Division, LP pursuant to separate net
leases under which each tenant is required to pay certain operating expenses, capital expenditures,
and a proportionate amount of common area maintenance charges in addition to base rent.
Academy is a sporting goods retailer, operating over 80 stores across the southeastern United
States. Academy leases approximately 50,500 square feet of the MT Spring Property subject to a net
lease, which commenced on October 5, 1999. The annual base rent of $371,175, is fixed through the
first three years of the initial lease term, with 3.0% rental escalations beginning every five
years thereafter through the expiration date of the lease on October 31, 2024. Academy has two
options to renew the lease each for an additional five-year term beginning on November 1, 2024,
with rental escalations of 3.0% at the beginning of each five-year renewal option.
Specs is a Houston-based retailer with over 28 stores located throughout the Houston
metropolitan area. Specs leases approximately 12,300 square feet of the MT Spring Property subject
to a net lease, which commenced on August 1, 1994. The annual base rent of $125,484, is fixed
through the initial lease renewal period, which commenced on January 1, 2006 and expires on
December 31, 2008.
Hi-Lo, a subsidiary of OReilly Automotive, Inc., is an operator of automotive parts retail
stores. Hi-Lo leases approximately 8,100 square feet of the MT Spring Property subject to a net
lease, which commenced on March 5, 1993. The annual base rent of $60,720, is fixed through the
initial lease renewal period, which commenced on April 1, 2003 and expires on March 31, 2008. Hi-Lo
has one additional option to renew the lease for an additional five-year term beginning on April 1,
2008, with rental escalations of 15% at the beginning of the five-year renewal option.
Sherwin-Williams core business is the manufacture, distribution and sale of paint, coatings
and related products. Sherwin-Williams has an S&P Credit Rating of A+ and is publicly traded on the
New York Stock Exchange under the symbol SHW. Sherwin-Williams leases approximately 6,500 square feet of the MT Spring Property subject to a
net lease, which commenced on
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December 1, 1987. The current annual base rent of $74,520 increases
to $81,000 on December 1, 2006 and increases to $93,960 on December 1, 2007, which is then fixed
for the remaining five years of the renewal term, which expires on November 30, 2012.
Sherwin-Williams has one remaining option to renew the lease for an additional five-year term
beginning on December 1, 2012, with a rental escalation of 10% at the beginning of the five-year
renewal option.
Jack in the Box, Inc. (Jack in the Box), which guarantees the Jack in the Box Eastern
Division, LP lease, operates over 2,000 quick-service restaurants primarily in the western and
southwestern United States. Jack in the Box has an S&P Credit Rating of BB- and is publicly traded
on the New York Stock Exchange under the symbol JBX. Jack in the Box leases approximately 2,600
square feet of the MT Spring Property pursuant to a ground lease, which commenced on July 9, 2001.
The annual base rent of $60,000 is fixed through the first five years of the lease term with rental
increases of 15% at the beginning of the second five-year period of the lease term, and rental
increases based on the consumer price index at the beginning of the third and fourth five-year
periods of the lease term, which expires on July 8, 2021.
Cole Realty has the sole and exclusive right to manage, operate, lease and supervise the
overall maintenance of the MT Spring Property and will receive a property management fee of 2.0% of
the monthly gross revenue from the MT Spring Property. We currently have no plans for any
renovations, improvements or development of the MT Spring Property. We believe the MT Spring
Property is adequately insured.
The MT Spring Loan has a fixed interest rate of 5.636% per annum with monthly interest-only
payments and the outstanding principal and any accrued and unpaid interest is due on April 1, 2016
(the MT Spring Maturity Date).
The MT Spring Loan may not be prepaid, in whole or in part, except under the following
circumstances: (i) full prepayment may be made on any of the three (3) monthly payment dates
occurring immediately prior to the maturity date, and (ii) partial prepayments may be made as a
result of default for the application of insurance or condemnation proceeds to reduce the
outstanding principal balance of the MT Spring Loan. Notwithstanding the prepayment limitations, MT
Spring may sell the MT Spring Property to a buyer that assumes the MT Spring Loan. The transfer
would be subject to the conditions set forth in the MT Spring Loan documents, including without
limitation, the Bear Stearns approval of the proposed buyer and the payment of the Bear Stearns
fees, costs and expenses associated with the sale of the MT Spring Property and the assumption of
the MT Spring Loan.
In the event the MT Spring Loan is not paid off on the MT Spring Maturity Date, the MT Spring
Loan includes hyperamortization provisions. The interest rate during the hyperamortization period
shall be the fixed interest rate of the greater of (i) the Initial Interest Rate plus two percent
(2.0%) per annum, and (ii) the then current Ten Year Treasury Yield plus two percent (2.0%) per
annum, not to exceed the Initial Interest Rate plus five percent (5.0%) per annum. The MT Spring
Maturity Date, under the hyperamortization provisions, will be extended by twenty (20) years.
During such period, Bear Stearns will apply 100% of the rents collected to (i) all payments for
escrow or reserve accounts, (ii) payment of interest at the original fixed interest rate, (iii)
payments for the replacement reserve account, (iv) any other amounts due in accordance with the MT
Spring Loan other than any additional interest expense, (v) any operating expenses of the MT Spring
Property pursuant to an approved annual budget, (vi) any extraordinary expenses, (vii) payments to
be applied to the reduction of the principal balance of the MT Spring Loan, and (viii) any
additional interest expense. Any additional interest expense that is not paid will be added to the
principal balance of the MT Spring Loan.
CVS Portsmouth, Ohio
On March 8, 2006, Cole CV Scioto Trail OH, LLC, a Delaware limited liability company (CV
Scioto Trail), a wholly-owned subsidiary of COP II, acquired a 100% fee simple interest in an
approximately 10,100 square foot single-tenant distribution center (the CV Scioto Trail
Property), from Scioto Trail Company (Scioto), a company not affiliated with us, our
subsidiaries or affiliates. The CV Scioto Trail Property was constructed in 1997 on an
approximately .82 acre site in Portsmouth, Ohio. The area surrounding the CV Scioto Trail Property
is shared by single-family residential and light commercial development.
The purchase price of the CV Scioto Trail Property was approximately $2.2 million, exclusive
of closing costs. The acquisition was funded by net proceeds from our ongoing public offering and
an approximately $1.8 million loan from Wachovia secured by the CV Scioto Trail Property (the CV
Scioto Trail Loan). In connection with the acquisition, we paid an affiliate of our advisor an
acquisition fee of approximately $43,000 and our advisor a finance coordination fee of
approximately $14,000.
The CV Scioto Trail Property is 100% leased to Revco Discount Drug Centers, Inc. (Revco), a
wholly-owned subsidiary of CVS, which is the guarantor under the lease. The CV Scioto Trail
Property is subject to a net lease, which commenced on July 6, 1998. Pursuant to the lease, the
tenant is required to pay substantially all operating expenses and capital expenditures in addition
to base rent. The annual base rent of $153,333 is fixed through July 31, 2008. The lease provides
for a 2.0% rental escalation every five
years thereafter through the end of the initial lease term, which expires July 31, 2018. Revco
has four options to renew the lease, each for an additional five-year term beginning on August 1,
2018.
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CVS operates over 5,000 stores in 36 states. CVS has a Standard & Poors credit rating of A-
and the companys stock is publicly traded on the New York Stock Exchange under the ticker symbol
CVS.
Cole Realty has the sole and exclusive right to manage, operate, lease and supervise the
overall maintenance of the CV Scioto Trail Property and will receive a property management fee of
2.0% of the monthly gross revenue from the CV Scioto Trail Property. We currently have no plans for
any renovations, improvements or development of the CV Scioto Trail Property. We believe the CV
Scioto Trail Property is adequately insured.
The CV Scioto Trail Loan consists of an approximately $1.4 million fixed interest rate tranche
(the CV Scioto Fixed Rate Tranche) and a $329,000 variable interest rate tranche (the CV Scioto
Variable Rate Tranche). The CV Scioto Fixed Rate Tranche has a fixed interest rate of 5.67% per
annum with monthly interest-only payments, and the outstanding principal and any accrued and unpaid
interest is due on March 11, 2011 (the CV Scioto Trail Maturity Date). The CV Scioto Variable
Rate Tranche has a variable interest rate based on the one-month LIBOR rate plus 200 basis points
with monthly interest-only payments, and the outstanding principal and any accrued and unpaid
interest is due on June 8, 2006. The CV Scioto Trail Loan generally is non-recourse to CV Scioto
Trail and COP II, but both are liable for customary non-recourse carveouts.
The CV Scioto Trail Loan may not be prepaid, in whole or in part, except under the following
circumstances: (i) full prepayment may be made on any of the three (3) monthly payment dates
occurring immediately prior to the CV Scioto Trail Maturity Date and (ii) partial prepayments may
be made as a result of Wachovias election to apply insurance or condemnation proceeds may be made
to reduce the outstanding principal balance of the CV Scioto Trail Loan. Notwithstanding the
prepayment limitations, CV Scioto may sell the CV Scioto Trail Property to a buyer that assumes the
CV Scioto Trail Loan. The transfer would be subject to Wachovias approval of the proposed buyer
and the payment of Wachovias costs and expenses associated with the sale of the CV Scioto Trail
Property.
In the event the CV Scioto Fixed Rate Tranche is not paid off on the CV Scioto Trail Maturity
Date, the CV Scioto Trail Loan would become subject to hyperamortization provisions that are
included in the terms of the CV Scioto Trail Loan. The CV Scioto Trail Maturity Date, pursuant to
the hyperamortization provisions, will be extended by twenty (20) years. During such period,
Wachovia will apply 100% of the rents collected to (i) all payments due to Wachovia under the CV
Scioto Trail Loan, including any payments to escrows or reserve accounts, (ii) any operating
expenses of the CV Scioto Trail Property pursuant to an approved annual budget, (iii) any
extraordinary expenses and (iv) any accrued interest under the CV Scioto Trail Loan. Any remaining
amount will be applied to the reduction of the principal balance of the CV Scioto Trail Loan, until
paid in full. The interest rate during the hyperamortization period shall be the greater of (x) the
fixed interest rate of 5.67% plus two percent (2.0%) or (y) the Treasury Constant Maturity Yield
Index plus two percent (2.0%).
Wawa Portfolio Hockessin, Delaware; Manahawkin, New Jersey; Narberth, Pennsylvania
On March 29, 2006, Cole OP II acquired 100% of the membership interests (the WW II
Interests) in Cole WW II, LLC (WW II) from Series A, LLC, an affiliate of our advisor. WW II
owns, as its only assets, a portfolio of three separate freestanding convenience stores (the Wawa
Properties), each of which is leased to Wawa, Inc. (Wawa). The Wawa Properties were constructed
between 2000 and 2001 and consist of an approximately 5,200 square foot single-tenant convenience
store on an approximately 1.6 acre site located in Hockessin, Delaware, an approximately 4,700
square foot single-tenant convenience store on an approximately 6.5 acre site located in
Manahawkin, New Jersey, and an approximately 4,500 square foot single-tenant convenience store on
an approximately 0.9 acre site located in Narberth, Pennsylvania. The area surrounding the Wawa
Properties is comprised of general light commercial, small retail, limited office and single-family
residential developments.
The purchase price of the WW II Interests was approximately $13.5 million, exclusive of
closing costs. The acquisition was funded by net proceeds from our ongoing public offering and an
approximately $7.2 million loan from SouthTrust Bank (SouthTrust), which was assumed by Cole OP
II and secured by the Wawa Properties (the WW II Loan).
The Wawa Properties are 100% leased to Wawa under a master lease agreement, which commenced on
December 28, 2001. Pursuant to the master lease, the tenant is required to pay substantially all
operating expenses and capital expenditures in addition to base rent for each of the Wawa
Properties. The current aggregate annual base rent of $1,013,117 is fixed through the initial lease
term, which expires on December 31, 2021. Wawa has five options to renew the lease. The first
option is for an additional lease term of nine years and nine months, the next option is for an
additional lease term of five years and three months, and the last three option periods are for
five year lease terms each, subject to certain rental rate adjustments.
Wawa operates over 500 convenience stores in five states, specializing in convenience foods,
grocery items and gasoline products. In determining the creditworthiness of Wawa, we considered a
variety of factors, including historical financial information and financial performance and local
market position.
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Cole Realty has the sole and exclusive right to manage, operate, lease and supervise the
overall maintenance of the Wawa Properties and will receive a property management fee of 2.0% of
the monthly gross revenue from the Wawa Properties. We currently have no plans for any renovations,
improvements or development of the Wawa Properties. We believe the Wawa Properties are adequately
insured.
The WW II Loan has a variable interest rate based on the 30-day LIBOR plus 220 basis points
per annum (the WW II Interest Rate) with monthly interest-only payments and the outstanding
principal and any accrued and unpaid interest due on February 26, 2010 (the WW II Maturity Date).
The WW II Loan may be prepaid, in whole or in part, without premium or penalty. The WW II Loan is
generally non-recourse to WW II and Cole OP II, but both are liable for customary non-recourse
carveouts.
In the event the WW II Loan is not paid off on the WW II Maturity Date, the WW II Loan would become
subject to default provisions, including, that all obligations would become immediately due and
payable at the option of SouthTrust and the WW II Loan would be subject to a default interest rate
equal to the WW II Interest Rate plus 500 basis points.
Family Dollar and Charter One Bank Lakewood, Ohio
On April 20, 2006, Cole MT Lakewood OH, LLC, a Delaware limited liability company (MT
Lakewood), a wholly-owned subsidiary of Cole OP II, acquired a 100% fee simple interest in an
approximately 12,800 square foot multi-tenant retail building (the MT Lakewood Property), from SZ
Madison, LLC, which is not affiliated with us, our subsidiaries or affiliates. The MT Lakewood
Property was constructed in 1996 on an approximately .82 acre site in Lakewood, Ohio. The area
surrounding the MT Lakewood Property is shared by single and multi-family residential housing
developments.
The purchase price of the MT Lakewood Property was approximately $2.5 million, exclusive of
closing costs. The acquisition was funded by net proceeds from our ongoing public offering and an
approximately $1.9 million loan from Wachovia, which is secured by the MT Lakewood Property (the
MT Lakewood Loan). In connection with the acquisition, we paid an affiliate of our advisor an
acquisition fee of $49,000 and our advisor a finance coordination fee of approximately $13,000.
The MT Lakewood Property is 100% leased to two tenants, Revco, which is a wholly-owned
subsidiary of CVS, and Charter One Bank, N.A. (Charter One). Revco subleases their space to
Family Dollar, Inc., while Revco remains the guarantor under the lease.
The lease to Revco (the Revco Lease) is a net lease, which commenced on September 15, 1996,
pursuant to which Revco is required to pay certain operating expenses, capital expenditures, and a
proportionate amount of common area maintenance charges in addition to base rent. The annual base
rent of $180,900, increases to $191,700 on November 1, 2006 and is fixed through the end of the
initial lease term, which expires September 30, 2016. Revco has two options to renew the lease,
each for an additional five-year term beginning on October 1, 2016, with rental escalations of
approximately 5% at the beginning of each five-year renewal option.
The lease to Charter One (the Charter One Lease) is a net lease, which commenced on July 30,
1996, pursuant to which Charter One is required to pay certain operating expenses, capital
expenditures, and a proportionate amount of common area maintenance charges in addition to base
rent. Charter One has exercised its first renewal option under the Charter One Lease and the annual
base rent of $30,992, will increase to $33,898 on August 1, 2006 when the first renewal term
commences. The first renewal term expires on July 31, 2011. Charter One has an additional option to
renew the Charter One Lease at the end of the initial renewal term. Annual base rent during the
second renewal term will increase to $35,835. The additional renewal term is for a period of five
years.
Charter One is an operating entity of Citizens Financial Group which has branches, non-branch
retail, and commercial offices in 40 states. Charter One has an S&P Credit Rating of AA- and its
stock is publicly traded on the New York Stock Exchange under the ticker symbol CF.
Cole Realty has the sole and exclusive right to manage, operate, lease and supervise the
overall maintenance of the MT Lakewood Property and will receive a property management fee of 2.0%
of the monthly gross revenue from the MT Lakewood Property. We currently have no plans for any
renovations, improvements or development of the MT Lakewood Property. We believe the MT Lakewood
Property is adequately insured.
The MT Lakewood Loan consists of an approximately $1.3 million fixed interest rate tranche
(the MT Lakewood Fixed Rate Tranche) and a $612,000 variable interest rate tranche (the MT
Lakewood Variable Rate Tranche). The MT Lakewood Fixed
Rate Tranche has a fixed interest rate of 5.77% per annum with monthly interest-only payments.
The outstanding principal and any accrued and unpaid interest is due on May 11, 2011 (the MT
Lakewood Maturity Date). The MT Lakewood Variable Rate Tranche has a variable interest rate based
on the one-month LIBOR rate plus 200 basis points with monthly interest-only payments, and the
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outstanding principal and any accrued and unpaid interest is due on July 17, 2006. The MT Lakewood
Loan is generally non-recourse to MT Lakewood and Cole OP II, but both are liable for customary
non-recourse carveouts.
The MT Lakewood Loan may not be prepaid, in whole or in part, except under the following
circumstances: (i) full prepayment may be made on any of the three (3) monthly payment dates
occurring immediately prior to the MT
Lakewood Maturity Date and (ii) partial prepayments resulting from Wachovias election to
apply insurance or condemnation proceeds may be made to reduce the outstanding principal balance of
the MT Lakewood Loan. Notwithstanding the prepayment limitations, MT Lakewood may sell the MT
Lakewood Property to a buyer that assumes the MT Lakewood Loan. The transfer shall be subject to
Wachovias approval of the proposed buyer and the payment of Wachovias costs and expenses
associated with the sale of the MT Lakewood Property.
In the event the MT Lakewood Loan is not paid off on the MT Lakewood Maturity Date, the MT
Lakewood Loan includes hyperamortization provisions. The MT Lakewood Maturity Date, pursuant to the
hyperamortization provisions, will be extended by twenty (20) years. During such period, Wachovia
will apply 100% of the rents collected to (i) all payments due to Wachovia under the MT Lakewood
Loan, including any payments to escrows or reserve accounts, (ii) any operating expenses of the MT
Lakewood Property pursuant to an approved annual budget, (iii) any extraordinary expenses and (iv)
any accrued interest under the MT Lakewood Loan. Any remaining amount will be applied to the
reduction of the principal balance of the MT Lakewood Loan, until paid in full. The interest rate
during the hyperamortization period shall be the greater of (x) the fixed interest rate of 5.77%
plus two percent (2.0%) or (y) the Treasury Constant Maturity Yield Index plus two percent (2.0%).
Notwithstanding the forgoing, failure to make any required payments under the MT Lakewood Loan in a
timely manner will cause an event of default, which will result in a 4.0% default interest rate in
excess of the applicable interest rate, late charges equal to 5.0% of the amount of such overdue
payment, and all interest and principal becoming immediately due and payable in full.
Rite Aid Fremont, Ohio
On April 27, 2006, Cole RA Fremont OH, LLC, a Delaware limited liability company (RA
Fremont), a wholly-owned subsidiary of Cole OP II, acquired a 100% fee simple interest in an
approximately 11,300 square foot multi-tenant retail building (the RA Fremont Property), from
Geller and Associates, LLC, which is not affiliated with us, our subsidiaries or affiliates. The RA
Fremont Property was constructed in 1997 on an approximately 2.17 acre site in Fremont, Ohio. The
area surrounding the RA Fremont Property is shared by commercial and retail developments.
The purchase price of the RA Fremont Property was approximately $2.5 million, exclusive of
closing costs. The acquisition was funded by net proceeds from our ongoing public offering and an
approximately $2.0 million loan from Wachovia, which is secured by the RA Fremont Property (the RA
Fremont Loan). In connection with the acquisition, we paid an affiliate of our advisor an
acquisition fee of approximately $50,000 and our advisor a finance coordination fee of
approximately $20,000.
The RA Fremont Property is 100% leased to RA Ohio, which is a wholly-owned subsidiary of Rite
Aid, which guarantees the lease. The RA Fremont Property is subject to a net lease, which commenced
on February 2, 1998, pursuant to which the tenant is required to pay substantially all operating
expenses and capital expenditures in addition to base rent. The annual base rent of $201,955, is
fixed through the initial lease term, which expires February 28, 2018. Rite Aid has six options to
renew the lease, each for an additional five-year term beginning on March 1, 2018, with rental
escalations descending in a range from 5% at the beginning of the first renewal term to 4% at the
beginning of the final renewal term.
Rite Aid operates over 3,300 drugstores in 28 states and Washington, DC. Rite Aid has a
Standard and Poors credit rating of B+ and its stock is publicly traded on the New York Stock
Exchange under the symbol RAD.
Cole Realty has the sole and exclusive right to manage, operate, lease and supervise the
overall maintenance of the RA Fremont Property and will receive a property management fee of 2.0%
of the monthly gross revenue from the RA Fremont Property. We currently have no plans for any
renovations, improvements or development of the RA Fremont Property. We believe the RA Fremont
Property is adequately insured.
The RA Fremont Loan consists of an approximately $1.4 million fixed interest rate tranche (the
RA Fremont Fixed Rate Tranche) and a $632,000 variable interest rate tranche (the RA Fremont
Variable Rate Tranche).
The RA Fremont Fixed Rate Tranche has a fixed interest rate of 6.05% per annum with monthly
interest-only payments. The outstanding principal and any accrued and unpaid interest is due on May
11, 2011 (the RA Fremont Maturity Date). The RA Fremont Variable Rate Tranche has a variable
interest rate based on the one-month LIBOR rate plus 200 basis points with monthly
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interest-only payments, and the outstanding principal and any accrued and unpaid interest is due on July 27,
2006. The RA Fremont Loan is generally non-recourse to RA Fremont and Cole OP II, but both are
liable for customary non-recourse carveouts.
The RA Fremont Loan may not be prepaid, in whole or in part, except under the following
circumstances: (i) full prepayment may be made on any of the three (3) monthly payment dates
occurring immediately prior to the RA Fremont Maturity Date and (ii) partial prepayments resulting
from Wachovias election to apply insurance or condemnation proceeds may be made to reduce the
outstanding principal balance of the RA Fremont Loan. Notwithstanding the prepayment limitations,
RA Fremont may sell the RA Fremont Property to a buyer that assumes the RA Fremont Loan. The
transfer shall be subject to Wachovias approval of the proposed buyer and the payment of
Wachovias costs and expenses associated with the sale of the RA Fremont Property.
In the event the RA Fremont Loan is not paid off on the RA Fremont Maturity Date, the RA
Fremont Loan includes hyperamortization provisions. The RA Fremont Maturity Date, pursuant to the
hyperamortization provisions, will be extended by twenty (20) years. During such period, Wachovia
will apply 100% of the rents collected to (i) all payments due to Wachovia under the RA Fremont
Loan, including any payments to escrows or reserve accounts, (ii) any operating expenses of the RA
Fremont Property pursuant to an approved annual budget, (iii) any extraordinary expenses and (iv)
any accrued interest under the RA Fremont Loan. Any remaining amount will be applied to the
reduction of the principal balance of the RA Fremont Loan, until paid in full. The interest rate
during the hyperamortization period shall be the greater of (x) the fixed interest rate of 6.05%
plus two percent (2.0%) or (y) the Treasury Constant Maturity Yield Index plus two percent (2.0%).
Notwithstanding the forgoing, failure to make any required payments under the RA Fremont Loan in a
timely manner will cause an event of default, which will result in a 4.0% default interest rate in
excess of the applicable interest rate, late charges equal to 5.0% of the amount of such overdue
payment, and all interest and principal becoming immediately due and payable in full.
Rite Aid Cleveland, Ohio
On April 27, 2006, Cole RA Cleveland OH, LLC, a Delaware limited liability company (RA
Cleveland), a wholly-owned subsidiary of Cole OP II, acquired a 100% fee simple interest in an
approximately 11,300 square foot multi-tenant retail building (the RA Cleveland Property), from
Geller and Associates, which is not affiliated with us, our subsidiaries or affiliates. The RA
Cleveland Property was constructed in 1997 on an approximately .97 acre site in Cleveland, Ohio.
The area surrounding the RA Cleveland Property is shared by single family residential and
supporting commercial and retail developments.
The purchase price of the RA Cleveland Property was approximately $2.6 million, exclusive of
closing costs. The acquisition was funded by net proceeds from our ongoing public offering and an
approximately $2.1 million loan from Wachovia, which is secured by the RA Cleveland Property (the
RA Cleveland Loan). In connection with the acquisition, we paid an affiliate of our advisor an
acquisition fee of $51,000 and our advisor a finance coordination fee of approximately $20,000.
The RA Cleveland Property is 100% leased to RA Ohio, which is a wholly-owned subsidiary of
Rite Aid , which guarantees the lease. The RA Cleveland Property is subject to a net lease, which
commenced on June 8, 1998, pursuant to which the tenant is required to pay substantially all
operating expenses and capital expenditures in addition to base rent. The annual base rent of
$220,470, is fixed through the initial lease term, which expires June 30, 2018. Rite Aid has six
options to renew the lease, each for an additional five-year term beginning on July 1, 2018, with
rental escalations descending in a range from 5% at the beginning of the first renewal term to 4%
at the beginning of the final renewal term.
Rite Aid operates over 3,300 drugstores in 28 states and Washington, DC. Rite Aid has a
Standard and Poors credit rating of B+ and its stock is publicly traded on the New York Stock
Exchange under the symbol RAD.
Cole Realty has the sole and exclusive right to manage, operate, lease and supervise the
overall maintenance of the RA Cleveland Property and will receive a property management fee of 2.0%
of the monthly gross revenue from the RA Cleveland Property. We currently have no plans for any
renovations, improvements or development of the RA Cleveland Property. We believe the RA Cleveland
Property is adequately insured.
The RA Cleveland Loan consists of an approximately $1.4 million fixed interest rate tranche
(the RA Cleveland Fixed Rate Tranche) and a $642,000 variable interest rate tranche (the RA
Cleveland Variable Rate Tranche). The RA Cleveland Fixed Rate Tranche has a fixed interest rate of
6.05% per annum with monthly interest-only payments. The outstanding principal and any accrued and
unpaid interest is due on May 11, 2011 (the RA Cleveland Maturity Date). The RA Cleveland
Variable Rate Tranche has a variable interest rate based on the one-month LIBOR rate plus 200 basis
points with monthly interest-only payments, and the outstanding principal and any accrued and
unpaid interest is due on
July 27, 2006. The RA Cleveland Loan generally is non-recourse to RA Cleveland and Cole OP II,
but both are liable for customary non-recourse carveouts.
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The RA Cleveland Loan may not be prepaid, in whole or in part, except under the following
circumstances: (i) full prepayment may be made on any of the three (3) monthly payment dates
occurring immediately prior to the RA Cleveland Maturity Date and (ii) partial prepayments
resulting from Wachovias election to apply insurance or condemnation proceeds may be made to
reduce the outstanding principal balance of the RA Cleveland Loan. Notwithstanding the prepayment
limitations, RA Cleveland may sell the RA Cleveland Property to a buyer that assumes the RA
Cleveland Loan. The transfer shall be subject to Wachovias approval of the proposed buyer and the
payment of Wachovias costs and expenses associated with the sale of the RA Cleveland Property.
In the event the RA Cleveland Loan is not paid off on the RA Cleveland Maturity Date, the RA
Cleveland Loan includes hyperamortization provisions. The RA Cleveland Maturity Date, pursuant to
the hyperamortization provisions, will be extended by twenty (20) years. During such period,
Wachovia will apply 100% of the rents collected to (i) all payments due to Wachovia under the RA
Cleveland Loan, including any payments to escrows or reserve accounts, (ii) any operating expenses
of the RA Cleveland Property pursuant to an approved annual budget, (iii) any extraordinary
expenses and (iv) any accrued interest under the RA Cleveland Loan. Any remaining amount will be
applied to the reduction of the principal balance of the RA Cleveland Loan, until paid in full. The
interest rate during the hyperamortization period shall be the greater of (x) the fixed interest
rate of 6.05% plus two percent (2.0%) or (y) the Treasury Constant Maturity Yield Index plus two
percent (2.0%). Notwithstanding the forgoing, failure to make any required payments under the RA
Cleveland Loan in a timely manner will cause an event of default, which will result in a 4.0%
default interest rate in excess of the applicable interest rate, late charges equal to 5.0% of the
amount of such overdue payment, and all interest and principal becoming immediately due and payable
in full.
Walgreens Knoxville, Tennessee
On May 8, 2006, Cole WG Knoxville TN, LLC, a Delaware limited liability company (WG
Knoxville), a wholly-owned subsidiary of Cole Operating Partnership II (Cole OP II), our
operating partnership, acquired a 100% fee simple interest in an approximately 15,100 square foot
single-tenant retail building (the WG Knoxville Property), from Halls Partners II, LP., which is
not affiliated with us, our subsidiaries or affiliates. The WG Knoxville Property was constructed
in 2000 on an approximately 2.07 acre site in Knoxville, Tennessee. The area surrounding the WG
Knoxville Property is shared by commercial and retail developments.
The purchase price of the WG Knoxville Property was approximately $4.8 million, exclusive of
closing costs. The acquisition was funded by net proceeds from our ongoing public offering and an
approximately $3.8 million loan from Wachovia, which is secured by the WG Knoxville Property (the
WG Knoxville Loan). In connection with the acquisition, we paid an affiliate of our advisor an
acquisition fee of $95,000 and our advisor a finance coordination fee of approximately $30,000.
The WG Knoxville Property is 100% leased to Walgreens. The WG Knoxville Property is subject to
a net lease, which commenced on May 1, 2000, pursuant to which the tenant is required to pay
substantially all operating expenses and capital expenditures in addition to base rent. The annual
base rent of $350,000 is fixed through the initial lease term, which expires April 30, 2020, and
all renewal options. Walgreens has eight options to renew the lease, each for an additional
five-year term beginning on May 1, 2020.
Walgreens has over 4,900 stores in 45 states and Puerto Rico. Walgreens has a Standard &
Poors credit rating of A+ and its stock is publicly traded on the New York Stock Exchange under
the ticker symbol WAG.
Cole Realty has the sole and exclusive right to manage, operate, lease and supervise the
overall maintenance of the WG Knoxville Property and will receive a property management fee of 2.0%
of the monthly gross revenue from the WG Knoxville Property. We currently have no plans for any
renovations, improvements or development of the WG Knoxville Property. We believe the WG Knoxville
Property is adequately insured.
The WG Knoxville Loan consists of an approximately $3.1 million fixed interest rate tranche
(the WG Knoxville Fixed Rate Tranche) and a $712,000 variable interest rate tranche (the WG
Knoxville Variable Rate Tranche). The WG Knoxville Fixed Rate Tranche has a fixed interest rate of
5.80% per annum with monthly interest-only payments. The outstanding principal and any accrued and
unpaid interest is due on May 11, 2011 (the WG Knoxville Maturity Date).
The WG Knoxville Variable Rate Tranche has a variable interest rate based on the one-month
LIBOR rate plus 200 basis points with monthly interest-only payments, and the outstanding principal
and any accrued and unpaid interest is due on August 8, 2006. The WG Knoxville Loan is generally
non-recourse to WG Knoxville and Cole OP II, but both are liable for customary non-recourse
carveouts.
The WG Knoxville Loan may not be prepaid, in whole or in part, except under the following
circumstances: (i) full prepayment may be made on any of the three (3) monthly payment dates
occurring immediately prior to the WG Knoxville Maturity Date and (ii) partial prepayments
resulting from Wachovias election to apply insurance or condemnation proceeds may be made to
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reduce the outstanding principal balance of the WG Knoxville Loan. Notwithstanding the prepayment
limitations, WG Knoxville may sell the WG Knoxville Property to a buyer that assumes the WG
Knoxville Loan. The transfer shall be subject to Wachovias approval of the proposed buyer and the
payment of Wachovias costs and expenses associated with the sale of the WG Knoxville Property.
In the event the WG Knoxville Loan is not paid off on the WG Knoxville Maturity Date, the WG
Knoxville Loan includes hyperamortization provisions. The WG Knoxville Maturity Date, pursuant to
the hyperamortization provisions, will be extended by twenty (20) years. During such period,
Wachovia will apply 100% of the rents collected to (i) all payments due to Wachovia under the WG
Knoxville Loan, including any payments to escrows or reserve accounts, (ii) any operating expenses
of the WG Knoxville Property pursuant to an approved annual budget, (iii) any extraordinary
expenses and (iv) any accrued interest under the WG Knoxville Loan. Any remaining amount will be
applied to the reduction of the principal balance of the WG Knoxville Loan, until paid in full.
The interest rate during the hyperamortization period shall be the greater of (x) the fixed
interest rate of 5.80% plus two percent (2.0%) or (y) the Treasury Constant Maturity Yield Index
plus two percent (2.0%). Notwithstanding the forgoing, failure to make any required payments under
the WG Knoxville Loan in a timely manner will cause an event of default, which will result in a
4.0% default interest rate in excess of the applicable interest rate, late charges equal to 5.0% of
the amount of such overdue payment, and all interest and principal becoming immediately due and
payable in full.
Conns San Antonio, Texas
On May 26, 2006, Cole OP II, directly and through a wholly-owned subsidiary acquired 100% of
the partnership interests (the CO San Antonio Interests) in Cole CO San Antonio TX, LP (CO San
Antonio) from Series D, LLC, and Cole GP San Antonio TX CO, LLC, both affiliates of our advisor.
CO San Antonio owns, as its only asset, a retail building (the CO San Antonio Property), leased
to CAI, LP, a wholly-owned subsidiary of Conns Inc. (Conns), which guarantees the lease. The CO
San Antonio Property was built in 2002 and consists of an approximately 25,000 square foot
single-tenant retail building on an approximately 2.5 acre site located in San Antonio, Texas. The
area surrounding the CO San Antonio Property is largely surrounded by commercial retail
developments.
The purchase price of the CO San Antonio Interests was approximately $4.6 million, exclusive
of closing costs. The acquisition was funded by net proceeds from our ongoing public offering, and
the assumption of an approximately $3.6 million loan from Wachovia secured by the CO San Antonio
Property (the CO San Antonio Loan). In connection with the acquisition, we paid an affiliate of
our advisor a finance coordination fee of approximately $36,000. A majority of our board of
directors, including all of our independent directors not otherwise interested in the acquisition,
approved the acquisition as being fair and reasonable to us and at a price to us no greater than
the cost of the assets to the affiliates. The cost to us is not in excess of the current appraised
value of the property.
The CO San Antonio Property is subject to a net lease, which commenced on April 15, 2002.
Pursuant to the lease agreement, the tenant is required to pay substantially all operating expenses
and capital expenditures in addition to base rent. The current aggregate annual base rent of
$338,000 has rental escalations of 4.0% beginning on May 1, 2008 and every three years thereafter
through the initial lease term which expires on April 30, 2017. Conns has five options to renew
the lease, each for an additional three year period, with rental escalations of 4.0% at the
beginning of each three year renewal term.
Conns is a specialty retailer of home appliances and consumer electronics operating 57 stores
in the southwestern United States. Conns is publicly traded on the Nasdaq under the ticker symbol
CONN.
Cole Realty has the sole and exclusive right to manage, operate, lease and supervise the
overall maintenance of the CO San Antonio Property and will receive a property management fee of
2.0% of the monthly gross revenue from the CO San Antonio Property. We currently have no plans for
any renovations, improvements or development of the CO San Antonio Property. We believe the CO San
Antonio Property is adequately insured.
The CO San Antonio Loan, which is secured by the CO San Antonio Property, consists of an
approximately $2.5 million fixed interest rate tranche (the CO San Antonio Fixed Rate Tranche)
and a $1.1 million variable interest rate tranche (the CO San Antonio Variable Rate Tranche). The
CO San Antonio Fixed Rate Tranche has a fixed interest rate of 5.86% per annum with monthly
interest-only payments and the outstanding principal and any accrued and unpaid interest is due on
May 11, 2011 (the CO San Antonio Maturity Date). The CO San Antonio Variable Rate Tranche has a
variable interest rate based on the one-month LIBOR rate plus 200 basis points with monthly
interest-only payments, and the outstanding principal and any accrued and unpaid interest is
due on July 25, 2006. The CO San Antonio Loan is generally non-recourse to CO San Antonio and
COP II, but both are liable for customary non-recourse carveouts.
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The CO San Antonio Loan may be prepaid in whole but not in part at any time after the first
anniversary of the date of the note. Partial prepayments are provided for under the following
circumstances: (i) partial prepayments may be made as a result of Wachovias election to apply
insurance or condemnation proceeds to reduce the outstanding principal balance of the CO San
Antonio Loan, and (ii) partial prepayments required on or prior to the maturity date of the CO San
Antonio Variable Rate Tranche. Notwithstanding the partial prepayment limitations, CO San Antonio
may sell the CO San Antonio Property to a buyer that assumes the CO San Antonio Loan. The transfer
would be subject to Wachovias approval of the proposed buyer and the payment of Wachovias costs
and expenses associated with the sale of the CO San Antonio Property.
In the event the CO San Antonio Loan is not paid off on the CO San Antonio Maturity Date, the
CO San Antonio Loan includes hyperamortization provisions. The CO San Antonio Maturity Date,
pursuant to the hyperamortization provisions, will be extended by twenty (20) years. During such
period, Wachovia will apply 100% of the rents collected to (i) all payments due to Wachovia under
the CO San Antonio Loan, including any payments to escrows or reserve accounts, (ii) any operating
expenses of the CO San Antonio Property pursuant to an approved annual budget, (iii) any
extraordinary expenses and (iv) any accrued interest under the CO San Antonio Loan. Any remaining
amount will be applied to the reduction of the principal balance of the CO San Antonio Loan, until
paid in full.
The interest rate during the hyperamortization period shall be the greater of (x) the fixed
interest rate of 5.86% plus two percent (2.0%) or (y) the Treasury Constant Maturity Yield Index
plus two percent (2.0%). Notwithstanding the forgoing, failure to make any required payments under
the CO San Antonio Loan in a timely manner will cause an event of default, which will result in a
4.0% default interest rate in excess of the applicable interest rate, late charges equal to 5.0% of
the amount of such overdue payment, and all interest and principal becoming immediately due and
payable in full.
Rite Aid Defiance, Ohio
On May 26, 2006, Cole OP II acquired 100% of the membership interests (the RA Defiance
Interests) in Cole RA Defiance OH, LLC (RA Defiance) from Cole Acquisitions I, LLC, f/k/a Cole
Takedown, LLC (Cole Acquisitions), which is an affiliate of our advisor. RA Defiance owns, as its
only asset, a retail building (the RA Defiance Property) leased to RA Ohio, which is a
wholly-owned subsidiary of Rite Aid, which guarantees the lease. The RA Defiance Property was built
in 2005 and consists of an approximately 14,600 square foot single-tenant retail building on an
approximately 1.9 acre site located in Defiance, Ohio. The area surrounding the RA Defiance
Property is surrounded by commercial and residential developments.
The purchase price of the RA Defiance Interests was approximately $4.3 million, exclusive of
closing costs. The acquisition was funded by net proceeds from our ongoing public offering, and the
assumption of an approximately $2.3 million loan from Wachovia secured by the RA Defiance Property
(the RA Defiance Loan). In connection with the acquisition, we paid our advisor a finance
coordination fee of approximately $23,000. A majority of our board of directors, including all of
our independent directors not otherwise interested in the acquisition, approved the acquisition as
being fair and reasonable to us and at a price to us no greater than the cost of the assets to the
affiliates. The cost to us is not in excess of the current appraised value of the property.
The RA Defiance Property is subject to a net lease, which commenced on January 14, 2005.
Pursuant to the lease agreement, the tenant is required to pay substantially all operating expenses
and capital expenditures in addition to base rent. The annual base rent of $337,917 is fixed
through the initial lease term, which expires January 31, 2026. Rite Aid has six options to renew
the lease, each for an additional five-year period beginning on February 1, 2026, with rental
escalations of 4.0% at the start of each five-year renewal term.
Rite Aid operates over 3,300 drugstores in 28 states and Washington, DC. Rite Aid has a
Standard and Poors credit rating of B+ and its stock is publicly traded on the New York Stock
Exchange under the symbol RAD.
Cole Realty has the sole and exclusive right to manage, operate, lease and supervise the
overall maintenance of the RA Defiance Property and will receive a property management fee of 2.0%
of the monthly gross revenue from the RA Defiance Property. We currently have no plans for any
renovations, improvements or development of the RA Defiance Property. We believe the RA Defiance
Property is adequately insured.
The RA Defiance Loan has a fixed interest rate of 5.76% per annum with monthly interest-only
payments. The outstanding principal and any accrued and unpaid interest is due on January 11, 2016
(the RA Defiance Maturity Date). The RA Defiance Loan is generally non-recourse to RA Defiance
and Cole OP II, but both are liable for customary non-recourse carveouts.
The RA Defiance Loan may not be prepaid, in whole or in part, except under the following
circumstances: (i) full prepayment may be made on any of the three (3) monthly payment dates
occurring immediately prior to the RA Defiance Maturity Date and (ii) partial prepayments resulting
from Wachovias election to apply insurance or condemnation proceeds may be made to
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reduce the outstanding principal balance of the RA Defiance Loan. Notwithstanding the prepayment limitations,
RA Defiance may sell the RA Defiance Property to a buyer that assumes the RA Defiance Loan. The
transfer shall be subject to Wachovias approval of the proposed buyer and the payment of
Wachovias costs and expenses associated with the sale of the RA Defiance Property.
In the event the RA Defiance Loan is not paid off on the RA Defiance Maturity Date, the RA
Defiance Loan includes hyperamortization provisions. The RA Defiance Maturity Date, pursuant to the
hyperamortization provisions, will be extended by twenty (20) years. During such period, Wachovia
will apply 100% of the rents collected to (i) all payments due to Wachovia under the RA Defiance
Loan, including any payments to escrows or reserve accounts, (ii) any operating expenses of the RA
Defiance Property pursuant to an approved annual budget, (iii) any extraordinary expenses and (iv)
any accrued interest under the RA Defiance Loan. Any remaining amount will be applied to the
reduction of the principal balance of the RA Defiance Loan, until paid in full. The interest rate
during the hyperamortization period shall be the greater of (x) the fixed interest rate of 5.76%
plus two percent (2.0%) or (y) the Treasury Constant Maturity Yield Index plus two percent (2.0%).
Notwithstanding the forgoing, failure to make any required payments under the RA Defiance Loan in a
timely manner will cause an event of default, which will result in a 4.0% default interest rate in
excess of the applicable interest rate, late charges equal to 5.0% of the amount of such overdue
payment, and all interest and principal becoming immediately due and payable in full.
CVS Madison, Mississippi
On May 26, 2006, Cole OP II acquired 100% of the membership interests (the CV Madison
Interests) in Cole CV Madison MS, LLC (CV Madison) from Cole Acquisitions, which is an affiliate
of our advisor. CV Madison owns, as its only asset, a retail building (the CV Madison Property),
leased to CVS EGL Highland Madison MS, Inc., (CVS EGL), which is a wholly-owned subsidiary of
CVS, which guarantees the lease. The CV Madison Property was built in 2004 and consists of an
approximately 13,800 square foot single-tenant retail building on an approximately 1.5 acre site
located in Madison, Mississippi. The area surrounding the CV Madison Property is surrounded by
commercial and residential developments.
The purchase price of the CV Madison Interests was approximately $4.5 million, exclusive of
closing costs. The acquisition was funded by net proceeds from our ongoing public offering, and the
assumption of an approximately $2.8 million loan from Wachovia secured by the CV Madison Property
(the CV Madison Loan). In connection with the acquisition, we paid our advisor a finance
coordination fee of approximately $28,000. A majority of our board of directors, including all of
our independent directors not otherwise interested in the acquisition, approved the acquisition as
being fair and reasonable to us and at a price to us no greater than the cost of the assets to the
affiliates. The cost to us is not in excess of the current appraised value of the property.
The CV Madison Property is subject to a net lease, which commenced on June 11, 2004, pursuant
to which the tenant is required to pay substantially all operating expenses and capital
expenditures in addition to base rent. The annual base rent of $302,484 is fixed through the
initial lease term, which expires June 10, 2024. The tenant has four options to renew the lease,
each for an additional five-year term beginning on June 11, 2024, with rental escalations
descending in a range of 5.0% at the start of first five-year renewal option to 2.0% at the final
renewal option.
CVS operates over 5,000 stores in 36 states. CVS has a Standard & Poors credit rating of A-
and the companys stock is publicly traded on the New York Stock Exchange under the ticker symbol
CVS.
Cole Realty has the sole and exclusive right to manage, operate, lease and supervise the
overall maintenance of the CV Madison Property and will receive a property management fee of 2.0%
of the monthly gross revenue from the CV Madison Property. We currently have no plans for any
renovations, improvements or development of the CV Madison Property. We believe the CV Madison
Property is adequately insured.
The CV Madison Loan has a fixed interest rate of 5.60% per annum with monthly interest-only
payments. The outstanding principal and any accrued and unpaid interest is due on February 11, 2016
(the CV Madison Maturity Date). The CV Madison Loan is generally non-recourse to CV Madison and
Cole OP II, but both are liable for customary non-recourse carveouts.
The CV Madison Loan may not be prepaid, in whole or in part, except under the following
circumstances: (i) full prepayment may be made on any of the three (3) monthly payment dates
occurring immediately prior to the CV Madison Maturity Date and (ii) partial prepayments resulting
from Wachovias election to apply insurance or condemnation proceeds may be made to reduce the
outstanding principal balance of the CV Madison Loan. Notwithstanding the prepayment limitations,
CV Madison may sell the CV Madison Property to a buyer that assumes the CV Madison Loan. The
transfer shall be subject to Wachovias approval of the proposed buyer and the payment of
Wachovias costs and expenses associated with the sale of the CV Madison Property.
In the event the CV Madison Loan is not paid off on the CV Madison Maturity Date, the CV
Madison Loan includes hyperamortization provisions. The CV Madison Maturity Date, pursuant to the
hyperamortization provisions, will be extended by
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twenty (20) years. During such period, Wachovia
will apply 100% of the rents collected to (i) all payments due to Wachovia under the CV Madison
Loan, including any payments to escrows or reserve accounts, (ii) any operating expenses of the CV
Madison Property pursuant to an approved annual budget, (iii) any extraordinary expenses and (iv)
any accrued interest under the CV Madison Loan. Any remaining amount will be applied to the
reduction of the principal balance of the CV Madison Loan, until paid in full. The interest rate
during the hyperamortization period shall be the greater of (x) the fixed interest rate of 5.60%
plus two percent (2.0%) or (y) the Treasury Constant Maturity Yield Index plus two percent (2.0%).
Notwithstanding the forgoing, failure to make any required payments under the CV Madison Loan in a
timely manner will cause an event of default, which will result in a 4.0% default interest rate in
excess of the applicable interest rate, late charges equal to 5.0% of the amount of such overdue
payment, and all interest and principal becoming immediately due and payable in full.
Dollar General Crossville, Tennessee
On June 2, 2006, Cole DG Crossville TN, LLC, a Delaware limited liability company (DG
Crossville), a wholly-owned subsidiary of Cole OP II, acquired a 100% fee simple interest in an
approximately 24,300 square foot single-tenant retail building (the DG Crossville Property), from
GEC Crossville, LLC, which is not affiliated with us, our subsidiaries or affiliates. The DG
Crossville Property was constructed in 2006 on an approximately 2.73 acre site in Crossville,
Tennessee. The area surrounding the DG Crossville Property is shared by commercial and retail
developments.
The purchase price of the DG Crossville Property was $3.0 million, exclusive of closing costs.
The acquisition was funded by net proceeds from our ongoing public offering and a $2.4 million loan
from Wachovia, which is secured by the DG Crossville Property (the DG Crossville Loan). In
connection with the acquisition, we paid an affiliate of our advisor an acquisition fee of
approximately $60,000 and our advisor a finance coordination fee of approximately $20,000.
The DG Crossville Property is 100% leased to Dolgencorp, Inc., which is a wholly-owned
subsidiary of Dollar General Corporation (Dollar General), which guarantees the lease. The DG
Crossville Property is subject to a net lease, which commenced on April 1, 2006, pursuant to which
the tenant is required to pay substantially all operating expenses and capital expenditures in
addition to base rent. The annual base rent of $217,852 is fixed through the first ten years of the
initial lease term and increases to $239,637 in the eleventh year through the initial lease term,
which expires March 31, 2021. Dollar General has six options to renew the lease, each for an
additional five-year term beginning on April 1, 2021, with rental escalations of 5% at the
beginning of each five year renewal term.
Dollar General operates over 8,000 retail stores in the United States selling basic goods and
consumables. Dollar General has a Standard and Poors credit rating of BBB- and its stock is
publicly traded on the New York Stock Exchange under the symbol DG.
Cole Realty has the sole and exclusive right to manage, operate, lease and supervise the
overall maintenance of the DG Crossville Property and will receive a property management fee of
2.0% of the monthly gross revenue from the DG Crossville Property. We currently have no plans for
any renovations, improvements or development of the DG Crossville Property. We believe the DG
Crossville Property is adequately insured.
The DG Crossville Loan consists of an approximately $1.95 million fixed interest rate tranche
(the DG Crossville Fixed Rate Tranche) and a $450,000 variable interest rate tranche (the DG
Crossville Variable Rate Tranche). The DG Crossville Fixed Rate Tranche has a fixed interest rate
of 5.75% per annum with monthly interest-only payments. The outstanding principal and any accrued
and unpaid interest is due on June 11, 2016 (the DG Crossville Maturity Date). The DG Crossville
Variable Rate Tranche has a variable interest rate based on the one-month LIBOR rate plus 200 basis
points with monthly interest-only payments, and the outstanding principal and any accrued and
unpaid interest is due on August 26, 2006. The DG Crossville Loan is generally non-recourse to DG
Crossville and Cole OP II, but both are liable for customary non-recourse carveouts.
The DG Crossville Loan may not be prepaid, in whole or in part, except under the following
circumstances: (i) full prepayment may be made on any of the three (3) monthly payment dates
occurring immediately prior to the DG Crossville Maturity Date and (ii) partial prepayments
resulting from Wachovias election to apply insurance or condemnation proceeds may be made to
reduce the outstanding principal balance of the DG Crossville Loan. Notwithstanding the prepayment
limitations, DG Crossville may sell the DG Crossville Property to a buyer that assumes the DG
Crossville Loan. The transfer shall be subject to Wachovias approval of the proposed buyer and the
payment of Wachovias costs and expenses associated with the sale of the DG Crossville Property.
In the event the DG Crossville Loan is not paid off on the DG Crossville Maturity Date, the DG
Crossville Loan includes hyperamortization provisions. The DG Crossville Maturity Date, pursuant to
the hyperamortization provisions, will be extended by
twenty (20) years. During such period, Wachovia will apply 100% of the rents collected to (i)
all payments due to Wachovia under the DG Crossville Loan, including any payments to escrows or
reserve accounts, (ii) any operating expenses of the DG Crossville
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Property pursuant to an approved annual budget, (iii) any extraordinary expenses and (iv) any accrued interest under the DG
Crossville Loan. Any remaining amount will be applied to the reduction of the principal balance of
the DG Crossville Loan, until paid in full. The interest rate during the hyperamortization period
shall be the greater of (x) the fixed interest rate of 5.75% plus two percent (2.0%) or (y) the
Treasury Constant Maturity Yield Index plus two percent (2.0%). Notwithstanding the forgoing,
failure to make any required payments under the DG Crossville Loan in a timely manner will cause an
event of default, which will result in a 4.0% default interest rate in excess of the applicable
interest rate, late charges equal to 5.0% of the amount of such overdue payment, and all interest
and principal becoming immediately due and payable in full.
Dollar General Ardmore, Tennessee
On June 9, 2006, Cole DG Ardmore TN, LLC, a Delaware limited liability company (DG Ardmore),
a wholly-owned subsidiary of Cole OP II, acquired a 100% fee simple interest in an approximately
24,300 square foot single-tenant retail building (the DG Ardmore Property), from GES Ardmore,
LLC, which is not affiliated with us, our subsidiaries or affiliates. The DG Ardmore Property was
constructed in 2005 on an approximately 3.8 acre site in Ardmore, Tennessee. The area surrounding
the DG Ardmore Property is shared by commercial and residential developments.
The purchase price of the DG Ardmore Property was $2.8 million, exclusive of closing costs.
The acquisition was funded by net proceeds from our ongoing public offering and an approximately
$2.2 million loan from Wachovia, which is secured by the DG Ardmore Property (the DG Ardmore
Loan). In connection with the acquisition, we paid an affiliate of our advisor an acquisition fee
of approximately $55,000 and our advisor a finance coordination fee of approximately $18,000.
The DG Ardmore Property is 100% leased to Dolgencorp, Inc., which is a wholly-owned subsidiary
of Dollar General, which guarantees the lease. The DG Ardmore Property is subject to a net lease,
which commenced on December 1, 2005, pursuant to which the tenant is required to pay substantially
all operating expenses and capital expenditures in addition to base rent. The annual base rent of
$208,116 is fixed through the first ten years of the initial lease term and increases to $228,928
in the eleventh year through the initial lease term, which expires November 30, 2020. Dollar
General has six options to renew the lease, each for an additional five-year term beginning on
December 1, 2020, with rental escalations of 5% at the beginning of each five year renewal term.
Cole Realty has the sole and exclusive right to manage, operate, lease and supervise the
overall maintenance of the DG Ardmore Property and will receive a property management fee of 2.0%
of the monthly gross revenue from the DG Ardmore Property. We currently have no plans for any
renovations, improvements or development of the DG Ardmore Property. We believe the DG Ardmore
Property is adequately insured.
The DG Ardmore Loan consists of an approximately $1.8 million fixed interest rate tranche (the
DG Ardmore Fixed Rate Tranche) and a $416,000 variable interest rate tranche (the DG Ardmore
Variable Rate Tranche). The DG Ardmore Fixed Rate Tranche has a fixed interest rate of 5.79% per
annum with monthly interest-only payments. The outstanding principal and any accrued and unpaid
interest is due on June 11, 2016 (the DG Ardmore Maturity Date). The DG Ardmore Variable Rate
Tranche has a variable interest rate based on the one-month LIBOR rate plus 200 basis points with
monthly interest-only payments, and the outstanding principal and any accrued and unpaid interest
is due on September 9, 2006. The DG Ardmore Loan is generally non-recourse to DG Ardmore and Cole
OP II, but both are liable for customary non-recourse carveouts.
The DG Ardmore Loan may not be prepaid, in whole or in part, except under the following
circumstances: (i) full prepayment may be made on any of the three (3) monthly payment dates
occurring immediately prior to the DG Ardmore Maturity Date and (ii) partial prepayments resulting
from Wachovias election to apply insurance or condemnation proceeds may be made to reduce the
outstanding principal balance of the DG Ardmore Loan. Notwithstanding the prepayment limitations,
DG Ardmore may sell the DG Ardmore Property to a buyer that assumes the DG Ardmore Loan. The
transfer shall be subject to Wachovias approval of the proposed buyer and the payment of
Wachovias costs and expenses associated with the sale of the DG Ardmore Property.
In the event the DG Ardmore Loan is not paid off on the DG Ardmore Maturity Date, the DG
Ardmore Loan includes hyperamortization provisions. The DG Ardmore Maturity Date, pursuant to the
hyperamortization provisions, will be extended by twenty (20) years. During such period, Wachovia
will apply 100% of the rents collected to (i) all payments due to Wachovia under the DG Ardmore
Loan, including any payments to escrows or reserve accounts, (ii) any operating expenses of the DG
Ardmore Property pursuant to an approved annual budget, (iii) any extraordinary expenses and (iv)
any accrued interest under the DG Ardmore Loan. Any remaining amount will be applied to the
reduction of the principal balance of the DG Ardmore Loan, until paid in full. The interest rate
during the hyperamortization period shall be the greater of (x) the fixed interest rate of 5.79%
plus two percent (2.0%) or (y) the Treasury Constant Maturity Yield Index plus two percent (2.0%).
Notwithstanding the forgoing, failure to make any required payments under the DG Ardmore Loan in a
timely manner will cause an event of default, which will result in a 4.0% default interest
rate in excess of the applicable interest rate, late charges equal to 5.0% of the amount of
such overdue payment, and all interest and principal becoming immediately due and payable in full.
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Dollar General Livingston, Tennessee
On June 12, 2006, Cole DG Livingston TN, LLC, a Delaware limited liability company (DG
Livingston), a wholly-owned subsidiary of Cole OP II, acquired a 100% fee simple interest in an
approximately 24,300 square foot single-tenant retail building (the DG Livingston Property), from
GES Livingston, LLC, which is not affiliated with us, our subsidiaries or affiliates. The DG
Livingston Property was constructed in 2006 on an approximately 4.4 acre site in Livingston,
Tennessee. The area surrounding the DG Livingston Property is shared by commercial and residential
developments.
The purchase price of the DG Livingston Property was $2.9 million, exclusive of closing costs.
The acquisition was funded by net proceeds from our ongoing public offering and an approximately
$2.3 million loan from Wachovia, which is secured by the DG Livingston Property (the DG Livingston
Loan). In connection with the acquisition, we paid an affiliate of our advisor an acquisition fee
of approximately $57,000 and our advisor a finance coordination fee of approximately $19,000.
The DG Livingston Property is 100% leased to Dolgencorp, Inc., which is a wholly-owned
subsidiary of Dollar General, which guarantees the lease. The DG Livingston Property is subject to
a net lease, which commenced on May 1, 2006, pursuant to which the tenant is required to pay
substantially all operating expenses and capital expenditures in addition to base rent. The annual
base rent of $214,200 is fixed through the first ten years of the initial lease term and increases
to $235,620 in the eleventh year through the remainder of the initial lease term, which expires
April 30, 2021. Dollar General has six options to renew the lease, each for an additional five-year
term beginning on May 1, 2021, with rental escalations of 5% at the beginning of each five year
renewal term.
Cole Realty has the sole and exclusive right to manage, operate, lease and supervise the
overall maintenance of the DG Livingston Property and will receive a property management fee of
2.0% of the monthly gross revenue from the DG Livingston Property. We currently have no plans for
any renovations, improvements or development of the DG Livingston Property. We believe the DG
Livingston Property is adequately insured.
The DG Livingston Loan consists of an approximately $1.9 million fixed interest rate tranche
(the DG Livingston Fixed Rate Tranche) and a $429,000 variable interest rate tranche (the DG
Livingston Variable Rate Tranche). The DG Livingston Fixed Rate Tranche has a fixed interest rate
of 5.79% per annum with monthly interest-only payments. The outstanding principal and any accrued
and unpaid interest is due on July 11, 2016 (the DG Livingston Maturity Date). The DG Livingston
Variable Rate Tranche has a variable interest rate based on the one-month LIBOR rate plus 200 basis
points with monthly interest-only payments, and the outstanding principal and any accrued and
unpaid interest is due on October 12, 2006. The DG Livingston Loan is generally non-recourse to DG
Livingston and Cole OP II, but both are liable for customary non-recourse carveouts.
The DG Livingston Loan may not be prepaid, in whole or in part, except under the following
circumstances: (i) full prepayment may be made on any of the three (3) monthly payment dates
occurring immediately prior to the DG Livingston Maturity Date and (ii) partial prepayments
resulting from Wachovia s election to apply insurance or condemnation proceeds may be made to
reduce the outstanding principal balance of the DG Livingston Loan. Notwithstanding the prepayment
limitations, DG Livingston may sell the DG Livingston Property to a buyer that assumes the DG
Livingston Loan. The transfer shall be subject to Wachovias approval of the proposed buyer and the
payment of Wachovias costs and expenses associated with the sale of the DG Livingston Property.
In the event the DG Livingston Loan is not paid off on the DG Livingston Maturity Date, the DG
Livingston Loan includes hyperamortization provisions. The DG Livingston Maturity Date, pursuant to
the hyperamortization provisions, will be extended by twenty (20) years. During such period,
Wachovia will apply 100% of the rents collected to (i) all payments due to Wachovia under the DG
Livingston Loan, including any payments to escrows or reserve accounts, (ii) any operating expenses
of the DG Livingston Property pursuant to an approved annual budget, (iii) any extraordinary
expenses and (iv) any accrued interest under the DG Livingston Loan. Any remaining amount will be
applied to the reduction of the principal balance of the DG Livingston Loan, until paid in full.
The interest rate during the hyperamortization period shall be the greater of (x) the fixed
interest rate of 5.79% plus two percent (2.0%) or (y) the Treasury Constant Maturity Yield Index
plus two percent (2.0%). Notwithstanding the forgoing, failure to make any required payments under
the DG Livingston Loan in a timely manner will cause an event of default, which will result in a
4.0% default interest rate in excess of the applicable interest rate, late charges equal to 5.0% of
the amount of such overdue payment, and all interest and principal becoming immediately due and
payable in full.
Wehrenberg Theatre Arnold, Missouri
On June 14, 2006, Cole WT Arnold MO, LLC, a Delaware limited liability company (WT
Wehrenberg), a wholly-owned subsidiary of Cole OP II, acquired a 100% fee simple interest in an
approximately 50,000 square foot single-tenant retail building (the WT Wehrenberg Property), from
Greater Missouri Builders, Inc. which is not affiliated with us, our subsidiaries or affiliates.
The
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WT Wehrenberg Property was constructed in 1998 on an approximately 9.7 acre site in Arnold,
Missouri. The area surrounding the WT Wehrenberg Property is shared by commercial and retail
developments.
The purchase price of the WT Wehrenberg Property was $8.2 million, exclusive of closing costs.
The acquisition was funded by net proceeds from our ongoing public offering. In connection with the
acquisition, we paid an affiliate of our advisor an acquisition fee of $82,000.
The WT Wehrenberg Property is 100% leased to Wehrenberg, Inc. (Wehrenberg). The WT
Wehrenberg Property is subject to a net lease, which commenced on March 26, 1999, pursuant to which
the tenant is required to pay substantially all operating expenses and capital expenditures in
addition to base rent. The annual base rent of $784,453 increases to $836,094 in the eleventh year
and $897,572 in the sixteenth year through the initial lease term, which expires March 31, 2019.
Wehrenberg has two options to renew the lease, each for an additional five-year term beginning on
April 1, 2019, with rental escalations of 18% and 9% at the beginning of the first and second
renewal terms respectively.
Wehrenberg Theatres, headquartered in St. Louis, is the nations oldest family-owned and
operated theater company. The company was started in 1906 by Fred Wehrenberg and currently operates
15 theatres in Missouri, Illinois, and Iowa.
Cole Realty has the sole and exclusive right to manage, operate, lease and supervise the
overall maintenance of the WT Wehrenberg Property and will receive a property management fee of
2.0% of the monthly gross revenue from the WT Wehrenberg Property. We currently have no plans for
any renovations, improvements or development of the WT Wehrenberg Property. We believe the WT
Wehrenberg Property is adequately insured.
Sportsmans Warehouse Wichita, Kansas
On June 27, 2006, Cole SP Wichita KS, LLC, a Delaware limited liability company (SP
Wichita), a wholly-owned subsidiary of Cole OP II, acquired a 100% fee simple interest in an
approximately 50,000 square foot single-tenant retail building (the SP Wichita Property), from
GRH Wichita, LLC, GRH South Ogden, LLC, and MRH Venture Capital, LLC, none of which is affiliated
with us, our subsidiaries or affiliates. The SP Wichita Property was constructed in 2006 on an
approximately 4.88 acre site in Wichita, Kansas. The area surrounding the SP Wichita Property is
shared by commercial and retail developments.
The purchase price of the SP Wichita Property was approximately $8.2 million, exclusive of
closing costs. The acquisition was funded by net proceeds from our ongoing public offering and a
100% drawdown under an approximately $6.2 million revolving credit facility from Wachovia Financial
Services, which is secured by the SP Wichita Property (the SP Wichita Loan). In connection with
the acquisition, we paid an affiliate of our advisor an acquisition fee of approximately $164,000
and our advisor a finance coordination fee of approximately $62,000.
The SP Wichita Property is 100% leased to Sportsmans Warehouse, Inc., a wholly-owned
subsidiary of Sportsmans Warehouse Holdings, Inc., (Sportsmans), which guarantees the lease.
The SP Wichita Property is subject to a net lease, which commenced on April 27, 2006, pursuant to
which the tenant is required to pay substantially all operating expenses and capital expenditures
in addition to base rent. The current aggregate annual base rent of $639,046 has rental escalations
of 5.0% at May 1, 2011 and every five years thereafter through the initial lease term, which
expires April 30, 2021. Sportsmans has five options to renew the lease, each for an additional
five-year term beginning on May 1, 2021.
Sportsmans Warehouse operates retail stores across the United States that specialize in
selling outerwear, footwear, and hunting, fishing, and camping products for outdoor enthusiasts.
Cole Realty, has the sole and exclusive right to manage, operate, lease and supervise the
overall maintenance of the SP Wichita Property and will receive a property management fee of 2.0%
of the monthly gross revenue from the SP Wichita Property. We currently have no plans for any
renovations, improvements or development of the SP Wichita Property. We believe the SP Wichita
Property is adequately insured.
The SP Wichita Loan is a $6.2 million variable interest rate loan. The SP Wichita Loan has a
variable interest rate based on the 1-Month LIBOR plus 2.0% (the SP Wichita Interest Rate) with
monthly interest-only payments. The outstanding principal and
any accrued and unpaid interest is due on December 27, 2006 (the SP Wichita Maturity Date).
At the election of SP Wichita, the SP Wichita Maturity Date may be extended to June 27, 2007.
The SP Wichita Loan may be prepaid at any time without penalty or premium. In the event the SP
Wichita Loan is not paid off on the SP Wichita Maturity Date, subject to extension, the SP Wichita
Loan would become subject to default provisions, including,
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among others, that all obligations
would become immediately due and payable at the option of Wachovia Financial Services and the SP
Wichita Loan would be subject to a default interest rate of the SP Wichita Interest Rate plus 400
basis points.
CVS Portsmouth (Chillicothe), Ohio
On June 28, 2006, Cole OP II acquired 100% of the membership interests (the CV Portsmouth
Interests) in Cole CV Portsmouth OH, LLC (CV Portsmouth) from Cole Acquisitions, an affiliate of
our advisor. CV Portsmouth owns, as its only asset, a retail building (the CV Portsmouth
Property), leased to Revco and is a wholly-owned subsidiary of CVS. The CV Portsmouth Property was
built in 1997 and consists of an approximately 10,600 square foot single-tenant retail building on
an approximately 0.44 acre site located in Portsmouth, Ohio. The area surrounding the CV Portsmouth
Property is primarily surrounded by commercial retail developments.
The purchase price of the CV Portsmouth Interests was approximately $2.1 million, exclusive of
closing costs. The acquisition was funded by net proceeds from our ongoing public offering. A
majority of our board of directors, including all of our independent directors, not otherwise
interested in the acquisition, approved the acquisition as being fair and reasonable to us and at a
price to us no greater than the cost of the asset to the affiliate. The cost to us was not in
excess of the current appraised value of the property as determined by an independent expert
selected by our independent directors.
The CV Portsmouth Property is subject to a net lease, which commenced on November 23, 1997.
Pursuant to the lease agreement, the tenant is required to pay substantially all operating expenses
and capital expenditures in addition to base rent. The current aggregate annual base rent of
$143,700 has rental escalations of 4.0% beginning on December 1, 2007 through the initial lease
term which expires on November 30, 2017. Revco has four options to renew the lease, each for an
additional five-year period. CVS operates over 5,000 stores in 36 states.
CVS has a Standard & Poors credit rating of A- and the companys stock is publicly traded
on the New York Stock Exchange under the ticker symbol CVS.
Cole Realty has the sole and exclusive right to manage, operate, lease and supervise the
overall maintenance of the CV Portsmouth Property and will receive a property management fee of
2.0% of the monthly gross revenue from the CV Portsmouth Property. We currently have no plans for
any renovations, improvements or development of the CV Portsmouth Property. We believe the CV
Portsmouth Property is adequately insured.
Advance Auto Greenfield, Indiana
On June 29, 2006, Cole AA Greenfield IN, LLC, a Delaware limited liability company (AA
Greenfield), a wholly-owned subsidiary of Cole OP II, acquired a 100% fee simple interest in an
approximately 7,000 square foot single-tenant retail building (the AA Greenfield Property), from
Solid Muldoon Partners, LLC, which is not affiliated with us, our subsidiaries or affiliates. The
AA Greenfield Property was built in 2003 on an approximately 1.14 acre site located in Greenfield,
Indiana. The area surrounding the AA Greenfield Property is surrounded by commercial and
residential developments.
The purchase price of the AA Greenfield Property was approximately $1.4 million, exclusive of
closing costs. The acquisition was funded by net proceeds from our ongoing public offering. In
connection with the acquisition, we paid an affiliate of our advisor an acquisition fee of
approximately $28,000.
The AA Greenfield Property is 100% leased to Advance Stores Company, Incorporated (Advance
Auto). The AA Greenfield Property is subject to a net lease, which commenced on June 12, 2003.
Pursuant to the lease agreement, the tenant is required to pay substantially all operating expenses
and capital expenditures in addition to base rent. The annual base rent of $110,040 is fixed
through the initial lease term, which expires June 30, 2013. Advance Auto has three options to
renew the lease, one option for an additional six-month period beginning on July 1, 2013, and two
additional options, each for an additional five-year period, with rental escalations of 3.0% at the
start of each five-year renewal term.
Advance Auto operates over 2,800 auto parts stores in 40 states, Puerto Rico and the Virgin
Islands. Advance Auto has a Standard and Poors credit rating of BB+ and its stock is publicly
traded on the New York Stock Exchange under the symbol AAP.
Cole Realty has the sole and exclusive right to manage, operate, lease and supervise the
overall maintenance of the AA Greenfield Property and will receive a property management fee of
2.0% of the monthly gross revenue from the AA Greenfield Property. We currently have no plans for
any renovations, improvements or development of the AA Greenfield Property. We believe the AA
Greenfield Property is adequately insured.
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Advance Auto Trenton, Ohio
On June 29, 2006, Cole AA Trenton OH, LLC, a Delaware limited liability company (AA
Trenton), a wholly-owned subsidiary of Cole OP II, acquired a 100% fee simple interest in an
approximately 7,000 square foot single-tenant retail building (the AA Trenton Property), from
Temptation Partners, LLC, which is not affiliated with us, our subsidiaries or affiliates. The AA
Trenton Property was built in 2003 on an approximately 1.14 acre site located in Trenton, Ohio. The
area surrounding the AA Trenton Property is surrounded by commercial, agricultural and residential
developments.
The purchase price of the AA Trenton Property was approximately $1.1 million, exclusive of
closing costs. The acquisition was funded by net proceeds from our ongoing public offering. In
connection with the acquisition, we paid an affiliate of our advisor an acquisition fee of
approximately $21,000.
The AA Trenton Property is 100% leased to Advance Auto. The AA Trenton Property is subject to
a net lease, which commenced on April 10, 2003. Pursuant to the lease agreement, the tenant is
required to pay substantially all operating expenses and capital expenditures in addition to base
rent. The annual base rent of $84,782 is fixed through the initial lease term, which expires June
30, 2013. Advance Auto has three options to renew the lease, one option for an additional six-month
period beginning on July 1, 2013, and two additional options, each for an additional five-year
period, with rental escalations of 4.0% at the start of each five-year renewal term.
Cole Realty has the sole and exclusive right to manage, operate, lease and supervise the
overall maintenance of the AA Trenton Property and will receive a property management fee of 2.0%
of the monthly gross revenue from the AA Trenton Property. We currently have no plans for any
renovations, improvements or development of the AA Trenton Property. We believe the AA Trenton
Property is adequately insured.
Rite Aid Lansing, Michigan
On June 29, 2006, Cole RA Lansing MI, LLC, a Delaware limited liability company (RA
Lansing), a wholly-owned subsidiary of Cole OP II, acquired a 100% fee simple interest in an
approximately 12,000 square foot single-tenant retail building (the RA Lansing Property), from VP
Investments, LLC, which is not affiliated with us, our subsidiaries or affiliates. The RA Lansing
Property was constructed in 1950 and completely renovated in 1996 to accommodate the current
tenant. The RA Lansing Property sits on an approximately 0.48 acre site in Lansing, Michigan. The
area surrounding the RA Lansing Property is shared by commercial, retail and residential
developments.
The purchase price of the RA Lansing Property was $1.7 million, exclusive of closing costs.
The acquisition was funded by net proceeds from our ongoing public offering and a $1.04 million
loan from Bear Stearns, which is secured by the RA Lansing Property (the RA Lansing Loan). In
connection with the acquisition, we paid an affiliate of our advisor an acquisition fee of
approximately $35,000 and our advisor a finance coordination fee of approximately $10,000.
The RA Lansing Property is 100% leased to Rite Aid of Michigan, Inc., which is a wholly-owned
subsidiary of Rite Aid, which guarantees the lease. The RA Lansing Property is subject to a net
lease, which commenced on December 10, 1996, pursuant to which the tenant is required to pay
substantially all operating expenses and capital expenditures in addition to base rent. The annual
base rent of $160,480 has rental increases of 4.0% beginning on January 1, 2007 and every five
years thereafter through the initial lease term which expires December 31, 2016. Rite Aid has four
options to renew the lease, each for an additional five-year term beginning on January 1, 2017,
with rental escalations of 3.0% at the beginning of each five-year renewal term.
Rite Aid has operates over 3,300 stores in 28 states and Washington, DC. Rite Aid has a
Standard and Poors credit rating of B+ and its stock is publicly traded on the New York Stock
Exchange under the ticker symbol RAD.
Cole Realty has the sole and exclusive right to manage, operate, lease and supervise the
overall maintenance of the RA Lansing Property and will receive a property management fee of 2.0%
of the monthly gross revenue from the RA Lansing Property. We currently have no plans for any
renovations, improvements or development of the RA Lansing Property. We believe the RA Lansing
Property is adequately insured.
The RA Lansing Loan has a fixed interest rate of 5.90% per annum with monthly interest-only
payments. The outstanding principal and any accrued and unpaid interest is due on July 1, 2016 (the
RA Lansing Maturity Date). The RA Lansing Loan is generally non-recourse to RA Lansing and Cole
OP II, but both are liable for customary non-recourse carveouts.
The RA Lansing Loan may not be prepaid, in whole or in part, except under the following
circumstances: (i) full prepayment may be made on any of the three (3) monthly payment dates
occurring immediately prior to the RA Lansing Maturity Date and (ii)
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partial prepayments resulting
from Bear Stearns election to apply insurance or condemnation proceeds may be made to reduce the
outstanding principal balance of the RA Lansing Loan. Notwithstanding the prepayment limitations,
RA Lansing may sell the RA Lansing Property to a buyer that assumes the RA Lansing Loan. The
transfer would be subject to Bear Stearns approval of the proposed buyer and the payment of Bear
Stearns costs and expenses associated with the sale of the RA Lansing Property.
In the event the RA Lansing Loan is not paid off on the RA Lansing Maturity Date, the RA
Lansing Loan includes hyperamortization provisions. The RA Lansing Maturity Date, pursuant to the
hyperamortization provisions, will be extended by twenty (20) years. During such period, Bear
Stearns will apply 100% of the rents collected to (i) all payments due to Bear Stearns under the RA
Lansing Loan, including any payments to escrows or reserve accounts, (ii) any operating expenses of
the RA Lansing Property pursuant to an approved annual budget, (iii) any extraordinary expenses and
(iv) any accrued interest under the RA Lansing Loan. Any remaining amount will be applied to the
reduction of the principal balance of the RA Lansing Loan, until paid in full. The interest rate
during the hyperamortization period shall be the greater of (x) the fixed interest rate of 5.90%
plus two percent (2.0%) and (y) the then current Ten Year Treasury Yield plus two percent (2.0%).
Notwithstanding the forgoing, failure to make any required payments under the RA Lansing Loan in a
timely manner will cause an event of default, which will result in a 4.0% default interest rate in
excess of the applicable interest rate and all interest and principal becoming immediately due and
payable in full.
Advance Auto Columbia Heights, Minnesota
On July 6, 2006, Cole AA Columbia Heights MN, LLC, a Delaware limited liability company (AA
Columbia Heights), a wholly-owned subsidiary of Cole OP II, acquired a 100% fee simple interest in
an approximately 7,000 square foot single-tenant retail building (the AA Columbia Heights
Property), from Spirit Management Company, which is not affiliated with us, our subsidiaries or
affiliates. The AA Columbia Heights Property was constructed in 2005 on an approximately 0.79 acre
site in Columbia Heights, Minnesota. The area surrounding the AA Columbia Heights Property is
shared by commercial and retail developments.
The purchase price of the AA Columbia Heights Property was $1.7 million, exclusive of closing
costs. The acquisition was funded by net proceeds from our ongoing public offering and an
approximately $1.4 million loan from Wachovia, which is secured by the AA Columbia Heights Property
(the AA Columbia Heights Loan). In connection with the acquisition, we paid an affiliate of our
advisor an acquisition fee of approximately $35,000 and our advisor a finance coordination fee of
approximately $10,000.
The AA Columbia Heights Property is 100% leased to Advance Auto. The AA Columbia Heights
Property is subject to a net lease, which commenced on January 19, 2006, pursuant to which the
tenant is required to pay substantially all operating expenses and capital expenditures in addition
to base rent. The annual base rent of $131,524 is fixed through the first ten years of the initial
lease term and increases to $138,100 in the eleventh year through the remainder of the initial
lease term, which expires January 31, 2021. Advance Auto has three options to renew the lease, each
for an additional five-year term beginning on February 1, 2021, with rental escalations of 5.0% at
the beginning of each five-year renewal term.
Cole Realty has the sole and exclusive right to manage, operate, lease and supervise the
overall maintenance of the AA Columbia Heights Property and will receive a property management fee
of 2.0% of the monthly gross revenue from the AA Columbia Heights Property. We currently have no
plans for any renovations, improvements or development of the AA Columbia Heights Property. We
believe the AA Columbia Heights Property is adequately insured.
The AA Columbia Heights Loan consists of an approximately $1.04 million fixed interest rate
tranche (the AA Columbia Heights Fixed Rate Tranche) and a $346,000 variable interest rate
tranche (the AA Columbia Heights Variable Rate Tranche). The AA Columbia Heights Fixed Rate
Tranche has a fixed interest rate of 5.83% per annum with monthly interest-only payments. The
outstanding principal and any accrued and unpaid interest is due on July 11, 2016 (the AA Columbia
Heights Maturity Date). The AA Columbia Heights Variable Rate Tranche has a variable interest rate
based on the one-month LIBOR rate plus 200 basis points with monthly interest-only payments, and
the outstanding principal and any accrued and unpaid interest is due on October 6, 2006. The AA
Columbia Heights Loan is generally non-recourse to AA Columbia Heights and Cole OP II, but both are
liable for customary non-recourse carveouts.
The AA Columbia Heights Loan may not be prepaid, in whole or in part, except under the
following circumstances: (i) full prepayment may be made on any of the three (3) monthly payment
dates occurring immediately prior to the AA Columbia Heights Maturity Date and (ii) partial
prepayments resulting from Wachovias election to apply insurance or condemnation proceeds may be
made to reduce the outstanding principal balance of the AA Columbia Heights Loan.
Notwithstanding the prepayment limitations, AA Columbia Heights may sell the AA Columbia Heights
Property to a buyer that assumes the AA Columbia Heights Loan. The transfer shall be subject to
Wachovias approval of the proposed buyer and the payment of Wachovias costs and expenses
associated with the sale of the AA Columbia Heights Property.
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In the event the AA Columbia Heights Loan is not paid off on the AA Columbia Heights Maturity
Date, the AA Columbia Heights Loan includes hyperamortization provisions. The AA Columbia Heights
Maturity Date, pursuant to the hyperamortization provisions, will be extended by twenty (20) years.
During such period, Wachovia will apply 100% of the rents collected to (i) all payments due to
Wachovia under the AA Columbia Heights Loan, including any payments to escrows or reserve accounts,
(ii) any operating expenses of the AA Columbia Heights Property pursuant to an approved annual
budget, (iii) any extraordinary expenses and (iv) any accrued interest under the AA Columbia
Heights Loan. Any remaining amount will be applied to the reduction of the principal balance of the
AA Columbia Heights Loan, until paid in full. The interest rate during the hyperamortization period
shall be the greater of (x) the fixed interest rate of 5.83% plus two percent (2.0%) or (y) the
Treasury Constant Maturity Yield Index plus two percent (2.0%). Notwithstanding the forgoing,
failure to make any required payments under the AA Columbia Heights Loan in a timely manner will
cause an event of default, which will result in a 4.0% default interest rate in excess of the
applicable interest rate, late charges equal to 5.0% of the amount of such overdue payment, and all
interest and principal becoming immediately due and payable in full.
Advance Auto Fergus Falls, Minnesota
On July 6, 2006, Cole AA Fergus Falls MN, LLC, a Delaware limited liability company (AA
Fergus Falls), a wholly-owned subsidiary of Cole OP II, acquired a 100% fee simple interest in an
approximately 7,000 square foot single-tenant retail building (the AA Fergus Falls Property),
from Spirit Management Company, which is not affiliated with us, our subsidiaries or affiliates.
The AA Fergus Falls Property was constructed in 2005 on an approximately 0.74 acre site in Fergus
Falls, Minnesota. The area surrounding the AA Fergus Falls Property is shared by retail and
residential developments.
The purchase price of the AA Fergus Falls Property was $1.2 million, exclusive of closing
costs. The acquisition was funded by net proceeds from our ongoing public offering and a $963,000
loan from Wachovia, which is secured by the AA Fergus Falls Property (the AA Fergus Falls Loan).
In connection with the acquisition, we paid an affiliate of our advisor an acquisition fee of
approximately $24,000 and our advisor a finance coordination fee of approximately $7,000.
The AA Fergus Falls Property is 100% leased to Advance Auto. The AA Fergus Falls Property is
subject to a net lease, which commenced on November 3, 2005, pursuant to which the tenant is
required to pay substantially all operating expenses and capital expenditures in addition to base
rent. The current aggregate annual base rent of $91,441 is fixed through the first ten years of the
initial lease term and increases to $96,013 in the eleventh year through the remainder of the
initial lease term, which expires November 30, 2020. Advance Auto has three options to renew the
lease, each for an additional five-year term beginning on December 1, 2020, with rental escalations
of 5.0% at the beginning of each five-year renewal term.
Cole Realty has the sole and exclusive right to manage, operate, lease and supervise the
overall maintenance of the AA Fergus Falls Property and will receive a property management fee of
2.0% of the monthly gross revenue from the AA Fergus Falls Property. We currently have no plans for
any renovations, improvements or development of the AA Fergus Falls Property. We believe the AA
Fergus Falls Property is adequately insured.
The AA Fergus Falls Loan consists of a $722,000 fixed interest rate tranche (the AA Fergus
Falls Fixed Rate Tranche) and a $241,000 variable interest rate tranche (the AA Fergus Falls
Variable Rate Tranche). The AA Fergus Falls Fixed Rate Tranche has a fixed interest rate of 5.83%
per annum with monthly interest-only payments. The outstanding principal and any accrued and unpaid
interest is due on July 11, 2016 (the AA Fergus Falls Maturity Date). The AA Fergus Falls
Variable Rate Tranche has a variable interest rate based on the one-month LIBOR rate plus 200 basis
points with monthly interest-only payments, and the outstanding principal and any accrued and
unpaid interest is due on October 6, 2006. The AA Fergus Falls Loan is generally non-recourse to AA
Fergus Falls and Cole OP II, but both are liable for customary non-recourse carveouts.
The AA Fergus Falls Loan may not be prepaid, in whole or in part, except under the following
circumstances: (i) full prepayment may be made on any of the three (3) monthly payment dates
occurring immediately prior to the AA Fergus Falls Maturity Date and (ii) partial prepayments
resulting from Wachovias election to apply insurance or condemnation proceeds may be made to
reduce the outstanding principal balance of the AA Fergus Falls Loan. Notwithstanding the
prepayment limitations, AA Fergus Falls may sell the AA Fergus Falls Property to a buyer that
assumes the AA Fergus Falls Loan. The transfer shall be subject to Wachovias approval of the
proposed buyer and the payment of Wachovias costs and expenses associated with the sale of the AA
Fergus Falls Property.
In the event the AA Fergus Falls Loan is not paid off on the AA Fergus Falls Maturity Date,
the AA Fergus Falls Loan includes hyperamortization provisions. The AA Fergus Falls Maturity Date,
pursuant to the hyperamortization provisions, will be extended by twenty (20) years. During such
period, Wachovia will apply 100% of the rents collected to (i) all payments due to Wachovia under
the AA Fergus Falls Loan, including any payments to escrows or reserve accounts, (ii) any operating
expenses of the AA Fergus Falls Property pursuant to an approved annual budget, (iii) any
extraordinary expenses and (iv) any accrued interest under
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the AA Fergus Falls Loan. Any remaining
amount will be applied to the reduction of the principal balance of the AA Fergus Falls Loan, until
paid in full. The interest rate during the hyperamortization period shall be the greater of (x) the
fixed interest rate of 5.83% plus two percent (2.0%) or (y) the Treasury Constant Maturity Yield
Index plus two percent (2.0%). Notwithstanding the forgoing, failure to make any required payments
under the AA Fergus Falls Loan in a timely manner will cause an event of default, which will result
in a 4.0% default interest rate in excess of the applicable interest rate, late charges equal to
5.0% of the amount of such overdue payment, and all interest and principal becoming immediately due
and payable in full.
CVS Okeechobee, Florida
On July 7, 2006, Cole OP II acquired 100% of the membership interests (the CV Okeechobee
Interests) in Cole CV Okeechobee FL, LLC (CV Okeechobee) from Cole Acquisitions, an affiliate of
our advisor. CV Okeechobee owns, as its only asset, a retail building (the CV Okeechobee
Property) leased to CVS EGL Parrott Okeechobee FL, LLC., a wholly-owned subsidiary of CVS, which
guarantees the lease. The CV Okeechobee Property was built in 2001 and consists of an approximately
13,000 square foot single-tenant retail building on an approximately 1.7 acre site located in
Okeechobee, Florida. The area surrounding the CV Okeechobee Property is primarily surrounded by
commercial retail developments.
The purchase price of the CV Okeechobee Interests was approximately $6.5 million, exclusive of
closing costs. The acquisition was funded by net proceeds from our ongoing public offering and the
assumption of an approximately $4.1 million loan from Wachovia secured by the CV Okeechobee
Property (the CV Okeechobee Loan). In connection with the acquisition, we paid an affiliate of
our advisor a finance coordination fee of approximately $41,000. A majority of our board of
directors, including all of our independent directors, not otherwise interested in the acquisition,
approved the acquisition as being fair and reasonable to us and at a price to us no greater than
the cost of the asset to the affiliate. The cost to us was not in excess of the current appraised
value of the property as determined by an independent expert selected by our independent directors.
The CV Okeechobee Property is subject to a net lease, which commenced on July 6, 2001.
Pursuant to the lease agreement, the tenant is required to pay substantially all operating expenses
and capital expenditures in addition to base rent. The current aggregate annual base rent of
$435,130, is fixed through the initial lease term, which expires on July 5, 2026. CVS has five
options to renew the lease, each for an additional five year period, with rental escalations of
1.0% at the start of each five-year renewal period.
Cole Realty has the sole and exclusive right to manage, operate, lease and supervise the
overall maintenance of the CV Okeechobee Property and will receive a property management fee of
2.0% of the monthly gross revenue from the CV Okeechobee Property. We currently have no plans for
any renovations, improvements or development of the CV Okeechobee Property. We believe the CV
Okeechobee Property is adequately insured.
The CV Okeechobee Loan has a fixed interest rate of 5.60% per annum with monthly interest-only
payments. The outstanding principal and any accrued and unpaid interest is due on February 11, 2016
(the CV Okeechobee Maturity Date). The CV Okeechobee Loan is generally non-recourse to CV
Okeechobee and Cole OP II, but both are liable for customary non-recourse carveouts.
The CV Okeechobee Loan may not be prepaid, in whole or in part, except under the following
circumstances: (i) full prepayment may be made on any of the three (3) monthly payment dates
occurring immediately prior to the CV Okeechobee Maturity Date and (ii) partial prepayments
resulting from Wachovias election to apply insurance or condemnation proceeds may be made to
reduce the outstanding principal balance of the CV Okeechobee Loan. Notwithstanding the prepayment
limitations, CV Okeechobee may sell the CV Okeechobee Property to a buyer that assumes the CV
Okeechobee Loan. The transfer would be subject to Wachovias approval of the proposed buyer and the
payment of Wachovias costs and expenses associated with the sale of the CV Okeechobee Property.
In the event the CV Okeechobee Loan is not paid off on the CV Okeechobee Maturity Date, the CV
Okeechobee Loan includes hyperamortization provisions. The CV Okeechobee Maturity Date, pursuant to
the hyperamortization provisions, will be extended by twenty (20) years. During such period,
Wachovia will apply 100% of the rents collected to (i) all payments due to Wachovia under the CV
Okeechobee Loan, including any payments to escrows or reserve accounts, (ii) any operating expenses
of the CV Okeechobee Property pursuant to an approved annual budget, (iii) any extraordinary
expenses and (iv) any accrued interest under the CV Okeechobee Loan. Any remaining amount will be
applied to the reduction of the principal balance of the CV Okeechobee Loan, until paid in full.
The interest rate during the hyperamortization period shall be the greater of (x) the fixed
interest rate of 5.60%
plus two percent (2.0%) or (y) the Treasury Constant Maturity Yield Index plus two percent
(2.0%). Notwithstanding the forgoing, failure to make any required payments under the CV Okeechobee
Loan in a timely manner will cause an event of default, which will result in a 4.0% default
interest rate in excess of the applicable interest rate, late charges equal to 5.0% of the amount
of such overdue payment, and all interest and principal becoming immediately due and payable in
full.
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Office Depot Dayton, Ohio
On July 7, 2006, Cole OP II acquired 100% of the membership interests (the OD Dayton
Interests) in Cole OD Dayton OH, LLC (OD Dayton) from Cole Acquisitions, an affiliate of our
advisor. OD Dayton owns, as its only asset, a retail building (the OD Dayton Property) leased to
Office Depot, Inc. (Office Depot) The OD Dayton Property was built in 2005 and consists of an
approximately 20,000 square foot single-tenant retail building on an approximately 2.04 acre site
located in Dayton, Ohio. The area surrounding the OD Dayton Property is primarily surrounded by
commercial retail developments.
The purchase price of the OD Dayton Interests was approximately $3.4 million, exclusive of
closing costs. The acquisition was funded by net proceeds from our ongoing public offering and the
assumption of an approximately $2.1 million loan from Wachovia secured by the OD Dayton Property
(the OD Dayton Loan). In connection with the acquisition, we paid an affiliate of our advisor a
finance coordination fee of approximately $21,000. A majority of our board of directors, including
all of our independent directors, not otherwise interested in the acquisition, approved the
acquisition as being fair and reasonable to us and at a price to us no greater than the cost of the
asset to the affiliate. The cost to us was not in excess of the current appraised value of the
property as determined by an independent expert selected by our independent directors.
The OD Dayton Property is subject to a net lease, which commenced on January 18, 2006.
Pursuant to the lease agreement, the tenant is required to pay substantially all operating expenses
and capital expenditures in addition to base rent. The current aggregate annual base rent of
$237,566, is fixed through the initial lease term which expires on December 31, 2021. Office Depot
has four options to renew the lease, each for an additional five year period, with rental
escalations of 20% at the beginning of the first five-year renewal term, and rental escalations of
10% at the beginning of each subsequent five-year renewal term.
Office Depot is a global supplier of office products and services. Office Depot has a Standard
& Poors credit rating of BBB- and its stock is publicly traded on the New York Stock Exchange
under the ticker symbol ODP.
Cole Realty has the sole and exclusive right to manage, operate, lease and supervise the
overall maintenance of the OD Dayton Property and will receive a property management fee of 2.0% of
the monthly gross revenue from the OD Dayton Property. We currently have no plans for any
renovations, improvements or development of the OD Dayton Property. We believe the OD Dayton
Property is adequately insured.
The OD Dayton Loan, which is secured by the OD Dayton Property, has a fixed interest rate of
5.73% per annum with monthly interest-only payments and the outstanding principal and any accrued
and unpaid interest due on January 11, 2016 (the OD Dayton Maturity Date). The OD Dayton Loan is
generally non-recourse to OD Dayton and Cole OP II, but both are liable for customary non-recourse
carveouts.
The OD Dayton Loan may not be prepaid, in whole or in part, except under the following
circumstances: (i) full prepayment may be made on any of the three (3) monthly payment dates
occurring immediately prior to the OD Dayton Maturity Date and (ii) partial prepayments resulting
from Wachovias election to apply insurance or condemnation proceeds may be made to reduce the
outstanding principal balance of the OD Dayton Loan. Notwithstanding the prepayment limitations, OD
Dayton may sell the OD Dayton Property to a buyer that assumes the OD Dayton Loan. The transfer
would be subject to Wachovias approval of the proposed buyer and the payment of Wachovias costs
and expenses associated with the sale of the OD Dayton Property.
In the event the OD Dayton Loan is not paid off on the OD Dayton Maturity Date, the OD Dayton
Loan includes hyperamortization provisions. The OD Dayton Maturity Date, pursuant to the
hyperamortization provisions, will be extended by twenty (20) years. During such period, Wachovia
will apply 100% of the rents collected to (i) all payments due to Wachovia under the OD Dayton
Loan, including any payments to escrows or reserve accounts, (ii) any operating expenses of the OD
Dayton Property pursuant to an approved annual budget, (iii) any extraordinary expenses and (iv)
any accrued interest under the OD Dayton Loan. Any remaining amount will be applied to the
reduction of the principal balance of the OD Dayton Loan, until paid in full. The interest rate
during the hyperamortization period shall be the greater of (x) the fixed interest rate of 5.73%
plus two percent (2.0%) or (y) the Treasury Constant Maturity Yield Index plus two percent (2.0%).
Notwithstanding the forgoing, failure to make any required payments under the OD Dayton Loan in a
timely manner will cause an event of default, which will result in a 4.0% default interest rate in
excess of the applicable interest rate, late charges equal to 5.0% of the amount of such overdue
payment, and all interest and principal becoming immediately due and payable in full.
Advance Auto Holland, Michigan
On July 12, 2006, Cole OP II acquired 100% of the membership interests (the AA Holland
Interests) in Cole AA Holland MI, LLC (AA Holland) from Cole Acquisitions, an affiliate of our
advisor. AA Holland owns, as its only asset, a retail building (the AA Holland Property) leased
to Advance Auto. The AA Holland Property was built in 2006 and consists of an approximately 7,000
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square foot single-tenant retail building on an approximately 1.06 acre site located in Holland,
Michigan. The area surrounding the AA Holland Property is primarily surrounded by commercial,
retail and residential developments.
The purchase price of the AA Holland Interests was approximately $2.1 million, exclusive of
closing costs. The acquisition was funded by net proceeds from our ongoing public offering and the
assumption of an approximately $1.2 million loan from Wachovia secured by the AA Holland Property
(the AA Holland Loan). In connection with the acquisition, we paid an affiliate of our advisor a
finance coordination fee of approximately $12,000. A majority of our board of directors, including
all of our independent directors, not otherwise interested in the acquisition, approved the
acquisition as being fair and reasonable to us and at a price to us no greater than the cost of the
asset to the affiliate. The cost to us was not in excess of the current appraised value of the
property as determined by an independent expert selected by our independent directors.
The AA Holland Property is subject to a net lease, which commenced on January 26, 2006.
Pursuant to the lease agreement, the tenant is required to pay substantially all operating expenses
and capital expenditures in addition to base rent. The current aggregate annual base rent of
$149,063 is fixed through the first ten years of the initial lease term and increases to $163,968
in the eleventh year through the remainder of the initial lease term, which expires January 31,
2021. Advance Auto has three options to renew the lease, each for an additional five-year term
beginning on February 1, 2021, with rental escalations of 10% at the beginning of each five-year
renewal term.
Cole Realty has the sole and exclusive right to manage, operate, lease and supervise the
overall maintenance of the AA Holland Property and will receive a property management fee of 2.0%
of the monthly gross revenue from the AA Holland Property. We currently have no plans for any
renovations, improvements or development of the AA Holland Property. We believe the AA Holland
Property is adequately insured.
The AA Holland Loan, which is secured by the AA Holland Property, has a fixed interest rate of
5.83% per annum with monthly interest-only payments and the outstanding principal and any accrued
and unpaid interest due on April 11, 2016 (the AA Holland Maturity Date). The AA Holland Loan is
generally non-recourse to AA Holland and Cole OP II, but both are liable for customary non-recourse
carveouts.
The AA Holland Loan may not be prepaid, in whole or in part, except under the following
circumstances: (i) full prepayment may be made on any of the three (3) monthly payment dates
occurring immediately prior to the AA Holland Maturity Date and (ii) partial prepayments resulting
from Wachovias election to apply insurance or condemnation proceeds may be made to reduce the
outstanding principal balance of the AA Holland Loan. Notwithstanding the prepayment limitations,
AA Holland may sell the AA Holland Property to a buyer that assumes the AA Holland Loan. The
transfer would be subject to Wachovias approval of the proposed buyer and the payment of
Wachovias costs and expenses associated with the sale of the AA Holland Property.
In the event the AA Holland Loan is not paid off on the AA Holland Maturity Date, the AA
Holland Loan includes hyperamortization provisions. The AA Holland Maturity Date, pursuant to the
hyperamortization provisions, will be extended by twenty (20) years. During such period, Wachovia
will apply 100% of the rents collected to (i) all payments due to Wachovia under the AA Holland
Loan, including any payments to escrows or reserve accounts, (ii) any operating expenses of the AA
Holland Property pursuant to an approved annual budget, (iii) any extraordinary expenses and (iv)
any accrued interest under the AA Holland Loan. Any remaining amount will be applied to the
reduction of the principal balance of the AA Holland Loan, until paid in full. The interest rate
during the hyperamortization period shall be the greater of (x) the fixed interest rate of 5.83%
plus two percent (2.0%) or (y) the Treasury Constant Maturity Yield Index plus two percent (2.0%).
Notwithstanding the forgoing, failure to make any required payments under the AA Holland Loan in a
timely manner will cause an event of default, which will result in a 4.0% default interest rate in
excess of the applicable interest rate, late charges equal to 5.0% of the amount of such overdue
payment, and all interest and principal becoming immediately due and payable in full.
Advance Auto Holland Township, Michigan
On July 12, 2006, Cole OP II acquired 100% of the membership interests (the AA Holland
Township Interests) in Cole AA Holland Township MI, LLC (AA Holland Township) from Cole
Acquisitions, an affiliate of our advisor. AA Holland Township owns, as its only asset, a retail
building (the AA Holland Township Property) leased to Advance Auto. The AA Holland Township
Property was built in 2006 and consists of an approximately 7,000 square foot single-tenant retail
building on an approximately 1.44
acre site located in Holland Township, Michigan. The area surrounding the AA Holland Township
Property is primarily surrounded by commercial, retail and residential developments.
The purchase price of the AA Holland Township Interests was approximately $2.1 million,
exclusive of closing costs. The acquisition was funded by net proceeds from our ongoing public
offering and the assumption of an approximately $1.2 million loan from Wachovia secured by the AA
Holland Township Property (the AA Holland Township Loan). In connection with the
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acquisition, we
paid an affiliate of our advisor a finance coordination fee of approximately $12,000. A majority of
our board of directors, including all of our independent directors, not otherwise interested in the
acquisition, approved the acquisition as being fair and reasonable to us and at a price to us no
greater than the cost of the asset to the affiliate. The cost to us was not in excess of the
current appraised value of the property as determined by an independent expert selected by our
independent directors.
The AA Holland Township Property is subject to a net lease, which commenced on January 26,
2006. Pursuant to the lease agreement, the tenant is required to pay substantially all operating
expenses and capital expenditures in addition to base rent. The current aggregate annual base rent
of $153,908 is fixed through the first ten years of the initial lease term and increases to
$169,299 in the eleventh year through the remainder of the initial lease term, which expires
January 31, 2021. Advance Auto has three options to renew the lease, each for an additional
five-year term beginning on February 1, 2021, with rental escalations of 5.0% at the beginning of
each five-year renewal term.
Cole Realty has the sole and exclusive right to manage, operate, lease and supervise the
overall maintenance of the AA Holland Township Property and will receive a property management fee
of 2.0% of the monthly gross revenue from the AA Holland Township Property. We currently have no
plans for any renovations, improvements or development of the AA Holland Township Property. We
believe the AA Holland Township Property is adequately insured.
The AA Holland Township Loan, which is secured by the AA Holland Township Property, has a
fixed interest rate of 5.83% per annum with monthly interest-only payments and the outstanding
principal and any accrued and unpaid interest due on April 11, 2016 (the AA Holland Township
Maturity Date). The AA Holland Township Loan is generally non-recourse to AA Holland Township and
Cole OP II, but both are liable for customary non-recourse carveouts.
The AA Holland Township Loan may not be prepaid, in whole or in part, except under the
following circumstances: (i) full prepayment may be made on any of the three (3) monthly payment
dates occurring immediately prior to the AA Holland Township Maturity Date and (ii) partial
prepayments resulting from Wachovias election to apply insurance or condemnation proceeds may be
made to reduce the outstanding principal balance of the AA Holland Township Loan. Notwithstanding
the prepayment limitations, AA Holland Township may sell the AA Holland Township Property to a
buyer that assumes the AA Holland Township Loan. The transfer would be subject to Wachovias
approval of the proposed buyer and the payment of Wachovias costs and expenses associated with the
sale of the AA Holland Township Property.
In the event the AA Holland Township Loan is not paid off on the AA Holland Township Maturity
Date, the AA Holland Township Loan includes hyperamortization provisions. The AA Holland Township
Maturity Date, pursuant to the hyperamortization provisions, will be extended by twenty (20) years.
During such period, Wachovia will apply 100% of the rents collected to (i) all payments due to
Wachovia under the AA Holland Township Loan, including any payments to escrows or reserve accounts,
(ii) any operating expenses of the AA Holland Township Property pursuant to an approved annual
budget, (iii) any extraordinary expenses and (iv) any accrued interest under the AA Holland
Township Loan. Any remaining amount will be applied to the reduction of the principal balance of
the AA Holland Township Loan, until paid in full. The interest rate during the hyperamortization
period shall be the greater of (x) the fixed interest rate of 5.83% plus two percent (2.0%) or (y)
the Treasury Constant Maturity Yield Index plus two percent (2.0%). Notwithstanding the forgoing,
failure to make any required payments under the AA Holland Township Loan in a timely manner will
cause an event of default, which will result in a 4.0% default interest rate in excess of the
applicable interest rate, late charges equal to 5.0% of the amount of such overdue payment, and all
interest and principal becoming immediately due and payable in full.
Advance Auto Zeeland, Michigan
On July 12, 2006, Cole OP II acquired 100% of the membership interests (the AA Zeeland
Interests) in Cole AA Zeeland MI, LLC (AA Zeeland) from Cole Acquisitions, an affiliate of our
advisor. AA Zeeland owns, as its only asset, a retail building (the AA Zeeland Property) leased
to Advance Auto. The AA Zeeland Property was built in 2006 and consists of an approximately 7,000
square foot single-tenant retail building on an approximately 0.98 acre site located in Zeeland,
Michigan. The area surrounding the AA Zeeland Property is primarily surrounded by commercial,
retail and residential developments.
The purchase price of the AA Zeeland Interests was approximately $1.8 million, exclusive of
closing costs. The acquisition was funded by net proceeds from our ongoing public offering and the
assumption of an approximately $1.1 million loan from
Wachovia secured by the AA Zeeland Property (the AA Zeeland Loan). In connection with the
acquisition, we paid an affiliate of our advisor a finance coordination fee of approximately
$11,000. A majority of our board of directors, including all of our independent directors, not
otherwise interested in the acquisition, approved the acquisition as being fair and reasonable to
us and at a price to us no greater than the cost of the asset to the affiliate. The cost to us was
not in excess of the current appraised value of the property as determined by an independent expert
selected by our independent directors.
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The AA Zeeland Property is subject to a net lease, which commenced on January 26, 2006.
Pursuant to the lease agreement, the tenant is required to pay substantially all operating expenses
and capital expenditures in addition to base rent. The current aggregate annual base rent of
$132,089 is fixed through the first ten years of the initial lease term and increases to $145,298
in the eleventh year through the remainder of the initial lease term, which expires January 31,
2021. Advance Auto has three options to renew the lease, each for an additional five-year term
beginning on February 1, 2021, with rental escalations of 10% at the beginning of each five-year
renewal term.
Cole Realty has the sole and exclusive right to manage, operate, lease and supervise the
overall maintenance of the AA Zeeland Property and will receive a property management fee of 2.0%
of the monthly gross revenue from the AA Zeeland Property. We currently have no plans for any
renovations, improvements or development of the AA Zeeland Property. We believe the AA Zeeland
Property is adequately insured.
The AA Zeeland Loan, which is secured by the AA Zeeland Property, has a fixed interest rate of
5.83% per annum with monthly interest-only payments and the outstanding principal and any accrued
and unpaid interest due on April 11, 2016 (the AA Zeeland Maturity Date). The AA Zeeland Loan is
generally non-recourse to AA Zeeland and Cole OP II, but both are liable for customary non-recourse
carveouts.
The AA Zeeland Loan may not be prepaid, in whole or in part, except under the following
circumstances: (i) full prepayment may be made on any of the three (3) monthly payment dates
occurring immediately prior to the AA Zeeland Maturity Date and (ii) partial prepayments resulting
from Wachovias election to apply insurance or condemnation proceeds may be made to reduce the
outstanding principal balance of the AA Zeeland Loan. Notwithstanding the prepayment limitations,
AA Zeeland may sell the AA Zeeland Property to a buyer that assumes the AA Zeeland Loan. The
transfer would be subject to Wachovias approval of the proposed buyer and the payment of
Wachovias costs and expenses associated with the sale of the AA Zeeland Property.
In the event the AA Zeeland Loan is not paid off on the AA Zeeland Maturity Date, the AA
Zeeland Loan includes hyperamortization provisions. The AA Zeeland Maturity Date, pursuant to the
hyperamortization provisions, will be extended by twenty (20) years. During such period, Wachovia
will apply 100% of the rents collected to (i) all payments due to Wachovia under the AA Zeeland
Loan, including any payments to escrows or reserve accounts, (ii) any operating expenses of the AA
Zeeland Property pursuant to an approved annual budget, (iii) any extraordinary expenses and (iv)
any accrued interest under the AA Zeeland Loan. Any remaining amount will be applied to the
reduction of the principal balance of the AA Zeeland Loan, until paid in full. The interest rate
during the hyperamortization period shall be the greater of (x) the fixed interest rate of 5.83%
plus two percent (2.0%) or (y) the Treasury Constant Maturity Yield Index plus two percent (2.0%).
Notwithstanding the forgoing, failure to make any required payments under the AA Zeeland Loan in a
timely manner will cause an event of default, which will result in a 4.0% default interest rate in
excess of the applicable interest rate, late charges equal to 5.0% of the amount of such overdue
payment, and all interest and principal becoming immediately due and payable in full.
CVS Orlando, Florida
On July 12, 2006, Cole OP II acquired 100% of the membership interests (the CV Orlando
Interests) in Cole CV Orlando FL, LLC (CV Orlando) from Series D, LLC, (Series D), an
affiliate of our advisor. CV Orlando owns, as its only asset, a retail building (the CV Orlando
Property) leased to CVS EGL Lake Pickett FL, LLC, a wholly-owned subsidiary of CVS, which
guarantees the lease. The CV Orlando Property was built in 2005 and consists of an approximately
14,000 square foot single-tenant retail building on an approximately 1.38 acre site located in
Orlando, Florida. The area surrounding the CV Orlando Property is primarily surrounded by retail
and residential developments.
The purchase price of the CV Orlando Interests was approximately $4.95 million, exclusive of
closing costs. The acquisition was funded by net proceeds from our ongoing public offering and the
assumption of an approximately $3.0 million loan Wachovia secured by the CV Orlando Property (the
CV Orlando Loan). In connection with the acquisition, we paid an affiliate of our advisor a
finance coordination fee of approximately $30,000. A majority of our board of directors, including
all of our independent directors, not otherwise interested in the acquisition, approved the
acquisition as being fair and reasonable to us and at a price to us no greater than the cost of the
asset to the affiliate. The cost to us was not in excess of the current appraised value of the
property as determined by an independent expert selected by our independent directors.
The CV Orlando Property is subject to a net lease, which commenced on November 2, 2005.
Pursuant to the lease agreement, the tenant is required to pay substantially all operating expenses
and capital expenditures in addition to base rent. The current aggregate annual base rent of
$324,765, is fixed through the initial lease term which expires on November 1, 2025. CVS has four
options to renew the lease, each for an additional five-year period, with rental escalations of
2.0% at the beginning of each five-year renewal term.
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Cole Realty has the sole and exclusive right to manage, operate, lease and supervise the
overall maintenance of the CV Orlando Property and will receive a property management fee of 2.0%
of the monthly gross revenue from the CV Orlando Property. We currently have no plans for any
renovations, improvements or development of the CV Orlando Property. We believe the CV Orlando
Property is adequately insured.
The CV Orlando Loan, which is secured by the CV Orlando Property, has a fixed interest rate of
5.68% per annum with monthly interest-only payments and the outstanding principal and any accrued
and unpaid interest due on April 11, 2016 (the CV Orlando Maturity Date). The CV Orlando Loan is
generally non-recourse to CV Orlando and Cole OP II, but both are liable for customary non-recourse
carveouts.
The CV Orlando Loan may not be prepaid, in whole or in part, except under the following
circumstances: (i) full prepayment may be made on any of the three (3) monthly payment dates
occurring immediately prior to the CV Orlando Maturity Date and (ii) partial prepayments resulting
from Wachovias election to apply insurance or condemnation proceeds may be made to reduce the
outstanding principal balance of the CV Orlando Loan. Notwithstanding the prepayment limitations,
CV Orlando may sell the CV Orlando Property to a buyer that assumes the CV Orlando Loan. The
transfer would be subject to Wachovias approval of the proposed buyer and the payment of
Wachovias costs and expenses associated with the sale of the CV Orlando Property.
In the event the CV Orlando Loan is not paid off on the CV Orlando Maturity Date, the CV
Orlando Loan includes hyperamortization provisions. The CV Orlando Maturity Date, pursuant to the
hyperamortization provisions, will be extended by twenty (20) years. During such period, Wachovia
will apply 100% of the rents collected to (i) all payments due to Wachovia under the CV Orlando
Loan, including any payments to escrows or reserve accounts, (ii) any operating expenses of the CV
Orlando Property pursuant to an approved annual budget, (iii) any extraordinary expenses and (iv)
any accrued interest under the CV Orlando Loan. Any remaining amount will be applied to the
reduction of the principal balance of the CV Orlando Loan, until paid in full. The interest rate
during the hyperamortization period shall be the greater of (x) the fixed interest rate of 5.68%
plus two percent (2.0%) or (y) the Treasury Constant Maturity Yield Index plus two percent (2.0%).
Notwithstanding the forgoing, failure to make any required payments under the CV Orlando Loan in a
timely manner will cause an event of default, which will result in a 4.0% default interest rate in
excess of the applicable interest rate, late charges equal to 5.0% of the amount of such overdue
payment, and all interest and principal becoming immediately due and payable in full.
Office Depot Greenville, Mississippi
On July 12, 2006, Cole OP II acquired 100% of the membership interests (the OD Greenville
Interests) in Cole OD Greenville OH, LLC (OD Greenville) from Cole Acquisitions, an affiliate of
our advisor. OD Greenville owns, as its only asset, a retail building (the OD Greenville
Property) leased to Office Depot. The OD Greenville Property was built in 2000 and consists of an
approximately 25,000 square foot single-tenant retail building on an approximately 1.95 acre site
located in Greenville, Mississippi. The area surrounding the OD Greenville Property is primarily
surrounded by commercial, retail and residential developments.
The purchase price of the OD Greenville Interests was approximately $3.5 million, exclusive of
closing costs. The acquisition was funded by net proceeds from our ongoing public offering and the
assumption of an approximately $2.2 million loan from Wachovia secured by the OD Greenville
Property (the OD Greenville Loan). In connection with the acquisition, we paid an affiliate of
our advisor a finance coordination fee of approximately $22,000. A majority of our board of
directors, including all of our independent directors, not otherwise interested in the acquisition,
approved the acquisition as being fair and reasonable to us and at a price to us no greater than
the cost of the asset to the affiliate. The cost to us was not in excess of the current appraised
value of the property as determined by an independent expert selected by our independent directors.
The OD Greenville Property is subject to a net lease, which commenced on September 15, 2000.
Pursuant to the lease agreement, the tenant is required to pay substantially all operating expenses
and capital expenditures in addition to base rent. The current aggregate annual base rent of
$256,804, is fixed through the initial lease term which expires on September 30, 2015. Office Depot
has three options to renew the lease, each for an additional five-year period, with rental
escalations of 32% at the beginning of the first five-year renewal term, and rental escalations of
7.0% at the beginning of each subsequent five-year renewal term.
Cole Realty has the sole and exclusive right to manage, operate, lease and supervise the
overall maintenance of the OD Greenville Property and will receive a property management fee of
2.0% of the monthly gross revenue from the OD Greenville
Property. We currently have no plans for any renovations, improvements or development of the
OD Greenville Property. We believe the OD Greenville Property is adequately insured.
The OD Greenville Loan, which is secured by the OD Greenville Property, has a fixed interest
rate of 5.76% per annum with monthly interest-only payments and the outstanding principal and any
accrued and unpaid interest due on March 11, 2011 (the OD
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Greenville Maturity Date). The OD Greenville Loan is generally non-recourse to OD Greenville and Cole OP II, but both are liable for
customary non-recourse carveouts.
The OD Greenville Loan may not be prepaid, in whole or in part, except under the following
circumstances: (i) full prepayment may be made on any of the three (3) monthly payment dates
occurring immediately prior to the OD Greenville Maturity Date and (ii) partial prepayments
resulting from Wachovias election to apply insurance or condemnation proceeds may be made to
reduce the outstanding principal balance of the OD Greenville Loan. Notwithstanding the prepayment
limitations, OD Greenville may sell the OD Greenville Property to a buyer that assumes the OD
Greenville Loan. The transfer would be subject to Wachovias approval of the proposed buyer and the
payment of Wachovias costs and expenses associated with the sale of the OD Greenville Property.
In the event the OD Greenville Loan is not paid off on the OD Greenville Maturity Date, the OD
Greenville Loan includes hyperamortization provisions. The OD Greenville Maturity Date, pursuant to
the hyperamortization provisions, will be extended by twenty (20) years. During such period,
Wachovia will apply 100% of the rents collected to (i) all payments due to Wachovia under the OD
Greenville Loan, including any payments to escrows or reserve accounts, (ii) any operating expenses
of the OD Greenville Property pursuant to an approved annual budget, (iii) any extraordinary
expenses and (iv) any accrued interest under the OD Greenville Loan. Any remaining amount will be
applied to the reduction of the principal balance of the OD Greenville Loan, until paid in full.
The interest rate during the hyperamortization period shall be the greater of (x) the fixed
interest rate of 5.76% plus two percent (2.0%) or (y) the Treasury Constant Maturity Yield Index
plus two percent (2.0%). Notwithstanding the forgoing, failure to make any required payments under
the OD Greenville Loan in a timely manner will cause an event of default, which will result in a
4.0% default interest rate in excess of the applicable interest rate, late charges equal to 4.0% of
the amount of such overdue payment, and all interest and principal becoming immediately due and
payable in full.
Office Depot Warrensburg, Missouri
On July 19, 2006, Cole OP II acquired 100% of the membership interests (the OD Warrensburg
Interests) in Cole OD Warrensburg OH, LLC (OD Warrensburg) from Series D. OD Warrensburg owns,
as its only asset, a retail building (the OD Warrensburg Property) leased to Office Depot. The OD
Warrensburg Property was built in 2001 and consists of an approximately 20,000 square foot
single-tenant retail building on an approximately 2.06 acre site located in Warrensburg, Missouri.
The area surrounding the OD Warrensburg Property is primarily surrounded by commercial, retail and
residential developments.
The purchase price of the OD Warrensburg Interests was approximately $2.9 million, exclusive
of closing costs. The acquisition was funded by net proceeds from our ongoing public offering and
the assumption of an approximately $1.8 million loan from Wachovia secured by the OD Warrensburg
Property (the OD Warrensburg Loan). In connection with the acquisition, we paid an affiliate of
our advisor a finance coordination fee of approximately $18,000. A majority of our board of
directors, including all of our independent directors, not otherwise interested in the acquisition,
approved the acquisition as being fair and reasonable to us and at a price to us no greater than
the cost of the asset to the affiliate. The cost to us was not in excess of the current appraised
value of the property as determined by an independent expert selected by our independent directors.
The OD Warrensburg Property is subject to a net lease, which commenced on August 24, 2001.
Pursuant to the lease agreement, the tenant is required to pay substantially all operating expenses
and capital expenditures in addition to base rent. The current aggregate annual base rent of
$210,000, is fixed through the initial lease term which expires on August 31, 2016. Office Depot
has four options to renew the lease, each for an additional five-year period, with rental
escalations of descending in a range from 5.0% at the beginning of the first five-year renewal
term, to 4.0% at the beginning of the final five-year renewal term.
Cole Realty has the sole and exclusive right to manage, operate, lease and supervise the
overall maintenance of the OD Warrensburg Property and will receive a property management fee of
2.0% of the monthly gross revenue from the OD Warrensburg Property. We currently have no plans for
any renovations, improvements or development of the OD Warrensburg Property. We believe the OD
Warrensburg Property is adequately insured.
The OD Warrensburg Loan, which is secured by the OD Warrensburg Property, has a fixed interest
rate of 5.85% per annum with monthly interest-only payments and the outstanding principal and any
accrued and unpaid interest due on April 11, 2011 (the OD Warrensburg Maturity Date). The OD
Warrensburg Loan is generally non-recourse to OD Warrensburg and Cole OP II, but both are liable
for customary non-recourse carveouts.
The OD Warrensburg Loan may not be prepaid, in whole or in part, except under the following
circumstances: (i) full prepayment may be made on any of the three (3) monthly payment dates
occurring immediately prior to the OD Warrensburg Maturity Date and (ii) partial prepayments
resulting from Wachovias election to apply insurance or condemnation proceeds may be made to
reduce the outstanding principal balance of the OD Warrensburg Loan. Notwithstanding the prepayment
limitations, OD Warrensburg
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may sell the OD Warrensburg Property to a buyer that assumes the OD Warrensburg Loan. The
transfer would be subject to Wachovias approval of the proposed buyer and the payment of
Wachovias costs and expenses associated with the sale of the OD Warrensburg Property.
In the event the OD Warrensburg Loan is not paid off on the OD Warrensburg Maturity Date, the
OD Warrensburg Loan includes hyperamortization provisions. The OD Warrensburg Maturity Date,
pursuant to the hyperamortization provisions, will be extended by twenty (20) years. During such
period, Wachovia will apply 100% of the rents collected to (i) all payments due to Wachovia under
the OD Warrensburg Loan, including any payments to escrows or reserve accounts, (ii) any operating
expenses of the OD Warrensburg Property pursuant to an approved annual budget, (iii) any
extraordinary expenses and (iv) any accrued interest under the OD Warrensburg Loan. Any remaining
amount will be applied to the reduction of the principal balance of the OD Warrensburg Loan, until
paid in full. The interest rate during the hyperamortization period shall be the greater of (x) the
fixed interest rate of 5.85% plus two percent (2.0%) or (y) the Treasury Constant Maturity Yield
Index plus two percent (2.0%). Notwithstanding the forgoing, failure to make any required payments
under the OD Warrensburg Loan in a timely manner will cause an event of default, which will result
in a 4.0% default interest rate in excess of the applicable interest rate, late charges equal to
4.0% of the amount of such overdue payment, and all interest and principal becoming immediately due
and payable in full.
CVS Gulfport, Mississippi
On August 10, 2006, Cole OP acquired 100% of the membership interests (the CV Gulfport
Interests) in Cole CV Gulfport MS, LLC (CV Gulfport) from Cole Acquisitions, an affiliate of
ours and our advisor. CV Gulfport owns 100% fee simple interest in, as its only asset, a retail
building (the CV Gulfport Property), 100% leased to CVS EGL East Pass Gulfport MS, Inc., a
wholly-owned subsidiary of CVS. The CV Gulfport Property was built in 2000 and consists of an
approximately 11,000 square foot single-tenant retail building on an approximately 1.2 acre site
located in Gulfport, Mississippi. The area surrounding the CV Gulfport Property is primarily
surrounded by commercial, retail and residential developments.
The purchase price of the CV Gulfport Property was approximately $4.4 million, exclusive of
closing costs. The acquisition was funded by net proceeds from our ongoing public offering and an
approximately $2.6 million loan from Wachovia, which is secured by the CV Gulfport Property (the
CV Gulfport Loan). In connection with the acquisition, we paid our advisor a finance coordination
fee of approximately $26,000. A majority of our board of directors, including all of our
independent directors, not otherwise interested in the acquisition, approved the acquisition as
being fair and reasonable to us and at a price to us no greater than the cost of the asset to the
affiliate. The cost to us was not in excess of the current appraised value of the property as
determined by an independent expert selected by our independent directors.
The CV Gulfport Property is subject to a net lease, which commenced on October 25, 2000.
Pursuant to the lease agreement, the tenant is required to pay substantially all operating expenses
and capital expenditures in addition to base rent. The current aggregate annual base rent of
$281,136 is fixed through the initial lease term which expires on October 24, 2025. CVS has four
options to renew the lease, each for an additional five-year term beginning on October 26, 2025,
with rental escalations of 2.0% at the beginning of each five-year term.
CVS operates over 5,000 stores in 36 states. CVS has a Standard & Poors credit rating of A-
and the companys stock is publicly traded on the New York Stock Exchange under the ticker symbol
CVS.
Cole Realty has the sole and exclusive right to manage, operate, lease and supervise the
overall maintenance of the CV Gulfport Property and will receive a property management fee of 2.0%
of the monthly gross revenue from the CV Gulfport Property. We currently have no plans for any
renovations, improvements or development of the CV Gulfport Property. We believe the CV Gulfport
Property is adequately insured.
The CV Gulfport Loan has a fixed interest rate of 5.28% per annum with monthly interest-only
payments. The outstanding principal and any accrued and unpaid interest is due on April 11, 2016
(the CV Gulfport Maturity Date). The CV Gulfport Loan is generally non-recourse to CV Gulfport
and Cole OP II, but both are liable for customary non-recourse carveouts.
The CV Gulfport Loan may not be prepaid, in whole or in part, except under the following
circumstances: (i) full prepayment may be made on any of the three (3) monthly payment dates
occurring immediately prior to the CV Gulfport Maturity Date and (ii) partial prepayments resulting
from Wachovias election to apply insurance or condemnation proceeds may be made to reduce the
outstanding principal balance of the CV Gulfport Loan. Notwithstanding the prepayment limitations,
CV Gulfport may sell the CV Gulfport Property to a buyer that assumes the CV Gulfport Loan. The
transfer would be subject to Wachovias approval of the proposed buyer and the payment of
Wachovias costs and expenses associated with the sale of the CV Gulfport Property.
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In the event the CV Gulfport Loan is not paid off on the CV Gulfport Maturity Date, the CV
Gulfport Loan includes hyperamortization provisions. The CV Gulfport Maturity Date, pursuant to the
hyperamortization provisions, will be extended by twenty (20) years. During such period, Wachovia
will apply 100% of the rents collected to (i) all payments due to Wachovia under the CV Gulfport
Loan, including any payments to escrows or reserve accounts, (ii) any operating expenses of the CV
Gulfport Property pursuant to an approved annual budget, (iii) any extraordinary expenses and (iv)
any accrued interest under the CV Gulfport Loan. Any remaining amount will be applied to the
reduction of the principal balance of the CV Gulfport Loan, until paid in full. The interest rate
during the hyperamortization period shall be the greater of (x) the fixed interest rate of 5.28%
plus two percent (2.0%) or (y) the Treasury Constant Maturity Yield Index plus two percent (2.0%).
Notwithstanding the forgoing, failure to make any required payments under the CV Gulfport Loan in a
timely manner will cause an event of default, which will result in a 4.0% default interest rate in
excess of the applicable interest rate, late charges equal to 5.0% of the amount of such overdue
payment, and all interest and principal becoming immediately due and payable in full.
Advance Auto Grand Forks, North Dakota
On August 15, 2006, Cole AA Grand Forks ND, LLC, a Delaware limited liability company (AA
Grand Forks), a wholly-owned subsidiary of Cole OP II, acquired a 100% fee simple interest in an
approximately 7,000 square foot single-tenant retail building (the AA Grand Forks Property) from
Spirit Management Company, which is not affiliated with us, our subsidiaries or affiliates. The AA
Grand Forks Property was constructed in 2005 on an approximately 1.15 acre site in Grand Forks,
North Dakota. The area surrounding the AA Grand Forks Property is shared by commercial, retail and
residential developments.
The purchase price of the AA Grand Forks Property was approximately $1.4 million, exclusive of
closing costs. The acquisition was funded by net proceeds from our ongoing public offering and an
approximately $1.1 million loan from Wachovia, which is secured by the AA Grand Forks Property (the
AA Grand Forks Loan). In connection with the acquisition, we paid an affiliate of our advisor an
acquisition fee of approximately $28,000 and our advisor a finance coordination fee of
approximately $8,000.
The AA Grand Forks Property is 100% leased to AdvanceAuto. The AA Grand Forks Property is
subject to a net lease, which commenced on December 15, 2005, pursuant to which the tenant is
required to pay substantially all operating expenses and capital expenditures in addition to base
rent. The current aggregate annual base rent of $106,375 is fixed through the first ten years of
the initial lease term and increases to $111,694 in the eleventh year through the remainder of the
initial lease term, which expires December 31, 2020. Advance Auto has three options to renew the
lease, each for an additional five-year term beginning on January 1, 2021, with rental escalations
of 5.0% at the beginning of each five-year renewal term.
Advance Auto operates over 2,800 auto parts stores in 40 states, Puerto Rico and the Virgin
Islands. Advance Auto has a Standard and Poors credit rating of BB+ and its stock is publicly
traded on the New York Stock Exchange under the symbol AAP.
Cole Realty has the sole and exclusive right to manage, operate, lease and supervise the
overall maintenance of the AA Grand Forks Property and will receive a property management fee of
2.0% of the monthly gross revenue from the AA Grand Forks Property. We currently have no plans for
any renovations, improvements or development of the AA Grand Forks Property. We believe the AA
Grand Forks Property is adequately insured.
The AA Grand Forks Loan consists of an approximately $840,000 fixed interest rate tranche (the
AA Grand Forks Fixed Rate Tranche) and a $280,000 variable interest rate tranche (the AA Grand
Forks Variable Rate Tranche). The AA Grand Forks Fixed Rate Tranche has a fixed interest rate of
5.87% per annum with monthly interest-only payments. The outstanding principal and any accrued and
unpaid interest is due on September 11, 2016 (the AA Grand Forks Maturity Date). The AA Grand
Forks Variable Rate Tranche has a variable interest rate based on the one-month LIBOR rate plus 200
basis points with monthly interest-only payments, and the outstanding principal and any accrued and
unpaid interest is due on November 15, 2006. The AA Grand Forks Loan is generally non-recourse to
AA Grand Forks and Cole OP II, but both are liable for customary non-recourse carveouts.
The AA Grand Forks Loan may not be prepaid, in whole or in part, except under the following
circumstances: (i) full prepayment may be made on any of the three (3) monthly payment dates
occurring immediately prior to the AA Grand Forks Maturity Date and (ii) partial prepayments
resulting from Wachovias election to apply insurance or condemnation proceeds may be made to
reduce the outstanding principal balance of the AA Grand Forks Loan. Notwithstanding the prepayment
limitations, AA Grand Forks may sell the AA Grand Forks Property to a buyer that assumes the AA
Grand Forks Loan. The transfer shall be subject to Wachovias approval of the proposed buyer and
the payment of Wachovias costs and expenses associated with the sale of the AA Grand Forks
Property.
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In the event the AA Grand Forks Loan is not paid off on the AA Grand Forks Maturity Date, the
AA Grand Forks Loan includes hyperamortization provisions. The AA Grand Forks Maturity Date,
pursuant to the hyperamortization provisions, will be extended by twenty (20) years. During such
period, Wachovia will apply 100% of the rents collected to (i) all payments due to Wachovia under
the AA Grand Forks Loan, including any payments to escrows or reserve accounts, (ii) any operating
expenses of the AA Grand Forks Property pursuant to an approved annual budget, (iii) any
extraordinary expenses and (iv) any accrued interest under the AA Grand Forks Loan. Any remaining
amount will be applied to the reduction of the principal balance of the AA Grand Forks Loan, until
paid in full. The interest rate during the hyperamortization period shall be the greater of (x) the
fixed interest rate of 5.87% plus two percent (2.0%) or (y) the Treasury Constant Maturity Yield
Index plus two percent (2.0%). Notwithstanding the forgoing, failure to make any required payments
under the AA Grand Forks Loan in a timely manner will cause an event of default, which will result
in a 4.0% default interest rate in excess of the applicable interest rate, late charges equal to
5.0% of the amount of such overdue payment, and all interest and principal becoming immediately due
and payable in full.
CVS Clinton, New York
On August 24, 2006, Cole OP II acquired 100% of the membership interests (the CV Clinton
Interests) in Meadow Street Development, LLC (Meadow Street) from Braxton Capital Company, LP,
Devin A. Dal Pos, Douglas E. Ulrich, and Gregory E. Binzer, companies and persons that are not
affiliated with us, our subsidiaries or affiliates. Meadow Street owns a 100% fee simple interest
in, as its only asset, a retail building (the CV Clinton Property), leased to CVS BDI, Inc.,
which is a wholly-owned subsidiary of CVS. The CV Clinton Property was built in 2006 and consists
of an approximately 10,000 square foot single-tenant retail building on an approximately 1.6 acre
site located in Clinton, New York. The area surrounding the CV Clinton Property is primarily
surrounded by, retail and residential developments.
The purchase price of the CV Clinton Interests was approximately $3.1 million, exclusive of
closing costs. The acquisition was funded by net proceeds from our ongoing public offering and an
approximately $2.4 million loan from Wachovia, which is secured by the CV Clinton Property (the CV
Clinton Loan). The CV Clinton Loan is subject to cross-collateralization with the WG Picayune
Property and in the future with the GG OFallon Property (defined below). In connection with the
acquisition, we paid an affiliate of our advisor an acquisition fee of $61,000 and our advisor a
finance coordination fee of approximately $19,000.
The CV Clinton Property is subject to a net lease, which commenced on April 5, 2006, pursuant
to which the tenant is required to pay substantially all operating expenses and capital
expenditures in addition to base rent. The current aggregate annual base rent of $222,661 is fixed
through the remainder of the initial lease term, which expires January 31, 2032. CVS has four
options to renew the lease, each for an additional five-year term beginning on February 1, 2032,
with rental escalations of 10.0% at the beginning of the first five-year renewal term and 5.0% at
each subsequent five-year renewal term.
Cole Realty has the sole and exclusive right to manage, operate, lease and supervise the
overall maintenance of the CV Clinton Property and will receive a property management fee of 2.0%
of the monthly gross revenue from the CV Clinton Property. We currently have no plans for any
renovations, improvements or development of the CV Clinton Property. We believe the Clinton
Property is adequately insured.
The CV Clinton Loan consists of an approximately $1.9 million fixed interest rate tranche (the
CV Clinton Fixed Rate Tranche) and a $457,000 variable interest rate tranche (the CV Clinton
Variable Rate Tranche). The CV Clinton Fixed Rate Tranche has a fixed interest rate of 5.74% per
annum with monthly interest-only payments. The outstanding principal and any accrued and unpaid
interest is due on September 11, 2016 (the CV Clinton Maturity Date). The CV Clinton Variable
Rate Tranche has a variable interest rate based on the one-month LIBOR rate plus 200 basis points
with monthly interest-only payments, and the outstanding principal and any accrued and unpaid
interest is due on December 24, 2006. The CV Clinton Loan is generally non-recourse to CV Clinton
and Cole OP II, but both are liable for customary non-recourse carveouts.
The CV Clinton Loan may not be prepaid, in whole or in part, except under the following
circumstances: (i) full prepayment may be made on any of the three (3) monthly payment dates
occurring immediately prior to the CV Clinton Maturity Date and (ii) partial prepayments resulting
from Wachovias election to apply insurance or condemnation proceeds may be made to reduce the
outstanding principal balance of the CV Clinton Loan. Notwithstanding the prepayment limitations,
CV Clinton may sell the CV Clinton Property to a buyer that assumes the CV Clinton Loan. The
transfer shall be subject to Wachovias approval of the proposed buyer and the payment of
Wachovias costs and expenses associated with the sale of the CV Clinton Property.
In the event the CV Clinton Loan is not paid off on the CV Clinton Maturity Date, the CV
Clinton Loan includes hyperamortization provisions. The CV Clinton Maturity Date, pursuant to the
hyperamortization provisions, will be extended by twenty (20) years. During such period, Wachovia
will apply 100% of the rents collected to (i) all payments due to Wachovia under the CV Clinton
Loan, including any payments to escrows or reserve accounts, (ii) any operating expenses of the CV
Clinton Property pursuant to an approved annual budget, (iii) any extraordinary expenses (iv) the
outstanding principal balance of the CV Clinton Loan
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and (v) any accrued interest under the CV Clinton Loan. Any remaining amount will be applied
to the reduction of the principal balance of the CV Clinton Loan, until paid in full. The interest
rate during the hyperamortization period shall be the greater of (x) the fixed interest rate of
5.74% plus two percent (2.0%) or (y) the Treasury Constant Maturity Yield Index plus two percent
(2.0%). Notwithstanding the forgoing, failure to make any required payments under the CV Clinton
Loan in a timely manner will cause an event of default, which will result in a 4.0% default
interest rate in excess of the applicable interest rate, late charges equal to 5.0% of the amount
of such overdue payment, and all interest and principal becoming immediately due and payable in
full.
Oxford Theatre Oxford, Mississippi
On August 31, 2006, Cole OT Oxford MS, LP, a Delaware limited partnership (OT Oxford), in
which Cole OP II is the sole limited partner and a wholly-owned subsidiary of Cole OP II is the
sole general partner, acquired a 100% fee simple interest in an approximately 35,000 square foot
single-tenant retail building (the OT Oxford Property), from Kenlan Development Oxford, LLC,
which is not affiliated with us, our subsidiaries or affiliates. The OT Oxford Property was
constructed in 2006 on an approximately 5.76 acre site in Oxford, Mississippi. The area surrounding
the OT Oxford Property is shared by commercial, retail and residential developments.
The purchase price of the OT Oxford Property was approximately $9.7 million, exclusive of
closing costs. The acquisition was funded by net proceeds from our ongoing public offering and an
approximately $5.2 million loan from Bear Stearns, which is secured by the OT Oxford Property (the
OT Oxford Loan). The OT Oxford Loan is subject to cross-collateralization in the future with the
LO Midland Property, the LO Lubbock Property, and the KO Wichita Property. In connection with the
acquisition, we paid an affiliate of our advisor an acquisition fee of approximately $194,000 and
our advisor a finance coordination fee of approximately $52,000.
The OT Oxford Property is 100% leased to Oxford Theater Company, Inc., which is a wholly-owned
subsidiary of American Screen Works, Inc., which guarantees the lease. The OT Oxford Property is
subject to a net lease, which commenced on August 1, 2006, pursuant to which the tenant is required
to pay substantially all operating expenses and capital expenditures in addition to base rent. The
current aggregate annual base rent of $848,088 has rental escalations of 5.0% every five-years of
the initial lease term, which expires July 31, 2026.
American Screenworks, Inc. is a wholly owned subsidiary of Restaurant Entertainment Group
(REG). REG was founded in Orlando, Florida in 1979 and owns and operates 35 American Screen Works
cinema complexes. The theatres are in eighteen states throughout the US.
Cole Realty has the sole and exclusive right to manage, operate, lease and supervise the
overall maintenance of the OT Oxford Property and will receive a property management fee of 2.0% of
the monthly gross revenue from the OT Oxford Property. We currently have no plans for any
renovations, improvements or development of the OT Oxford Property. We believe the OT Oxford
Property is adequately insured.
The OT Oxford Loan has a fixed interest rate of 6.11% per annum with monthly interest-only
payments. The outstanding principal and any accrued and unpaid interest is due on July 1, 2016 (the
OT Oxford Maturity Date). The OT Oxford Loan is generally non-recourse to OT Oxford and Cole OP
II, but both are liable for customary non-recourse carveouts. In the event that the OT Oxford Loan
is not cross-collateralized in the future with the LO Midland Property, the LO Lubbock Property,
and the KO Wichita Property, at the option of Bear Stearns, we may be required to repay the OT
Oxford Loan in full or increase the fixed interest rate by 1.0% per annum.
The OT Oxford Loan may not be prepaid, in whole or in part, except under the following
circumstances: (i) full prepayment may be made on any of the three (3) monthly payment dates
occurring immediately prior to the OT Oxford Maturity Date and (ii) partial prepayments resulting
from Bear Stearns election to apply insurance or condemnation proceeds may be made to reduce the
outstanding principal balance of the OT Oxford Loan. Notwithstanding the prepayment limitations, OT
Oxford may sell the OT Oxford Property to a buyer that assumes the OT Oxford Loan. The transfer
shall be subject to Bear Stearns approval of the proposed buyer and the payment of Bear Stearns
costs and expenses associated with the sale of the OT Oxford Property.
In the event the OT Oxford Loan is not paid off on the OT Oxford Maturity Date, the OT Oxford
Loan includes hyperamortization provisions. The OT Oxford Maturity Date, pursuant to the
hyperamortization provisions, will be extended by twenty (20) years. During such period, Bear
Stearns will apply 100% of the rents collected to (i) all payments due to Bear Stearns under the OT
Oxford Loan, including any payments to escrows or reserve accounts, (ii) any operating expenses of
the OT Oxford Property pursuant to an approved annual budget, (iii) any extraordinary expenses and
(iv) any accrued interest under the OT Oxford Loan. The interest rate during the hyperamortization
period shall be the greater of (x) the fixed interest rate of 6.11% plus two percent (2.0%) per
annum or (y) the Treasury Constant Maturity Yield Index plus two percent (2.0%) per annum, not to
exceed 11.11% per
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annum. Notwithstanding the forgoing, failure to make any required payments under the OT Oxford
Loan in a timely manner will cause an event of default, which will result in a 4.0% default
interest rate in excess of the applicable interest rate, late charges equal to 5.0% of the amount
of such overdue payment, and all interest and principal becoming immediately due and payable in
full.
Advance Auto Duluth, Minnesota
On September 8, 2006, Cole AA Duluth MN, LLC, a Delaware limited liability company (AA
Duluth), a wholly-owned subsidiary of Cole OP II, acquired a 100% fee simple interest in an
approximately 7,000 square foot single-tenant retail building (the AA Duluth Property) from
Spirit Management Company, which is not affiliated with us, our subsidiaries or affiliates. The AA
Duluth Property was constructed in 2006 on an approximately .44 acre site in Duluth, Minnesota. The
area surrounding the AA Duluth Property is shared by retail and residential developments.
The purchase price of the AA Duluth Property was approximately $1.4 million, exclusive of
closing costs. The acquisition was funded by net proceeds from our ongoing public offering. In
connection with the acquisition, we paid an affiliate of our advisor an acquisition fee of
approximately $29,000. On September 22, 2006, AA Duluth entered into a $1.1 million loan with
Wachovia, which is secured by the AA Duluth Property (the AA Duluth Loan). In connection with the
origination of the AA Duluth Loan, we paid our advisor a finance coordination fee of approximately
$9,000.
Cole Realty has the sole and exclusive right to manage, operate, lease and supervise the
overall maintenance of the AA Duluth Property and will receive a property management fee of 2.0% of
the monthly gross revenue from the AA Duluth Property. We currently have no plans for any
renovations, improvements or development of the AA Duluth Property. We believe the AA Duluth
Property is adequately insured.
The AA Duluth Property is 100% leased to Advance Auto. The AA Duluth Property is subject to a
net lease, which commenced on February 9, 2006, pursuant to which the tenant is required to pay
substantially all operating expenses and capital expenditures in addition to base rent. The current
aggregate annual base rent of $108,875 is fixed through the first ten years of the initial lease
term and increases to $114,319 in the eleventh year through the remainder of the initial lease
term, which expires February 28, 2021. Advance Auto has three options to renew the lease, each for
an additional five-year term, beginning on March 1, 2021, with rental escalations of 5.0% at the
beginning of each five-year renewal term.
The AA Duluth Loan consists of an approximately $860,000 fixed interest rate tranche (the AA
Duluth Fixed Rate Tranche) and a $286,000 variable interest rate tranche (the AA Duluth Variable
Rate Tranche). The AA Duluth Fixed Rate Tranche has a fixed interest rate of 5.87% per annum with
monthly interest-only payments. The outstanding principal and any accrued and unpaid interest is
due on October 11, 2016 (the AA Duluth Maturity Date). The AA Duluth Variable Rate Tranche has a
variable interest rate based on the one-month LIBOR rate plus 200 basis points with monthly
interest-only payments, and the outstanding principal and any accrued and unpaid interest is due on
December 22, 2006. The AA Duluth Loan is generally non-recourse to AA Duluth and Cole OP II, but
both are liable for customary non-recourse carveouts.
The AA Duluth Loan may not be prepaid, in whole or in part, except under the following
circumstances: (i) full prepayment may be made on any of the three (3) monthly payment dates
occurring immediately prior to the AA Duluth Maturity Date and (ii) partial prepayments resulting
from Wachovias election to apply insurance or condemnation proceeds may be made to reduce the
outstanding principal balance of the AA Duluth Loan. Notwithstanding the prepayment limitations, AA
Duluth may sell the AA Duluth Property to a buyer that assumes the AA Duluth Loan. The transfer
shall be subject to Wachovias approval of the proposed buyer and the payment of Wachovias costs
and expenses associated with the sale of the AA Duluth Property.
In the event the AA Duluth Loan is not paid off on the AA Duluth Maturity Date, the AA Duluth
Loan includes hyperamortization provisions. The AA Duluth Maturity Date, pursuant to the
hyperamortization provisions, will be extended by twenty (20) years. During such period, Wachovia
will apply 100% of the rents collected to (i) all payments due to Wachovia under the AA Duluth
Loan, including any payments to escrows or reserve accounts, (ii) any operating expenses of the AA
Duluth Property pursuant to an approved annual budget, (iii) any extraordinary expenses and (iv)
any accrued interest under the AA Duluth Loan. Any remaining amount will be applied to the
reduction of the principal balance of the AA Duluth Loan, until paid in full. The interest rate
during the hyperamortization period shall be the greater of (x) the fixed interest rate of 5.87%
plus two percent (2.0%) or (y) the Treasury Constant Maturity Yield Index plus two percent (2.0%).
Notwithstanding the forgoing, failure to make any required payments under the AA Duluth Loan in a
timely manner will cause an event of default, which will result in a 4.0% default interest rate in
excess of the applicable interest rate, late charges equal to 5.0% of the amount of such overdue
payment, and all interest and principal becoming immediately due and payable in full.
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Walgreens Picayune, Mississippi
On September 15, 2006, Cole WG Picayune MS, LLC, a Delaware limited liability company (WG
Picayune), a wholly-owned subsidiary of Cole OP II, acquired a 100% fee simple interest in an
approximately 15,000 square foot single-tenant retail building (the WG Picayune Property) from
Spanish Coin Development, LLC, which is not affiliated with us, our subsidiaries or affiliates. The
WG Picayune Property was constructed in 2006 on an approximately 1.7 acre site in Picayune,
Mississippi. The area surrounding the WG Picayune Property is shared by commercial, and residential
developments.
The purchase price of the WG Picayune Property was approximately $4.3 million, exclusive of
closing costs. The acquisition was funded by net proceeds from our ongoing public offering and an
approximately $3.4 million loan from Wachovia, which is secured by the WG Picayune Property (the
WG Picayune Loan). The WG Picayune Loan is subject to cross-collateralization with the CV Clinton
Property and in the future with the GG OFallon Property (defined below). In connection with the
acquisition, we paid an affiliate of our advisor an acquisition fee of approximately $85,000 and
our advisor a finance coordination fee of approximately $28,000.
The WG Picayune Property is 100% leased to Walgreens. The WG Picayune Property is subject to a
net lease, which commenced on March 20, 2006, pursuant to which the tenant is required to pay
substantially all operating expenses and capital expenditures in addition to base rent. The current
aggregate annual base rent of $291,385 is fixed through the initial lease term, which expires March
31, 2031, and all renewal options. Walgreens has ten options to renew the lease, each for an
additional five-year term beginning on April 1, 2031.
Walgreens operates over 4,900 stores in 45 states and Puerto Rico. Walgreens has a Standard &
Poors Credit Rating of A+ and the companys stock is publicly traded on the New York Stock
Exchange under the ticker symbol WAG.
Cole Realty has the sole and exclusive right to manage, operate, lease and supervise the
overall maintenance of the WG Picayune Property and will receive a property management fee of 2.0%
of the monthly gross revenue from the WG Picayune Property. We currently have no plans for any
renovations, improvements or development of the WG Picayune Property. We believe the WG Picayune
Property is adequately insured.
The WG Picayune Loan consists of an approximately $2,766,000 fixed interest rate tranche (the
WG Picayune Fixed Rate Tranche) and a $638,000 variable interest rate tranche (the WG Picayune
Variable Rate Tranche). The WG Picayune Fixed Rate Tranche has a fixed interest rate of 5.53% per
annum with monthly interest-only payments. The outstanding principal and any accrued and unpaid
interest is due on October 11, 2016 (the WG Picayune Maturity Date). The WG Picayune Variable
Rate Tranche has a variable interest rate based on the one-month LIBOR rate plus 200 basis points
with monthly interest-only payments, and the outstanding principal and any accrued and unpaid
interest is due on January 12, 2007. The WG Picayune Loan is generally non-recourse to WG Picayune
and Cole OP II, but both are liable for customary non-recourse carveouts.
The WG Picayune Loan may not be prepaid, in whole or in part, except under the following
circumstances: (i) full prepayment may be made on any of the three (3) monthly payment dates
occurring immediately prior to the WG Picayune Maturity Date and (ii) partial prepayments resulting
from Wachovias election to apply insurance or condemnation proceeds may be made to reduce the
outstanding principal balance of the WG Picayune Loan. Notwithstanding the prepayment limitations,
WG Picayune may sell the WG Picayune Property to a buyer that assumes the WG Picayune Loan. The
transfer shall be subject to Wachovias approval of the proposed buyer and the payment of
Wachovias costs and expenses associated with the sale of the WG Picayune Property.
In the event the WG Picayune Loan is not paid off on the WG Picayune Maturity Date, the WG
Picayune Loan includes hyperamortization provisions. The WG Picayune Maturity Date, pursuant to the
hyperamortization provisions, will be extended by twenty (20) years. During such period, Wachovia
will apply 100% of the rents collected to (i) all payments due to Wachovia under the WG Picayune
Loan, including any payments to escrows or reserve accounts, (ii) any operating expenses of the WG
Picayune Property pursuant to an approved annual budget, (iii) any extraordinary expenses and (iv)
any accrued interest under the WG Picayune Loan. Any remaining amount will be applied to the
reduction of the principal balance of the WG Picayune Loan, until paid in full. The interest rate
during the hyperamortization period shall be the greater of (x) the fixed interest rate of 5.53%
plus two percent (2.0%) or (y) the Treasury Constant Maturity Yield Index plus two percent (2.0%).
Notwithstanding the forgoing, failure to make any required payments under the WG Picayune Loan in a
timely manner will cause an event of default, which will result in a 4.0% default interest rate in
excess of the applicable interest rate, late charges equal to 5.0% of the amount of such overdue
payment, and all interest and principal becoming immediately due and payable in full.
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Kohls Wichita, Kansas
On September 27, 2006, Cole KO Wichita KS, LP, a Delaware limited partnership (KO Wichita),
in which Cole OP II, is the sole limited partner and a wholly-owned subsidiary of Cole OP II is the
sole general partner, acquired a 100% fee simple interest in an approximately 87,000 square foot
single-tenant retail building (the KO Wichita Property) from ELJ, L.L.C. , which is not
affiliated with us, our subsidiaries or affiliates. The KO Wichita Property was constructed in 1996
on an approximately 9.0 acre site in Wichita, Kansas. The area surrounding the KO Wichita Property
is shared by commercial, retail and residential developments.
The purchase price of the KO Wichita Property was approximately $7.9 million, exclusive of
closing costs. The acquisition was funded by net proceeds from our ongoing public offering and an
approximately $5.2 million loan (the KO Wichita Loan) from Bear Stearns, which is secured by the
KO Wichita Property, the LO Midland Property, the LO Lubbock Property and the OT Oxford Property.
In connection with the acquisition, we paid an affiliate of our advisor an acquisition fee of
approximately $157,000 and our advisor a finance coordination fee of $52,000.
The KO Wichita Property is 100% leased to Kohls Illinois, Inc. (Kohls Illinois), a
wholly-owned subsidiary of Kohls Corporation (Kohls), which guarantees the lease. The KO
Wichita Property is subject to a net lease, which commenced on March 8, 1996, pursuant to which the
tenant is required to pay substantially all operating expenses and capital expenditures in addition
to base rent. The current aggregate annual base rent of $601,759 is fixed through the first twenty
years of the initial lease term, which expires January 28, 2017. Kohls Illinois has six options to
renew the lease, each for an additional five-year term beginning on January 29, 2017, with rental
escalations of 5.0% at the beginning of each five-year renewal term.
Kohls operates over 730 retail department stores in 41 states. Kohls has a Standard and
Poors credit rating of BBB+ and its stock is publicly traded on the New York Stock Exchange
under the symbol KSS.
Cole Realty has the sole and exclusive right to manage, operate, lease and supervise the
overall maintenance of the KO Wichita Property and will receive a property management fee of 2.0%
of the monthly gross revenue from the KO Wichita Property. We currently have no plans for any
renovations, improvements or development of the KO Wichita Property. We believe the KO Wichita
Property is adequately insured.
The KO Wichita Loan has a fixed interest rate of 6.11% per annum with monthly interest-only
payments. The outstanding principal and any accrued and unpaid interest is due on September 1, 2016
(the KO Wichita Maturity Date). The KO Wichita Loan is generally non-recourse to KO Wichita and
Cole OP II, but both are liable for customary non-recourse carveouts.
The KO Wichita Loan may not be prepaid, in whole or in part, except under the following
circumstances: (i) full prepayment may be made on any of the three (3) monthly payment dates
occurring immediately prior to the KO Wichita Maturity Date and (ii) partial prepayments resulting
from Bear Stearns election to apply insurance or condemnation proceeds may be made to reduce the
outstanding principal balance of the KO Wichita Loan. Notwithstanding the prepayment limitations,
KO Wichita may sell the KO Wichita Property to a buyer that assumes the KO Wichita Loan. The
transfer shall be subject to Bear Stearns approval of the proposed buyer and the payment of Bear
Stearns costs and expenses associated with the sale of the KO Wichita Property.
In the event the KO Wichita Loan is not paid off on the KO Wichita Maturity Date, the KO
Wichita Loan includes hyperamortization provisions. The KO Wichita Maturity Date, pursuant to the
hyperamortization provisions, will be extended by twenty (20) years. During such period, Bear
Stearns will apply 100% of the rents collected to (i) all payments due to Bear Stearns under the KO
Wichita Loan, including any payments to escrows or reserve accounts, (ii) any operating expenses of
the KO Wichita Property pursuant to an approved annual budget, (iii) any extraordinary expenses and
(iv) any accrued interest under the KO Wichita Loan. The interest rate during the hyperamortization
period shall be the greater of (x) the fixed interest rate of 6.11% plus two percent (2.0%) per
annum or (y) the Treasury Constant Maturity Yield Index plus two percent (2.0%) per annum, not to
exceed 11.11% per annum. Notwithstanding the forgoing, failure to make any required payments under
the KO Wichita Loan in a timely manner will cause an event of default, which will result in a 4.0%
default interest rate in excess of the applicable interest rate, late charges equal to 5.0% of the
amount of such overdue payment, and all interest and principal becoming immediately due and payable
in full.
Lowes Lubbock, Texas
On September 27, 2006, Cole LO Lubbock TX, LP, a Delaware limited partnership (LO Lubbock),
in which Cole OP II is the sole limited partner and a wholly-owned subsidiary of Cole OP II is the
sole general partner, acquired a 100% fee simple interest in an approximately 130,000 square foot
single-tenant retail building (the LO Lubbock Property) from Midway Court, L.P. (Midway), which
is not affiliated with us, our subsidiaries or affiliates. The LO Lubbock Property was constructed
in 1996 on an approximately 16.6 acre site in Lubbock, Texas. The area surrounding the LO Lubbock
Property is shared by commercial, retail and residential developments.
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The purchase price of the LO Lubbock Property was approximately $11.5 million, exclusive of
closing costs. The acquisition was funded by net proceeds from our ongoing public offering and an
approximately $7.5 million loan (the LO Lubbock Loan) from Bear Stearns, which is secured by the
LO Lubbock Property, the KO Wichita Property, the LO Midland Property and the OT Oxford Property.
In connection with the acquisition, we paid an affiliate of our advisor an acquisition fee of
approximately $230,000 and our advisor a finance coordination fee of approximately $75,000.
The LO Lubbock Property is 100% leased to Lowes Home Centers, Inc. (Lowes Home), which is
a wholly-owned subsidiary of Lowes, which guarantees the lease. The LO Lubbock Property is subject
to a net lease, which commenced on May 1, 1996, pursuant to which the tenant is required to pay
substantially all operating expenses and capital expenditures in addition to base rent. The current
aggregate annual base rent of $861,280 is fixed through the initial lease term, which expires April
30, 2016 and all renewal options. Lowes has six options to renew the lease, each for an additional
five-year term beginning on May 1, 2016.
Lowes operates retail home improvement stores across the United States and Canada. Lowes has
a Standard & Poors Credit Rating of A+ and its stock is publicly traded on the New York Stock
Exchange under the ticker symbol LOW.
Cole Realty has the sole and exclusive right to manage, operate, lease and supervise the
overall maintenance of the LO Lubbock Property and will receive a property management fee of 2.0%
of the monthly gross revenue from the LO Lubbock Property. We currently have no plans for any
renovations, improvements or development of the LO Lubbock Property. We believe the LO Lubbock
Property is adequately insured.
The LO Lubbock Loan has a fixed interest rate of 6.11% per annum with monthly interest-only
payments. The outstanding principal and any accrued and unpaid interest is due on September 1, 2016
(the LO Lubbock Maturity Date). The LO Lubbock Loan is generally non-recourse to LO Lubbock and
Cole OP II, but both are liable for customary non-recourse carveouts.
The LO Lubbock Loan may not be prepaid, in whole or in part, except under the following
circumstances: (i) full prepayment may be made on any of the three (3) monthly payment dates
occurring immediately prior to the LO Lubbock Maturity Date and (ii) partial prepayments resulting
from Bear Stearns election to apply insurance or condemnation proceeds may be made to reduce the
outstanding principal balance of the LO Lubbock Loan. Notwithstanding the prepayment limitations,
LO Lubbock may sell the LO Lubbock Property to a buyer that assumes the LO Lubbock Loan. The
transfer shall be subject to Bear Stearns approval of the proposed buyer and the payment of Bear
Stearns costs and expenses associated with the sale of the LO Lubbock Property.
In the event the LO Lubbock Loan is not paid off on the LO Lubbock Maturity Date, the LO
Lubbock Loan includes hyperamortization provisions. The LO Lubbock Maturity Date, pursuant to the
hyperamortization provisions, will be extended by twenty (20) years. During such period, Bear
Stearns will apply 100% of the rents collected to (i) all payments due to Bear Stearns under the LO
Lubbock Loan, including any payments to escrows or reserve accounts, (ii) any operating expenses of
the LO Lubbock Property pursuant to an approved annual budget, (iii) any extraordinary expenses and
(iv) any accrued interest under the LO Lubbock Loan. The interest rate during the hyperamortization
period shall be the greater of (x) the fixed interest rate of 6.11% plus two percent (2.0%) per
annum or (y) the Treasury Constant Maturity Yield Index plus two percent (2.0%) per annum, not to
exceed 11.11% per annum. Notwithstanding the forgoing, failure to make any required payments under
the LO Lubbock Loan in a timely manner will cause an event of default, which will result in a 4.0%
default interest rate in excess of the applicable interest rate, late charges equal to 5.0% of the
amount of such overdue payment, and all interest and principal becoming immediately due and payable
in full.
Lowes Midland, Texas
On September 27, 2006, Cole LO Midland TX, LP, a Delaware limited partnership (LO Midland),
in which Cole OP II is the sole limited partner and a wholly-owned subsidiary of Cole OP II is the
sole general partner, acquired a 100% fee simple interest in an approximately 130,000 square foot
single-tenant retail building (the LO Midland Property) from Midway. The LO Midland Property was
constructed in 1996 on an approximately 18.5 acre site in Midland, Texas. The area surrounding the
LO Midland Property is shared by commercial, retail and residential developments.
The purchase price of the LO Midland Property was approximately $11.1 million, exclusive of
closing costs. The acquisition was funded by net proceeds from our ongoing public offering and an
approximately $7.2 million loan (the LO Midland Loan) from Bear Stearns, which is secured by the
LO Midland Property, the KO Wichita Property, the LO Lubbock Property and the OT Oxford Property.
In connection with the acquisition, we paid an affiliate of our advisor an acquisition fee of
approximately $222,000 and our advisor a finance coordination fee of approximately $72,000.
The LO Midland Property is 100% leased to Lowes Home, which is a wholly-owned subsidiary of
Lowes, which guarantees the lease. The LO Midland Property is subject to a net lease, which
commenced on May 1, 1996, pursuant to which the tenant is required to pay substantially all
operating expenses and capital expenditures in addition to base rent. The current aggregate
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annual base rent of $829,960 is fixed through the initial lease term which expires April 30,
2016 and all renewal options. Lowes has six options to renew the lease, each for an additional
five-year term beginning on May 1, 2016.
Cole Realty has the sole and exclusive right to manage, operate, lease and supervise the
overall maintenance of the LO Midland Property and will receive a property management fee of 2.0%
of the monthly gross revenue from the LO Midland Property. We currently have no plans for any
renovations, improvements or development of the LO Midland Property. We believe the LO Midland
Property is adequately insured.
The LO Midland Loan has a fixed interest rate of 6.11% per annum with monthly interest-only
payments. The outstanding principal and any accrued and unpaid interest is due on September 1, 2016
(the LO Midland Maturity Date). The LO Midland Loan is generally non-recourse to LO Midland and
Cole OP II, but both are liable for customary non-recourse carveouts.
The LO Midland Loan may not be prepaid, in whole or in part, except under the following
circumstances: (i) full prepayment may be made on any of the three (3) monthly payment dates
occurring immediately prior to the LO Midland Maturity Date and (ii) partial prepayments resulting
from Bear Stearns election to apply insurance or condemnation proceeds may be made to reduce the
outstanding principal balance of the LO Midland Loan. Notwithstanding the prepayment limitations,
LO Midland may sell the LO Midland Property to a buyer that assumes the LO Midland Loan. The
transfer shall be subject to Bear Stearns approval of the proposed buyer and the payment of Bear
Stearns costs and expenses associated with the sale of the LO Midland Property.
In the event the LO Midland Loan is not paid off on the LO Midland Maturity Date, the LO
Midland Loan includes hyperamortization provisions. The LO Midland Maturity Date, pursuant to the
hyperamortization provisions, will be extended by twenty (20) years. During such period, Bear
Stearns will apply 100% of the rents collected to (i) all payments due to Bear Stearns under the LO
Midland Loan, including any payments to escrows or reserve accounts, (ii) any operating expenses of
the LO Midland Property pursuant to an approved annual budget, (iii) any extraordinary expenses and
(iv) any accrued interest under the LO Midland Loan. The interest rate during the hyperamortization
period shall be the greater of (x) the fixed interest rate of 6.11% plus two percent (2.0%) per
annum or (y) the Treasury Constant Maturity Yield Index plus two percent (2.0%) per annum, not to
exceed 11.11% per annum. Notwithstanding the forgoing, failure to make any required payments under
the LO Midland Loan in a timely manner will cause an event of default, which will result in a 4.0%
default interest rate in excess of the applicable interest rate, late charges equal to 5.0% of the
amount of such overdue payment, and all interest and principal becoming immediately due and payable
in full.
Advance Auto Grand Bay, Alabama
On September 29, 2006, Cole AA Grand Bay AL, LLC, a Delaware limited liability company (AA
Grand Bay), a wholly-owned subsidiary of Cole OP II, acquired a 100% fee simple interest in an
approximately 7,000 square foot single-tenant retail building (the AA Grand Bay Property), from
Grand Bay Tenn, LLC which is not affiliated with us, our subsidiaries or affiliates. The AA Grand
Bay Property was constructed in 2005 on an approximately 1.0 acre site in Grand Bay, Alabama. The
area surrounding the AA Grand Bay Property is shared by commercial, retail and residential
developments.
The purchase price of the AA Grand Bay Property was approximately $1.1 million, exclusive of
closing costs. The acquisition was funded by net proceeds from our ongoing public offering. In
connection with the acquisition, we paid an affiliate of our advisor an acquisition fee of
approximately $22,000.
The AA Grand Bay Property is 100% leased to Advance Auto. The AA Grand Bay Property is subject
to a net lease, which commenced on August 25, 2005, pursuant to which the tenant is required to pay
substantially all operating expenses and capital expenditures in addition to base rent. The current
aggregate annual base rent of $84,786 is fixed through the first ten years of the initial lease
term and increases to $93,265 in the eleventh year through the remainder of the initial lease term,
which expires August 31, 2020. Advance Auto has three options to renew the lease, each for an
additional five-year term beginning on September 1, 2020, with rental escalations of 5.0% at the
beginning of each five-year renewal term.
Advance Auto operates over 2,800 auto parts stores in 40 states, Puerto Rico and the Virgin
Islands. Advance Auto has a Standard and Poors credit rating of BB+ and its stock is publicly
traded on the New York Stock Exchange under the symbol AAP.
Cole Realty has the sole and exclusive right to manage, operate, lease and supervise the
overall maintenance of the AA Grand Bay Property and will receive a property management fee of 2.0%
of the monthly gross revenue from the AA Grand Bay Property. We currently have no plans for any
renovations, improvements or development of the AA Grand Bay Property. We believe the AA Grand Bay
Property is adequately insured.
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Advance Auto Hurley, Mississippi
On September 29, 2006, Cole AA Hurley MS, LLC, a Delaware limited liability company (AA
Hurley), a wholly-owned subsidiary of Cole OP II, acquired a 100% fee simple interest in an
approximately 7,000 square foot single-tenant retail building (the AA Hurley Property), from
Hurley Tenn, LLC. The AA Hurley Property was constructed in 2005 on an approximately 0.85 acre site
in Hurley, Mississippi. The area surrounding the AA Hurley Property is shared by retail and
residential developments.
The purchase price of the AA Hurley Property was approximately $1.1 million, exclusive of
closing costs. The acquisition was funded by net proceeds from our ongoing public offering. In
connection with the acquisition, we paid an affiliate of our advisor an acquisition fee of
approximately $22,000.
The AA Hurley Property is 100% leased to Advance Auto. The AA Hurley Property is subject to a
net lease, which commenced on March 9, 2006, pursuant to which the tenant is required to pay
substantially all operating expenses and capital expenditures in addition to base rent. The current
aggregate annual base rent of $82,324 is fixed through the first ten years of the initial lease
term and increases to $90,556 in the eleventh year through the remainder of the initial lease term,
which expires March 31, 2021. Advance Auto has three options to renew the lease, each for an
additional five-year term beginning on April 1, 2021, with rental escalations of 5.0% at the
beginning of each five-year renewal term.
Cole Realty has the sole and exclusive right to manage, operate, lease and supervise the
overall maintenance of the AA Hurley Property and will receive a property management fee of 2.0% of
the monthly gross revenue from the AA Hurley Property. We currently have no plans for any
renovations, improvements or development of the AA Hurley Property. We believe the AA Hurley
Property is adequately insured.
Advance Auto Rainsville, Alabama
On September 29, 2006, Cole AA Rainsville AL, LLC, a Delaware limited liability company (AA
Rainsville), a wholly-owned subsidiary of Cole OP II, acquired a 100% fee simple interest in an
approximately 7,000 square foot single-tenant retail building (the AA Rainsville Property), from
Rainsville Tenn, LLC. The AA Rainsville Property was constructed in 2005 on an approximately 0.88
acre site in Rainsville, Alabama. The area surrounding the AA Rainsville Property is shared by
retail and residential developments.
The purchase price of the AA Rainsville Property was approximately $1.3 million, exclusive of
closing costs. The acquisition was funded by net proceeds from our ongoing public offering. In
connection with the acquisition, we paid an affiliate of our advisor an acquisition fee of
approximately $27,000.
The AA Rainsville Property is 100% leased to Advance Auto. The AA Rainsville Property is
subject to a net lease, which commenced on December 18, 2005, pursuant to which the tenant is
required to pay substantially all operating expenses and capital expenditures in addition to base
rent. The current aggregate annual base rent of $100,928 is fixed through the first ten years of
the initial lease term and increases to $111,021 in the eleventh year through the remainder of the
initial lease term, which expires December 31, 2020. Advance Auto has three options to renew the
lease, each for an additional five-year term beginning on January 1, 2021, with rental escalations
of 5.0% at the beginning of each five-year renewal term.
Cole Realty has the sole and exclusive right to manage, operate, lease and supervise the
overall maintenance of the AA Rainsville Property and will receive a property management fee of
2.0% of the monthly gross revenue from the AA Rainsville Property. We currently have no plans for
any renovations, improvements or development of the AA Rainsville Property. We believe the AA
Rainsville Property is adequately insured.
Golds Gym OFallon, Illinois
On September 29, 2006, Cole GG OFallon IL, LLC, a Delaware limited liability company (GG
OFallon), a wholly-owned subsidiary of Cole OP II, acquired a 100% fee simple interest in an
approximately 41,000 square foot single-tenant commercial building (the GG OFallon Property)
from Scannell Properties #34, LLC, which is not affiliated with us, our subsidiaries or affiliates.
The GG OFallon Property was constructed in 2005 on an approximately 4.5 acre site in OFallon,
Illinois. The area surrounding the GG OFallon Property is shared by commercial and residential
developments.
The purchase price of the GG OFallon Property was $7.3 million, exclusive of closing costs.
The acquisition was funded by net proceeds from our ongoing public offering and an approximately
$5.8 million loan (the GG OFallon Loan)from Wachovia , which is secured by the GG OFallon
Property, the WG Picayune Property and the CV Clinton Property. In connection with the
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acquisition, we paid an affiliate of our advisor an acquisition fee of $146,000 and our
advisor a finance coordination fee of approximately $37,000.
The GG OFallon Property is 100% leased to Golds St Louis, LLC, which is a wholly-owned
subsidiary of Golds Gym International, Inc. (Golds Gym), which guarantees the lease. The GG
OFallon Property is subject to a net lease, which commenced on October 1, 2005, pursuant to which
the tenant is required to pay substantially all operating expenses and capital expenditures in
addition to base rent. The current aggregate annual base rent of $588,000 is fixed through the
first ten years of the initial lease term and increases to $617,000 for the remainder of the
initial lease term, which expires September 30, 2019. The tenant has two options to renew the
lease, each for an additional five-year term beginning on October 1, 2019, with rental escalations
of 5.0% at the beginning of each five-year renewal term.
Golds Gym is an international chain of fitness centers. Golds Gym operates over 650 fitness
centers in 27 countries and 45 states in the US. In additional to operating fitness centers, Golds
Gym, licenses its name to fitness equipment, dietary supplements, and clothing sold in major retail
outlets throughout the United States. In determining the creditworthiness of Golds Gym, we
considered a variety of factors, including historical financial information and financial
performance and local market position.
Cole Realty has the sole and exclusive right to manage, operate, lease and supervise the
overall maintenance of the GG OFallon Property and will receive a property management fee of 2.0%
of the monthly gross revenue from the GG OFallon Property. We currently have no plans for any
renovations, improvements or development of the GG OFallon Property. We believe the GG OFallon
Property is adequately insured.
The GG OFallon Loan consists of an approximately $3.7 million fixed interest rate tranche
(the GG OFallon Fixed Rate Tranche) and an approximately $2.1 million variable interest rate
tranche (the GG OFallon Variable Rate Tranche). The GG OFallon Fixed Rate Tranche has a fixed
interest rate of 5.83% per annum with monthly interest-only payments. The outstanding principal and
any accrued and unpaid interest is due on October 11, 2016 (the GG OFallon Maturity Date). The
GG OFallon Variable Rate Tranche has a variable interest rate based on the one-month LIBOR rate
plus 200 basis points with monthly interest-only payments, and the outstanding principal and any
accrued and unpaid interest is due on December 27, 2006. The GG OFallon Loan is generally
non-recourse to GG OFallon and Cole OP II, but both are liable for customary non-recourse
carveouts.
The GG OFallon Loan may not be prepaid, in whole or in part, except under the following
circumstances: (i) full prepayment may be made on any of the three (3) monthly payment dates
occurring immediately prior to the GG OFallon Maturity Date and (ii) partial prepayments resulting
from Wachovias election to apply insurance or condemnation proceeds may be made to reduce the
outstanding principal balance of the GG OFallon Loan. Notwithstanding the prepayment limitations,
GG OFallon may sell the GG OFallon Property to a buyer that assumes the GG OFallon Loan. The
transfer shall be subject to Wachovias approval of the proposed buyer and the payment of
Wachovias costs and expenses associated with the sale of the GG OFallon Property.
In the event the GG OFallon Loan is not paid off on the GG OFallon Maturity Date, the GG
OFallon Loan includes hyperamortization provisions. The GG OFallon Maturity Date, pursuant to the
hyperamortization provisions, will be extended by twenty (20) years. During such period, Wachovia
will apply 100% of the rents collected to (i) all payments due to Wachovia under the GG OFallon
Loan, including any payments to escrows or reserve accounts, (ii) any operating expenses of the GG
OFallon Property pursuant to an approved annual budget, (iii) any extraordinary expenses and (iv)
any accrued interest under the GG OFallon Loan. Any remaining amount will be applied to the
reduction of the principal balance of the GG OFallon Loan, until paid in full. The interest rate
during the hyperamortization period shall be the greater of (x) the fixed interest rate of 5.83%
plus two percent (2.0%) or (y) the Treasury Constant Maturity Yield Index plus two percent (2.0%).
Notwithstanding the forgoing, failure to make any required payments under the GG OFallon Loan in a
timely manner will cause an event of default, which will result in a 4.0% default interest rate in
excess of the applicable interest rate, late charges equal to 5.0% of the amount of such overdue
payment, and all interest and principal becoming immediately due and payable in full.
Rite Aid Glassport, Pennsylvania
On October 4, 2006, Cole RA Glassport PA, LLC, a Delaware limited liability company (RA
Glassport), a wholly-owned subsidiary of Cole OP II, acquired a 100% fee simple interest in an
approximately 15,000 square foot single-tenant retail building (the RA Glassport Property) from
GVH (Glassport), L.P., which is not affiliated with us, our subsidiaries or affiliates. The RA
Glassport Property was constructed in 2006 on an approximately 1.8 acre site in Glassport Borough,
Pennsylvania. The area surrounding the RA Glassport Property is shared by commercial and
residential developments.
The purchase price of the RA Glassport Property was approximately $3.8 million, exclusive of
closing costs. The acquisition was funded by net proceeds from our ongoing public offering and an
approximately $2.3 million loan from Bear Stearns, which is
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secured by the RA Glassport Property (the RA Glassport Loan). In connection with the
acquisition, we paid an affiliate of our advisor an acquisition fee of approximately $76,000 and
our advisor a finance coordination fee of approximately $23,000.
The RA Glassport Property is 100% leased to Rite Aid of Pennsylvania, Inc. (RA
Pennsylvania), which is a wholly-owned subsidiary of Rite Aid, which guarantees the lease. The RA
Glassport Property is subject to a net lease, which commenced on June 19, 2006, pursuant to which
the tenant is required to pay substantially all operating expenses and capital expenditures in
addition to base rent. The current aggregate annual base rent of $295,504 is fixed through the
initial lease term, which expires July 31, 2026. RA Pennsylvania has six options to renew the
lease, each for an additional five-year term beginning on August 1, 2026, with rental escalations
of 5.0% at the beginning of each five-year renewal term.
Rite Aid has operates over 3,300 stores in 28 states and Washington, DC. Rite Aid has a
Standard and Poors credit rating of B+ and its stock is publicly traded on the New York Stock
Exchange under the ticker symbol RAD.
Cole Realty has the sole and exclusive right to manage, operate, lease and supervise the
overall maintenance of the RA Glassport Property and will receive a property management fee of 2.0%
of the monthly gross revenue from the RA Glassport Property. We currently have no plans for any
renovations, improvements or development of the RA Glassport Property. We believe the RA Glassport
Property is adequately insured.
The RA Glassport Loan has a fixed interest rate of 6.10% per annum with monthly interest-only
payments. The outstanding principal and any accrued and unpaid interest is due on November 1, 2016
(the RA Glassport Maturity Date). The RA Glassport Loan is generally non-recourse to RA Glassport
and Cole OP II, but both are liable for customary non-recourse carveouts.
The RA Glassport Loan may not be prepaid, in whole or in part, except under the following
circumstances: (i) full prepayment may be made on any of the three (3) monthly payment dates
occurring immediately prior to the RA Glassport Maturity Date and (ii) partial prepayments
resulting from Bear Stearns election to apply insurance or condemnation proceeds may be made to
reduce the outstanding principal balance of the RA Glassport Loan. Notwithstanding the prepayment
limitations, RA Glassport may sell the RA Glassport Property to a buyer that assumes the RA
Glassport Loan. The transfer shall be subject to Bear Stearns approval of the proposed buyer and
the payment of Bear Stearns costs and expenses associated with the sale of the RA Glassport
Property.
Failure to make any required payments under the RA Glassport Loan in a timely manner will
cause an event of default, which will result in a 4.0% default interest rate in excess of the
applicable interest rate, late charges equal to 5.0% of the amount of such overdue payment, and all
interest and principal becoming immediately due and payable in full.
Davids Bridal and RadioShack Topeka, Kansas
On October 13, 2006, Cole MT Topeka KS, LLC, a Delaware limited liability company (MT
Topeka), a wholly-owned subsidiary of Cole OP II, acquired a 100% fee simple interest in an
approximately 10,000 square foot multi-tenant retail building (the MT Topeka Property) from
Topeka Holdings, LLC, which is not affiliated with us, our subsidiaries or affiliates. The MT
Topeka Property was constructed in 2006 on an approximately 0.98 acre site in Topeka, Kansas. The
area surrounding the MT Topeka Property is shared by commercial and residential developments.
The purchase price of the MT Topeka Property was approximately $3.0 million, exclusive of
closing costs. The acquisition was funded by net proceeds from our ongoing public offering. In
connection with the acquisition, we paid an affiliate of our advisor an acquisition fee of
approximately $60,000.
The MT Topeka Property is 100% leased to two tenants, Davids Bridal, a wholly-owned
subsidiary of Federated Department Stores, Inc. and RadioShack Corporation (RadioShack).
The lease to Davids Bridal (the Davids Bridal Lease) is a net lease that commenced on
August 4, 2006, pursuant to which Davids Bridal is required to pay substantially all operating
expenses, capital expenditures, and a proportionate amount of common area maintenance charges in
addition to base rent. The current aggregate annual base rent is $166,625, with increases of 10%
every five years, beginning on September 1, 2011 of the initial lease term, which expires October
31, 2016. Davids Bridal has two options to renew the Davids Bridal Lease, each for an additional
five-year term. There are no rental escalations during the renewal periods.
Davids Bridal is a bridal retailer, operating over 250 stores across the United States. In
determining the creditworthiness of Davids Bridal we considered a variety of factors, including
historical financial information and financial performance, regional market position, and the
forecasted financial performance of Davids Bridal.
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The lease to RadioShack (the RadioShack Lease) is a net lease that commenced on September
13, 2006, pursuant to which RadioShack is required to pay substantially all operating expenses,
capital expenditures, and a proportionate amount of common area maintenance charges in addition to
base rent. The current aggregate annual base rent is $60,000, which is fixed through the initial
lease term, which expires January 31, 2012. RadioShack has three options to renew the RadioShack
Lease, each for an additional five-year term, with rental escalations of 10% at the beginning of
each five-year renewal term.
RadioShack operates over 7,000 retail outlets across the United States and Puerto Rico.
RadioShack has a Standard & Poors Credit Rating of BB and the companys stock is publicly traded
on the New York Stock Exchange under the ticker symbol RSH.
Cole Realty has the sole and exclusive right to manage, operate, lease and supervise the
overall maintenance of the MT Topeka Property and will receive a property management fee of 2.0% of
the monthly gross revenue from the MT Topeka Property. We currently have no plans for any
renovations, improvements or development of the MT Topeka Property. We believe the MT Topeka
Property is adequately insured.
Rite Aid Hanover, Pennsylvania
On October 17, 2006, Cole RA Hanover PA, LLC, a Delaware limited liability company (RA
Hanover), a wholly-owned subsidiary of Cole OP II, acquired a 100% fee simple interest in an
approximately 15,000 square foot single-tenant retail building (the RA Hanover Property) from GVH
(Hanover), L.P., which is not affiliated with us, our subsidiaries or affiliates. The RA Hanover
Property was constructed in 2006 on an approximately 3.9 acre site in Hanover Borough,
Pennsylvania. The area surrounding the RA Hanover Property is shared by commercial and residential
developments.
The purchase price of the RA Hanover Property was approximately $6.3 million, exclusive of
closing costs. The acquisition was funded by net proceeds from our ongoing public offering and an
approximately $4.1 million loan from Bear Stearns, which is secured by the RA Hanover Property (the
RA Hanover Loan). In connection with the acquisition, we paid an affiliate of our advisor an
acquisition fee of approximately $127,000 and our advisor a finance coordination fee of
approximately $41,000.
The RA Hanover Property is 100% leased to RA Pennsylvania, which is a wholly-owned subsidiary
of Rite Aid, which guarantees the lease. The RA Hanover Property is subject to a net lease, which
commenced on October 11, 2006, pursuant to which the tenant is required to pay substantially all
operating expenses and capital expenditures in addition to base rent. The current aggregate annual
base rent of $493,787 is fixed through the initial lease term, which expires October 31, 2026. RA
Pennsylvania has four options to renew the lease, each for an additional five-year term beginning
on November 1, 2026, with rental escalations of 3.0% at the beginning of each five-year renewal
term.
Cole Realty has the sole and exclusive right to manage, operate, lease and supervise the
overall maintenance of the RA Hanover Property and will receive a property management fee of 2.0%
of the monthly gross revenue from the RA Hanover Property. We currently have no plans for any
renovations, improvements or development of the RA Hanover Property. We believe the RA Hanover
Property is adequately insured.
The RA Hanover Loan has a fixed interest rate of 6.11% per annum with monthly interest-only
payments. The outstanding principal and any accrued and unpaid interest is due on November 1, 2016
(the RA Hanover Maturity Date). The RA Hanover Loan is generally non-recourse to RA Hanover and
Cole OP II, but both are liable for customary non-recourse carveouts.
The RA Hanover Loan may not be prepaid, in whole or in part, except under the following
circumstances: (i) full prepayment may be made on any of the three (3) monthly payment dates
occurring immediately prior to the RA Hanover Maturity Date and (ii) partial prepayments resulting
from Bear Stearns election to apply insurance or condemnation proceeds may be made to reduce the
outstanding principal balance of the RA Hanover Loan. Notwithstanding the prepayment limitations,
RA Hanover may sell the RA Hanover Property to a buyer that assumes the RA Hanover Loan. The
transfer shall be subject to Bear Stearns approval of the proposed buyer and the payment of Bear
Stearns costs and expenses associated with the sale of the RA Hanover Property.
Failure to make any required payments under the RA Hanover Loan in a timely manner will cause
an event of default, which will result in a 4.0% default interest rate in excess of the applicable
interest rate, late charges equal to 5.0% of the amount of such overdue payment, and all interest
and principal becoming immediately due and payable in full.
American TV & Appliance Peoria, Illinois
On October 23, 2006, Cole AM Peoria IL, LLC, a Delaware limited liability company (AM
Peoria), a wholly-owned subsidiary of Cole OP II, acquired a 100% fee simple interest in an
approximately 127,000 square foot single-tenant retail building (the AM Peoria Property) from ATP
I, LLC, which is not affiliated with us, our subsidiaries or affiliates. The AM Peoria Property
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was constructed in 2003 on an approximately 12.5 acre site in Peoria, Illinois. The area
surrounding the AM Peoria Property is shared by commercial, retail and residential developments.
The purchase price of the AM Peoria Property was $11.3 million, exclusive of closing costs.
The acquisition was funded by net proceeds from our ongoing public offering and an approximately
$7.4 million loan from General Electric Capital Business Asset Funding Corporation, which was
assumed by Cole OP II and secured by the AM Peoria Property (the AM Peoria Loan). In connection
with the acquisition, we paid an affiliate of our advisor an acquisition fee of $230,000 and our
advisor a finance coordination fee of approximately $74,000.
The AM Peoria Property is 100% leased to American TV & Appliance of Madison, Inc. (American
TV). The AM Peoria Property is subject to a net lease, which commenced on September 24, 2003,
pursuant to which the tenant is required to pay substantially all operating expenses and capital
expenditures in addition to base rent. The current aggregate annual base rent of $840,750 has
rental escalations of 10% on October 1, 2008 and October 1, 2013. The initial lease term expires
September 23, 2018. American TV has eight options to renew the lease, each for an additional
five-year term beginning on September 24, 2018, with rental escalations of 7.5% at the beginning of
each five-year renewal term.
American TV was founded in 1954 and currently operates 15 retail electronic stores in five
states across the midwest United States. In determining the creditworthiness of American TV, we
considered a variety of factors, including historical financial information and financial
performance and local market position.
Cole Realty has the sole and exclusive right to manage, operate, lease and supervise the
overall maintenance of the AM Peoria Property and will receive a property management fee of 2.0% of
the monthly gross revenue from the AM Peoria Property. We currently have no plans for any
renovations, improvements or development of the AM Peoria Property. We believe the AM Peoria
Property is adequately insured.
The AM Peoria Loan has a fixed interest rate of 6.0% per annum (the AM Peoria Interest Rate)
with monthly principal and interest payments and the outstanding principal and any accrued interest
due on October 1, 2018. The AM Peoria Loan may be prepaid in whole, but not in part, subject to a
prepayment premium. The AM Peoria Loan is generally non-recourse to AM Peoria and Cole OP II, but
both are liable for customary non-recourse carveouts. In the event the AM Peoria Loan is not paid
off on the maturity date, the AM Peoria Loan would become subject to default provisions, including,
that all obligations would become immediately due and payable and the AM Peoria Loan would be
subject to a default interest rate equal to the AM Peoria Interest Rate plus 500 basis points or
15% per annum, whichever is higher, provided that such interest rate shall not exceed the maximum
interest rate permitted by law.
Tractor Supply La Grange, Texas
On November 6, 2006, Cole MP-TS Texas, LP, a Delaware limited partnership (MP Texas), in
which Cole OP II is the sole limited partner and a wholly-owned subsidiary of Cole OP II is the
sole general partner, acquired a 100% fee simple interest in an approximately 25,000 square foot
single-tenant retail building (the TS La Grange Property) from DJ La Grange VIII, Ltd., which is
not affiliated with us, our subsidiaries or affiliates. The TS La Grange Property was constructed
in 2006 on an approximately 4.5 acre site in La Grange, Texas. The area surrounding the TS La
Grange Property is shared by commercial, retail and residential developments.
The purchase price of the TS La Grange Property was approximately $2.6 million, exclusive of
closing costs. The acquisition was funded by net proceeds from our ongoing public offering. In
connection with the acquisition, we paid an affiliate of our advisor an acquisition fee of
approximately $52,000.
On December 1, 2006 an approximately $1.4 million loan (the TS La Grange Loan) from Bear
Stearns was funded, which is secured by the TS New Braunfels Property, the TS Livingston Property,
the TS La Grange Property and the TS Crockett Property. In connection with the loan funding we paid
our advisor a finance coordination fee of approximately $14,000.
The TS La Grange Property is 100% leased to Tractor Supply Co. of Texas, LP (Tractor Supply
Texas), a wholly-owned subsidiary of Tractor Supply, which guarantees the lease. The TS La Grange
Property is subject to a net lease, which commenced on July 3, 2006, pursuant to which the tenant
is required to pay substantially all operating expenses and capital expenditures in addition to
base rent. The current aggregate annual base rent of $189,000 is fixed through the first five years
of the initial lease term, with rental escalations of 10% every five years thereafter through the
initial lease term, which expires May 31, 2021. Tractor Supply Texas has four options to renew the
lease, each for an additional five-year term beginning on June 1, 2021, with rental escalations of
10.0% at the beginning of each five-year renewal term.
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Tractor Supply currently operates more than 550 retail stores in 34 states, employs more than
7,800 and is headquartered in Brentwood, Tennessee. Tractor Supplys common stock is traded on The
Nasdaq National Market under the symbol TSCO.
Cole Realty has the sole and exclusive right to manage, operate, lease and supervise the
overall maintenance of the TS La Grange Property and will receive a property management fee of 2.0%
of the monthly gross revenue from the TS La Grange Property. We currently have no plans for any
renovations, improvements or development of the TS La Grange Property. We believe the TS La Grange
Property is adequately insured.
The TS La Grange Loan has a fixed interest rate of 5.99% per annum with monthly interest-only
payments. The outstanding principal and any accrued and unpaid interest is due on December 1, 2016
(the TS La Grange Maturity Date). The TS La Grange Loan is generally non-recourse to TS La Grange
and Cole OP II, but both are liable for customary non-recourse
carveouts. In addition to cross-collateralizing the aggregate loan amount of approximately $6.2 million
under the TS La Grange Loan, the TS New Braunfels Loan, the TS Livingston Loan, and the TS Crockett Loan,
Bear Stearns has the right to cross-collateralize such loans with other loans up to an aggregate
principal balance of approximately $6.2 million to be made by Bear Stearns to us in connection with
other property acquisitions.
The TS La Grange Loan may not be prepaid, in whole or in part, except under the following
circumstances: (i) full prepayment may be made on any of the three (3) monthly payment dates
occurring immediately prior to the TS La Grange Maturity Date and (ii) partial prepayments
resulting from Bear Stearns election to apply insurance or condemnation proceeds may be made to
reduce the outstanding principal balance of the TS La Grange Loan. Notwithstanding the prepayment
limitations, TS La Grange may sell the TS La Grange Property to a buyer that assumes the TS La
Grange Loan. The transfer shall be subject to Bear Stearns approval of the proposed buyer and the
payment of Bear Stearns costs and expenses associated with the sale of the TS La Grange Property.
In the event the TS La Grange Loan is not paid off on the TS La Grange Maturity Date, the TS
La Grange Loan includes hyperamortization provisions. The TS La Grange Maturity Date, pursuant to
the hyperamortization provisions, will be extended by twenty (20) years. During such period, Bear
Stearns will apply 100% of the rents collected to (i) all payments due to Bear Stearns under the TS
La Grange Loan, including any payments to escrows or reserve accounts, (ii) any operating expenses
of the TS La Grange Property pursuant to an approved annual budget, (iii) any extraordinary
expenses and (iv) any accrued interest under the TS La Grange Loan. The interest rate during the
hyperamortization period shall be the greater of (x) the fixed interest rate of 5.99% plus two
percent (2.0%) per annum or (y) the Treasury Constant Maturity Yield Index plus two percent (2.0%)
per annum, not to exceed 10.99% per annum. Notwithstanding the forgoing, failure to make any
required payments under the TS La Grange Loan in a timely manner will cause an event of default,
which will result in a 4.0% default interest rate in excess of the applicable interest rate, late
charges equal to 5.0% of the amount of such overdue payment, and all interest and principal
becoming immediately due and payable in full.
Staples Peru, Illinois
On November 9, 2006, Cole ST Peru IL, LLC, a Delaware limited liability company (ST Peru), a
wholly-owned subsidiary of Cole OP II, acquired a 100% fee simple interest in an approximately
24,000 square foot single-tenant retail building (the ST Peru Property) from Fiscus Peru, LLC,
which is not affiliated with us, our subsidiaries or affiliates. The ST Peru Property was
constructed in 1998 on an approximately 2.3 acre site in Peru, Illinois. The area surrounding the
ST Peru Property is shared by commercial, retail and residential developments.
The purchase price of the ST Peru Property was approximately $3.2 million, exclusive of
closing costs. The acquisition was funded by net proceeds from our ongoing public offering and an
approximately $1.9 million loan (the ST Peru Loan) from Bear Stearns, which is secured by the ST
Peru Property. In connection with the acquisition, we paid an affiliate of our advisor an
acquisition fee of approximately $64,000 and our advisor a finance coordination fee of
approximately $19,000.
The ST Peru Property is 100% leased to Staples East, which is a wholly-owned subsidiary of
Staples. The ST Peru Property is subject to a net lease, which commenced on June 8, 1998, pursuant
to which the tenant is required to pay substantially all operating expenses and capital
expenditures in addition to base rent. The current aggregate annual base rent of $257,194 is fixed
through June 30, 2008 and increases to $258,390 on July 1, 2008 through the initial lease term,
which expires June 30, 2013. Staples East has three options to renew the lease, each for an
additional five-year term beginning on July 1, 2013, with rental escalations from a range of 2.0%
to 5.0% during each of the five-year renewal terms.
Staples East operates retail office superstores. In determining the creditworthiness of
Staples East we considered a variety of factors, including historical financial information and
financial performance, regional market position, and the financial position of its parent, Staples.
Staples operates over 1,700 office superstores in 21 countries throughout North and South America,
Europe and Asia. Staples has a Standard and Poors credit rating of BBB and its stock is publicly
traded on the Nasdaq Stock Market under the symbol SPLS.
Cole Realty has the sole and exclusive right to manage, operate, lease and supervise the
overall maintenance of the ST Peru Property and will receive a property management fee of 2.0% of
the monthly gross revenue from the ST Peru Property. We currently
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have no plans for any renovations, improvements or development of the ST Peru Property. We
believe the ST Peru Property is adequately insured.
The ST Peru Loan has a fixed interest rate of 5.65% per annum with monthly interest-only
payments. The outstanding principal and any accrued and unpaid interest is due on December 1, 2011
(the ST Peru Maturity Date). The ST Peru Loan is generally non-recourse to ST Peru and Cole OP
II, but both are liable for customary non-recourse carveouts.
The ST Peru Loan may not be prepaid, in whole or in part, except under the following
circumstances: (i) full prepayment may be made on any of the three (3) monthly payment dates
occurring immediately prior to the ST Peru Maturity Date and (ii) partial prepayments resulting
from Bear Stearns election to apply insurance or condemnation proceeds may be made to reduce the
outstanding principal balance of the ST Peru Loan. Notwithstanding the prepayment limitations, ST
Peru may sell the ST Peru Property to a buyer that assumes the ST Peru Loan. The transfer shall be
subject to Bear Stearns approval of the proposed buyer and the payment of Bear Stearns costs and
expenses associated with the sale of the ST Peru Property.
In the event the ST Peru Loan is not paid off on the ST Peru Maturity Date, the ST Peru Loan
includes hyperamortization provisions. The ST Peru Maturity Date, pursuant to the hyperamortization
provisions, will be extended by twenty (20) years. During such period, Bear Stearns will apply 100%
of the rents collected to (i) all payments due to Bear Stearns under the ST Peru Loan, including
any payments to escrows or reserve accounts, (ii) any operating expenses of the ST Peru Property
pursuant to an approved annual budget, (iii) any extraordinary expenses and (iv) any accrued
interest under the ST Peru Loan. The interest rate during the hyperamortization period shall be the
greater of (x) the fixed interest rate of 5.65% plus two percent (2.0%) per annum or (y) the
Treasury Constant Maturity Yield Index plus two percent (2.0%) per annum, not to exceed 10.65% per
annum. Notwithstanding the forgoing, failure to make any required payments under the ST Peru Loan
in a timely manner will cause an event of default, which will result in a 4.0% default interest
rate in excess of the applicable interest rate, late charges equal to 5.0% of the amount of such
overdue payment, and all interest and principal becoming immediately due and payable in full.
FedEx Council Bluffs, Iowa
On November 15, 2006, Cole FE Council Bluffs IA, LLC, a Delaware limited liability company
(FE Council Bluffs), a wholly-owned subsidiary of Cole OP II, acquired a 100% fee simple interest
in an approximately 24,000 square foot single-tenant distribution facility (the FE Council Bluffs
Property) from Iowa FX Landlord, LLC, which is not affiliated with us, our subsidiaries or
affiliates. The FE Council Bluffs Property was constructed in 1999 on an approximately 10.6 acre
site in Council Bluffs, Iowa. The area surrounding the FE Council Bluffs Property is shared by
commercial, retail and residential developments.
The purchase price of the FE Council Bluffs Property was approximately $3.4 million, exclusive
of closing costs. The acquisition was funded by net proceeds from our ongoing public offering and
an approximately $2.2 million loan (the FE Council Bluffs Loan) from Bear Stearns, which is
secured by the FE Council Bluffs Property. In connection with the acquisition, we paid an affiliate
of our advisor an acquisition fee of approximately $67,000 and our advisor a finance coordination
fee of approximately $22,000.
The FE Council Bluffs Property is 100% leased to Fedex Freight East, Inc. (Fedex East), a
wholly-owned subsidiary of Fedex Freight Corporation (Fedex Freight), which is a wholly owned
subsidiary of FDX, which guarantees the lease. The FE Council Bluffs Property is subject to a net
lease, which commenced on September 28, 2006, pursuant to which the tenant is required to pay
substantially all operating expenses and capital expenditures in addition to base rent. The current
aggregate annual base rent of $252,054 is fixed through the initial lease term, which expires
September 30, 2021 and all renewal options. Fedex East has four options to renew the lease, each
for an additional five-year term beginning on October 1, 2021.
Fedex Freight specializes in regional next-day and second-day and interregional
less-than-truckload freight services. FDX has a Standard & Poors credit rating of BBB and the
companys stock is publicly traded on the New York Stock Exchange under the ticker symbol FDX.
Cole Realty has the sole and exclusive right to manage, operate, lease and supervise the
overall maintenance of the FE Council Bluffs Property and will receive a property management fee of
2.0% of the monthly gross revenue from the FE Council Bluffs Property. We currently have no plans
for any renovations, improvements or development of the FE Council Bluffs Property. We believe the
FE Council Bluffs Property is adequately insured.
The FE Council Bluffs Loan has a fixed interest rate of 5.97% per annum with monthly
interest-only payments. The outstanding principal and any accrued and unpaid interest is due on
December 1, 2016 (the FE Council Bluffs Maturity Date). The FE Council Bluffs Loan is generally
non-recourse to FE Council Bluffs and Cole OP II, but both are liable for customary non-recourse
carveouts.
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The FE Council Bluffs Loan may not be prepaid, in whole or in part, except under the following
circumstances: (i) full prepayment may be made on any of the three (3) monthly payment dates
occurring immediately prior to the FE Council Bluffs Maturity Date and (ii) partial prepayments
resulting from Bear Stearns election to apply insurance or condemnation proceeds may be made to
reduce the outstanding principal balance of the FE Council Bluffs Loan. Notwithstanding the
prepayment limitations, FE Council Bluffs may sell the FE Council Bluffs Property to a buyer that
assumes the FE Council Bluffs Loan. The transfer shall be subject to Bear Stearns approval of the
proposed buyer and the payment of Bear Stearns costs and expenses associated with the sale of the
FE Council Bluffs Property.
In the event the FE Council Bluffs Loan is not paid off on the FE Council Bluffs Maturity
Date, the FE Council Bluffs Loan includes hyperamortization provisions. The FE Council Bluffs
Maturity Date, pursuant to the hyperamortization provisions, will be extended by twenty (20) years.
During such period, Bear Stearns will apply 100% of the rents collected to (i) all payments due to
Bear Stearns under the FE Council Bluffs Loan, including any payments to escrows or reserve
accounts, (ii) any operating expenses of the FE Council Bluffs Property pursuant to an approved
annual budget, (iii) any extraordinary expenses and (iv) any accrued interest under the FE Council
Bluffs Loan. The interest rate during the hyperamortization period shall be the greater of (x) the
fixed interest rate of 5.97% plus two percent (2.0%) per annum or (y) the Treasury Constant
Maturity Yield Index plus two percent (2.0%) per annum, not to exceed 10.97% per annum.
Notwithstanding the forgoing, failure to make any required payments under the FE Council Bluffs
Loan in a timely manner will cause an event of default, which will result in a 4.0% default
interest rate in excess of the applicable interest rate, late charges equal to 5.0% of the amount
of such overdue payment, and all interest and principal becoming immediately due and payable in
full.
FedEx Edwardsville, Kansas
On November 15, 2006, Cole FE Edwardsville KS, LLC, a Delaware limited liability company (FE
Edwardsville), a wholly-owned subsidiary of Cole OP II, acquired a 100% fee simple interest in an
approximately 156,000 square foot single-tenant industrial building (the FE Edwardsville
Property) from Kansas FX Landlord, LLC, which is not affiliated with us, our subsidiaries or
affiliates. The FE Edwardsville Property was constructed in 1999 on an approximately 109.5 acre
site in Edwardsville, Kansas. The area surrounding the FE Edwardsville Property is shared by
commercial, retail and residential developments.
The purchase price of the FE Edwardsville Property was approximately $19.8 million, exclusive
of closing costs. The acquisition was funded by net proceeds from our ongoing public offering and
an approximately $12.9 million loan (the FE Edwardsville Loan) from Bear Stearns, which is
secured by the FE Edwardsville Property. In connection with the acquisition, we paid an affiliate
of our advisor an acquisition fee of approximately $396,000 and our advisor a finance coordination
fee of approximately $129,000.
The FE Edwardsville Property is 100% leased to Fedex East, a wholly-owned subsidiary of Fedex
Freight, which is a wholly owned subsidiary of FDX, which guarantees the lease. The FE Edwardsville
Property is subject to a net lease, which commenced on September 28, 2006, pursuant to which the
tenant is required to pay substantially all operating expenses and capital expenditures in addition
to base rent. The current aggregate annual base rent of $1,486,123 is fixed through the initial
lease term, which expires September 30, 2021 and all renewal options. Fedex East has four options
to renew the lease, each for an additional five-year term beginning on October 1, 2021.
Cole Realty has the sole and exclusive right to manage, operate, lease and supervise the
overall maintenance of the FE Edwardsville Property and will receive a property management fee of
2.0% of the monthly gross revenue from the FE Edwardsville Property. We currently have no plans for
any renovations, improvements or development of the FE Edwardsville Property. We believe the FE
Edwardsville Property is adequately insured.
The FE Edwardsville Loan has a fixed interest rate of 5.97% per annum with monthly
interest-only payments. The outstanding principal and any accrued and unpaid interest is due on
December 1, 2016 (the FE Edwardsville Maturity Date). The FE Edwardsville Loan is generally
non-recourse to FE Edwardsville and Cole OP II, but both are liable for customary non-recourse
carveouts.
The FE Edwardsville Loan may not be prepaid, in whole or in part, except under the following
circumstances: (i) full prepayment may be made on any of the three (3) monthly payment dates
occurring immediately prior to the FE Edwardsville Maturity Date and (ii) partial prepayments
resulting from Bear Stearns election to apply insurance or condemnation proceeds may be made to
reduce the outstanding principal balance of the FE Edwardsville Loan. Notwithstanding the
prepayment limitations, FE Edwardsville may sell the FE Edwardsville Property to a buyer that
assumes the FE Edwardsville Loan. The transfer shall be subject to Bear Stearns approval of the
proposed buyer and the payment of Bear Stearns costs and expenses associated with the sale of the
FE Edwardsville Property.
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In the event the FE Edwardsville Loan is not paid off on the FE Edwardsville Maturity Date,
the FE Edwardsville Loan includes hyperamortization provisions. The FE Edwardsville Maturity Date,
pursuant to the hyperamortization provisions, will be extended by twenty (20) years. During such
period, Bear Stearns will apply 100% of the rents collected to (i) all payments due to Bear Stearns
under the FE Edwardsville Loan, including any payments to escrows or reserve accounts, (ii) any
operating expenses of the FE Edwardsville Property pursuant to an approved annual budget, (iii) any
extraordinary expenses and (iv) any accrued interest under the FE Edwardsville Loan. The interest
rate during the hyperamortization period shall be the greater of (x) the fixed interest rate of
5.97% plus two percent (2.0%) per annum or (y) the Treasury Constant Maturity Yield Index plus two
percent (2.0%) per annum, not to exceed 10.97% per annum. Notwithstanding the forgoing, failure to
make any required payments under the FE Edwardsville Loan in a timely manner will cause an event of
default, which will result in a 4.0% default interest rate in excess of the applicable interest
rate, late charges equal to 5.0% of the amount of such overdue payment, and all interest and
principal becoming immediately due and payable in full.
CVS Glenville Scotia, New York
On November 16, 2006, Cole OP II acquired 100% of the membership interests (the CV Glenville
Scotia Interests) in Glenville Scotia Development, LLC (Glenville Scotia) from Devin A. Dal Pos,
Douglas E. Ulrich, and James V. Breuer, persons that are not affiliated with us, our subsidiaries
or affiliates. Glenville Scotia owns a 100% fee simple interest in, as its only asset, a retail
building (the CV Glenville Scotia Property), leased to CVS Mack Drug of New York, LLC, (CVS
Mack) which is a wholly-owned subsidiary of CVS, which guarantees the lease. The CV Glenville
Scotia Property was built in 2006 and consists of an approximately 13,000 square foot single-tenant
retail building on an approximately 1.8 acre site located in Glenville Scotia, New York. The area
surrounding the CV Glenville Scotia Property is primarily surrounded by, retail and residential
developments.
The purchase price of the CV Glenville Scotia Interests was approximately $5.3 million,
exclusive of closing costs. The acquisition was funded by net proceeds from our ongoing public
offering and a $4.2 million loan from Wachovia, which is secured by the CV Glenville Scotia
Property (the CV Glenville Scotia Loan). In connection with the acquisition, we paid an affiliate
of our advisor an acquisition fee of $105,000 and our advisor a finance coordination fee of
approximately $34,000.
The CV Glenville Scotia Property is subject to a net lease, which commenced on October 2,
2006, pursuant to which the tenant is required to pay substantially all operating expenses and
capital expenditures in addition to base rent. The current aggregate annual base rent of $371,912
is fixed through the remainder of the initial lease term, which expires January 31, 2032. CVS Mack
has four options to renew the lease, each for an additional five-year term beginning on February 1,
2032, with rental escalations of 5.0% at the beginning of each five-year renewal term.
Cole Realty has the sole and exclusive right to manage, operate, lease and supervise the
overall maintenance of the CV Glenville Scotia Property and will receive a property management fee
of 2.0% of the monthly gross revenue from the CV Glenville Scotia Property. We currently have no
plans for any renovations, improvements or development of the CV Glenville Scotia Property. We
believe the CV Glenville Scotia Property is adequately insured.
The CV Glenville Scotia Loan consists of an approximately $3.4 million fixed interest rate
tranche (the CV Glenville Scotia Fixed Rate Tranche) and a $787,000 variable interest rate
tranche (the CV Glenville Scotia Variable Rate Tranche). The CV Glenville Scotia Fixed Rate
Tranche has a fixed interest rate of 5.74% per annum with monthly interest-only payments. The
outstanding principal and any accrued and unpaid interest is due on December 11, 2016 (the CV
Glenville Scotia Maturity Date). The CV Glenville Scotia Variable Rate Tranche has a variable
interest rate based on the one-month LIBOR rate plus 200 basis points with monthly interest-only
payments, and the outstanding principal and any accrued and unpaid interest is due on March 16,
2007. The CV Glenville Scotia Loan is generally non-recourse to CV Glenville Scotia and Cole OP II,
but both are liable for customary non-recourse carveouts.
The CV Glenville Scotia Loan may not be prepaid, in whole or in part, except under the
following circumstances: (i) full prepayment may be made on any of the three (3) monthly payment
dates occurring immediately prior to the CV Glenville Scotia Maturity Date and (ii) partial
prepayments resulting from Wachovias election to apply insurance or condemnation proceeds may be
made to reduce the outstanding principal balance of the CV Glenville Scotia Loan. Notwithstanding
the prepayment limitations, CV Glenville Scotia may sell the CV Glenville Scotia Property to a
buyer that assumes the CV Glenville Scotia Loan. The transfer shall be subject to Wachovias
approval of the proposed buyer and the payment of Wachovias costs and expenses associated with the
sale of the CV Glenville Scotia Property.
In the event the CV Glenville Scotia Loan is not paid off on the CV Glenville Scotia Maturity
Date, the CV Glenville Scotia Loan includes hyperamortization provisions. The CV Glenville Scotia
Maturity Date, pursuant to the hyperamortization provisions, will be extended by twenty (20) years.
During such period, Wachovia will apply 100% of the rents collected to (i) all payments due to
Wachovia under the CV Glenville Scotia Loan, including any payments to escrows or reserve accounts,
(ii) any operating expenses of
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the CV Glenville Scotia Property pursuant to an approved annual budget, (iii) any
extraordinary expenses (iv) the outstanding principal balance of the CV Glenville Scotia Loan and
(v) any accrued interest under the CV Glenville Scotia Loan. Any remaining amount will be applied
to the reduction of the principal balance of the CV Glenville Scotia Loan, until paid in full. The
interest rate during the hyperamortization period shall be the greater of (x) the fixed interest
rate of 5.74% plus two percent (2.0%) or (y) the Treasury Constant Maturity Yield Index plus two
percent (2.0%). Notwithstanding the forgoing, failure to make any required payments under the CV
Glenville Scotia Loan in a timely manner will cause an event of default, which will result in a
4.0% default interest rate in excess of the applicable interest rate, late charges equal to 5.0% of
the amount of such overdue payment, and all interest and principal becoming immediately due and
payable in full.
Advance Auto Ashland, Kentucky
On November 17, 2006, Cole MP-AA Midwest Portfolio, LLC, a Delaware limited liability company
(AA Midwest Portfolio), a wholly-owned subsidiary of Cole OP II, acquired a 100% fee simple
interest in an approximately 7,000 square foot single-tenant retail building (the AA Ashland
Property), from Blue Bell Partners, LLC (Blue Bell) which is not affiliated with us, our
subsidiaries or affiliates. The AA Ashland Property was constructed in 2006 on an approximately 1.3
acre site in Ashland, Kentucky. The area surrounding the AA Ashland Property is shared by
commercial, retail and residential developments.
The purchase price of the AA Ashland Property was approximately $1.7 million, exclusive of
closing costs. The acquisition was funded by net proceeds from our ongoing public offering. In
connection with the acquisition, we paid an affiliate of our advisor an acquisition fee of
approximately $34,000.
The AA Ashland Property is 100% leased to Advance Auto. The AA Ashland Property is subject to
a net lease, which commenced on June 22, 2006, pursuant to which the tenant is required to pay
substantially all operating expenses and capital expenditures in addition to base rent. The current
aggregate annual base rent of $126,948 is fixed through the first ten years of the initial lease
term and increases to $139,643 in the eleventh year through the remainder of the initial lease
term, which expires June 30, 2021. Advance Auto has three options to renew the lease, each for an
additional five-year term beginning on July 1, 2021, with rental escalations of 5.0% at the
beginning of each five-year renewal term.
Advance Auto operates over 2,800 auto parts stores in 40 states, Puerto Rico and the Virgin
Islands. Advance Auto has a Standard and Poors credit rating of BB+ and its stock is publicly
traded on the New York Stock Exchange under the symbol AAP.
Cole Realty has the sole and exclusive right to manage, operate, lease and supervise the
overall maintenance of the AA Ashland Property and will receive a property management fee of 2.0%
of the monthly gross revenue from the AA Ashland Property. We currently have no plans for any
renovations, improvements or development of the AA Ashland Property. We believe the AA Ashland
Property is adequately insured.
Advance Auto Jackson, Ohio
On November 17, 2006, AA Midwest Portfolio acquired a 100% fee simple interest in an
approximately 7,000 square foot single-tenant retail building (the AA Jackson Property), from
Blue Bell. The AA Jackson Property was constructed in 2005 on an approximately 1.3 acre site in
Jackson, Ohio. The area surrounding the AA Jackson Property is shared by commercial, retail and
residential developments.
The purchase price of the AA Jackson Property was approximately $1.4 million, exclusive of
closing costs. The acquisition was funded by net proceeds from our ongoing public offering. In
connection with the acquisition, we paid an affiliate of our advisor an acquisition fee of
approximately $27,000.
The AA Jackson Property is 100% leased to Advance Auto. The AA Jackson Property is subject to
a net lease, which commenced on September 29, 2005, pursuant to which the tenant is required to pay
substantially all operating expenses and capital expenditures in addition to base rent. The current
aggregate annual base rent of $102,100 is fixed through the first ten years of the initial lease
term and increases to $112,310 in the eleventh year through the remainder of the initial lease
term, which expires September 30, 2020. Advance Auto has three options to renew the lease, each for
an additional five-year term beginning on October 1, 2020, with rental escalations of 5.0% at the
beginning of each five-year renewal term.
Cole Realty has the sole and exclusive right to manage, operate, lease and supervise the
overall maintenance of the AA Jackson Property and will receive a property management fee of 2.0%
of the monthly gross revenue from the AA Jackson Property. We currently have no plans for any
renovations, improvements or development of the AA Jackson Property. We believe the AA Jackson
Property is adequately insured.
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Advance Auto New Boston, Ohio
On November 17, 2006, AA Midwest Portfolio acquired a 100% fee simple interest in an
approximately 7,000 square foot single-tenant retail building (the AA New Boston Property), from
Blue Bell. The AA New Boston Property was constructed in 2005 on an approximately 0.71 acre site in
New Boston, Ohio. The area surrounding the AA New Boston Property is shared by commercial, retail
and residential developments.
The purchase price of the AA New Boston Property was approximately $1.5 million, exclusive of
closing costs. The acquisition was funded by net proceeds from our ongoing public offering. In
connection with the acquisition, we paid an affiliate of our advisor an acquisition fee of
approximately $30,000.
The AA New Boston Property is 100% leased to Advance Auto. The AA New Boston Property is
subject to a net lease, which commenced on June 16, 2005, pursuant to which the tenant is required
to pay substantially all operating expenses and capital expenditures in addition to base rent. The
current aggregate annual base rent of $114,501 is fixed through the first ten years of the initial
lease term and increases to $125,951 in the eleventh year through the remainder of the initial
lease term, which expires June 30, 2020. Advance Auto has three options to renew the lease, each
for an additional five-year term beginning on July 1, 2020, with rental escalations of 5.0% at the
beginning of each five-year renewal term.
Cole Realty has the sole and exclusive right to manage, operate, lease and supervise the
overall maintenance of the AA New Boston Property and will receive a property management fee of
2.0% of the monthly gross revenue from the AA New Boston Property. We currently have no plans for
any renovations, improvements or development of the AA New Boston Property. We believe the AA New
Boston Property is adequately insured.
Advance Auto Scottsburg, Indiana
On November 17, 2006, AA Midwest Portfolio acquired a 100% fee simple interest in an
approximately 7,000 square foot single-tenant retail building (the AA Scottsburg Property), from
Solid Muldoon Partners, LLC, which is not affiliated with us, our subsidiaries or affiliates. The
AA Scottsburg Property was constructed in 2006 on an approximately 0.69 acre site in Scottsburg,
Indiana. The area surrounding the AA Scottsburg Property is shared by commercial, retail and
residential developments.
The purchase price of the AA Scottsburg Property was approximately $1.3 million, exclusive of
closing costs. The acquisition was funded by net proceeds from our ongoing public offering. In
connection with the acquisition, we paid an affiliate of our advisor an acquisition fee of
approximately $25,000.
The AA Scottsburg Property is 100% leased to Advance Auto. The AA Scottsburg Property is
subject to a net lease, which commenced on August 31, 2006, pursuant to which the tenant is
required to pay substantially all operating expenses and capital expenditures in addition to base
rent. The current aggregate annual base rent of $96,008 is fixed through the first ten years of the
initial lease term and increases to $100,808 in the eleventh year through the remainder of the
initial lease term, which expires August 31, 2021. Advance Auto has three options to renew the
lease, each for an additional five-year term beginning on September 1, 2021, with rental
escalations of 5.0% at the beginning of each five-year renewal term.
Cole Realty has the sole and exclusive right to manage, operate, lease and supervise the
overall maintenance of the AA Scottsburg Property and will receive a property management fee of
2.0% of the monthly gross revenue from the AA Scottsburg Property. We currently have no plans for
any renovations, improvements or development of the AA Scottsburg Property. We believe the AA
Scottsburg Property is adequately insured.
Tractor Supply Livingston, Texas
On November 22, 2006, MP Texas acquired a 100% fee simple interest in an approximately 25,000
square foot single-tenant retail building (the TS Livingston Property) from DJ Livingston IX,
Ltd., which is not affiliated with us, our subsidiaries or affiliates. The TS Livingston Property
was constructed in 2006 on an approximately 3.8 acre site in Livingston, Texas. The area
surrounding the TS Livingston Property is shared by commercial, retail and residential
developments.
The purchase price of the TS Livingston Property was approximately $3.1 million, exclusive of
closing costs. The acquisition was funded by net proceeds from our ongoing public offering. In
connection with the acquisition, we paid an affiliate of our advisor an acquisition fee of $62,000.
On December 1, 2006 an approximately $1.7 million loan (the TS Livingston Loan) from Bear Stearns
was funded, which is secured by the TS Livingston Property, the TS New Braunfels Property, the TS
La Grange Property and the TS Crockett Property. In connection with the loan funding we paid our
advisor a finance coordination fee of approximately $17,000.
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The TS Livingston Property is 100% leased to Tractor Supply Texas, a wholly-owned subsidiary
of Tractor Supply, which guarantees the lease. The TS Livingston Property is subject to a net
lease, which commenced on November 14, 2006, pursuant to which the tenant is required to pay
substantially all operating expenses and capital expenditures in addition to base rent. The current
aggregate annual base rent of $225,000 is fixed through the first five years of the initial lease
term, with rental escalations of 10% every five years thereafter through the initial lease term,
which expires November 13, 2021. Tractor Supply Texas has four options to renew the lease, each for
an additional five-year term beginning on November 14, 2021, with rental escalations of 10.0% at
the beginning of each five-year renewal term.
Cole Realty has the sole and exclusive right to manage, operate, lease and supervise the
overall maintenance of the TS Livingston Property and will receive a property management fee of
2.0% of the monthly gross revenue from the TS Livingston Property. We currently have no plans for
any renovations, improvements or development of the TS Livingston Property. We believe the TS
Livingston Property is adequately insured.
The TS Livingston Loan has a fixed interest rate of 5.99% per annum with monthly interest-only
payments. The outstanding principal and any accrued and unpaid interest is due on December 1, 2016
(the TS Livingston Maturity Date). The TS Livingston Loan is generally non-recourse to TS
Livingston and Cole OP II, but both are liable for customary
non-recourse carveouts. In addition to cross-collateralizing the aggregate loan amount of approximately $6.2 million
under the TS La Grange Loan, the TS New Braunfels Loan, the TS Livingston Loan, and the TS Crockett Loan,
Bear Stearns has the right to cross-collateralize such loans with other loans up to an aggregate
principal balance of approximately $6.2 million to be made by Bear Stearns to us in connection with
other property acquisitions.
The TS Livingston Loan may not be prepaid, in whole or in part, except under the following
circumstances: (i) full prepayment may be made on any of the three (3) monthly payment dates
occurring immediately prior to the TS Livingston Maturity Date and (ii) partial prepayments
resulting from Bear Stearns election to apply insurance or condemnation proceeds may be made to
reduce the outstanding principal balance of the TS Livingston Loan. Notwithstanding the prepayment
limitations, TS Livingston may sell the TS Livingston Property to a buyer that assumes the TS
Livingston Loan. The transfer shall be subject to Bear Stearns approval of the proposed buyer and
the payment of Bear Stearns costs and expenses associated with the sale of the TS Livingston
Property.
In the event the TS Livingston Loan is not paid off on the TS Livingston Maturity Date, the TS
Livingston Loan includes hyperamortization provisions. The TS Livingston Maturity Date, pursuant to
the hyperamortization provisions, will be extended by twenty (20) years. During such period, Bear
Stearns will apply 100% of the rents collected to (i) all payments due to Bear Stearns under the TS
Livingston Loan, including any payments to escrows or reserve accounts, (ii) any operating expenses
of the TS Livingston Property pursuant to an approved annual budget, (iii) any extraordinary
expenses and (iv) any accrued interest under the TS Livingston Loan. The interest rate during the
hyperamortization period shall be the greater of (x) the fixed interest rate of 5.99% plus two
percent (2.0%) per annum or (y) the Treasury Constant Maturity Yield Index plus two percent (2.0%)
per annum, not to exceed 10.99% per annum. Notwithstanding the forgoing, failure to make any
required payments under the TS Livingston Loan in a timely manner will cause an event of default,
which will result in a 4.0% default interest rate in excess of the applicable interest rate, late
charges equal to 5.0% of the amount of such overdue payment, and all interest and principal
becoming immediately due and payable in full.
Tractor Supply New Braunfels, Texas
On November 22, 2006, MP Texas acquired a 100% fee simple interest in an approximately 25,000
square foot single-tenant retail building (the TS New Braunfels Property) from 337 Comal, Ltd.,
which is not affiliated with us, our subsidiaries or affiliates. The TS New Braunfels Property was
constructed in 2006 on an approximately 3.5 acre site in New Braunfels, Texas. The area surrounding
the TS New Braunfels Property is shared by commercial, retail and residential developments.
The purchase price of the TS New Braunfels Property was approximately $3.2 million, exclusive
of closing costs. The acquisition was funded by net proceeds from our ongoing public offering. In
connection with the acquisition, we paid an affiliate of our advisor an acquisition fee of $63,000.
On December 1, 2006 an approximately $1.8 million loan (the TS New Braunfels Loan) from Bear
Stearns was funded, which is secured by the TS New Braunfels Property, the TS Livingston Property,
the TS La Grange Property and the TS Crockett Property. In connection with the loan funding we paid
our advisor a finance coordination fee of approximately $18,000.
The TS New Braunfels Property is 100% leased to Tractor Supply Texas, a wholly-owned
subsidiary of Tractor Supply, which guarantees the lease. The TS New Braunfels Property is subject
to a net lease, which commenced on June 5, 2006, pursuant to which the tenant is required to pay
substantially all operating expenses and capital expenditures in addition to base rent. The current
aggregate annual base rent of $224,500 is fixed through the first five years of the initial lease
term, with rental escalations of 10% every five years thereafter through the initial lease term,
which expires February 28, 2021. Tractor Supply Texas has four options to renew the lease, each for
an additional five-year term beginning on March 1, 2021, with rental escalations of 10.0% at the
beginning of each five-year renewal term.
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Cole Realty has the sole and exclusive right to manage, operate, lease and supervise the
overall maintenance of the TS New Braunfels Property and will receive a property management fee of
2.0% of the monthly gross revenue from the TS New Braunfels Property. We currently have no plans
for any renovations, improvements or development of the TS New Braunfels Property. We believe the
TS New Braunfels Property is adequately insured.
The TS New Braunfels Loan has a fixed interest rate of 5.99% per annum with monthly
interest-only payments. The outstanding principal and any accrued and unpaid interest is due on
December 1, 2016 (the TS New Braunfels Maturity Date). The TS New Braunfels Loan is generally
non-recourse to TS New Braunfels and Cole OP II, but both are liable for customary non-recourse
carveouts. In addition to cross-collateralizing the aggregate loan amount of approximately $6.2 million
under the TS La Grange Loan, the TS New Braunfels Loan, the TS Livingston Loan, and the TS Crockett Loan,
Bear Stearns has the right to cross-collateralize such loans with other loans up to an aggregate
principal balance of approximately $6.2 million to be made by Bear Stearns to us in connection with
other property acquisitions.
The TS New Braunfels Loan may not be prepaid, in whole or in part, except under the following
circumstances: (i) full prepayment may be made on any of the three (3) monthly payment dates
occurring immediately prior to the TS New Braunfels Maturity Date and (ii) partial prepayments
resulting from Bear Stearns election to apply insurance or condemnation proceeds may be made to
reduce the outstanding principal balance of the TS New Braunfels Loan. Notwithstanding the
prepayment limitations, TS New Braunfels may sell the TS New Braunfels Property to a buyer that
assumes the TS New Braunfels Loan. The transfer shall be subject to Bear Stearns approval of the
proposed buyer and the payment of Bear Stearns costs and expenses associated with the sale of the
TS New Braunfels Property.
In the event the TS New Braunfels Loan is not paid off on the TS New Braunfels Maturity Date,
the TS New Braunfels Loan includes hyperamortization provisions. The TS New Braunfels Maturity
Date, pursuant to the hyperamortization provisions, will be extended by twenty (20) years. During
such period, Bear Stearns will apply 100% of the rents collected to (i) all payments due to Bear
Stearns under the TS New Braunfels Loan, including any payments to escrows or reserve accounts,
(ii) any operating expenses of the TS New Braunfels Property pursuant to an approved annual budget,
(iii) any extraordinary expenses and (iv) any accrued interest under the TS New Braunfels Loan. The
interest rate during the hyperamortization period shall be the greater of (x) the fixed interest
rate of 5.99% plus two percent (2.0%) per annum or (y) the Treasury Constant Maturity Yield Index
plus two percent (2.0%) per annum, not to exceed 10.99% per annum. Notwithstanding the forgoing,
failure to make any required payments under the TS New Braunfels Loan in a timely manner will cause
an event of default, which will result in a 4.0% default interest rate in excess of the applicable
interest rate, late charges equal to 5.0% of the amount of such overdue payment, and all interest
and principal becoming immediately due and payable in full.
Office Depot Benton, Arkansas
On November 21, 2006, Cole OD Benton AR, LLC, a Delaware limited liability company (OD
Benton), a wholly-owned subsidiary of Cole OP II, acquired a 100% fee simple interest in an
approximately 21,000 square foot single-tenant retail building (the OD Benton Property) from
Legis Company, Inc. and Giles Properties Family Partnership, LLP, which is not affiliated with us,
our subsidiaries or affiliates. The OD Benton Property was constructed in 2001 on an approximately
2.04 acre site in Benton, Arkansas. The area surrounding the OD Benton Property is shared by
commercial, retail and residential developments.
The purchase price of the OD Benton Property was approximately $3.3 million, exclusive of
closing costs. The acquisition was funded by net proceeds from our ongoing public offering and an
approximately $2.1 million loan (the OD Benton Loan) from JP Morgan Chase Bank, NA (JP Morgan),
which is secured by the OD Benton Property. In connection with the acquisition, we paid an
affiliate of our advisor an acquisition fee of approximately $66,000 and our advisor a finance
coordination fee of approximately $21,000.
The OD Benton Property is 100% leased to Office Depot. The OD Benton Property is subject to a
net lease, which commenced on November 16, 2001, pursuant to which the tenant is required to pay
substantially all operating expenses and capital expenditures in addition to base rent. The current
aggregate annual base rent of $246,180 is fixed through November 30, 2011 and increases to $251,309
for the remainder of the initial lease term, which expires November 30, 2016. Office Depot has four
options to renew the lease, each for an additional five-year term beginning on December 1, 2016,
with rental escalations of approximately 5.0% at the beginning of each five-year renewal term.
Office Depot is a global supplier of office products and services. Office Depot has a Standard
& Poors credit rating of BBB- and its stock is publicly traded on the New York Stock Exchange
under the ticker symbol ODP.
Cole Realty has the sole and exclusive right to manage, operate, lease and supervise the
overall maintenance of the OD Benton Property and will receive a property management fee of 2.0% of
the monthly gross revenue from the OD Benton Property. We currently have no plans for any
renovations, improvements or development of the OD Benton Property. We believe the OD Benton
Property is adequately insured.
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The OD Benton Loan has a fixed interest rate of 5.76% per annum with monthly interest-only
payments. The outstanding principal and any accrued and unpaid interest is due on December 1, 2016
(the OD Benton Maturity Date). The OD Benton Loan is generally non-recourse to OD Benton and Cole
OP II, but both are liable for customary non-recourse carveouts.
The OD Benton Loan may not be prepaid, in whole or in part, except under the following
circumstances: (i) full prepayment may be made on any of the three (3) monthly payment dates
occurring immediately prior to the OD Benton Maturity Date and (ii) partial prepayments resulting
from JP Morgans election to apply insurance or condemnation proceeds may be made to reduce the
outstanding principal balance of the OD Benton Loan. Notwithstanding the prepayment limitations, OD
Benton may sell the OD Benton Property to a buyer that assumes the OD Benton Loan. The transfer
shall be subject to JP Morgans approval of the proposed buyer and the payment of JP Morgans costs
and expenses associated with the sale of the OD Benton Property.
In the event the OD Benton Loan is not paid off on the OD Benton Maturity Date, the OD Benton
Loan includes default provisions. Upon the occurrence of an event of default, interest on the OD
Benton Loan will accrue at an annual default interest rate equal to the lesser of (a) the maximum
rate permitted by applicable law, or (b) 10.76%. In addition, OD Benton will be required to pay a
prepayment consideration in an amount equal to the greater of 1.0% of the outstanding principal
balance of the OD Benton Loan, or the present value of the remaining scheduled payments of
principal and interest from the date such payment is received through the OD Benton Maturity Date
at the time any payment is received by JP Morgan.
Old Time Pottery Fairview Heights, Illinois
On November 21, 2006, Cole OL Fairview Heights IL, LLC, a Delaware limited liability company
(OL Fairview Heights), a wholly-owned subsidiary of Cole OP II, acquired a 100% fee simple
interest in an approximately 98,000 square foot single-tenant retail building (the OL Fairview
Heights Property) from PK Fairview, LLC, which is not affiliated with us, our subsidiaries or
affiliates. The OL Fairview Heights Property was constructed in 1979 on an approximately 8.0 acre
site in Fairview Heights, Illinois. The area surrounding the OL Fairview Heights Property is shared
by commercial, retail and residential developments.
The purchase price of the OL Fairview Heights Property was approximately $4.3 million,
exclusive of closing costs. The acquisition was funded by net proceeds from our ongoing public
offering and an approximately $3.4 million loan (the OL Fairview Heights Loan) from Wachovia,
which is secured by the OL Fairview Heights Property. In connection with the acquisition, we paid
an affiliate of our advisor an acquisition fee of approximately $86,000 and our advisor a finance
coordination fee of approximately $21,000.
The OL Fairview Heights Property is 100% leased to Old Time Pottery, Inc (Old Time Pottery).
The OL Fairview Heights Property is subject to a net lease, which commenced on August 22, 2005,
pursuant to which the tenant is required to pay substantially all operating expenses and capital
expenditures in addition to base rent. The current aggregate annual base rent of $342,472 is fixed
through December 31, 2010 and increases to $366,934 for the remainder of the initial lease term,
which expires December 30, 2015. Old Time Pottery has three options to renew the lease, each for an
additional five-year term beginning on December 31, 2015, with rental escalations of approximately
6.0% at the beginning of each five-year renewal term.
Old Time Pottery operates a chain of 37 stores in 12 mostly southern states that sell
discounted closeout and overstock housewares, silk flowers, framed art, linens, rugs and more. In
determining the creditworthiness of Old Time Pottery, the Company considered a variety of factors,
including historical financial information and financial performance, and local market position.
Cole Realty has the sole and exclusive right to manage, operate, lease and supervise the
overall maintenance of the OL Fairview Heights Property and will receive a property management fee
of 2.0% of the monthly gross revenue from the OL Fairview Heights Property. We currently have no
plans for any renovations, improvements or development of the OL Fairview Heights Property. We
believe the OL Fairview Heights Property is adequately insured.
The OL Fairview Heights Loan consists of an approximately $2.1 million fixed interest rate
tranche (the OL Fairview Heights Fixed Rate Tranche) and a $1.3 million variable interest rate
tranche (the OL Fairview Heights Variable Rate Tranche). The OL Fairview Heights Fixed Rate
Tranche has a fixed interest rate of 6.31% per annum with monthly interest-only payments. The
outstanding principal and any accrued and unpaid interest is due on December 11, 2011 (the OL
Fairview Heights Maturity Date). The OL Fairview Heights Variable Rate Tranche has a variable
interest rate based on the one-month LIBOR rate plus 200 basis points with monthly interest-only
payments, and the outstanding principal and any accrued and unpaid interest is due on March 21,
2007. The OL Fairview Heights Loan is generally non-recourse to OL Fairview Heights and Cole OP II,
but both are liable for customary non-recourse carveouts.
The OL Fairview Heights Loan may not be prepaid, in whole or in part, except under the
following circumstances: (i) full prepayment may be made on any of the three (3) monthly payment
dates occurring immediately prior to the OL Fairview Heights
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Maturity Date and (ii) partial prepayments resulting from Wachovias election to apply
insurance or condemnation proceeds may be made to reduce the outstanding principal balance of the
OL Fairview Heights Loan. Notwithstanding the prepayment limitations, OL Fairview Heights may sell
the OL Fairview Heights Property to a buyer that assumes the OL Fairview Heights Loan. The transfer
shall be subject to Wachovias approval of the proposed buyer and the payment of Wachovias costs
and expenses associated with the sale of the OL Fairview Heights Property.
In the event the OL Fairview Heights Loan is not paid off on the OL Fairview Heights Maturity
Date, the OL Fairview Heights Loan includes hyperamortization provisions. The OL Fairview Heights
Maturity Date, pursuant to the hyperamortization provisions, will be extended by twenty (20) years.
During such period, Wachovia will apply 100% of the rents collected to (i) all payments due to
Wachovia under the OL Fairview Heights Loan, including any payments to escrows or reserve accounts,
(ii) any operating expenses of the OL Fairview Heights Property pursuant to an approved annual
budget, (iii) any extraordinary expenses (iv) the outstanding principal balance of the OL Fairview
Heights Loan and (v) any accrued interest under the OL Fairview Heights Loan. Any remaining amount
will be applied to the reduction of the principal balance of the OL Fairview Heights Loan, until
paid in full. The interest rate during the hyperamortization period shall be the greater of (x) the
fixed interest rate of 6.31% plus two percent (2.0%) or (y) the Treasury Constant Maturity Yield
Index plus two percent (2.0%). Notwithstanding the forgoing, failure to make any required payments
under the OL Fairview Heights Loan in a timely manner will cause an event of default, which will
result in a 4.0% default interest rate in excess of the applicable interest rate, late charges
equal to 5.0% of the amount of such overdue payment, and all interest and principal becoming
immediately due and payable in full.
Infiniti Davie, Florida
On November 30, 2006, Cole IN Davie FL, LLC, a Delaware limited liability company (IN
Davie), a wholly-owned subsidiary of Cole OP II, acquired a 100% fee simple interest in an
approximately 21,000 square foot single-tenant auto dealership building (the IN Davie Property)
from WH Florida, LLC, which is not affiliated with us, our subsidiaries or affiliates. The IN Davie
Property was constructed in 2006 on an approximately 3.6 acre site in Davie, Florida. The area
surrounding the IN Davie Property is shared by commercial, retail and residential developments.
The purchase price of the IN Davie Property was approximately $9.4 million, exclusive of
closing costs. The acquisition was funded by net proceeds from our ongoing public offering. In
connection with the acquisition, we paid an affiliate of our advisor an acquisition fee of
approximately $189,000.
The IN Davie Property is 100% leased to Warren Henry Automobiles, Inc. (WH Auto) The IN
Davie Property is subject to a net lease, which commenced on July 1, 2006, pursuant to which the
tenant is required to pay substantially all operating expenses and capital expenditures in addition
to base rent. The current aggregate annual base rent of $707,395 is fixed through July 1, 2007 with
rental escalations of 1.25% each year for the remainder of the initial lease term, which expires
July 1, 2021 and all renewal options. WH Auto has four options to renew the lease, each for an
additional five-year term beginning on July 2, 2021.
WH Auto operates five auto dealerships in the state of Florida under the brands of Jaguar,
Volvo, Land Rover and Infiniti and was founded in 1976. In determining the creditworthiness of WH
Auto, the Company considered a variety of factors, including historical financial information and
financial performance, and local market position.
Cole Realty has the sole and exclusive right to manage, operate, lease and supervise the
overall maintenance of the IN Davie Property and will receive a property management fee of 2.0% of
the monthly gross revenue from the IN Davie Property. We currently have no plans for any
renovations, improvements or development of the IN Davie Property. We believe the IN Davie Property
is adequately insured.
Tractor Supply Crockett, Texas
On December 1, 2006, MP Texas acquired a 100% fee simple interest in an approximately 25,000
square foot single-tenant retail building (the TS Crockett Property) from DJ Crockett X, LP,
which is not affiliated with us, our subsidiaries or affiliates. The TS Crockett Property was
constructed in 2006 on an approximately 6.2 acre site in Crockett, Texas. The area surrounding the
TS Crockett Property is shared by commercial, retail and residential developments.
The purchase price of the TS Crockett Property was approximately $2.5 million, exclusive of
closing costs. The acquisition was funded by net proceeds from our ongoing public offering and an
approximately $1.3 million loan (the TS Crockett Loan) with Bear Stearns. . In connection with
the acquisition, we paid an affiliate of our advisor an acquisition fee of $49,000 and our advisor
a finance coordination fee of approximately $13,000.
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The TS Crockett Property is 100% leased to Tractor Supply Texas, a wholly-owned subsidiary of
Tractor Supply, which guarantees the lease. The TS Crockett Property is subject to a net lease,
which commenced on October 24, 2006, pursuant to which the tenant is required to pay substantially
all operating expenses and capital expenditures in addition to base rent. The current aggregate
annual base rent of $179,000 is fixed through the first five years of the initial lease term, with
rental escalations of 10% every five years thereafter through the initial lease term, which expires
October 23, 2021. Tractor Supply Texas has four options to renew the lease, each for an additional
five-year term beginning on October 24, 2021, with rental escalations of 10.0% at the beginning of
each five-year renewal term.
Cole Realty has the sole and exclusive right to manage, operate, lease and supervise the
overall maintenance of the TS Crockett Property and will receive a property management fee of 2.0%
of the monthly gross revenue from the TS Crockett Property. We currently have no plans for any
renovations, improvements or development of the TS Crockett Property. We believe the TS Crockett
Property is adequately insured.
The TS Crockett Loan has a fixed interest rate of 5.99% per annum with monthly interest-only
payments. The outstanding principal and any accrued and unpaid interest is due on December 1, 2016
(the TS Crockett Maturity Date). The TS Crockett Loan is generally non-recourse to TS Crockett
and Cole OP II, but both are liable for customary non-recourse carveouts. In addition to cross-collateralizing the aggregate loan amount of approximately $6.2 million
under the TS La Grange Loan, the TS New Braunfels Loan, the TS Livingston Loan, and the TS Crockett Loan,
Bear Stearns has the right to cross-collateralize such loans with other loans up to an aggregate
principal balance of approximately $6.2 million to be made by Bear Stearns to us in connection with
other property acquisitions.
The TS Crockett Loan may not be prepaid, in whole or in part, except under the following
circumstances: (i) full prepayment may be made on any of the three (3) monthly payment dates
occurring immediately prior to the TS Crockett Maturity Date and (ii) partial prepayments resulting
from Bear Stearns election to apply insurance or condemnation proceeds may be made to reduce the
outstanding principal balance of the TS Crockett Loan. Notwithstanding the prepayment limitations,
TS Crockett may sell the TS Crockett Property to a buyer that assumes the TS Crockett Loan. The
transfer shall be subject to Bear Stearns approval of the proposed buyer and the payment of Bear
Stearns costs and expenses associated with the sale of the TS Crockett Property.
In the event the TS Crockett Loan is not paid off on the TS Crockett Maturity Date, the TS
Crockett Loan includes hyperamortization provisions. The TS Crockett Maturity Date, pursuant to the
hyperamortization provisions, will be extended by twenty (20) years. During such period, Bear
Stearns will apply 100% of the rents collected to (i) all payments due to Bear Stearns under the TS
Crockett Loan, including any payments to escrows or reserve accounts, (ii) any operating expenses
of the TS Crockett Property pursuant to an approved annual budget, (iii) any extraordinary expenses
and (iv) any accrued interest under the TS Crockett Loan. The interest rate during the
hyperamortization period shall be the greater of (x) the fixed interest rate of 5.99% plus two
percent (2.0%) per annum or (y) the Treasury Constant Maturity Yield Index plus two percent (2.0%)
per annum, not to exceed 10.99% per annum. Notwithstanding the forgoing, failure to make any
required payments under the TS Crockett Loan in a timely manner will cause an event of default,
which will result in a 4.0% default interest rate in excess of the applicable interest rate, late
charges equal to 5.0% of the amount of such overdue payment, and all interest and principal
becoming immediately due and payable in full.
Office Depot Oxford, Mississippi
On December 1, 2006, Cole OD Oxford MS, LLC, a Delaware limited liability company (OD
Oxford), a wholly-owned subsidiary of Cole OP II, acquired a 100% fee simple interest in an
approximately 20,000 square foot single-tenant retail building (the OD Oxford Property) from NOM
Oxford, LLC, which is not affiliated with us, our subsidiaries or affiliates. The OD Oxford
Property was constructed in 2006 on an approximately 2.7 acre site in Oxford, Mississippi. The area
surrounding the OD Oxford Property is shared by commercial, retail and residential developments.
The purchase price of the OD Oxford Property was approximately $3.5 million, exclusive of
closing costs. The acquisition was funded by net proceeds from our ongoing public offering and an
approximately $2.3 million loan (the OD Oxford Loan) from Bear Stearns, which is secured by the
OD Oxford Property. In connection with the acquisition, we paid an affiliate of our advisor an
acquisition fee of approximately $70,000 and our advisor a finance coordination fee of
approximately $23,000.
The OD Oxford Property is 100% leased to Office Depot. The OD Oxford Property is subject to a
net lease, which commenced on October 30, 2006, pursuant to which the tenant is required to pay
substantially all operating expenses and capital expenditures in addition to base rent. The current
aggregate annual base rent of $264,000 is fixed through the first ten years of the initial lease
term and increases to $290,400 for the remainder of the initial lease term, which expires October
31, 2021. Office Depot has three options to renew the lease, each for an additional five-year term
beginning on November 1, 2021, with rental escalations of approximately 10.0% at the beginning of
each five-year renewal term.
Cole Realty has the sole and exclusive right to manage, operate, lease and supervise the
overall maintenance of the OD Oxford Property and will receive a property management fee of 2.0% of
the monthly gross revenue from the OD Oxford Property. We currently have no plans for any
renovations, improvements or development of the OD Oxford Property. We believe the OD Oxford
Property is adequately insured.
- 104 -
The OD Oxford Loan has a fixed interest rate of 6.17% per annum with monthly interest-only
payments. The outstanding principal and any accrued and unpaid interest is due on December 1, 2016
(the OD Oxford Maturity Date). The OD Oxford Loan is generally non-recourse to OD Oxford and Cole
OP II, but both are liable for customary non-recourse carveouts.
The OD Oxford Loan may not be prepaid, in whole or in part, except under the following
circumstances: (i) full prepayment may be made on any of the three (3) monthly payment dates
occurring immediately prior to the OD Oxford Maturity Date and (ii) partial prepayments resulting
from Bear Stearns election to apply insurance or condemnation proceeds may be made to reduce the
outstanding principal balance of the OD Oxford Loan. Notwithstanding the prepayment limitations, OD
Oxford may sell the OD Oxford Property to a buyer that assumes the OD Oxford Loan. The transfer
shall be subject to Bear Stearns approval of the proposed buyer and the payment of Bear Stearns
costs and expenses associated with the sale of the OD Oxford Property.
In the event the OD Oxford Loan is not paid off on the OD Oxford Maturity Date, the OD Oxford
Loan includes hyperamortization provisions. The OD Oxford Maturity Date, pursuant to the
hyperamortization provisions, will be extended by twenty (20) years. During such period, Bear
Stearns will apply 100% of the rents collected to (i) all payments due to Bear Stearns under the OD
Oxford Loan, including any payments to escrows or reserve accounts, (ii) any operating expenses of
the OD Oxford Property pursuant to an approved annual budget, (iii) any extraordinary expenses and
(iv) any accrued interest under the OD Oxford Loan. The interest rate during the hyperamortization
period shall be the greater of (x) the fixed interest rate of 6.17% plus two percent (2.0%) per
annum or (y) the Treasury Constant Maturity Yield Index plus two percent (2.0%) per annum, not to
exceed 11.17% per annum. Notwithstanding the forgoing, failure to make any required payments under
the OD Oxford Loan in a timely manner will cause an event of default, which will result in a 4.0%
default interest rate in excess of the applicable interest rate, late charges equal to 5.0% of the
amount of such overdue payment, and all interest and principal becoming immediately due and payable
in full.
Mercedes Benz Atlanta, Georgia
On December 15, 2006, Cole ME Atlanta GA, LLC, a Delaware limited liability company (ME
Atlanta), a wholly-owned subsidiary of Cole OP II, acquired a 100% fee simple interest in an
approximately 42,000 square foot single-tenant commercial building (the ME Atlanta Property),
from Atlanta Eurocars, LLC (Atlanta Eurocars), which is not affiliated with us, our subsidiaries
or affiliates. The ME Atlanta Property was constructed in 2000 on an approximately 8.0 acre site in
Atlanta, Georgia. The area surrounding the ME Atlanta Property is shared by commercial, retail and
residential developments.
The purchase price of the ME Atlanta Property was approximately $11.8 million, exclusive of
closing costs. The acquisition was funded by net proceeds from our ongoing public offering. In
connection with the acquisition, we paid an affiliate of our advisor an acquisition fee of
approximately $235,000.
The ME Atlanta Property is 100% leased to Atlanta Eurocars. The ME Atlanta Property is subject
to a net lease, which commenced on December 15, 2006, pursuant to which the tenant is required to
pay substantially all operating expenses and capital expenditures in addition to base rent. The
current aggregate annual base rent of $900,000 is fixed through the first five years of the initial
lease term with rental escalations of 10.0% every five years thereafter, through the remainder of
the initial lease term, which expires December 31, 2026. Atlanta Eurocars has four options to renew
the lease, each for an additional five-year term beginning on January 1, 2027, with rental
escalations of 10.0% at the beginning of each five-year renewal term.
Cole Realty has the sole and exclusive right to manage, operate, lease and supervise the
overall maintenance of the ME Atlanta Property and will receive a property management fee of 2.0%
of the monthly gross revenue from the ME Atlanta Property. We currently have no plans for any
renovations, improvements or development of the ME Atlanta Property. We believe the ME Atlanta
Property is adequately insured.
Potential Property Investments
Our advisor has identified the following properties as potential suitable investments for us.
The acquisition of each such property is subject to a number of conditions. A significant condition
to acquiring any one of these potential acquisitions is our ability to raise sufficient proceeds in
this offering to pay a portion of the purchase price. An additional condition to acquiring these
properties will be our securing debt financing to pay the balance of the purchase price. Such
financing may not be available on acceptable terms or at all.
Our evaluation of a property as a potential acquisition, including the appropriate purchase
price, will include our consideration of a property condition report; unit-level store performance;
property location, visibility and access; age of the property, physical condition and curb appeal;
neighboring property uses; local market conditions, including vacancy rates; area demographics,
including trade area population and average household income; neighborhood growth patterns and
economic conditions; and the presence of demand generators.
- 105 -
We will decide whether to acquire these properties generally based upon:
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satisfaction of the conditions to the acquisitions contained in the respective contract |
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no material adverse change occurring relating to the properties, the tenants or in the local economic conditions; |
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our receipt of sufficient net proceeds from the offering of our common stock to the
public and financing proceeds to make these acquisitions; and |
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our receipt of satisfactory due diligence information including appraisals,
environmental reports and tenant and lease information. |
Other properties may be identified in the future that we may acquire before or instead of
these properties. Due to the considerable conditions to the consummation of the acquisition of
these properties, we cannot make any assurances that the closing of these acquisitions is probable.
La-Z-Boy Newington, Connecticut
Series B has entered into an agreement to purchase an approximately 21,000 square foot
single-tenant retail building on an approximately 2.6 acre site located in Newington, Connecticut
(the LZ Newington Property), for a purchase price of approximately $6.9 million, exclusive of
closing costs (the LZ Newington Agreement). Subject to the satisfactory completion of certain
conditions to closing, we expect that Series B will assign all of its rights and obligations under
the LZ Newington Agreement to a wholly-owned subsidiary of Cole OP II prior to the closing of the
transaction.
The LZ Newington Property was constructed in 2006 and is 100% leased to LZB Furniture
Galleries of Paramus, Inc., (LZB Paramus) a wholly owned subsidiary of La-Z-Boy Incorporated,
which guarantees the lease. The LZ Newington Property is subject to a net lease, pursuant to which
the tenant is required to pay substantially all operating expenses and capital expenditures in
addition to base rent. The annual base rent of $496,824 is fixed through the first ten years of the
initial lease term and increases to $558,927 in the eleventh year through the remainder of the
initial lease term, which expires December 31, 2021. LZB Paramus has two options to renew the
lease, each for an additional five-year term beginning on January 1, 2022, with rental escalations
of 13.0% and 10.0% at the beginning of each five-year renewal term, respectively.
We expect to purchase the LZ Newington Property with proceeds from our ongoing public offering
and an approximately $4.1 million loan to be secured by the LZ Newington Property (the LZ
Newington Property Loan). We expect the loan to be a ten-year fixed rate, interest only loan.
Sofa Express Cincinnati, Ohio
Series B has entered into an agreement to purchase an approximately 79,000 square foot
single-tenant retail building on an approximately 7.1 acre site located in Cincinnati, Ohio (the
SE Cincinnati Property), for a purchase price of approximately $8.8 million, exclusive of closing
costs (the SE Cincinnati Agreement). Subject to the satisfactory completion of certain conditions
to closing, we expect that Series B will assign all of its rights and obligations under the SE
Cincinnati Agreement to a wholly-owned subsidiary of Cole OP II prior to the closing of the
transaction.
The SE Cincinnati Property was constructed in 1995 and is 100% leased to Sofa Express, Inc.
The SE Cincinnati Property is subject to a net lease, pursuant to which the tenant is required to
pay substantially all operating expenses and capital expenditures in addition to base rent. The
annual base rent of $769,051 increases to $847,928 on December 1, 2009 through the initial lease
term, which expires November 30, 2015.
We expect to purchase the SE Cincinnati Property with proceeds from our ongoing public
offering and an approximately $4.4 million loan to be secured by the SE Cincinnati Property (the
SE Cincinnati Property Loan). We expect the loan to be a five-year fixed rate, interest only
loan.
Staples Clarksville, Indiana
Series B has entered into an agreement to purchase an approximately 20,000 square foot
single-tenant retail building on an approximately 1.98 acre site located in Clarksville, Indiana
(the ST Clarksville Property), for a purchase price of approximately $4.4 million, exclusive of
closing costs (the ST Clarksville Agreement). Subject to the satisfactory completion of certain
conditions to closing, we expect that Series B will assign all of its rights and obligations under
the ST Clarksville Agreement to a wholly-owned subsidiary of Cole OP II prior to the closing of the
transaction.
The ST Clarksville Property was constructed in 2006 and is 100% leased to Staples the Office
Superstore East, Inc. which is a wholly owned subsidiary of Staples. The ST Clarksville Property is
subject to a net lease, pursuant to which the tenant is required to
- 106 -
pay substantially all operating expenses and capital expenditures in addition to base
rent. The annual base rent of $326,208 is fixed through the first five years of the initial lease
term and increases to $356,790 in the sixth year through the remainder of the initial lease term,
which expires May 31, 2016. Staples has three options to renew the lease, each for an additional
five-year term beginning on June 1, 2016, with rental escalations of approximately 8.0% at the
beginning of each five-year renewal term.
We expect to purchase the ST Clarksville Property with proceeds from our ongoing public
offering and an approximately $2.9 million loan to be secured by the ST Clarksville Property (the
ST Clarksville Property Loan). We expect the loan to be a ten-year fixed rate, interest only
loan.
Office Depot Enterprise, Alabama
Series B has entered into an agreement to purchase an approximately 20,000 square foot
single-tenant retail building on an approximately 4.2 acre site located in Enterprise, Alabama (the
OD Enterprise Property), for a purchase price of approximately $2.9 million, exclusive of closing
costs (the OD Enterprise Agreement). Subject to the satisfactory completion of certain conditions
to closing, we expect that Series B will assign all of its rights and obligations under the OD
Enterprise Agreement to a wholly-owned subsidiary of Cole OP II prior to the closing of the
transaction.
The OD Enterprise Property was constructed in 2006 and is 100% leased to Office Depot. The OD
Enterprise Property is subject to a net lease, pursuant to which the tenant is required to pay
substantially all operating expenses and capital expenditures in addition to base rent. The annual
base rent of $215,129 is fixed through the first ten years of the initial lease term with a rental
escalation of 5.0% in the eleventh year through the remainder of the initial lease term, which
expires October 31, 2021. Office Depot has three options to renew the lease, each for an additional
five-year term beginning on November 1, 2021, with rental escalations of 10.0% at the beginning of
each five-year renewal term.
We expect to purchase the OD Enterprise Property with proceeds from our ongoing public
offering and an approximately $1.9 million loan to be secured by the OD Enterprise Property (the
OD Enterprise Property Loan). We expect the loan to be a ten-year fixed rate, interest only loan.
- 107 -
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
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Audited Financial Statements of Cole Credit Property Trust II, Inc. |
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Report of Independent Registered Public Accounting Firm on the Consolidated Financial Statements |
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F-7 |
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Consolidated Balance Sheets as of December 31, 2005 and 2004 |
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F-8 |
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Consolidated Statements of Operations for the Year Ended December 31, 2005 and the Period From
Inception (September 29, 2004) to December 31, 2004 |
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F-9 |
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Consolidated Statements of Stockholders Equity for the Year Ended December 31, 2005 and the
Period From Inception (September 29, 2004) to December 31, 2004 |
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F-10 |
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Consolidated Statements of Cash Flows for the Year Ended December 31, 2005 and the Period From
Inception (September 29, 2004) to December 31, 2004 |
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F-11 |
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Notes to Consolidated Financial Statements |
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F-12 |
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Unaudited
Financial Statements of Cole Credit Property Trust II, Inc. |
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Condensed Consolidated Balance Sheets as of September 30, 2006 (Unaudited) and December 31, 2005 |
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F-25 |
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Condensed Consolidated Statements of Operations for the Three Months and Nine Months Ended
September 30, 2006 and 2005 (Unaudited) |
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F-26 |
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Condensed Consolidated Statements of Stockholders Equity for the Nine Months Ended September
30, 2006 (Unaudited) |
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F-27 |
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Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2006
and 2005 (Unaudited) |
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F-28 |
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Notes to Condensed Consolidated Financial Statements (Unaudited) |
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F-29 |
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Summary Financial Information of Businesses Acquired |
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CVS Alpharetta, GA (CV Alpharetta Property) |
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Overview |
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F-39 |
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CVS Richland Hills, TX (CV RH Property) |
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Overview |
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F-39 |
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CVS Portsmouth, OH (CV Scioto Trail Property) |
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Overview |
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F-39 |
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CVS Madison, MS (CV Madison Property) |
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Overview |
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F-39 |
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CVS Portsmouth, OH (CV Portsmouth Property) |
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Overview |
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F-39 |
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CVS Okeechobee, FL (CV Okeechobee Property) |
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Overview |
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F-40 |
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CVS Orlando, FL (CV Orlando Property) |
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Overview |
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F-40 |
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CVS Gulfport MS (CV Gulfport Property) |
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Overview |
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F-40 |
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CVS Clinton, NY (CV Clinton Property) |
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Overview |
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F-40 |
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Summary Financial Data Regarding CVS |
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F-41 |
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Advance Auto Greenfield, IN (AA Greenfield Property) |
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Overview |
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F-42 |
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Advance Auto Trenton, OH (AA Trenton Property) |
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Overview |
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F-42 |
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F - 1
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Advance Auto Columbia Heights, MN (AA Columbia Heights Property) |
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Overview |
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F-42 |
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Advance Auto Fergus Falls, MN (AA Fergus Falls Property |
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Overview |
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F-42 |
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Advance Auto Holland, MI (AA Holland Property) |
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Overview |
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F-42 |
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Advance Auto Holland Township, MI (AA Holland Township Property) |
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Overview |
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F-43 |
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Advance Auto Zeeland, MI (AA Zeeland Property) |
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Overview |
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F-43 |
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Advance Auto Grand Forks, ND (AA Grand Forks Property) |
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Overview |
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F-43 |
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Advance Auto Duluth, MN (AA Duluth Property) |
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Overview |
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F-43 |
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Advance Auto Grand Bay, AL (AA Grand Bay Property) |
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Overview |
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F-43 |
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Advance Auto Hurley, MS (AA Hurley Property) |
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Overview |
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F-44 |
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Advance Auto Rainsville, AL (AA Rainsville Property) |
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Overview |
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F-44 |
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Advance Auto Ashland, KY (AA Ashland Property) |
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Overview |
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F-44 |
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Advance Auto Jackson, OH (AA Jackson Property) |
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Overview |
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F-44 |
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Advance Auto New Boston, OH (AA New Boston Property) |
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Overview |
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F-44 |
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Advance Auto Scottsburg, IN (AA Scottsburg Property) |
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Overview |
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F-44 |
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Summary Financial Data Regarding Advance Auto |
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F-45 |
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Tractor Supply Parkersburg, WV (TS Parkersburg Property) |
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Overview |
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F-46 |
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Tractor Supply La Grange, Texas (TS La Grange Property) |
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Overview |
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F-46 |
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Tractor Supply Livingston, Texas (TS Livingston Property) |
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Overview |
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F-46 |
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Tractor Supply New Braunfels, Texas (TS New Braunfels Property) |
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Overview |
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F-46 |
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Tractor Supply Crockett, Texas (TS Crockett Property) |
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Overview |
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F-46 |
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Summary Financial Data Regarding Tractor Supply |
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F-47 |
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F - 2
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Rite Aid Alliance, OH (RA Alliance Property) |
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Overview |
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F-48 |
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Rite Aid Enterprise, OH (RA Enterprise Property) |
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Overview |
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F-48 |
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Rite Aid Saco, ME (RA Saco Property) |
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Overview |
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F-48 |
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Rite Aid Wauseon, OH (RA Wauseon Property) |
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Overview |
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F-48 |
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Rite Aid Cleveland, OH (RA Cleveland Property) |
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Overview |
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F-48 |
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Rite Aid Fremont, OH (RA Fremont Property) |
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Overview |
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F-49 |
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Rite Aid Defiance, OH (RA Defiance Property) |
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Overview |
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F-49 |
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Rite Aid Lansing, MI (RA Lansing Property) |
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Overview |
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F-49 |
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Rite Aid Glassport, PA (RA Glassport Property) |
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Overview |
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F-49 |
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Rite Aid Hanover, PA (RA Hanover Property) |
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Overview |
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F-49 |
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Summary Financial Data Regarding Rite Aid |
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F-50 |
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Office Depot Dayton, OH (OD Dayton Property) |
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Overview |
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F-51 |
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Office Depot Greenville, MS (OD Greenville Property) |
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Overview |
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F-51 |
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Office Depot Warrensburg, MO (OD Warrensburg Property) |
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Overview |
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F-51 |
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Summary Financial Data Regarding Office Depot |
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F-52 |
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Walgreens Brainerd, MN (WG Brainerd Property) |
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Overview |
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F-53 |
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Walgreens St. Louis, MO (WG SL Properties) |
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Overview |
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F-53 |
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Walgreens Olivette, MO (WG Olivette Property) |
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Overview |
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F-53 |
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Walgreens Columbia, MO (WG Columbia Property) |
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Overview |
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F-53 |
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Walgreens Picayune, MS (WG Picayune Property) |
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Overview |
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F-53 |
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Summary Financial Data Regarding Walgreens |
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F-54 |
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Oxford Theatre Oxford, MS (OT Oxford Property) |
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Overview |
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F-55 |
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F - 3
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Sportsmans Warehouse Wichita, KS (SP Wichita Property) |
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Overview |
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F-56 |
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Lowes Enterprise, AL (LO Enterprise Property) |
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Overview |
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F-57 |
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Lowes Midland, TX (LO Midland Property) |
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Overview |
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F-57 |
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|
Lowes Lubbock, TX (LO Lubbock Property) |
|
|
|
|
Overview |
|
|
F-57 |
|
|
|
|
|
|
Summary Financial Data Regarding Lowes |
|
|
F-58 |
|
|
|
|
|
|
FedEx Rockford, IL (FE Rockford Property) |
|
|
|
|
Overview |
|
|
F-59 |
|
|
|
|
|
|
Summary
Financial Data Regarding Fed EX Ground |
|
|
F-59 |
|
|
|
|
|
|
FedEx Council Bluffs, Iowa (FE Council Bluffs Property) |
|
|
|
|
Overview |
|
|
F-60 |
|
|
|
|
|
|
FedEx Edwardsville, Kansas (FE Edwardsville Property) |
|
|
|
|
Overview |
|
|
F-60 |
|
|
|
|
|
|
Summary
Financial Data Regarding FedEx Freight |
|
|
F-61 |
|
|
|
|
|
|
Wawa Hockessin, DL; Manahawkin, NJ; Narberth, PA (Wawa Properties) |
|
|
|
|
Overview |
|
|
F-62 |
|
|
|
|
|
|
Summary Financial Data Regarding Wawa |
|
|
F-62 |
|
|
|
|
|
|
Conns San Antonio, TX (CO San Antonio Property) |
|
|
|
|
Overview |
|
|
F-64 |
|
|
|
|
|
|
Summary Financial Data Regarding Conns |
|
|
F-64 |
|
|
|
|
|
|
Drexel Heritage Hickory, NC (DH Hickory Property) |
|
|
|
|
Overview |
|
|
F-65 |
|
|
|
|
|
|
Summary Financial Data Regarding Furniture Brands |
|
|
F-65 |
|
|
|
|
|
|
Kohls Wichita, KS (KO Wichita Property) |
|
|
|
|
Overview |
|
|
F-66 |
|
|
|
|
|
|
Summary Financial Data Regarding Kohls |
|
|
F-66 |
|
|
|
|
|
|
Dollar General Crossville, TN (DG Crossville Property) |
|
|
|
|
Overview |
|
|
F-67 |
|
|
|
|
|
|
Dollar General Ardmore, TN (DG Ardmore Property) |
|
|
|
|
Overview |
|
|
F-67 |
|
|
|
|
|
|
Dollar General Livingston, TN (DG Livingston Property) |
|
|
|
|
Overview |
|
|
F-67 |
|
|
|
|
|
|
Academy Sports Macon, GA (AS Macon Property) |
|
|
|
|
Overview |
|
|
F-68 |
|
|
|
|
|
|
Davids Bridal Lenexa, KS (DB Lenexa Property) |
|
|
|
|
Overview |
|
|
F-68 |
|
|
|
|
|
|
Walgreens Knoxville, TN (WG Knoxville Property) |
|
|
|
|
Overview |
|
|
F-68 |
|
|
|
|
|
|
CVS Lakewood, OH (MT Lakewood Property) |
|
|
|
|
Overview |
|
|
F-69 |
|
|
|
|
|
|
Office Depot Benton, Arkansas (OD Benton Property) |
|
|
|
|
Overview |
|
|
F-69 |
|
|
|
|
|
|
Office Depot Oxford, Mississippi (OD Oxford Property) |
|
|
|
|
Overview |
|
|
F-69 |
|
F - 4
|
|
|
|
|
CVS Glenville Scotia, New York (CV Glenville Scotia Property) |
|
|
|
|
Overview |
|
|
F-69 |
|
|
|
|
|
|
Staples Peru, Illinois (ST Peru Property) |
|
|
|
|
Overview |
|
|
F-70 |
|
|
|
|
|
|
Old Time Pottery Fairview Heights, Illinois (OT Fairview Heights Property) |
|
|
|
|
Overview |
|
|
F-70 |
|
|
|
|
|
|
Infiniti Davie, Florida (IN Davie Property) |
|
|
|
|
Overview |
|
|
F-70 |
|
|
|
|
|
|
Mercedes Benz Atlanta, Georgia (ME Atlanta Property)
Overview |
|
|
F-70 |
|
|
|
|
|
|
Staples Crossville, TN (ST Crossville Property) |
|
|
|
|
Overview |
|
|
F-71 |
|
Independent Auditors Report |
|
|
F-72 |
|
Audited Financial Statements of Property Acquired |
|
|
|
|
Statement of Revenues and Certain Operating Expenses for the year Ended December 31, 2005 |
|
|
F-73 |
|
Notes to the Statement of Revenues and Certain Operating Expenses |
|
|
F-74 |
|
|
|
|
|
|
Wadsworth Boulevard Marketplace Denver, CO (MT Denver Property) |
|
|
|
|
Overview |
|
|
F-76 |
|
Independent Auditors Report |
|
|
F-77 |
|
Audited Financial Statements of Property Acquired |
|
|
|
|
Statement of Revenues and Certain Operating Expenses for the year Ended December 31, 2005 |
|
|
F-78 |
|
Notes to the Statement of Revenues and Certain Operating Expenses |
|
|
F-79 |
|
|
|
|
|
|
Mountainside Fitness Chandler, AZ (MF Chandler Property) |
|
|
|
|
Overview |
|
|
F-81 |
|
Independent Auditors Report |
|
|
F-82 |
|
Audited Financial Statements of Property Acquired |
|
|
|
|
Statement of Revenues and Certain Operating Expenses for the year Ended December 31, 2005 |
|
|
F-83 |
|
Notes to the Statement of Revenues and Certain Operating Expenses |
|
|
F-84 |
|
|
|
|
|
|
Rayford Square Spring, TX (MT Spring Property) |
|
|
|
|
Overview |
|
|
F-86 |
|
Independent Auditors Report |
|
|
F-87 |
|
Audited Financial Statements of Property Acquired |
|
|
|
|
Statement of Revenues and Certain Operating Expenses for the year Ended December 31, 2005 |
|
|
F-88 |
|
Notes to the Statement of Revenues and Certain Operating Expenses |
|
|
F-89 |
|
|
|
|
|
|
Wehrenberg Theater Arnold, MO (WT Arnold Property) |
|
|
|
|
Overview |
|
|
F-91 |
|
Independent Auditors Report |
|
|
F-92 |
|
Audited Financial Statements of Property Acquired |
|
|
|
|
Statement of Revenues and Certain Operating Expenses for the year Ended October 31, 2005 |
|
|
F-93 |
|
Notes to the Statement of Revenues and Certain Operating Expenses |
|
|
F-94 |
|
|
|
|
|
|
Golds Gym OFallon, IL (GG OFallon Property) |
|
|
|
|
Overview |
|
|
F-96 |
|
F - 5
|
|
|
|
|
Independent Auditors Report |
|
|
F-97 |
|
Audited Financial Statements of Property Acquired |
|
|
|
|
|
|
|
|
|
Statement of Revenues and Certain Operating Expenses for the year Ended December 31, 2005 |
|
|
F-98 |
|
Notes to the Statement of Revenues and Certain Operating Expenses |
|
|
F-99 |
|
|
|
|
|
|
American TV & Appliance Peoria, IL (AM Peoria Property) |
|
|
|
|
Overview |
|
|
F-101 |
|
Independent Auditors Report |
|
|
F-102 |
|
Audited Financial Statements of Property Acquired |
|
|
|
|
|
|
|
|
|
Statement of Revenues and Certain Operating Expenses for the year Ended December 31, 2005 |
|
|
F-103 |
|
Notes to the Statement of Revenues and Certain Operating Expenses |
|
|
F-104 |
|
|
|
|
|
|
Summary Financial Information of Probable Business Acquisitions |
|
|
|
|
|
|
|
|
|
La-Z-Boy Newington, Connecticut (LZ Newington Property) |
|
|
|
|
Overview |
|
|
F-106 |
|
|
|
|
|
|
Staples Clarksville, Indiana (ST Clarksville Property) |
|
|
|
|
Overview |
|
|
F-106 |
|
|
|
|
|
|
Office Depot Enterprise, Alabama (OD Enterprise Property) |
|
|
|
|
Overview |
|
|
F-106 |
|
|
|
|
|
|
Audited Financial Statements of Probable Business Acquisitions |
|
|
|
|
|
|
|
|
|
Sofa Express Cincinnati, Ohio (SE Cincinnati Property) |
|
|
|
|
Overview |
|
|
F-108 |
|
Independent Auditors Report |
|
|
F-109 |
|
Statement of Revenues and Certain Operating Expenses for the year ended December 31, 2005 and
the Nine Months Ended September 30, 2006 (Unaudited) |
|
|
F-110 |
|
Notes to the Statement of Revenues and Certain Operating Expenses |
|
|
F-111 |
|
|
|
|
|
|
Unaudited Pro Forma Financial Statements Cole Credit Property Trust II, Inc. |
|
|
|
|
Aggregated Pro Forma Financial Statements (Unaudited) |
|
|
|
|
|
|
|
|
|
Pro Forma Consolidated Balance Sheet as of September 30, 2006 (Unaudited) |
|
|
F-113 |
|
Pro Forma Consolidated Statement of Operations for the Nine Months Ended September 30, 2006
(Unaudited) |
|
|
F-114 |
|
Notes to Pro Forma Consolidated Financial Statements (Unaudited) |
|
|
F-115 |
|
|
|
|
|
|
Pro Forma Consolidated Statement Operations for the Year Ended December 31, 2005 (Unaudited) |
|
|
F-118 |
|
Notes to Pro Forma Consolidated Statement of Operations (Unaudited) |
|
|
F-119 |
|
F - 6
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of
Cole Credit Property Trust II, Inc.
Phoenix, Arizona
We have audited the accompanying consolidated balance sheets of Cole Credit Property Trust II,
Inc. and subsidiaries (the Company) as of December 31, 2005 and 2004 and the related consolidated
statements of operations, stockholders equity, and cash flows for the year ended December 31, 2005
and for the period from September 29, 2004 (date of inception) to December 31, 2004. Our audits
also included the financial statement schedule listed in the index at Item 15. These financial
statements and financial statement schedule are the responsibility of the Companys management.
Our responsibility is to express an opinion on these financial statements and financial statement
schedule based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting
Oversight Board (United States). Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of material
misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its
internal control over financial reporting. Our audits included consideration of internal control
over financial reporting as a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
Companys internal control over financial reporting. Accordingly, we express no such opinion. An
audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements presents fairly, in all material
respects, the financial position of the Company as of December 31, 2005 and 2004 and the results of
its operations and its cash flows for the year ended December 31, 2005 and for the period from
September 29, 2004 (date of inception) to December 31, 2004, in conformity with accounting
principles generally accepted in the United States of America. Also, in our opinion, such
financial statement schedule, when considered in relation to the basic consolidated financial
statements taken as a whole, present fairly, in all material respects, the information set forth
therein.
The Company was in the development stage at December 31, 2004; during the year ended December
31, 2005, the Company completed its development activities and commenced its planned principal
operations.
/s/ DELOITTE & TOUCHE LLP
Phoenix, Arizona
March 23, 2006
F - 7
COLE CREDIT PROPERTY TRUST II, INC.
CONSOLIDATED BALANCE SHEETS
|
|
|
|
|
|
|
|
|
|
|
December 31, |
|
|
|
2005 |
|
|
2004 |
|
ASSETS: |
|
|
|
|
|
|
|
|
Real estate assets, at cost: |
|
|
|
|
|
|
|
|
Land |
|
$ |
23,854,308 |
|
|
$ |
|
|
Buildings and improvements, less accumulated depreciation of $151,472 |
|
|
57,338,359 |
|
|
|
|
|
Acquired intangible lease assets, less accumulated amortization of $71,881 |
|
|
10,425,618 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total real estate assets |
|
|
91,618,285 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
|
4,575,144 |
|
|
|
200,000 |
|
Restricted cash |
|
|
1,813,804 |
|
|
|
|
|
Rents and tenant receivables |
|
|
36,001 |
|
|
|
|
|
Prepaid expenses and other assets |
|
|
11,928 |
|
|
|
|
|
Deferred financing costs, less accumulated amortization of $17,964 |
|
|
754,676 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets |
|
$ |
98,809,838 |
|
|
$ |
200,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS EQUITY: |
|
|
|
|
|
|
|
|
Mortgage notes payable |
|
$ |
66,804,041 |
|
|
$ |
|
|
Notes payable to affiliates |
|
|
4,453,000 |
|
|
|
|
|
Accounts payable and accrued expenses |
|
|
282,797 |
|
|
|
|
|
Escrowed investor proceeds |
|
|
1,813,804 |
|
|
|
|
|
Due to affiliates |
|
|
41,384 |
|
|
|
|
|
Acquired below market lease intangibles, less accumulated amortization of $52 |
|
|
14,637 |
|
|
|
|
|
Distributions payable |
|
|
195,209 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities |
|
|
73,604,872 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS EQUITY: |
|
|
|
|
|
|
|
|
Preferred stock, $0.01 par value; 10,000,000 shares authorized, none issued and outstanding |
|
|
|
|
|
|
|
|
Common stock, $.01 par value; 90,000,000 shares authorized, 2,832,387 and 20,000 shares
issued and outstanding at December 31, 2005 and 2004, respectively |
|
|
28,324 |
|
|
|
200 |
|
Capital in excess of par value |
|
|
25,486,442 |
|
|
|
199,800 |
|
Accumulated distributions in excess of earnings |
|
|
(309,800 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total stockholders equity |
|
|
25,204,966 |
|
|
|
200,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders equity |
|
$ |
98,809,838 |
|
|
$ |
200,000 |
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these consolidated financial statements.
F-8
COLE CREDIT PROPERTY TRUST II, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Period from Inception |
|
|
|
Year Ended |
|
|
(September 29, 2004) to |
|
|
|
December 31, 2005 |
|
|
December 31, 2004 |
|
Revenues: |
|
|
|
|
|
|
|
|
Rental income |
|
$ |
741,669 |
|
|
$ |
|
|
Expenses: |
|
|
|
|
|
|
|
|
General and administrative |
|
|
156,252 |
|
|
|
|
|
Property and asset management fees |
|
|
38,768 |
|
|
|
|
|
Depreciation |
|
|
151,472 |
|
|
|
|
|
Amortization |
|
|
69,939 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses |
|
|
416,431 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate operating income |
|
|
325,238 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense): |
|
|
|
|
|
|
|
|
Interest income |
|
|
27,557 |
|
|
|
|
|
Interest expense |
|
|
(467,386 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total other expense |
|
|
(439,829 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(114,591 |
) |
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of common shares outstanding: |
|
|
|
|
|
|
|
|
Basic and diluted |
|
|
411,909 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per common share: |
|
|
|
|
|
|
|
|
Basic and diluted |
|
$ |
(0.28 |
) |
|
$ |
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these consolidated financial statements.
F-9
COLE CREDIT PROPERTY TRUST II, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
For the Period From Inception (September 29, 2004) to December 31, 2004
and for the Year Ended December 31, 2005
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated |
|
|
|
|
|
|
Common Stock |
|
|
Capital in |
|
|
Distributions |
|
|
Total |
|
|
|
Number |
|
|
|
|
|
|
Excess of |
|
|
in Excess |
|
|
Shareholders |
|
|
|
of Shares |
|
|
Par Value |
|
|
Par Value |
|
|
of Earnings |
|
|
Equity |
|
Balance, September 29, 2004 (Date of Inception) |
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Issuance of common stock to Cole Holdings Corporation |
|
|
20,000 |
|
|
|
200 |
|
|
|
199,800 |
|
|
|
|
|
|
|
200,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2004 |
|
|
20,000 |
|
|
|
200 |
|
|
|
199,800 |
|
|
|
|
|
|
|
200,000 |
|
Issuance of common stock |
|
|
2,812,387 |
|
|
|
28,124 |
|
|
|
28,080,997 |
|
|
|
|
|
|
|
28,109,121 |
|
Distributions |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(195,209 |
) |
|
|
(195,209 |
) |
Commissions on stock sales and related dealer manager fees |
|
|
|
|
|
|
|
|
|
|
(2,375,780 |
) |
|
|
|
|
|
|
(2,375,780 |
) |
Other offering costs |
|
|
|
|
|
|
|
|
|
|
(418,575 |
) |
|
|
|
|
|
|
(418,575 |
) |
Net loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(114,591 |
) |
|
|
(114,591 |
) |
Balance, December 31, 2005 |
|
|
2,832,387 |
|
|
$ |
28,324 |
|
|
$ |
25,486,442 |
|
|
$ |
(309,800 |
) |
|
$ |
25,204,966 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these consolidated financial statements.
F-10
COLE CREDIT PROPERTY TRUST II, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Period September 29, 2004 (Date of Inception) to December 31, 2004
and for the Period Ended December 31, 2005
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Period from Inception |
|
|
|
Year Ended |
|
|
(September 29, 2004) |
|
|
|
December 31, 2005 |
|
|
to December 31, 2004 |
|
|
|
|
|
|
|
|
Cash Flows from Operating Activities: |
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(114,591 |
) |
|
$ |
|
|
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation |
|
|
151,472 |
|
|
|
|
|
Amortization |
|
|
89,793 |
|
|
|
|
|
Changes in assets and liabilities: |
|
|
|
|
|
|
|
|
Rents and tenant receivables |
|
|
(36,001 |
) |
|
|
|
|
Prepaid expenses and other assets |
|
|
(11,928 |
) |
|
|
|
|
Accounts payable and accrued expenses |
|
|
282,797 |
|
|
|
|
|
Due to affiliates |
|
|
36,199 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total adjustments |
|
|
512,332 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities |
|
|
397,741 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows from Investment Activities: |
|
|
|
|
|
|
|
|
Investment in real estate and related assets |
|
|
(81,344,139 |
) |
|
|
|
|
Acquired intangible lease assets |
|
|
(10,497,499 |
) |
|
|
|
|
Acquired below market lease intangibles |
|
|
14,689 |
|
|
|
|
|
Restricted cash |
|
|
(1,813,804 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in investing activities |
|
|
(93,640,753 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows from Financing Activities: |
|
|
|
|
|
|
|
|
Proceeds from issuance of common stock |
|
|
28,109,121 |
|
|
|
200,000 |
|
Proceeds from mortgage notes payable |
|
|
67,631,404 |
|
|
|
|
|
Repayment of mortgage note payable |
|
|
(827,363 |
) |
|
|
|
|
Proceeds from notes payable to affiliate |
|
|
4,453,000 |
|
|
|
|
|
Escrowed investor proceeds liability |
|
|
1,813,804 |
|
|
|
|
|
Offering costs on issuance of common stock |
|
|
(2,789,170 |
) |
|
|
|
|
Deferred financing costs paid |
|
|
(772,640 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by financing activities |
|
|
97,618,156 |
|
|
|
200,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase in cash and cash equivalents |
|
|
4,375,144 |
|
|
|
200,000 |
|
Cash and cash equivalents, beginning of period |
|
|
200,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents, end of period |
|
$ |
4,575,144 |
|
|
$ |
200,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental Disclosures of Non-Cash Investing and Financing Activities: |
|
|
|
|
|
|
|
|
Distributions declared and unpaid |
|
$ |
195,209 |
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commissions and dealer manager fees due to affiliate |
|
$ |
5,185 |
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest paid |
|
$ |
223,183 |
|
|
$ |
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these consolidated financial statements.
F-11
COLE CREDIT PROPERTY TRUST II, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2005
NOTE 1 ORGANIZATION AND BUSINESS
Cole Credit Property Trust II, Inc. (the Company) was formed on September 29, 2004 and is a
Maryland corporation that is organized and operating in order to qualify as a real estate
investment trust (REIT) by electing to be taxed as a REIT beginning with the taxable year ended
December 31, 2005. Substantially all of the Companys business is conducted through Cole Operating
Partnership II, LP (Cole OP II), a Delaware limited partnership. The Company is the sole general
partner of and owns a 99.9% partnership interest in Cole OP II. Cole REIT Advisors II, LLC (Cole
Advisors) the affiliate advisor to the Company, is the sole limited partner and owner of 0.1%
(minority interest) of the partnership interests of Cole OP II.
At December 31, 2005, the Company owned 14 properties comprising approximately 455,000 square
feet of single-tenant commercial space located in ten states. At December 31, 2005, these
properties were 100% leased.
Pursuant to a Registration Statement on Form S-11 under the Securities Act of 1933, as amended
(the Registration Statement), the Company is offering for sale to the public on a best efforts
basis a minimum of 250,000 and a maximum of 45,000,000 shares of its common stock at a price of
$10.00 per share, subject to certain volume and other discounts (the Offering), and up to
5,000,000 additional shares pursuant to a distribution reinvestment plan under which its
stockholders may elect to have distributions reinvested in additional shares of the Companys
common stock at $9.50 per share. The Registration Statement was declared effective on June 27,
2005.
On September 23, 2005, the Company issued the initial 486,000 shares under the Offering and
commenced its principal operations. Prior to such date, the Company was considered a development
stage company. As of December 31, 2005, the Company had issued approximately 2.83 million shares
of its common stock in the Offering for aggregate gross proceeds of approximately $28.3 million
before offering costs, selling commissions and dealer manager fees of approximately $2.8 million.
As disclosed in the Registration Statement, the Company expects to use substantially all of the net
proceeds from the Offering to acquire and operate commercial real estate primarily consisting of
high quality, freestanding, single-tenant commercial properties net-leased to investment grade and
other creditworthy tenants located throughout the United States.
The Companys stock is not currently listed on a national exchange. The Company may seek to
list its stock for trading on a national securities exchange or for quotation on The Nasdaq
National Market only if a majority of its independent directors believe listing would be in the
best interest of its stockholders. The Company does not intend to list its shares at this time.
The Company does not anticipate that there would be any market for its common stock until its
shares are listed or quoted. In the event it does not obtain listing prior to the tenth
anniversary of the completion or termination of the Offering, its charter requires that it either:
(1) seek stockholder approval of an extension or amendment of this listing deadline; or (2) seek
stockholder approval to adopt a plan of liquidation of the corporation.
NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The summary of significant accounting policies presented below is designed to assist in
understanding the Companys consolidated financial statements. Such financial statements and
accompanying notes are the representations of its management, who is responsible for their
integrity and objectivity. These accounting policies conform to generally accepted accounting
principles in the United States (GAAP), in all material respects, and have been consistently
applied in preparing the accompanying consolidated financial statements.
Principles of Consolidation and Basis of Presentation
The consolidated financial statements include the accounts of the Company and its wholly-owned
subsidiaries. All significant intercompany accounts and transactions have been eliminated in
consolidation.
Use of Estimates
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America necessarily requires management to make
estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure
of contingent assets and liabilities at the date of the consolidated financial
statements and the reported amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
F-12
COLE CREDIT PROPERTY TRUST II, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Investment in Real Estate Assets
Real estate assets are stated at cost, less accumulated depreciation. Amounts
capitalized to real estate assets consist of the cost of acquisition or construction and any
tenant improvements or major improvements and betterments that extend the useful life of
the related asset. All repairs and maintenance are expensed as incurred.
All assets are depreciated on a straight line basis. The estimate useful lives of
our assets by class are generally as follows:
|
|
|
Building |
|
40 years |
Tenant improvements |
|
Lease term |
Intangible lease assets |
|
Lesser of useful life or lease term |
Impairment losses are recorded on long-lived assets used in operations, which includes
the operating property, when indicators of impairment are present and the assets carrying amount
is greater than the sum of the future undiscounted cash flows, excluding interest, estimated to be
generated by those assets. As of December 31, 2005, no indicators of impairment existed and no
losses had been recorded.
Allocation of Purchase Price of Acquired Assets
Upon the acquisition of real properties, the Company allocates the purchase price of
such properties to acquired tangible assets, consisting of land and building, and identified
intangible assets and liabilities, consisting of the value of above-market and
below-market leases and the value of in-place leases, based in each case on their fair values.
The Company utilizes independent appraisals to determine the fair values of the tangible
assets of an acquired property (which includes land and building). Factors considered by
management in performing these analyses include an estimate of carrying costs during the expected
lease-up periods considering current market conditions and costs to execute similar
leases, including leasing commissions and other related costs. In estimating carrying costs,
management includes real estate taxes, insurance, and other operating expenses during the expected
lease-up periods based on current market demand.
The fair values of above-market and below-market in-place leases are recorded based on
the present value (using an interest rate which reflects the risks associated with the leases
acquired) of the difference between (i) the contractual amounts to be paid pursuant to the in-place
leases and (ii) an estimate of fair market lease rates for the corresponding in-place leases, which
is generally obtained from independent appraisals, measured over a period equal to the remaining
non-cancelable term of the lease. The capitalized above-market and below-market lease values are
capitalized as intangible lease assets or liabilities and amortized as an adjustment to rental
income over the remaining terms of the respective leases.
The fair values of in-place leases include direct costs associated with obtaining a new
tenant, opportunity costs associated with lost rentals which are avoided by acquiring an in-place
lease, and tenant relationships. Direct costs associated with obtaining a new tenant include
commissions, tenant improvements and other direct costs and are estimated based on independent
appraisals and managements consideration of current market costs to execute a similar lease.
These direct costs are included in intangible lease assets in the accompanying consolidated balance
sheets and are amortized to expense over the remaining terms of the respective leases.
The value of opportunity costs is calculated using the contractual amounts to be paid pursuant to
the in-place leases over a market absorption period for a similar lease. Customer relationships
are valued based on expected renewal of a lease or the likelihood of obtaining a particular tenant
for other locations. These lease intangibles are included in intangible lease assets in the
accompanying consolidated balance sheets and are amortized to rental income over the remaining term
of the respective leases.
Cash and Cash Equivalents
The Company considers all highly liquid instruments with maturities when purchased of three
months or less to be cash equivalents.
Restricted Cash and Escrowed Investor Proceeds
The Company is currently engaged in a public offering of its common stock. Included in
restricted cash and escrowed investor proceeds is approximately $1.8 million of offering proceeds
for which shares of common stock had not been issued as of December 31, 2005.
F-13
COLE CREDIT PROPERTY TRUST II, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Rents and Tenant Receivables
Rents and tenant receivables primarily includes amounts to be collected in future periods
related to the recognition of rental income on a straight-line basis over the lease term and cost
recoveries from tenants. See Revenue Recognition.
Prepaid Expenses and Other Assets
Prepaid expenses and other assets includes expenses incurred as of the balance sheet date that
relate to future periods and will be expensed or reclassified to another account during the period
to which the costs relate. Any amounts with no future economic benefit are charged to earnings
when identified.
Deferred Financing Costs
Deferred financing costs are capitalized and amortized on a straight-line basis over the term
of the related financing arrangement. Amortization of deferred financing costs for the year ended
December 31, 2005 was approximately $18,000 and was recorded in interest expense in the
consolidated statements of operations.
Revenue Recognition
Upon the acquisition of real estate, certain properties have leases where minimum rent
payments increase during the term of the lease. The Company records rental revenue for the full
term of each lease on a straight-line basis. Accordingly, the Company records a receivable from
tenants that the Company expects to collect over the remaining lease term rather than currently,
which is recorded as rents receivable. When the Company acquires a property, the term of existing
leases is considered to commence as of the acquisition date for the purposes of this calculation.
In accordance with Staff Accounting Bulletin 101, Revenue Recognition in Financial Statements, the
Company defers the recognition of contingent rental income, such as percentage rents, until the
specific target that triggers the contingent rental income is achieved. Cost recoveries from
tenants are included in rental income in the period the related costs are incurred.
Income Taxes
The Company intends to elect to be taxed as a REIT under Sections 856 through 860 of the
Internal Revenue Code commencing with its taxable year ended December 31, 2005. If the Company
qualifies for taxation as a REIT, the Company generally will not be subject to federal corporate
income tax to the extent it distributes its REIT taxable income to its stockholders, and so long as
it distributes at least 90% of its REIT taxable income. REITs are subject to a number of other
organizational and operational requirements. Even if the Company qualifies for taxation as a REIT,
it may be subject to certain state and local taxes on its income and property, and federal income
and excise taxes on its undistributed income. The Company believes it is organized and operating
in such a manner as to qualify to be taxed as a REIT for the taxable year ended December 31, 2005.
Concentration of Credit Risk
At December 31, 2005 and December 31, 2004, the Company had cash on deposit in one financial
institution in excess of federally insured levels; however, the Company has not experienced any
losses in such account. The Company limits investment of cash investments to financial
institutions with high credit standing; therefore, the Company believes it is not exposed to any
significant credit risk on cash.
The Companys tenants are generally of investment grade quality. One tenant in the
drugstore industry and one tenant in the automotive supply industry account for approximately 34%
and 31% of the Companys gross annualized base rental revenues, respectively. Tenants in the
drugstore, and automotive supply industries comprise approximately 44% and 31%, respectively, of
the Companys gross annualized base rental revenues.
Offering and Related Costs
Cole Advisors funds all of the organization and offering costs on the Companys behalf and may
be reimbursed for such costs up to 1.5% of the cumulative capital raised by the Company in the
Offering. As of December 31, 2005 and 2004, Cole Advisors had incurred organization and offering
costs of approximately $1,425,000 and $463,000, respectively, on behalf of the Company. Of these
amounts, the Company was responsible for approximately $421,000 and $0 at December 31, 2005 and
2004, respectively. The offering costs, which include items such as legal and accounting fees,
marketing, and promotional printing costs, are recorded as a reduction of capital in excess of par
value along with sales commissions and dealer manager fees of 7% and 1.5%, respectively.
Organization costs are expensed as incurred, of which approximately $2,000 was expensed during the
year ended December 31, 2005.
F-14
COLE CREDIT PROPERTY TRUST II, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Due to Affiliates
Due to affiliates consists of approximately $36,000 due to Cole Advisors for reimbursement of
legal fees and approximately $5,000 due to Cole Capital Corporation (Cole Capital), the Companys
affiliated dealer manager, for commissions and dealer manager fees payable on stock issuances.
Stockholders Equity
At December 31, 2005 and 2004, the Company was authorized to issue 90,000,000 shares of common
stock and 10,000,000 shares of preferred stock. All shares of such stock have a par value of $.01
per share. The Companys board of directors may authorize additional shares of capital stock and
amend their terms without obtaining stockholder approval.
The par value of investor proceeds raised from the Offering is classified as common stock,
with the remainder allocated to capital in excess of par value. The Companys share redemption
program provides that all redemptions during any calendar year, including those upon death or
qualifying disability, are limited to those that can be funded with proceeds raised from the
Companys distribution reinvestment plan. In accordance with Accounting Series Release No. 268,
Presentation in Financial Statements of Redeemable Preferred Stock, the Company will account for
the proceeds received from its distribution reinvestment plan outside of permanent equity for
future redemption of shares. No proceeds were received from the distribution reinvestment plan
during the year ended December 31, 2005.
Earnings Per Share
Earnings per share are calculated based on the weighted average number of common shares
outstanding during each period. The weighted average number of common shares outstanding is
identical for basic and fully diluted earnings per share. The effect of all the outstanding stock
options was anti-dilutive to earnings per share for the year ended December 31, 2005.
Stock Options
As permitted by Statement of Financial Accounting Standards (SFAS) No. 123, Accounting for
Stock-Based Compensation, and SFAS No. 148, Accounting for Stock-Based Compensation Transition and
Disclosure, the Company elected to follow Accounting Principles Board Opinion (APB) No. 25,
Accounting for Stock Issued to Employees, and related interpretations in accounting for its stock
options under the 2004 Independent Directors Stock Option Plan (IDSOP) (see Note 10). Under APB
No. 25, compensation expense is recorded when the exercise price of stock options is less than the
fair value of the underlying stock on the date of grant. The Company has implemented the
disclosure-only provisions of SFAS No. 123 and SFAS No. 148. As of December 31, 2005, there were
10,000 stock options outstanding under the IDSOP at an average exercise price of $9.15 per share.
If the Company elected to adopt the expense recognition provisions of SFAS No. 123, the impact on
net loss would have been an additional approximately $30,000 of general and administrative expenses
for the year ended December 31, 2005 or an additional loss of $0.07 per dilutive share.
Reportable Segments
The Financial Accounting Standards Board (FASB) issued SFAS No. 131, Disclosures about
Segments of an Enterprise and Related Information, which establishes standards for reporting
financial and descriptive information about an enterprises reportable segments. We have
determined that we have one reportable segment, with activities related to investing in real
estate. Our investments in real estate generate rental revenue and other income through the
leasing of single-tenant properties, which comprised 100% of our total consolidated revenues for
the year ended December 31, 2005. Although our investments in real estate are geographically
diversified throughout the United States, management evaluates operating performance on an
individual property level. However, as each of our single-tenant properties has similar economic
characteristics, tenants, and products and services, our single-tenant properties have been
aggregated into one reportable segment.
Interest
Interest is charged to interest expense as it accrues. No interest costs were capitalized
during the year ended December 31, 2005.
Distributions Payable and Distribution Policy
In order to maintain its status as a REIT, the Company is required to make distributions each
taxable year equal to at least 90% of its REIT taxable income excluding capital gains. To the
extent funds are available, the Company intends to pay regular quarterly distributions to
stockholders. Distributions are paid to those stockholders who are stockholders of record as of
applicable record dates.
F-15
COLE CREDIT PROPERTY TRUST II, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
On October 4, 2005, the Companys board of directors declared a distribution of $0.05 per
share for stockholders of record on each of October 7, 2005, November 7, 2005 and December 7, 2005.
The monthly distributions were calculated to be equivalent to an annualized distribution of six
percent (6%) per share, assuming a purchase price of $10.00 per share. As of December 31, 2005,
the Company had distributions payable of approximately $195,000. The distributions were paid in
January 2006, of which approximately $79,000 was reinvested in shares through our distribution
reinvestment program.
Recent Accounting Pronouncements
In December 2004, the FASB issued SFAS No. 123 (revised 2004), Share-Based Payment. SFAS
No. 123 (revised 2004) is a revision of FASB Statement No. 123, Accounting for Stock-Based
Compensation. This statement supersedes APB Opinion No. 25, Accounting for Stock Issued to
Employees, and its related implementation guidance.
SFAS No. 123 (revised 2004) requires a public entity to measure the cost of employee services
received in exchange for an award of equity instruments based on the grant date fair value of the
award. That cost will be recognized over the period during which an employee is required to
provide services in exchange for the award. We expect to adopt the provisions of SFAS 123 (revised
2004) using a modified prospective application. The modified prospective method requires companies
to recognize compensation cost for unvested awards that are outstanding on the effective date based
on the fair value that we had originally estimated for purposes of preparing its SFAS 123 pro forma
disclosures. For all new awards that are granted or modified after the effective date, a company
would use SFAS 123Rs measurement model. This statement is effective for us on January 1, 2006.
As of December 31, 2005, the amount of unrecognized compensation expense to be recognized in future
periods, in accordance with SFAS 123R, is approximately $30,000. Had SFAS No. 123R been
implemented in 2005, the Company would have experienced an approximately $30,000 reduction in net
income and a $0.07 per share decrease in both basic earnings per share and diluted earnings per
share.
In July 2005, the FASB issued Staff Position (FSP) Statement of Position (SOP) 78-9-1,
Interaction of American Institute of Certified Public Accountants (AICPA) SOP 78-9 and Emerging
Issues Task Force (EITF) Issue No. 04-5. The EITF reached a consensus on EITF Issue No. 04-5,
Determining Whether a General Partner or the General Partners as a Group, Controls a Limited
Partnership or Similar Entity When the Limited Partners Have Certain Rights stating that a general
partner is presumed to control a limited partnership and should consolidate the limited partnership
unless the limited partners possess substantive kick-out rights or the limited partners possess
substantive participating rights. This FSP eliminates the concept of important rights of SOP
78-9 and replaces it with the concepts of kick-out rights and substantive participating rights
as defined in Issue 04-5. This EITF and FSP are effective after June 29, 2005 for general partners
of all new partnerships formed and for existing partnerships for which the partnership agreements
are modified. For general partners in all other partnerships, this guidance is effective no later
than January 1, 2006. The Company believes the FSP does not have a material impact to the
consolidated financial statements.
In March 2005, the FASB issued Interpretation No. 47 Accounting for Conditional Asset
Retirement Obligations to clarify that the term conditional asset retirement obligation as used in
FASB Statement No. 143 is a legal obligation to perform an asset retirement activity in which the
timing and (or) method of settlement are conditional on a future event that the enterprise may or
may not have control over. This Interpretation requires recognition of a liability for the fair
value of a conditional asset retirement obligation when incurred if the liabilitys fair value can
be reasonably determined. This Interpretation is effective no later than the end of fiscal years
ending after December 15, 2005 (December 31, 2005, for calendar-year enterprises). The
Interpretation No. 47 did not have a material impact to the consolidated financial statements.
NOTE 3 REAL ESTATE ACQUISITIONS
During the year ended December 31, 2005, the Company acquired the following properties:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage of 2005 |
|
|
|
|
|
|
|
Square |
|
|
Purchase |
|
|
2005 Annualized |
|
|
Annualized |
|
Property |
|
Acquisition Date |
|
Location |
|
Feet |
|
|
Price |
|
|
Gross Base Rent |
|
|
Gross Base Rent |
|
Tractor Supply specialty retail |
|
September 26, 2005 |
|
Parkersburg, WV |
|
|
21,688 |
|
|
$ |
3,353,243 |
|
|
$ |
251,980 |
|
|
|
4 |
% |
Walgreens drugstore |
|
October 5, 2005 |
|
Brainerd, MN |
|
|
15,120 |
|
|
|
4,434,440 |
|
|
|
303,000 |
|
|
|
4 |
% |
Rite Aid drugstore |
|
October 20, 2005 |
|
Alliance, OH |
|
|
11,348 |
|
|
|
2,153,871 |
|
|
|
189,023 |
|
|
|
3 |
% |
La-Z-Boy furnishings store |
|
October 25, 2005 |
|
Glendale, AZ |
|
|
23,000 |
|
|
|
5,823,871 |
|
|
|
459,522 |
|
|
|
7 |
% |
Walgreens drugstore |
|
November 2, 2005 |
|
Florissant, MO |
|
|
15,120 |
|
|
|
5,280,483 |
|
|
|
344,000 |
|
|
|
5 |
% |
Walgreens drugstore |
|
November 2, 2005 |
|
Saint Louis, MO |
|
|
15,120 |
|
|
|
5,150,225 |
|
|
|
335,500 |
|
|
|
5 |
% |
Walgreens drugstore |
|
November 2, 2005 |
|
Saint Louis, MO |
|
|
15,120 |
|
|
|
6,261,239 |
|
|
|
408,000 |
|
|
|
6 |
% |
Walgreens drugstore |
|
November 22, 2005 |
|
Columbia, MO |
|
|
13,973 |
|
|
|
6,419,530 |
|
|
|
439,000 |
|
|
|
6 |
% |
Walgreens drugstore |
|
November 22, 2005 |
|
Olivette, MO |
|
|
15,030 |
|
|
|
7,997,138 |
|
|
|
528,000 |
|
|
|
8 |
% |
CVS drugstore |
|
December 1, 2005 |
|
Alpharetta, GA |
|
|
10,125 |
|
|
|
3,188,803 |
|
|
|
222,244 |
|
|
|
3 |
% |
Lowes home improvement |
|
December 1, 2005 |
|
Enterprise, AL |
|
|
95,173 |
|
|
|
7,632,658 |
|
|
|
500,000 |
|
|
|
7 |
% |
CVS drugstore |
|
December 8, 2005 |
|
Richland Hills, TX |
|
|
10,908 |
|
|
|
3,773,637 |
|
|
|
272,593 |
|
|
|
4 |
% |
FedEx Ground distribution center |
|
December 9, 2005 |
|
Rockford, IL |
|
|
67,925 |
|
|
|
6,279,083 |
|
|
|
445,632 |
|
|
|
7 |
% |
Plastech automotive supply |
|
December 15, 2005 |
|
Auburn Hills, MI |
|
|
111,881 |
|
|
|
24,093,417 |
|
|
|
2,138,878 |
|
|
|
31 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
|
|
|
|
441,531 |
|
|
$ |
91,841,638 |
|
|
$ |
6,837,372 |
|
|
|
100 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-16
COLE CREDIT PROPERTY TRUST II, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
In accordance with SFAS, No. 141, the Company allocated the purchase price of these
properties to the fair value of the assets acquired and the liabilities assumed, including the
allocation of the intangibles associated with the in-place leases considering the following
factors: lease origination costs, tenant relationships, and above or below market leases. See
Notes 4 and 6.
NOTE 4 INTANGIBLE LEASE ASSETS
Identified intangible assets relating to the real estate acquisitions discussed in Note 3
consisted of the following:
|
|
|
|
|
|
|
|
|
|
|
December 31, |
|
|
|
2005 |
|
|
2004 |
|
Acquired in place leases and tenant
relationships, net of accumulated
amortization of $69,939 and $0 at December
31, 2005 and 2004, respectively (with a
weighted average life of 172 and 0 months
for in-place leases and tenant
relationships, respectively) |
|
$ |
9,970,272 |
|
|
$ |
|
|
Acquired above market leases, net of
accumulated amortization of $1,942 and $0 at
December 31, 2005 and 2004, respectively
(with a weighted average life of 118 months) |
|
$ |
455,346 |
|
|
$ |
|
|
|
|
|
|
|
|
|
Total |
|
$ |
10,425,618 |
|
|
$ |
|
|
|
|
|
|
|
|
|
Amortization expense recorded on the identified intangible assets, for each of fiscal
years ended December 31, 2005 and 2004 was approximately $72,000 and $0, respectively.
Estimated amortization expense of the respective intangible lease assets as of December 31,
2005 for each of the five succeeding fiscal years is as follows:
|
|
|
|
|
|
|
|
|
|
|
Amount |
|
|
Leases |
|
Above |
Year |
|
In-Place |
|
Market Leases |
2006 |
|
$ |
716,504 |
|
|
$ |
46,610 |
|
2007 |
|
$ |
716,504 |
|
|
$ |
46,610 |
|
2008 |
|
$ |
716,504 |
|
|
$ |
46,610 |
|
2009 |
|
$ |
716,504 |
|
|
$ |
46,610 |
|
2010 |
|
$ |
716,504 |
|
|
$ |
46,610 |
|
NOTE 5 MORTGAGE NOTES PAYABLE
As of December 31, 2005, the Company had the following indebtedness outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed |
|
|
|
|
Variable |
|
|
|
|
|
|
|
|
|
|
Fixed Rate |
|
|
Interest |
|
|
|
|
Rate Loan |
|
|
|
|
Total Loan |
|
Property |
|
Location |
|
Loan Amount |
|
|
Rate |
|
|
Maturity Date |
|
Amount |
|
|
Maturity Date |
|
Outstanding |
|
Plastech mortgage note |
|
Auburn Hills, MI |
|
$ |
|
|
|
|
N/A |
|
|
N/A |
|
$ |
17,700,000 |
|
|
December 14, 2006 |
|
$ |
17,700,000 |
|
Lowes mortgage note |
|
Enterprise, AL |
|
|
4,859,000 |
|
|
|
5.52 |
% |
|
December 11, 2010 |
|
|
1,121,000 |
|
|
March 1, 2006 |
|
|
5,980,000 |
|
Walgreens mortgage note |
|
Olivette, MO |
|
|
5,379,146 |
|
|
|
5.15 |
% |
|
July 11, 2008 |
|
|
|
|
|
N/A |
|
|
5,379,146 |
|
Walgreens (Gravois Rd) mortgage note |
|
Saint Louis, MO |
|
|
3,999,000 |
|
|
|
5.48 |
% |
|
November 11, 2015 |
|
|
923,000 |
|
|
February 2, 2006 |
|
|
4,922,000 |
|
FedEx
Ground |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distribution Center mortgage note |
|
Rockford, IL |
|
|
3,998,000 |
|
|
|
5.61 |
% |
|
December 11, 2010 |
|
|
922,000 |
|
|
March 10, 2006 |
|
|
4,920,000 |
|
La-Z-Boy mortgage note |
|
Glendale, AZ |
|
|
3,415,000 |
|
|
|
5.76 |
% |
|
November 11, 2010 |
|
|
1,138,000 |
|
|
January 25, 2006 |
|
|
4,553,000 |
|
Walgreens mortgage note |
|
Columbia, MO |
|
|
4,487,895 |
|
|
|
5.15 |
% |
|
July 11, 2008 |
|
|
|
|
|
N/A |
|
|
4,487,895 |
|
Related Party Note |
|
N/A |
|
|
|
|
|
|
N/A |
|
|
N/A |
|
|
4,453,000 |
|
|
June 30, 2006 |
|
|
4,453,000 |
|
Walgreens mortgage note |
|
Florissant, MO |
|
|
3,372,000 |
|
|
|
5.48 |
% |
|
November 11, 2015 |
|
|
778,000 |
|
|
February 2, 2006 |
|
|
4,150,000 |
|
Walgreens (Telegraph Rd) mortgage note |
|
St. Louis, MO |
|
|
3,289,000 |
|
|
|
5.48 |
% |
|
November 11, 2015 |
|
|
759,000 |
|
|
February 2, 2006 |
|
|
4,048,000 |
|
Walgreens mortgage note |
|
Brainerd, MN |
|
|
2,814,000 |
|
|
|
5.44 |
% |
|
October 11, 2015 |
|
|
649,000 |
|
|
January 4, 2006 |
|
|
3,463,000 |
|
CVS mortgage note |
|
Richland Hills, TX |
|
|
2,379,000 |
|
|
|
5.52 |
% |
|
December 11,, 2010 |
|
|
549,000 |
|
|
March 8, 2006 |
|
|
2,928,000 |
|
CVS mortgage note |
|
Alpharetta, GA |
|
|
2,015,000 |
|
|
|
5.52 |
% |
|
December 11, 2010 |
|
|
465,000 |
|
|
March 1, 2006 |
|
|
2,480,000 |
|
Tractor Supply mortgage note |
|
Parkersburg, WV |
|
|
1,793,000 |
|
|
|
5.57 |
% |
|
October 11, 2015 |
|
|
|
|
|
N/A |
|
|
1,793,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total indebtedness |
|
|
|
$ |
41,800,041 |
|
|
|
|
|
|
|
|
$ |
29,457,000 |
|
|
|
|
$ |
71,257,041 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The fixed rate debt mortgage notes require monthly interest-only payments with the
principal balance due July 2008 through December 2015. The variable rate debt mortgage notes bear
interest at the one-month LIBOR rate plus 200 basis points and require monthly interest-only
payments. Each of the mortgage notes are secured by the respective property. The mortgage notes
are generally non-recourse to the Company and Cole Op II, but both are liable for customary
non-recourse carveouts.
The mortgage notes may not be prepaid, in whole or in part, except under the following
circumstances: (i) full prepayment may be made on any of the three (3) monthly payment dates
occurring immediately prior to the maturity date, and (ii) partial prepayments resulting from the
application of insurance or condemnation proceeds to reduce the outstanding principal balance of
the
F-17
COLE CREDIT PROPERTY TRUST II, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
mortgage notes. Notwithstanding the prepayment limitations, the Company may sell the
properties to a buyer that assumes the respective mortgage loan. The transfer would be subject to
the conditions set forth in the individual propertys mortgage note document, including without
limitation, the lenders approval of the proposed buyer and the payment of the lenders fees, costs
and expenses associated with the sale of the property and the assumption of the loan.
In the event that a mortgage note is not paid off on the respective maturity date, each
mortgage note includes hyperamortization provisions. The interest rate during the
hyperamortization period shall be the fixed interest rate as stated on the respective mortgage note
agreement plus two percent (2%). The individual mortgage note maturity date, under the
hyperamortization provisions, will be extended by twenty (20) years. During such period, the
lender will apply 100% of the rents collected to (i) all payments for escrow or reserve accounts,
(ii) payment of interest at the original fixed interest rate, (iii) payments for the replacement
reserve account, (iv) any other amounts due in accordance with the mortgage note agreement other
than any additional interest expense, (v) any operating expenses of the property pursuant to an
approved annual budget, (vi) any extraordinary expenses, (vii) payments to be applied to the
reduction of the principal balance of the mortgage note, and (viii) any additional interest
expense, which is not paid will be added to the principal balance of the mortgage note.
The Companys weighted average interest rate relating to the fixed rate debt mortgage at
December 31, 2005 was approximately 5.47%.
Related party notes
On December 15, 2005, Cole OP II borrowed $2,458,000 and $1,995,000 from Series C, LLC, which
is an affiliate of the Company and the Companys advisor, by executing two promissory notes which
are secured by the membership interests held by Cole OP II in Cole WG St. Louis MO, LLC and Cole RA
Alliance OH, LLC, respectively. Each of the loans has a variable interest rate based on the
one-month LIBOR rate plus 200 basis points with monthly interest-only payments, and the outstanding
principal and accrued and unpaid interest payable in full on June 30, 2006. Each of the loans is
generally non recourse to Cole OP II and may be prepaid at any time without penalty or premium.
The Companys board of directors, including a majority of its independent directors, approved
the loans and determined that the terms of the loans are no less favorable to the Company than
loans between unaffiliated third parties under the same circumstances.
The following table summarizes the scheduled aggregate principal repayments for the five
years subsequent to December 31, 2005:
|
|
|
|
|
For the Year Ending December 31: |
|
Principal Repayments |
|
2006 |
|
$ |
29,614,755 |
|
2007 |
|
|
166,193 |
|
2008 |
|
|
9,543,093 |
|
2009 |
|
|
|
|
2010 |
|
|
16,666,000 |
|
Thereafter |
|
|
15,267,000 |
|
|
|
|
|
Total |
|
$ |
71,257,041 |
|
|
|
|
|
The variable rate mortgages approximate fair market value. The fair value of our fixed rate
mortgage notes payable at December 31, 2005 approximates $41,400,000.
NOTE 6 INTANGIBLE LEASE LIABILITY
Identified intangible liability relating to the real estate acquisitions discussed in Note 3
consisted of the following:
|
|
|
|
|
|
|
|
|
|
|
December 31, |
|
|
|
2005 |
|
|
2004 |
|
Acquired belowmarket leases, net of accumulated
amortization of $52 and $0 at December 31, 2005
and 2004, respectively (with a weighted average
life of 141 months) |
|
$ |
14,637 |
|
|
$ |
|
|
|
|
|
|
|
|
|
F-18
COLE CREDIT PROPERTY TRUST II, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Amortization income recorded on the identified intangible liability, for each of fiscal years
ended December 31, 2005 and 2004 was $52 and $0, respectively.
Estimated amortization income of the respective intangible lease liability as of December 31,
2005 for each of the five succeeding fiscal years is as follows:
|
|
|
|
|
|
|
Amount Below |
Year |
|
Market Lease |
2006 |
|
$ |
1,253 |
|
2007 |
|
$ |
1,253 |
|
2008 |
|
$ |
1,253 |
|
2009 |
|
$ |
1,253 |
|
2010 |
|
$ |
1,253 |
|
NOTE 7 COMMITMENTS AND CONTINGENCIES
Litigation
In the ordinary course of business, the Company may become subject to litigation or claims.
There are no material pending legal proceedings known to be contemplated against us.
Environmental Matters
In connection with the ownership and operation of real estate, the Company may be potentially
liable for costs and damages related to environmental matters. The Company has not been notified
by any governmental authority of any non-compliance, liability or other claim, and the Company is
not aware of any other environmental condition that it believes will have a material adverse effect
on the consolidated results of operations.
NOTE 8 RELATED PARTY TRANSACTIONS AND ARRANGEMENTS
Certain affiliates of the Company will receive fees and compensation in connection with the
Offering, and the acquisition, management and sale of the assets of the Company. Cole Capital will
receive a selling commission of up to 7% of gross offering proceeds before reallowance of
commissions earned by participating broker-dealers. Cole Capital intends to reallow 100% of
commissions earned to participating broker-dealers. In addition, Cole Capital will receive up to
1.5% of gross proceeds, before reallowance to participating broker-dealers, as a dealer-manager
fee. Cole Capital, in its sole discretion, may reallow all or a portion of its dealer-manager fee
to such participating broker-dealers as a marketing and due diligence expense reimbursement, based
on such factors as the volume of shares sold by such participating broker-dealers and marketing
support incurred as compared to those of other participating broker-dealers. During the year ended
December 31, 2005, the Company paid approximately $2,376,000 to Cole Capital for commissions and
dealer manager fees, of which approximately $1,954,000 was reallowed to participating
broker-dealers.
All organization and offering expenses (excluding selling commissions and the dealer-manager
fee) are being paid for by Cole Advisors or its affiliates and will be reimbursed by the Company up
to 1.5% of gross offering proceeds. During the year ended December 31, 2005, the Company
reimbursed the Advisor approximately $421,000 for organizational and offering expenses, of which
approximately $2,000 was expensed as organization costs.
If Cole Advisors provides services, as determined by the independent directors, in connection
with the origination or refinancing of any debt financing obtained by the Company that is used to
acquire properties or to make other permitted investments, the Company will pay Cole Advisors a
financing coordination fee equal to 1% of the amount available under such financing; provided
however, that Cole Advisors shall not be entitled to a financing coordination fee in connection
with the refinancing of any loan secured by any particular property that was previously subject to
a refinancing in which Cole Advisors received such a fee. Financing coordination fees payable from
loan proceeds from permanent financing will be paid to Cole Advisors as the Company acquires such
permanent financing. However, no acquisition fees will be paid on loan proceeds from any line of
credit until such time as all net offering proceeds have been invested by the Company. All
organization and offering expenses (excluding selling commissions and the dealer-manager fee) are
being paid for by Cole Advisors or its affiliates and will be reimbursed by the Company up to 1.5%
of gross offering proceeds. During the year ended December 31, 2005, the Company paid Cole
Advisors approximately $320,000 for finance coordination fees.
F-19
COLE CREDIT PROPERTY TRUST II, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The Company pays Cole Realty, its affiliated property manager, fees for the management and
leasing of the Companys properties. Such fees are equal to 2% of gross revenues, plus leasing
commissions at prevailing market rates; provided however, that the aggregate of all property
management and leasing fees paid to affiliates plus all payments to third parties will not exceed
the amount that other nonaffiliated management and leasing companies generally charge for similar
services in the same geographic location. Cole Realty may subcontract its duties for a fee that
may be less than the fee provided for in the property management agreement. Cole Realty or its
affiliates also receive acquisition and advisory fees of up to 2% of the contract purchase price of
each asset for the acquisition, development or construction of real property and will be reimbursed
for acquisition costs incurred in the process of acquiring properties, but not to exceed 2%
of the contract purchase price. The Company expects the acquisition expenses to be approximately
0.5% of the purchase price of each property. During the year ended December 31, 2005, the Company
paid property management fees and acquisition fees to Cole Realty of approximately $14,000 and
approximately $1.7 million, respectively.
The Company pays Cole Advisors an annualized asset management fee of 0.25% of the
aggregate asset value of the Companys assets (the Asset Management Fee). The fee will be
payable monthly in an amount equal to 0.02083% of aggregate asset value as of the last day of the
immediately preceding month. During the year ended December 31, 2005, the Company paid asset
management fees to Cole Advisors of approximately $25,000.
If Cole Advisors or its affiliates provides a substantial amount of services, as determined by
the Companys independent directors, in connection with the sale of one or more properties, the
Company will pay Cole Advisors up to one-half of the brokerage commission paid, but in no event to
exceed an amount equal to 2% of the sales price of each property sold. In no event will the
combined real estate commission paid to Cole Advisors, its affiliates and unaffiliated third
parties exceed 6% of the contract sales price. In addition, after investors have received a return
of their net capital contributions and an 8% annual cumulative, non-compounded return, then Cole
Advisors is entitled to receive 10% of the remaining net sale proceeds. During the year ended
December 31, 2005, the Company did not pay any fees or amounts to Cole Advisors relating to the
sale of properties.
Upon listing of the Companys common stock on a national securities exchange or included for
quotation on The Nasdaq National Market, a fee equal to 10% of the amount by which the market value
of the Companys outstanding stock plus all distributions paid by the Company prior to listing,
exceeds the sum of the total amount of capital raised from investors and the amount of cash flow
necessary to generate an 8% annual cumulative, non-compounded return to investors will be paid to
Cole Advisors (the Subordinated Incentive Listing Fee).
Upon termination of the advisory agreement with Cole Advisors, other than termination by the
Company because of a material breach of the advisory agreement by Cole Advisors, a performance fee
of 10% of the amount, if any, by which (i) the appraised asset value at the time of such
termination plus total distributions paid to stockholders through the termination date exceeds (ii)
the aggregate capital contribution contributed by investors less distributions from sale proceeds
plus payment to investors of an 8% annual, cumulative, non-compounded return on capital. No
subordinated performance fee will be paid if the Company has already paid or become obligated to
pay Cole Advisors a Subordinated Incentive Listing Fee.
The Company will reimburse Cole Advisors for all expenses it paid or incurred in connection
with the services provided to the Company, subject to the limitation that the Company will not
reimburse for any amount by which its operating expenses (including the Asset Management Fee) at
the end of the four preceding fiscal quarters exceeds the greater of (i) 2% of average invested
assets, or (ii) 25% of net income other than any additions to reserves for depreciation, bad debts
or other similar non-cash reserves and excluding any gain from the sale of assets for that period.
The Company will not reimburse for personnel costs in connection with services for which Cole
Advisors receives acquisition fees or real estate commissions. During the year ended December 31,
2005, the Company did not reimburse Cole Advisors for any such costs.
On December 15, 2005, Cole OP II borrowed $2,458,000 and $1,995,000 from Series C, LLC, which
is an affiliate of the Company and the Companys advisor, by executing two promissory notes which
are secured by the membership interests held by Cole OP II in Cole WG St. Louis MO, LLC and Cole RA
Alliance OH, LLC, respectively. Each of the loans has a variable interest rate based on the
one-month LIBOR rate plus 200 basis points with monthly interest-only payments, and the outstanding
principal and any accrued and unpaid interest payable in full on June 30, 2006. Each of the
loans is generally non recourse to Cole OP II and may be prepaid at any time without penalty or
premium. The Companys board of directors, including a majority of its independent directors,
approved the loans and determined that the terms of the loans are no less favorable to the Company
than loans between unaffiliated third parties under the same circumstances.
NOTE 9 ECONOMIC DEPENDENCY
Under various agreements, the Company has engaged or will engage Cole Advisors and its
affiliates to provide certain services that are essential to the Company, including asset
management services, supervision of the management and leasing of properties owned by the Company,
asset acquisition and disposition decisions, the sale of shares of the Companys common stock
available for issue, as well as other administrative responsibilities for the Company including
accounting services and investor
F-20
COLE CREDIT PROPERTY TRUST II, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
relations. As a result of these relationships, the Company is dependent upon Cole Advisors
and its affiliates. In the event that these companies were unable to provide the Company with the
respective services, the Company would be required to find alternative providers of these services.
NOTE 10 INDEPENDENT DIRECTORS STOCK OPTION PLAN
The Company has a stock option plan, IDSOP, which authorizes the grant of non-qualified stock
options to the Companys independent directors, subject to the absolute discretion of the board and
the applicable limitations of the plan. The Company intends to grant options under the IDSOP to
each qualifying director annually. The exercise price for the options granted under the IDSOP
initially will be $9.15 per share (or greater, if such higher price as is necessary so that such
options shall not be considered a nonqualified deferred compensation plan under Section 409A of
the Internal Revenue Code of 1986, as amended). It is intended that the exercise price for future
options granted under the IDSOP will be at least 100% of the fair market value of the Companys
common stock as of the date that the option is granted. A total of 1,000,000 shares have been
authorized and reserved for issuance under the IDSOP.
No grants were made under the Independent Director Plan in 2004. A summary of the Companys
stock option activity under its Independent Director Plan during the year ended December 31, 2005
is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercise |
|
|
|
|
Number |
|
Price |
|
Exercisable |
Outstanding at December 31, 2004 |
|
|
|
|
|
|
|
|
|
|
|
|
Granted in 2005 |
|
|
10,000 |
|
|
$ |
9.15 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at December 31, 2005 |
|
|
10,000 |
|
|
$ |
9.15 |
|
|
|
10,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In accordance with Statement 123, the fair value of each stock option granted in 2005 has been
estimated as of the date of the grant using the Black-Scholes minimum value method. The weighted
average risk-free interest rate assumed for 2005 was 4.19%, and the projected future dividend yield
was estimated to be 6% for the options granted in 2005. The expected life of an option was assumed
to be 10 years for the year ended December 31, 2005. Based on these assumptions, the fair value of
the options granted during the year ended December 31, 2005 is approximately $60,000. The weighted
average contractual remaining life for options that were exercisable at December 31, 2005 was
approximately nine years.
NOTE 11 STOCKHOLDERS EQUITY
Distribution Reinvestment Plan
The Company maintains a distribution reinvestment plan that allows common stockholders (the
Stockholders) to elect to have the distributions the Stockholders receive reinvested in
additional shares of the Companys common stock. The purchase price per share under the
distribution reinvestment plan will be the higher of 95% of the fair market value per share as
determined by the Companys board of directors and $9.50 per share. No sales commissions or dealer
manager fees will be paid on shares sold under the distribution reinvestment plan. The Company may
terminate the distribution reinvestment plan at the Companys discretion at any time upon ten days
prior written notice to the Stockholders. Additionally, the Company will be required to
discontinue sales of shares under the distribution reinvestment plan on the earlier of June 27,
2007, which is two years from the effective date of the Offering, unless the Offering is extended,
or the date the Company sells 5,000,000 shares under the Offering, unless the Company files a new
registration statement with the Securities and Exchange Commission and applicable states. No
shares were purchased under the distribution reinvestment plan during the year ended December 31,
2005.
Share Redemption Program
The Companys share redemption program permits the Stockholders to sell their shares back to
the Company after they have held them for at least one year, subject to the significant conditions
and limitations described below.
There are several restrictions on the Stockholders ability to sell their shares to the
Company under the program. The Stockholders generally have to hold their shares for one year
before selling the shares to the Company under the plan; however, the Company may waive the
one-year holding period in the event of the death or bankruptcy of a Stockholder. In addition, the
Company will limit the number of shares redeemed pursuant to the Companys share redemption program
as follows: (1) during any calendar year, the Company will not redeem in excess of 3% of the
weighted average number of shares outstanding during the prior calendar year; and (2) funding for
the redemption of shares will be limited to the amount of net proceeds the Company receives from
the sale of shares under the Companys distribution reinvestment plan. These limits may prevent
the Company from accommodating all requests
F-21
COLE CREDIT PROPERTY TRUST II, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
made in any year. During the term of the Offering, and subject to certain provisions the
redemption price per share will depend on the length of time the Stockholder has held such shares
as follows: after one year from the purchase date 92.5% of the amount the Stockholder paid for
each share; after two years from the purchase date 95% of the amount the Stockholder paid for
each share; after three years from the purchase date 97.5% of the amount the Stockholder paid for
each share; and after four years from the purchase date 100% of the amount the Stockholder paid
for each share.
Upon receipt of a request for redemption, the Company will conduct a Uniform Commercial Code
search to ensure that no liens are held against the shares. The Company will charge an
administrative fee to the Stockholder for the search and other costs, which will be deducted from
the proceeds of the redemption or, if a lien exists, will be charged to the Stockholder.
Repurchases will be made quarterly. If funds are not available to redeem all requested redemptions
at the end of each quarter, the shares will be purchased on a pro rata basis and the unfulfilled
requests will be held until the next quarter, unless withdrawn. The Companys board of directors
may amend, suspend or terminate the share redemption program at any time upon 30 days prior written
notice to the Stockholders. No shares were redeemed under the share redemption program during the
year ended December 31, 2005.
NOTE 12 INCOME TAXES
For income tax purposes, dividends to common stockholders are characterized as ordinary
income, capital gains, or as a return of a stockholders invested capital. As the Company incurred
a loss for income tax purposes during the year ended December 31, 2005, none of the distributions
declared was taxable to the stockholders as ordinary income. Additionally, as the distributions
were paid during 2006, the character of such distributions will be determined based on future
taxable earnings and distributions which may be declared. During the period ended December 31,
2004, the Company was a development stage company and had no operations and made no distributions.
At December 31, 2005, the tax basis carrying value of the Companys total assets were
approximately $98.8 million.
NOTE 13 OPERATING LEASES
All of the Companys real estate assets are leased to tenants under operating leases for which
the terms and expirations vary. The leases frequently have provisions to extend the lease
agreement and other terms and conditions as negotiated. The Company retains substantially all of
the risks and benefits of ownership of the real estate assets leased to tenants.
The future minimum rental income from the Companys investment in real estate assets under
non-cancelable operating leases, at December 31, 2005 is as follows:
|
|
|
|
|
Year ending December 31: |
|
Amount |
|
2006 |
|
$ |
6,918,514 |
|
2007 |
|
|
6,937,978 |
|
2008 |
|
|
6,937,978 |
|
2009 |
|
|
6,937,978 |
|
2010 |
|
|
6,937,978 |
|
Thereafter |
|
|
66,182,219 |
|
|
|
|
|
Total |
|
$ |
100,852,645 |
|
|
|
|
|
NOTE 14 QUARTERLY RESULTS (unaudited)
Presented below is a summary of the unaudited quarterly financial information for the year
ended December 31, 2005. The Company believes that all necessary adjustments, consisting only of
normal recurring adjustments, have been included in the amounts stated below to present fairly, and
in accordance with GAAP, the selected quarterly information.
|
|
|
|
|
|
|
|
|
|
|
2005(1) |
|
|
Third |
|
Fourth |
Revenues(2) |
|
$ |
2,761 |
|
|
$ |
738,908 |
|
Net loss |
|
|
(29,543 |
) |
|
|
(85,048 |
) |
Basic and diluted net loss per share(2) |
|
|
(0.46 |
) |
|
|
(0.05 |
) |
Dividends per share |
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
No quarterly financial information is presented for 2004 and the first two quarters of 2005
as the Company was a development stage company during those quarters and had no operations. |
F-22
COLE CREDIT PROPERTY TRUST II, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
|
|
|
(2) |
|
The total of the two quarterly amounts for the year ended December 31, 2005, does not equal
the total for the year then ended. This difference results from the increase in shares
outstanding over the year. |
NOTE 15 SUBSEQUENT EVENTS
Sale of Shares of Common Stock
As of March 22, 2006, the Company had raised approximately $56.2 million in offering proceeds
through the issuance of approximately 5.6 million shares of the Companys common stock. As of
March 22, 2006 approximately $393.8 million (representing approximately 39.4 million shares)
remained available for sale to the public under the Offering, exclusive of shares available under
the Companys distribution reinvestment plan.
Property Acquisition and Borrowings
During the period from January 1, 2006 through March 22, 2006, the Company has acquired 11
commercial real estate buildings in separate transactions for an aggregate acquisition cost of
approximately $62.6 million and issued mortgage notes payable totaling approximately $45.1 million
to finance the transactions (see details on borrowings below). These acquisitions are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Square |
|
|
Purchase |
|
Property |
|
Location |
|
Acquisition Date |
|
Feet |
|
|
Price (1) |
|
Academy Sports |
|
Macon, GA |
|
January 6, 2006 |
|
|
74,532 |
|
|
$ |
5,600,000 |
|
Davids Bridal |
|
Lenexa, KS |
|
January 11, 2006 |
|
|
12,083 |
|
|
|
3,270,000 |
|
Rite Aid |
|
Enterprise, AL |
|
January 26, 2006 |
|
|
14,564 |
|
|
|
3,714,000 |
|
Rite Aid |
|
Wauseon, OH |
|
January 26, 2006 |
|
|
14,564 |
|
|
|
3,893,679 |
|
Staples |
|
Crossville, TN |
|
January 26, 2006 |
|
|
23,942 |
|
|
|
2,900,000 |
|
Rite Aid |
|
Saco, ME |
|
January 27, 2006 |
|
|
11,180 |
|
|
|
2,500,000 |
|
Wadsworth Blvd |
|
Denver, CO |
|
February 6, 2006 |
|
|
198,477 |
|
|
|
18,500,000 |
|
Mountainside Fitness |
|
Chandler, AZ |
|
February 9, 2006 |
|
|
31,063 |
|
|
|
5,863,000 |
|
Drexel Heritage |
|
Hickory, NC |
|
February 24, 2006 |
|
|
261,057 |
|
|
|
4,250,000 |
|
Rayford Square |
|
Spring, TX |
|
March 2, 2006 |
|
|
79,968 |
|
|
|
9,900,000 |
|
CVS |
|
Portsmouth, OH |
|
March 8, 2006 |
|
|
10,170 |
|
|
|
2,166,000 |
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
|
|
|
|
731,855 |
|
|
$ |
62,556,679 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Purchase price excludes related closing and acquisition costs. |
The following mortgage notes require monthly interest-only payments and relate to the
aforementioned acquisitions:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed |
|
|
|
|
Variable |
|
|
|
|
|
|
|
|
|
|
Fixed Rate |
|
|
Interest |
|
|
|
|
Rate Loan |
|
|
|
|
Total Loan |
|
Property |
|
Location |
|
Loan Amount |
|
|
Rate |
|
|
Maturity Date |
|
Amount (1) |
|
|
Maturity Date |
|
Outstanding |
|
Academy Sports |
|
Macon, GA |
|
$ |
3,478,000 |
|
|
|
5.69 |
% |
|
January 11, 2016 |
|
$ |
802,000 |
|
|
April 6, 2006 |
|
$ |
4,280,000 |
|
Davids Bridal |
|
Lenexa, KS |
|
|
1,799,000 |
|
|
|
5.86 |
% |
|
January 11, 2011 |
|
|
817,000 |
|
|
April 11, 2006 |
|
|
2,616,000 |
|
Rite Aid |
|
Enterprise, AL |
|
|
2,043,000 |
|
|
|
5.80 |
% |
|
February 11, 2016 |
|
|
928,000 |
|
|
April 26, 2006 |
|
|
2,971,000 |
|
Rite Aid |
|
Wauseon, OH |
|
|
2,142,000 |
|
|
|
5.80 |
% |
|
February 11, 2016 |
|
|
973,000 |
|
|
April 26, 2006 |
|
|
3,115,000 |
|
Staples |
|
Crossville, TN |
|
|
1,885,000 |
|
|
|
5.71 |
% |
|
February 11, 2011 |
|
|
435,000 |
|
|
April 26, 2006 |
|
|
2,320,000 |
|
Rite Aid |
|
Saco, ME |
|
|
1,375,000 |
|
|
|
5.82 |
% |
|
February 11, 2011 |
|
|
625,000 |
|
|
April 27, 2006 |
|
|
2,000,000 |
|
Wadsworth Blvd |
|
Denver, CO |
|
|
12,025,000 |
|
|
|
5.57 |
% |
|
March 1, 2011 |
|
|
2,275,000 |
|
|
December 31, 2006 |
|
|
12,025,000 |
|
Mountainside Fitness |
|
Chandler, AZ |
|
|
|
|
|
|
|
|
|
N/A |
|
|
4,690,400 |
|
|
December 31, 2006 |
|
|
4,690,400 |
|
Drexel Heritage |
|
Hickory, NC |
|
|
2,763,000 |
|
|
|
5.80 |
% |
|
March 11, 2011 |
|
|
637,000 |
|
|
May 24, 2006 |
|
|
3,400,000 |
|
Rayford Square |
|
Spring, TX |
|
|
5,940,000 |
|
|
|
5.64 |
% |
|
April 1, 2006 |
|
|
|
|
|
N/A |
|
|
5,940,000 |
|
CVS |
|
Portsmouth, OH |
|
|
1,424,000 |
|
|
|
5.67 |
% |
|
March 11, 2011 |
|
|
329,000 |
|
|
June 8, 2006 |
|
|
1,753,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
|
$ |
34,874,000 |
|
|
|
|
|
|
|
|
$ |
12,511,400 |
|
|
|
|
$ |
47,385,400 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
The variable rate debt mortgage notes bear interest at the one-month LIBOR rate plus 200
basis points with interest paid monthly. |
Declaration of Distributions
On January 3, 2006, the Companys board of directors authorized a distribution of $0.05 per
share for stockholders of record on each of January 7, 2006 and February 7, 2006 and a distribution
of $0.0521 per share for stockholders of record on March 7, 2006. The payment date for each of the
distributions will be in April 2006, but not later than April 6, 2006. The January and February
F-23
COLE CREDIT PROPERTY TRUST II, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
monthly distributions are calculated to be equivalent to an annualized distribution of six
percent (6%) per share, assuming a purchase price of $10.00 per share. The March distribution is
calculated to be equivalent to an annualized distribution of six and one-quarter percent (6.25%)
per share, assuming a purchase price of $10.00 per share.
F-24
COLE
CREDIT PROPERTY TRUST II, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
September 30, |
|
|
December 31, |
|
|
|
2006 |
|
|
2005 |
|
Assets: |
|
|
|
|
|
|
|
|
Real estate assets, at cost: |
|
|
|
|
|
|
|
|
Land |
|
$ |
82,839,737 |
|
|
$ |
23,854,308 |
|
Buildings and improvements, less accumulated
depreciation of $2,803,332 and $151,472, at
September 30, 2006 and December 31, 2005,
respectively |
|
|
201,752,737 |
|
|
|
57,338,359 |
|
Acquired intangible lease assets, less
accumulated amortization of $1,377,600 and
$71,881 at September 30, 2006 and December 31,
2005, respectively |
|
|
38,060,639 |
|
|
|
10,425,618 |
|
|
|
|
|
|
|
|
Total real estate assets |
|
|
322,653,113 |
|
|
|
91,618,285 |
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
|
9,214,421 |
|
|
|
4,575,144 |
|
Restricted cash |
|
|
6,208,342 |
|
|
|
1,813,804 |
|
Rents and tenant receivables |
|
|
1,125,088 |
|
|
|
36,001 |
|
Prepaid expenses and other assets |
|
|
1,847,092 |
|
|
|
11,928 |
|
Deferred financing costs, less accumulated
amortization of $361,029 and $17,964 at
September 30, 2006 and December 31, 2005,
respectively |
|
|
2,897,108 |
|
|
|
754,676 |
|
|
|
|
|
|
|
|
Total assets |
|
$ |
343,945,164 |
|
|
$ |
98,809,838 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders Equity: |
|
|
|
|
|
|
|
|
Mortgage notes payable |
|
$ |
167,242,838 |
|
|
$ |
66,804,041 |
|
Notes payable to affiliates |
|
|
|
|
|
|
4,453,000 |
|
Accounts payable and accrued expenses |
|
|
1,261,762 |
|
|
|
282,797 |
|
Escrowed investor proceeds |
|
|
6,208,342 |
|
|
|
1,813,804 |
|
Due to affiliates |
|
|
70,635 |
|
|
|
41,384 |
|
Acquired below market lease intangibles, less
accumulated amortization of $46,357 and $52 at
September 30, 2006 and December 31, 2005,
respectively |
|
|
1,954,993 |
|
|
|
14,637 |
|
Distributions payable |
|
|
940,028 |
|
|
|
195,209 |
|
|
|
|
|
|
|
|
Total liabilities |
|
|
177,678,598 |
|
|
|
73,604,872 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Redeemable Common Stock |
|
|
1,811,467 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders Equity: |
|
|
|
|
|
|
|
|
Preferred stock, $0.01 par value; 10,000,000
shares authorized, none issued and outstanding
at September 30, 2006 and December 31, 2005 |
|
|
|
|
|
|
|
|
Common stock, $.01 par value; 90,000,000
shares authorized, 18,963,568 and 2,832,387
shares issued and outstanding at September 30,
2006 and December 31, 2005, respectively |
|
|
189,636 |
|
|
|
28,324 |
|
Capital in excess of par value |
|
|
168,837,498 |
|
|
|
25,486,442 |
|
Accumulated distributions in excess of earnings |
|
|
(4,572,035 |
) |
|
|
(309,800 |
) |
|
|
|
|
|
|
|
Total stockholders equity |
|
|
164,455,099 |
|
|
|
25,204,966 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders equity |
|
$ |
343,945,164 |
|
|
$ |
98,809,838 |
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these condensed consolidated financial statements
(unaudited).
F-25
COLE CREDIT PROPERTY TRUST II, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months |
|
|
Three Months |
|
|
Nine Months |
|
|
Nine Months |
|
|
|
Ended |
|
|
Ended |
|
|
Ended |
|
|
Ended |
|
|
|
September 30, 2006 |
|
|
September 30, 2005 |
|
|
September 30, 2006 |
|
|
September 30, 2005 |
|
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rental and other income |
|
$ |
5,064,125 |
|
|
$ |
2,761 |
|
|
$ |
11,056,698 |
|
|
$ |
2,761 |
|
Tenant reimbursement income |
|
|
328,616 |
|
|
|
|
|
|
|
623,322 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenue |
|
|
5,392,741 |
|
|
|
2,761 |
|
|
|
11,680,020 |
|
|
|
2,761 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative |
|
|
265,079 |
|
|
|
26,936 |
|
|
|
805,935 |
|
|
|
26,936 |
|
Property operating expenses |
|
|
334,553 |
|
|
|
|
|
|
|
628,977 |
|
|
|
|
|
Property and asset management fees |
|
|
261,812 |
|
|
|
|
|
|
|
563,180 |
|
|
|
|
|
Depreciation |
|
|
1,206,287 |
|
|
|
2,467 |
|
|
|
2,651,860 |
|
|
|
2,467 |
|
Amortization |
|
|
576,695 |
|
|
|
1,037 |
|
|
|
1,239,242 |
|
|
|
1,037 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses |
|
|
2,644,426 |
|
|
|
30,440 |
|
|
|
5,889,194 |
|
|
|
30,440 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate operating income (loss) |
|
|
2,748,315 |
|
|
|
(27,679 |
) |
|
|
5,790,826 |
|
|
|
(27,679 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income |
|
|
93,409 |
|
|
|
|
|
|
|
181,173 |
|
|
|
|
|
Interest expense |
|
|
(2,292,782 |
) |
|
|
(1,864 |
) |
|
|
(5,787,492 |
) |
|
|
(1,864 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total other expense |
|
|
(2,199,373 |
) |
|
|
(1,864 |
) |
|
|
(5,606,319 |
) |
|
|
(1,864 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) |
|
$ |
548,942 |
|
|
$ |
(29,543 |
) |
|
$ |
184,507 |
|
|
$ |
(29,543 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per common share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted |
|
$ |
0.04 |
|
|
$ |
(0.46 |
) |
|
$ |
0.02 |
|
|
$ |
(0.85 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of common
shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted |
|
|
15,006,417 |
|
|
|
64,467 |
|
|
|
9,424,396 |
|
|
|
34,822 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these condensed consolidated financial
statements (unaudited).
F-26
COLE
CREDIT PROPERTY TRUST II, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated |
|
|
|
|
|
|
Common Stock |
|
|
Capital in |
|
|
Distributions |
|
|
Total |
|
|
|
Number |
|
|
Par |
|
|
Excess of |
|
|
in Excess |
|
|
Stockholders |
|
|
|
of Shares |
|
|
Value |
|
|
Par Value |
|
|
of Earnings |
|
|
Equity |
|
Balance, December 31, 2005 |
|
|
2,832,387 |
|
|
$ |
28,324 |
|
|
$ |
25,486,442 |
|
|
$ |
(309,800 |
) |
|
$ |
25,204,966 |
|
Issuance of common stock |
|
|
16,131,181 |
|
|
|
161,312 |
|
|
|
160,979,476 |
|
|
|
|
|
|
|
161,140,788 |
|
Distributions |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(4,446,742 |
) |
|
|
(4,446,742 |
) |
Commissions on stock sales
and related dealer manager
fees |
|
|
|
|
|
|
|
|
|
|
(13,474,006 |
) |
|
|
|
|
|
|
(13,474,006 |
) |
Other offering costs |
|
|
|
|
|
|
|
|
|
|
(2,382,995 |
) |
|
|
|
|
|
|
(2,382,995 |
) |
Stock compensation expense |
|
|
|
|
|
|
|
|
|
|
40,048 |
|
|
|
|
|
|
|
40,048 |
|
Redeemable common stock |
|
|
|
|
|
|
|
|
|
|
(1,811,467 |
) |
|
|
|
|
|
|
(1,811,467 |
) |
Net income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
184,507 |
|
|
|
184,507 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, September 30, 2006 |
|
|
18,963,568 |
|
|
$ |
189,636 |
|
|
$ |
168,837,498 |
|
|
$ |
(4,572,035 |
) |
|
$ |
164,455,099 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these condensed consolidated financial
statements (unaudited).
F-27
COLE
CREDIT PROPERTY TRUST II, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
Nine Months |
|
|
Nine Months |
|
|
|
Ended |
|
|
Ended |
|
|
|
September 30, 2006 |
|
|
September 30, 2005 |
|
Cash Flows from Operating Activities: |
|
|
|
|
|
|
|
|
Net income (loss) |
|
$ |
184,507 |
|
|
$ |
(29,543 |
) |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: |
|
|
|
|
|
|
|
|
Depreciation |
|
|
2,651,860 |
|
|
|
2,467 |
|
Amortization |
|
|
1,602,479 |
|
|
|
1,264 |
|
Stock compensation expense |
|
|
40,048 |
|
|
|
|
|
Changes in assets and liabilities: |
|
|
|
|
|
|
|
|
Rents and tenant receivables |
|
|
(1,089,087 |
) |
|
|
|
|
Prepaid expenses and other assets |
|
|
(340,164 |
) |
|
|
(7,584 |
) |
Accounts payable and accrued expenses |
|
|
978,965 |
|
|
|
14,678 |
|
Due to affiliates |
|
|
29,251 |
|
|
|
13,268 |
|
|
|
|
|
|
|
|
Net cash provided (used) by operating activities |
|
|
4,057,859 |
|
|
|
(5,450 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows from Investing Activities: |
|
|
|
|
|
|
|
|
Investment in real estate and related assets |
|
|
(175,918,360 |
) |
|
|
(3,352,405 |
) |
Acquired intangible lease assets |
|
|
(23,813,260 |
) |
|
|
|
|
Acquired below market lease intangibles |
|
|
1,986,661 |
|
|
|
|
|
Escrow deposit on property to be acquired |
|
|
|
|
|
|
(50,000 |
) |
Restricted cash |
|
|
(4,394,538 |
) |
|
|
(1,363,506 |
) |
|
|
|
|
|
|
|
Net cash used in investing activities |
|
|
(202,139,497 |
) |
|
|
(4,765,911 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows from Financing Activities: |
|
|
|
|
|
|
|
|
Proceeds from issuance of common stock |
|
|
159,329,321 |
|
|
|
5,988,426 |
|
Proceeds from mortgage and affiliate notes payable |
|
|
113,149,860 |
|
|
|
2,607,000 |
|
Repayment of mortgage and affiliate notes payable |
|
|
(52,424,850 |
) |
|
|
|
|
Refund of loan deposits |
|
|
1,210,620 |
|
|
|
|
|
Payment of loan deposits |
|
|
(2,705,620 |
) |
|
|
|
|
Escrowed investor proceeds liability |
|
|
4,394,538 |
|
|
|
1,363,506 |
|
Offering costs on issuance of common stock |
|
|
(15,857,001 |
) |
|
|
(568,670 |
) |
Distributions to investors |
|
|
(1,890,456 |
) |
|
|
|
|
Deferred financing costs paid |
|
|
(2,485,497 |
) |
|
|
(46,429 |
) |
|
|
|
|
|
|
|
Net cash provided by financing activities |
|
|
202,720,915 |
|
|
|
9,343,833 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase in cash and cash equivalents |
|
|
4,639,277 |
|
|
|
4,572,472 |
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents, beginning of period |
|
|
4,575,144 |
|
|
|
200,000 |
|
|
|
|
|
|
|
|
Cash and cash equivalents, end of period |
|
$ |
9,214,421 |
|
|
$ |
4,772,472 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental Disclosures of Non-Cash Investing and Financing Activities: |
|
|
|
|
|
|
|
|
Dividends declared and unpaid |
|
$ |
940,028 |
|
|
$ |
|
|
|
|
|
|
|
|
|
Mortgage notes assumed in real estate acquisitions |
|
$ |
35,260,787 |
|
|
$ |
|
|
|
|
|
|
|
|
|
Common stock issued through distribution reinvestment plan |
|
$ |
1,811,467 |
|
|
$ |
|
|
|
|
|
|
|
|
|
Escrow deposits due to affiliate |
|
$ |
|
|
|
$ |
50,000 |
|
|
|
|
|
|
|
|
Other offering costs due to affiliate |
|
$ |
|
|
|
$ |
17,170 |
|
|
|
|
|
|
|
|
Supplemental Cash Flow Disclosures: |
|
|
|
|
|
|
|
|
Interest paid |
|
$ |
5,192,625 |
|
|
$ |
1,864 |
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these condensed consolidated financial
statements (unaudited).
F-28
COLE
CREDIT PROPERTY TRUST II, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2006
(Unaudited)
Note 1 Organization
Cole Credit Property Trust II, Inc. (the Company) was formed on September 29, 2004 and is a
Maryland corporation that has elected to be taxed as a real estate investment trust (REIT)
beginning with the taxable year ended December 31, 2005. Substantially all of the Companys
business is conducted through Cole Operating Partnership II, LP (Cole OP II), a Delaware limited
partnership. The Company is the sole general partner of and owns a 99.99% partnership interest in
Cole OP II. Cole REIT Advisors II, LLC (the Advisor), the affiliated advisor to the Company, is
the sole limited partner and owner of 0.01% of the partnership interests of Cole OP II.
Pursuant to a Registration Statement on Form S-11 under the Securities Act of 1933, as amended
(the Registration Statement), the Company is offering for sale to the public on a best efforts
basis a minimum of 250,000 and a maximum of 45,000,000 shares of its common stock at a price of $10
per share (the Offering), subject to discounts in certain circumstances, and up to 5,000,000
additional shares pursuant to a distribution reinvestment plan under which its stockholders may
elect to have distributions reinvested in additional shares of the Companys common stock at the
higher of $9.50 per share or 95% of the estimated value of a share of the Companys common stock.
The Registration Statement was declared effective on June 27, 2005.
On September 23, 2005, the Company issued the initial 486,000 shares of its common stock under
the Offering and commenced its principal operations. Prior to such date, the Company was considered
a development stage company. As of September 30, 2006, the Company had issued approximately 19
million shares of its common stock in the Offering for aggregate gross proceeds of approximately
$189.3 million before offering costs and selling commissions of approximately $18.7 million. As
disclosed in the Registration Statement, the Company expects to use substantially all of the net
proceeds from the Offering to acquire and operate commercial real estate primarily consisting of
freestanding, single-tenant commercial properties net-leased to investment grade or otherwise
creditworthy tenants located throughout the United States.
On November 6, 2006, the Company filed a registration statement with the Securities and
Exchange Commission with respect to a proposed secondary public offering of up to 150,000,000
shares of its common stock. The offering would include up to 125,000,000 shares to be offered for
sale at $10.00 per share in the primary offering and up to 25,000,000 shares to be offered for sale
at the greater of $9.50 per share or 95% of the estimated value of a share of common stock pursuant
to the Companys distribution reinvestment plan (the DRIP).
On November 13, 2006, the Company filed a new registration statement with the Securities and
Exchange Commission filed under Rule 462(b) to add securities to a prior related effective
registration statement filed on Form S-11. This Registration Statement covers the registration of
an additional 4,390,000 shares of the Companys common stock, par value $0.01 per share, for sale
in the primary offering under the current Registration Statement at $10.00 per share. This
Registration Statement also covers the registration of an additional 952,000 shares of the
Registrants common stock, par value $0.01 per share, for sale pursuant to the Companys DRIP under
the current Registration Statement at a purchase price equal to the higher of $9.50 per share or
95% of the estimated value of a share of the Companys common stock.
The Companys stock is not currently listed on a national exchange. The Company may seek to
list its stock for trading on a national securities exchange or for quotation on The Nasdaq
National Market only if a majority of its independent directors believe listing would be in the
best interest of its stockholders. The Company does not intend to list its shares at this time.
The Company does not anticipate that there would be any market for its common stock until its
shares are listed or quoted. In the event it does not obtain listing prior to the tenth
anniversary of the completion or termination of the Offering, its charter requires that it either:
(1) seek stockholder approval of an extension or amendment of this listing deadline, or (2) seek
stockholder approval to adopt a plan of liquidation of the corporation.
Note 2 Summary of Significant Accounting Policies
Basis of Presentation
The condensed consolidated financial statements of the Company have been prepared in
accordance with the rules and regulations of the Securities and Exchange Commission, including the
instructions to Form 10-Q and Article 10 of Regulation S-X, and do not include all of the
information and footnotes required by accounting principles generally accepted in the United States
of America for complete financial statements. In the opinion of management, the statements for the
unaudited interim periods presented include all adjustments, which are of a normal and recurring
nature, necessary to present a fair presentation of the results for such
F-29
periods. Results for these interim periods are not necessarily indicative of full year
results. The information included in this Form 10-Q should be read in conjunction with the
Companys audited consolidated financial statements as of December 31, 2005, and related notes
thereto.
Principles of Consolidation
The consolidated financial statements include the accounts of the Company and its wholly-owned
subsidiaries. All significant intercompany accounts and transactions have been eliminated in
consolidation.
Restricted Cash and Escrowed Investor Proceeds
The Company is currently engaged in a public offering of its common stock. Included in
restricted cash and escrowed investor proceeds is approximately $6.2 million of offering proceeds
for which shares of common stock had not been issued as of September 30, 2006.
Redeemable Common Stock
The Companys share redemption program provides that all redemptions during any calendar year,
including those upon death or qualifying disability, are limited to those that can be funded with
proceeds from the Companys DRIP. In accordance with Accounting Series Release No. 268,
Presentation in Financial Statements of Redeemable Preferred Stock, the Company accounts for
proceeds received from its DRIP as redeemable common stock, outside of permanent equity. As of
September 30, 2006 and December 31, 2005, the Company had issued approximately 191,000 and 0 shares
of common stock under the DRIP, respectively, for proceeds of approximately $1.8 million and $0
under its DRIP, respectively, which have been recorded as redeemable common stock in the respective
condensed consolidated balance sheets. As of September 30, 2006 and December 31, 2005, no shares
had been redeemed under the Companys share redemption program.
Reportable Segments
The Financial Accounting Standards Board (FASB) issued SFAS No. 131, Disclosures about
Segments of an Enterprise and Related Information, which establishes standards for reporting
financial and descriptive information about an enterprises reportable segments. The Company has
determined that it has one reportable segment, with activities related to investing in real estate.
The Companys investments in real estate generate rental revenue and other income through the
leasing of single-tenant properties, which comprised approximately 94% and 95% of our total
consolidated revenues for the three and nine months ended September 30, 2006, respectively.
Although the Companys investments in real estate are geographically diversified throughout the
United States and management evaluates operating performance on an individual property level, each
of its single-tenant properties have similar economic characteristics, tenants, and products and
services. Therefore, our single-tenant properties have been aggregated into one reportable
segment.
Note 3 Real Estate Acquisitions
During the nine months ended September 30, 2006, the Company acquired the following
properties:
|
|
|
|
|
|
|
|
|
|
|
|
|
Property |
|
Acquisition Date |
|
Location |
|
Square Feet |
|
|
Purchase Price |
|
Academy Sports specialty retailer |
|
January 6, 2006 |
|
Macon, GA |
|
|
74,532 |
|
|
$ |
5,600,000 |
|
Davids Bridal specialty retailer |
|
January 11, 2006 |
|
Lenexa, KS |
|
|
12,083 |
|
|
|
3,270,000 |
|
Rite Aid drugstore |
|
January 26, 2006 |
|
Enterprise, AL |
|
|
14,564 |
|
|
|
3,714,000 |
|
Rite Aid drugstore |
|
January 26, 2006 |
|
Wauseon, OH |
|
|
14,564 |
|
|
|
3,893,679 |
|
Staples office supply |
|
January 26, 2006 |
|
Crossville, TN |
|
|
23,942 |
|
|
|
2,900,000 |
|
Rite Aid drugstore |
|
January 27, 2006 |
|
Saco, ME |
|
|
11,180 |
|
|
|
2,500,000 |
|
Wadsworth Boulevard marketplace |
|
February 6, 2006 |
|
Denver, CO |
|
|
198,477 |
|
|
|
18,500,000 |
|
Mountainside Fitness center |
|
February 9, 2006 |
|
Chandler, AZ |
|
|
31,063 |
|
|
|
5,863,000 |
|
Drexel Heritage furniture retailer |
|
February 24, 2006 |
|
Hickory, NC |
|
|
261,057 |
|
|
|
4,250,000 |
|
Rayford Square retail center |
|
March 2, 2006 |
|
Spring, TX |
|
|
79,968 |
|
|
|
9,900,000 |
|
CVS drugstore |
|
March 8, 2006 |
|
Portsmouth, OH |
|
|
10,170 |
|
|
|
2,166,000 |
|
Wawa convenience store |
|
March 29, 2006 |
|
Hockessin, DE |
|
|
5,160 |
|
|
|
4,830,000 |
|
Wawa convenience store |
|
March 29, 2006 |
|
Manahawkin, NJ |
|
|
4,695 |
|
|
|
4,414,000 |
|
Wawa convenience store |
|
March 29, 2006 |
|
Narbeth, PA |
|
|
4,461 |
|
|
|
4,206,000 |
|
CVS drugstore |
|
April 20, 2006 |
|
Lakewood, OH |
|
|
12,800 |
|
|
|
2,450,000 |
|
F-30
|
|
|
|
|
|
|
|
|
|
|
|
|
Property |
|
Acquisition Date |
|
Location |
|
Square Feet |
|
|
Purchase Price |
|
Rite Aid drugstore |
|
April 27, 2006 |
|
Cleveland, OH |
|
|
11,325 |
|
|
|
2,568,700 |
|
Rite Aid drugstore |
|
April 27, 2006 |
|
Fremont, OH |
|
|
11,325 |
|
|
|
2,524,500 |
|
Walgreens drugstore |
|
May 8, 2006 |
|
Knoxville, TN |
|
|
15,120 |
|
|
|
4,750,000 |
|
CVS drugstore |
|
May 26, 2006 |
|
Madison, MS |
|
|
13,824 |
|
|
|
4,463,088 |
|
Rite Aid drugstore |
|
May 26, 2006 |
|
Defiance, OH |
|
|
14,564 |
|
|
|
4,326,165 |
|
Conns appliance retailer |
|
May 26, 2006 |
|
San Antonio, TX |
|
|
25,230 |
|
|
|
4,624,619 |
|
Dollar General specialty retailer |
|
June 2, 2006 |
|
Crossville, TN |
|
|
24,341 |
|
|
|
3,000,000 |
|
Dollar General specialty retailer |
|
June 9, 2006 |
|
Ardmore, TN |
|
|
24,341 |
|
|
|
2,775,000 |
|
Dollar General specialty retailer |
|
June 12, 2006 |
|
Livingston, TN |
|
|
24,341 |
|
|
|
2,856,000 |
|
Wehrenberg movie theatre |
|
June 14, 2006 |
|
Arnold, MO |
|
|
50,000 |
|
|
|
8,200,000 |
|
Sportmans Warehouse specialty retailer |
|
June 27, 2006 |
|
Wichita, KS |
|
|
50,003 |
|
|
|
8,231,000 |
|
CVS drugstore |
|
June 28, 2006 |
|
Portsmouth, OH |
|
|
10,650 |
|
|
|
2,101,708 |
|
Advance Auto specialty retailer |
|
June 29, 2006 |
|
Greenfield, IN |
|
|
7,000 |
|
|
|
1,375,500 |
|
Advance Auto specialty retailer |
|
June 29, 2006 |
|
Trenton, OH |
|
|
7,000 |
|
|
|
1,060,000 |
|
Rite Aid drugstore |
|
June 29, 2006 |
|
Lansing, MI |
|
|
11,680 |
|
|
|
1,735,000 |
|
Advance Auto specialty retailer |
|
July 6, 2006 |
|
Columbia Heights, MN |
|
|
7,000 |
|
|
|
1,730,578 |
|
Advance Auto specialty retailer |
|
July 6, 2006 |
|
Fergus Falls, MN |
|
|
7,000 |
|
|
|
1,203,171 |
|
CVS drugstore |
|
July 7, 2006 |
|
Okeechobee, FL |
|
|
13,050 |
|
|
|
6,459,262 |
|
Office Depot office supply |
|
July 7, 2006 |
|
Dayton, OH |
|
|
19,880 |
|
|
|
3,416,526 |
|
Advance Auto specialty retailer |
|
July 12, 2006 |
|
Holland, MI |
|
|
7,000 |
|
|
|
2,071,843 |
|
Advance Auto specialty retailer |
|
July 12, 2006 |
|
Holland Township, MI |
|
|
7,000 |
|
|
|
2,137,244 |
|
Advance Auto specialty retailer |
|
July 12, 2006 |
|
Zeeland, MI |
|
|
7,000 |
|
|
|
1,840,715 |
|
CVS drugstore |
|
July 12, 2006 |
|
Orlando, FL |
|
|
13,013 |
|
|
|
4,956,763 |
|
Office Depot office supply |
|
July 12, 2006 |
|
Greenville, MS |
|
|
25,083 |
|
|
|
3,491,470 |
|
Office Depot office supply |
|
July 19, 2006 |
|
Warrensburg, MO |
|
|
20,000 |
|
|
|
2,880,552 |
|
CVS drugstore |
|
August 10, 2006 |
|
Gulfport, MS |
|
|
11,359 |
|
|
|
4,414,117 |
|
Advance Auto specialty retailer |
|
August 15, 2006 |
|
Grand Forks, ND |
|
|
7,000 |
|
|
|
1,399,657 |
|
CVS drugstore |
|
August 24, 2006 |
|
Clinton, NY |
|
|
10,055 |
|
|
|
3,050,000 |
|
Oxford movie theatre |
|
August 31, 2006 |
|
Oxford, MS |
|
|
35,000 |
|
|
|
9,692,503 |
|
Advance Auto specialty retailer |
|
September 8, 2006 |
|
Duluth, MN |
|
|
7,000 |
|
|
|
1,432,565 |
|
Walgreens drugstore |
|
September 15, 2006 |
|
Picayune, MS |
|
|
14,820 |
|
|
|
4,255,000 |
|
Kohls department store |
|
September 27, 2006 |
|
Wichita, KS |
|
|
86,584 |
|
|
|
7,866,000 |
|
Lowes home improvement |
|
September 27, 2006 |
|
Lubbock, TX |
|
|
137,480 |
|
|
|
11,508,000 |
|
Lowes home improvement |
|
September 27, 2006 |
|
Midland, TX |
|
|
134,050 |
|
|
|
11,099,000 |
|
Advance Auto specialty retailer |
|
September 29, 2006 |
|
Grand Bay, AL |
|
|
7,000 |
|
|
|
1,115,605 |
|
Advance Auto specialty retailer |
|
September 29, 2006 |
|
Hurley, MS |
|
|
7,000 |
|
|
|
1,083,195 |
|
Advance Auto specialty retailer |
|
September 29, 2006 |
|
Rainsville, AL |
|
|
7,000 |
|
|
|
1,328,000 |
|
Golds Gym |
|
September 29, 2006 |
|
OFallon, IL |
|
|
38,000 |
|
|
|
7,300,000 |
|
Total |
|
|
|
|
|
|
1,687,834 |
|
|
$ |
228,779,725 |
|
|
|
|
|
|
|
|
|
|
|
|
In accordance with SFAS, No. 141, Business Combinations, the Company allocated the
purchase price of these properties, including aggregate acquisition costs of approximately
$4,226,000 to the fair value of the assets acquired and liabilities assumed. The Company allocated
approximately $58,985,000 to land, approximately $147,067,000 to building and improvements,
approximately $28,941,000 to acquired in-place leases, approximately ($1,987,000) to acquired
below-market leases and approximately $35,260,000 related to debt assumed related to properties
acquired during the nine months ended September 30, 2006.
Note 4 Notes Payable
As of September 30, 2006, the Company had total mortgage notes payable of approximately $167.2
million. During the nine months ended September 30, 2006, the Company incurred, or assumed, the
following mortgage notes payable in connection with the real estate acquisitions described in Note
3 above:
F-31
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed Rate |
|
|
Interest |
|
|
|
|
Variable Rate |
|
|
|
|
|
|
|
|
Total Loan at |
|
Property |
|
Location |
|
Loan Amount |
|
|
Rate |
|
|
Maturity Date |
|
Loan Amount (1) |
|
|
|
|
Maturity Date |
|
|
Acquisition |
|
Academy Sports specialty retailer |
|
Macon, GA |
|
$ |
3,478,000 |
|
|
|
5.69 |
% |
|
January 11, 2016 |
|
$ |
802,000 |
|
|
(2) |
|
April 6, 2006 |
|
$ |
4,280,000 |
|
Davids Bridal specialty retailer |
|
Lenexa, KS |
|
|
1,799,000 |
|
|
|
5.86 |
% |
|
January 11, 2011 |
|
|
817,000 |
|
|
(2) |
|
April 11, 2006 |
|
|
2,616,000 |
|
Rite Aid drugstore |
|
Enterprise, AL |
|
|
2,043,000 |
|
|
|
5.80 |
% |
|
February 11, 2016 |
|
|
928,000 |
|
|
(2) |
|
April 26, 2006 |
|
|
2,971,000 |
|
Rite Aid drugstore |
|
Wauseon, OH |
|
|
2,142,000 |
|
|
|
5.80 |
% |
|
February 11, 2016 |
|
|
973,000 |
|
|
(2) |
|
April 26, 2006 |
|
|
3,115,000 |
|
Staples office supply |
|
Crossville, TN |
|
|
1,885,000 |
|
|
|
5.71 |
% |
|
February 11, 2011 |
|
|
435,000 |
|
|
(2) |
|
April 26, 2006 |
|
|
2,320,000 |
|
Rite Aid drugstore |
|
Saco, ME |
|
|
1,375,000 |
|
|
|
5.82 |
% |
|
February 11, 2011 |
|
|
625,000 |
|
|
(2) |
|
April 27, 2006 |
|
|
2,000,000 |
|
Wadsworth Boulevard marketplace |
|
Denver, CO |
|
|
12,025,000 |
|
|
|
5.57 |
% |
|
March 1, 2011 |
|
|
2,275,000 |
|
|
(2) |
|
December 31, 2006 |
|
|
14,300,000 |
|
Mountainside Fitness center |
|
Chandler, AZ |
|
|
|
|
|
|
N/A |
|
|
N/A |
|
|
4,690,400 |
|
|
(2) |
|
December 31, 2006 |
|
|
4,690,400 |
|
Drexel Heritage furniture
retailer |
|
Hickory, NC |
|
|
2,763,000 |
|
|
|
5.80 |
% |
|
March 11, 2011 |
|
|
637,000 |
|
|
(2) |
|
May 24, 2006 |
|
|
3,400,000 |
|
Rayford Square retail center |
|
Spring, TX |
|
|
5,940,000 |
|
|
|
5.64 |
% |
|
April 1, 2016 |
|
|
|
|
|
|
|
N/A |
|
|
|
5,940,000 |
|
CVS drugstore |
|
Portsmouth, OH |
|
|
1,424,000 |
|
|
|
5.67 |
% |
|
March 11, 2011 |
|
|
329,000 |
|
|
(2) |
|
June 8, 2006 |
|
|
1,753,000 |
|
Wawa convenience stores |
|
Various |
|
|
|
|
|
|
N/A |
|
|
N/A |
|
|
7,234,787 |
|
|
(3) |
|
February 26, 2010 |
|
|
7,234,787 |
|
CVS drugstore |
|
Lakewood, OH |
|
|
1,348,000 |
|
|
|
5.77 |
% |
|
May 11, 2011 |
|
|
612,000 |
|
|
(2) |
|
July 20, 2006 |
|
|
1,960,000 |
|
Rite Aid drugstore |
|
Cleveland, OH |
|
|
1,413,000 |
|
|
|
6.05 |
% |
|
May 11, 2011 |
|
|
642,000 |
|
|
(2) |
|
July 27, 2006 |
|
|
2,055,000 |
|
Rite Aid drugstore |
|
Fremont, OH |
|
|
1,388,000 |
|
|
|
6.05 |
% |
|
May 11, 2011 |
|
|
632,000 |
|
|
(2) |
|
July 27, 2006 |
|
|
2,020,000 |
|
Walgreens drugstore |
|
Knoxville, TN |
|
|
3,088,000 |
|
|
|
5.80 |
% |
|
May 11, 2011 |
|
|
712,000 |
|
|
(2) |
|
August 8, 2006 |
|
|
3,800,000 |
|
CVS drugstore |
|
Madison, MS |
|
|
2,809,000 |
|
|
|
5.60 |
% |
|
February 11, 2016 |
|
|
|
|
|
|
|
N/A |
|
|
|
2,809,000 |
|
Rite Aid drugstore |
|
Defiance, OH |
|
|
2,321,000 |
|
|
|
5.76 |
% |
|
January 11, 2016 |
|
|
|
|
|
|
|
N/A |
|
|
|
2,321,000 |
|
Conns appliance retailer |
|
San Antonio, TX |
|
|
2,461,000 |
|
|
|
5.86 |
% |
|
May 11, 2011 |
|
|
1,119,000 |
|
|
(2) |
|
July 25, 2006 |
|
|
3,580,000 |
|
Dollar General specialty retailer |
|
Crossville, TN |
|
|
1,950,000 |
|
|
|
5.75 |
% |
|
June 11, 2016 |
|
|
450,000 |
|
|
(2) |
|
September 2, 2006 |
|
|
2,400,000 |
|
Dollar General specialty retailer |
|
Ardmore, TN |
|
|
1,804,000 |
|
|
|
5.79 |
% |
|
June 11, 2016 |
|
|
416,000 |
|
|
|
|
October 10, 2006 |
|
|
2,220,000 |
|
Dollar General specialty retailer |
|
Livingston, TN |
|
|
1,856,000 |
|
|
|
5.79 |
% |
|
July 11, 2016 |
|
|
429,000 |
|
|
|
|
October 12, 2006 |
|
|
2,285,000 |
|
Sportmans Warehouse
specialty retailer |
|
Wichita, KS |
|
|
|
|
|
|
N/A |
|
|
N/A |
|
|
6,173,250 |
|
|
(4) (2) |
|
December 27, 2006 |
|
|
6,173,250 |
|
Rite Aid drugstore |
|
Lansing, MI |
|
|
1,041,000 |
|
|
|
5.90 |
% |
|
July 1, 2016 |
|
|
|
|
|
|
|
N/A |
|
|
|
1,041,000 |
|
Advance Auto specialty retailer |
|
Columbia Heights, MN |
|
|
1,038,000 |
|
|
|
5.83 |
% |
|
July 11, 2016 |
|
|
346,000 |
|
|
|
|
October 6, 2006 |
|
|
1,384,000 |
|
Advance Auto specialty retailer |
|
Fergus Falls, MN |
|
|
722,000 |
|
|
|
5.83 |
% |
|
July 11, 2016 |
|
|
241,000 |
|
|
|
|
October 6, 2006 |
|
|
963,000 |
|
CVS drugstore |
|
Okeechobee, FL |
|
|
4,076,000 |
|
|
|
5.60 |
% |
|
February 11, 2016 |
|
|
|
|
|
|
|
N/A |
|
|
|
4,076,000 |
|
Office Depot office supply |
|
Dayton, OH |
|
|
2,130,000 |
|
|
|
5.73 |
% |
|
February 11, 2016 |
|
|
|
|
|
|
|
N/A |
|
|
|
2,130,000 |
|
Advance Auto specialty retailer |
|
Holland, MI |
|
|
1,193,000 |
|
|
|
5.83 |
% |
|
April 11, 2016 |
|
|
|
|
|
|
|
N/A |
|
|
|
1,193,000 |
|
Advance Auto specialty retailer |
|
Holland Township, MI |
|
|
1,231,000 |
|
|
|
5.83 |
% |
|
April 11, 2016 |
|
|
|
|
|
|
|
N/A |
|
|
|
1,231,000 |
|
Advance Auto specialty retailer |
|
Zeeland, MI |
|
|
1,057,000 |
|
|
|
5.83 |
% |
|
April 11, 2016 |
|
|
|
|
|
|
|
N/A |
|
|
|
1,057,000 |
|
CVS drugstore |
|
Orlando, FL |
|
|
3,016,000 |
|
|
|
5.68 |
% |
|
April 11, 2016 |
|
|
|
|
|
|
|
N/A |
|
|
|
3,016,000 |
|
Office Depot office supply |
|
Greenville, MS |
|
|
2,192,000 |
|
|
|
5.76 |
% |
|
March 11, 2011 |
|
|
|
|
|
|
|
N/A |
|
|
|
2,192,000 |
|
Office Depot office supply |
|
Warrensburg, MO |
|
|
1,810,000 |
|
|
|
5.85 |
% |
|
April 11, 2011 |
|
|
|
|
|
|
|
N/A |
|
|
|
1,810,000 |
|
CVS drugstore |
|
Gulfport, MS |
|
|
2,611,000 |
|
|
|
5.28 |
% |
|
April 11, 2016 |
|
|
|
|
|
|
|
N/A |
|
|
|
2,611,000 |
|
Advance Auto specialty retailer |
|
Grand Forks, ND |
|
|
840,000 |
|
|
|
5.87 |
% |
|
September 11, 2016 |
|
|
280,000 |
|
|
|
|
November 15, 2006 |
|
|
1,120,000 |
|
CVS drugstore |
|
Clinton, NY |
|
|
1,983,000 |
|
|
|
5.74 |
% |
|
September 11, 2016 |
|
|
457,000 |
|
|
|
|
December 24, 2006 |
|
|
2,440,000 |
|
Oxford movie theatre |
|
Oxford, MS |
|
|
5,175,000 |
|
|
|
6.11 |
% |
|
September 1, 2016 |
|
|
|
|
|
|
|
N/A |
|
|
|
5,175,000 |
|
Advance Auto specialty retailer |
|
Duluth, MN |
|
|
860,000 |
|
|
|
5.87 |
% |
|
October 11, 2016 |
|
|
286,000 |
|
|
|
|
December 22, 2006 |
|
|
1,146,000 |
|
Walgreens drugstore |
|
Picayune, MS |
|
|
2,766,000 |
|
|
|
5.53 |
% |
|
October 11, 2016 |
|
|
638,000 |
|
|
|
|
January 15, 2007 |
|
|
3,404,000 |
|
Kohls department store |
|
Wichita, KS |
|
|
5,200,000 |
|
|
|
6.11 |
% |
|
September 1, 2016 |
|
|
|
|
|
|
|
N/A |
|
|
|
5,200,000 |
|
Lowes home improvement |
|
Lubbock, TX |
|
|
7,150,000 |
|
|
|
6.11 |
% |
|
September 1, 2016 |
|
|
|
|
|
|
|
N/A |
|
|
|
7,150,000 |
|
Lowes home improvement |
|
Midland, TX |
|
|
7,475,000 |
|
|
|
6.11 |
% |
|
September 1, 2016 |
|
|
|
|
|
|
|
N/A |
|
|
|
7,475,000 |
|
Golds Gym |
|
OFallon, IL |
|
|
3,650,000 |
|
|
|
5.83 |
% |
|
October 11, 2016 |
|
|
2,190,000 |
|
|
|
|
December 27, 2006 |
|
|
5,840,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total indebtedness |
|
|
|
$ |
112,528,000 |
|
|
|
|
|
|
|
|
$ |
35,369,437 |
|
|
|
|
|
|
|
|
$ |
147,897,437 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
The variable rate mortgage notes bear interest at the one-month LIBOR rate plus 200 basis points with interest only paid monthly. |
|
(2) |
|
The respective variable rate loan amounts were repaid prior to September 30, 2006. |
|
(3) |
|
The respective variable rate loan was refinanced on June 9, 2006 to a $7,748,000 term mortgage loan with a fixed interest rate
of 6.56% maturing on June 11, 2016. |
|
(4) |
|
The loan is a revolving credit facility secured by the respective property. |
F-32
Note 5 Extended Rate Lock Agreement
On July 14, 2006, the Company entered into an Extended Rate Lock Agreement with Bear Stearns
Commercial Mortgage, Inc. (Bear Stearns) (Rate Lock No. 1) to lock an interest rate of 6.262%
for up to $24.0 million in borrowings. On August 17, 2006, the Company entered into an additional
Extended Rate Lock Agreement (Rate Lock No. 2) with Bear Stearns to lock an interest rate of
5.909% for an additional $12.5 million in borrowings. On September 22, 2006, the Company entered
into an additional Extended Rate Lock Agreement (Rate Lock No. 3) with Bear Stearns to lock an
interest rate of 5.589% for an additional $50.0 million in borrowings.
Under the terms of Rate Locks No.1, No. 2 and No. 3, the Company made rate lock deposits of
approximately $1.2 million, approximately $480,000 and approximately $1.0 million to Bear Stearns,
respectively. As of September 30, 2006, the Company had available borrowings of $0, approximately
$11.5 million and $50.0 million under Rate Locks No. 1, No. 2 and No. 3, respectively. The
Company has approximately $1.5 million in rate lock deposits outstanding at September 30, 2006,
which have been recorded in Prepaid Expenses and Other Assets on the Companys balance sheet.
The deposits are refundable to the Company in amounts generally equal to 2% of any loans funded
under the agreements. The rate locks expire 60 days from execution. Rate Locks No. 2 and No. 3
may be extended by 30 days for a rate lock fee of 0.25% of the loan amount or, at the borrowers
election, by converting the fee into interest rate spread.
Note 6 Commitments and Contingencies
Litigation
In the ordinary course of business, the Company may become subject to litigation or claims.
There are no material legal proceedings pending or known to be contemplated against us.
Environmental Matters
In connection with the ownership and operation of real estate, the Company may potentially be
liable for costs and damages related to environmental matters. The Company has not been notified by
any governmental authority of any non-compliance, liability or other claim, and the Company is not
aware of any other environmental condition that it believes will have a material adverse effect on
the consolidated results of operations.
Note 7 Related-Party Transactions and Arrangements
Certain affiliates of the Company receive, and will continue to receive fees and compensation
in connection with the Offering, and the acquisition, management and sale of the assets of the
Company. Cole Capital Corporation (Cole Capital), the affiliated dealer-manager, receives, and
will continue to receive a selling commission of up to 7% of gross offering proceeds before
reallowance of commissions earned by participating broker-dealers. Cole Capital reallows, and
intends to continue to reallow 100% of commissions earned to participating broker-dealers. In
addition, Cole Capital will receive up to 1.5% of the gross proceeds from the Offering, before
reallowance to participating broker-dealers, as a dealer-manager fee. Cole Capital, in its sole
discretion, may reallow all or a portion of its dealer-manager fee to such participating
broker-dealers as a marketing and due diligence expense reimbursement, based on such factors as the
volume of shares sold by such participating broker-dealers and marketing support incurred as
compared to those of other participating broker-dealers. No selling commissions or dealer-manager
fees are paid to Cole Capital in respect of shares sold under the DRIP. During the three months
and nine months ended September 30, 2006, the Company paid approximately $6.3 million and $13.5
million, respectively, to Cole Capital for commissions and dealer manager fees, of which
approximately $5.3 million and $11.3 million, respectively, was reallowed to participating
broker-dealers. During the three and nine months ended September 30, 2005, the Company paid
approximately $497,000 to Cole Capital for commissions and dealer manager fees, of which
approximately $413,000 was reallowed to participating broker-dealers.
All organization and offering expenses (excluding selling commissions and the dealer-manager
fee) are paid for by the Advisor or its affiliates and are reimbursed by the Company up to 1.5% of
gross offering proceeds. The Advisor or its affiliates also receive acquisition and advisory fees
of up to 2% of the contract purchase price of each asset for the acquisition, development or
construction of real property and will be reimbursed for acquisition costs incurred in the process
of acquiring properties, but not to exceed 2.0% of the contract purchase price. The Company expects
the acquisition expenses to be approximately 0.5% of the purchase price of each property. During
the nine months ended September 30, 2006 and 2005, the Company reimbursed the Advisor approximately
$2.4 million and approximately $90,000, respectively, for organizational and offering expenses. At
September 30, 2006, approximately $394,000 of such costs had been incurred by the Advisor but had
not been reimbursed by the Company. During the three months and nine months ended September 30,
2006, the Company paid the Advisor approximately $1.3 million and approximately $3.4 million for
acquisition fees, respectively. During the three and nine months ended September 30, 2005, the
Company paid the Advisor approximately $65,000 for acquisition fees.
F-33
If the Advisor provides substantial services, as determined by the Companys independent
directors, in connection with the origination or refinancing of any debt financing obtained by the
Company that is used to acquire properties or to make other permitted investments, or that is
assumed, directly or indirectly, in connection with the acquisition of properties, the Company will
pay the Advisor a financing coordination fee equal to 1% of the amount available under such
financing; provided, however, that the Advisor shall not be entitled to a financing coordination
fee in connection with the refinancing of any loan secured by any particular property that was
previously subject to a refinancing in which the Advisor received such a fee. Financing
coordination fees payable from loan proceeds from permanent financing will be paid to the Advisor
as the Company acquires such permanent financing. However, no acquisition fees will be paid on loan
proceeds from any line of credit until such time as all net offering proceeds have been invested by
the Company. During the three months and nine months ended September 30, 2006, the Company paid the
Advisor approximately $562,000 and approximately $1.3 million, respectively, for finance
coordination fees, respectively. During the three and nine months ended September 30, 2005, the
Company paid the Advisor approximately $18,000 for finance coordination fees.
The Company pays, and expects to continue to pay, Cole Realty Advisors, Inc., f/k/a Fund
Realty Advisors, Inc., its affiliated property manager, fees for the management and leasing of the
Companys properties. Such fees currently equal, and are expected to continue to equal 2% of gross
revenues, plus leasing commissions at prevailing market rates; provided however, that the aggregate
of all property management and leasing fees paid to affiliates plus all payments to third parties
will not exceed the amount that other nonaffiliated management and leasing companies generally
charge for similar services in the same geographic location. Cole Realty may subcontract its duties
for a fee that may be less than the fee provided for in the property management agreement. During
the three months and nine months ended September 30, 2006, the Company paid Cole Realty
approximately $97,000 and approximately $210,000 for property management fees, respectively.
During the three and nine months ended September 30, 2005, the Company did not pay any property
management fees to Cole Realty.
The Company pays the Advisor an annualized asset management fee of 0.25% of the aggregate
asset value of the Companys assets. The fee is payable monthly in an amount equal to 0.02083% of
aggregate asset value as of the last day of the immediately preceding month. During the three
months and nine months ended September 30, 2006, the Company paid the Advisor approximately
$164,000 and approximately $353,000 for asset management fees, respectively. During the three and
nine months ended September 30, 2005, the Company did not pay any asset management fees to the
Advisor.
If the Advisor or its affiliates provides a substantial amount of services, as determined by
the Companys independent directors, in connection with the sale of one or more properties, the
Company pays the Advisor up to one-half of the brokerage commission paid, but in no event to exceed
an amount equal to 2% of the sales price of each property sold. In no event will the combined real
estate commission paid to the Advisor, its affiliates and unaffiliated third parties exceed 6% of
the contract sales price. In addition, after investors have received a return of their net capital
contributions and an 8% annual cumulative, non-compounded return, then the Advisor is entitled to
receive 10% of remaining net sale proceeds. During the nine months ended September 30, 2006 and
2005, the Company did not pay any fees or amounts to the Advisor relating to the sale of
properties.
In the event the Companys common stock is listed in the future on a national securities
exchange or included for quotation on The Nasdaq National Market, a fee equal to 10% of the amount
by which the market value of the Companys outstanding stock plus all distributions paid by the
Company prior to listing, exceeds the sum of the total amount of capital raised from investors and
the amount of cash flow necessary to generate an 8% annual cumulative, non-compounded return to
investors will be paid to the Advisor (the Subordinated Incentive Listing Fee).
In the event that the advisory agreement with the Advisor is terminated, other than termination by
the Company because of a material breach of the advisory agreement by the Advisor, a performance
fee of 10% of the amount, if any, by which (i) the appraised asset value of the Company at the time
of such termination plus total distributions paid to stockholders through the termination date
exceeds (ii) the aggregate capital contribution contributed by investors less distributions from
sale proceeds plus payment to investors of an 8% annual, cumulative, non-compounded return on
capital. No subordinated performance fee will be paid if the Company has already paid or become
obligated to pay the Advisor a Subordinated Incentive Listing Fee.
The Company may reimburse the Advisor for all expenses it paid or incurred in connection with the
services provided to the Company, subject to the limitation that the Company does not reimburse for
any amount by which its operating expenses (including the Asset Management Fee) at the end of the
four preceding fiscal quarters exceeds the greater of (i) 2% of average invested assets, or (ii)
25% of net income other than any additions to reserves for depreciation, bad debts or other similar
non-cash reserves and excluding any gain from the sale of assets for that period. The Company will
not reimburse for personnel costs in connection with services for which the Advisor receives
acquisition fees or real estate commissions. During the nine months ended September 30, 2006 and
2005, the Company did not reimburse the Advisor for any such costs.
On February 6, 2006, Cole OP II borrowed $2,275,000 from Series C, LLC (Series C), an
affiliate of the Company and the Companys advisor, by executing a promissory note which was
secured by the membership interest held by Cole OP II in a wholly-owned subsidiary. The loan
proceeds were used to acquire a property with a purchase price of approximately $18.5 million,
exclusive of closing costs. The loan had a variable interest rate based on the one-month LIBOR rate
plus 200 basis points with monthly interest-
F-34
only payments, and the outstanding principal and accrued and unpaid interest was payable in
full on December 31, 2006. The loan was generally non recourse to Cole OP II and could be prepaid
at any time without penalty or premium. The Companys board of directors, including all of the
independent directors, approved the loan and determined that its terms were no less favorable to
the Company than loans between unaffiliated third parties under the same circumstances. Cole OP II
repaid the note in full on April 26, 2006.
On February 10, 2006, Cole OP II borrowed $4,690,400 from Series B, LLC (Series B), an
affiliate of the Company and the Companys advisor, by executing a promissory note which was
secured by the membership interest held by Cole OP II in a wholly-owned subsidiary. The loan
proceeds were used to acquire a property with a purchase price of approximately $5.9 million,
exclusive of closing costs. The loan had a variable interest rate based on the one-month LIBOR rate
plus 200 basis points with monthly interest-only payments, and the outstanding principal and
accrued and unpaid interest was payable in full on December 31, 2006. The loan was generally
non-recourse to Cole OP II and could be prepaid at any time without penalty or premium. The
Companys board of directors, including all of the independent directors, approved the loan and
determined that its terms were no less favorable to the Company than loans between unaffiliated
third parties under the same circumstances. Cole OP II repaid the note in full in May 2006.
On April 26, 2006, Cole OP II repaid a $2,458,000 promissory note and a $1,995,000 promissory
note to Series C. The notes were issued on December 15, 2005.
During the three months and nine months ended September 30, 2006, Cole OP II paid
approximately $0 and approximately $224,000, respectively, in interest expense to affiliates under
the aforementioned loans.
During the nine months ended, September 30, 2006, Cole OP II acquired the following properties
from various affiliates of the Company and the Companys advisor. The acquisitions were funded by
net proceeds from the Companys Offering and the assumption of loans secured by the respective
properties.
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|
Acquisition |
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|
|
|
|
|
Purchase |
|
|
|
|
|
|
Loan |
|
Property Description |
|
Date |
|
|
Location |
|
Seller |
|
Price |
|
|
|
|
|
|
Assumed |
|
Wawa convenience store |
|
March 29, 2006 |
|
Hockessin, DE |
|
Series A, LLC |
|
$ |
4,830,000 |
|
|
|
(1 |
) |
|
$ |
2,598,068 |
|
Wawa convenience store |
|
March 29, 2006 |
|
Manahawkin, NJ |
|
Series A, LLC |
|
|
4,414,000 |
|
|
|
(1 |
) |
|
|
2,374,301 |
|
Wawa convenience store |
|
March 29, 2006 |
|
Narberth, PA |
|
Series A, LLC |
|
|
4,206,000 |
|
|
|
(1 |
) |
|
|
2,262,417 |
|
Conns applicane retailer |
|
May 26, 2006 |
|
San Antonio, TX |
|
Series D, LLC |
|
|
4,624,619 |
|
|
|
|
|
|
|
3,580,000 |
|
Rite Aid drugstore |
|
May 26, 2006 |
|
Defiance, OH |
|
Cole Acquisitions I, LLC |
|
|
4,326,165 |
|
|
|
|
|
|
|
2,321,000 |
|
CVS drugstore |
|
May 26, 2006 |
|
Madison, MS |
|
Cole Acquisitions I, LLC |
|
|
4,463,088 |
|
|
|
|
|
|
|
2,809,000 |
|
CVS drugstore |
|
June 28, 2006 |
|
Portsmouth, OH |
|
Cole Acquisitions I, LLC |
|
|
2,101,708 |
|
|
|
|
|
|
|
1,753,000 |
|
CVS drugstore |
|
July 7, 2006 |
|
Okeechobee, FL |
|
Cole Acquisitions I, LLC |
|
|
6,459,262 |
|
|
|
|
|
|
|
4,076,000 |
|
Office Depot office supply |
|
July 7, 2006 |
|
Dayton, OH |
|
Cole Acquisitions I, LLC |
|
|
3,416,526 |
|
|
|
|
|
|
|
2,130,000 |
|
Advance Auto specialty retailer |
|
July 12, 2006 |
|
Holland, MI |
|
Cole Acquisitions I, LLC |
|
|
2,071,843 |
|
|
|
|
|
|
|
1,193,000 |
|
Advance Auto specialty retailer |
|
July 12, 2006 |
|
Holland Township, MI |
|
Cole Acquisitions I, LLC |
|
|
2,137,244 |
|
|
|
|
|
|
|
1,231,000 |
|
Advance Auto specialty retailer |
|
July 12, 2006 |
|
Zeeland, MI |
|
Cole Acquisitions I, LLC |
|
|
1,840,715 |
|
|
|
|
|
|
|
1,057,000 |
|
CVS drugstore |
|
July 12, 2006 |
|
Orlando, FL |
|
Series D, LLC |
|
|
4,956,763 |
|
|
|
|
|
|
|
3,016,000 |
|
Office Depot office supply |
|
July 12, 2006 |
|
Greenville, MS |
|
Cole Acquisitions I, LLC |
|
|
3,491,470 |
|
|
|
|
|
|
|
2,192,000 |
|
Office Depot office supply |
|
July 19, 2006 |
|
Warrensburg, MO |
|
Series D, LLC |
|
|
2,880,552 |
|
|
|
|
|
|
|
1,810,000 |
|
CVS drugstore |
|
August 10, 2006 |
|
Gulfport, MS |
|
Cole Acquisitions I, LLC |
|
|
4,414,117 |
|
|
|
|
|
|
|
2,611,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
60,634,072 |
|
|
|
|
|
|
$ |
37,013,786 |
|
|
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|
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|
|
(1) |
|
The Companys board of directors, including all of the independent directors, approved the
transaction as being fair and reasonable to the Company, at a price in excess of the cost to
WW II, but substantial justification exists for such excess, such excess is reasonable and the
costs of the interest did exceed its current fair market value as determined by an independent
expert selected by the Companys independent directors. |
The Companys board of directors, including all of the independent directors, approved
the transactions above as being fair and reasonable to the Company, at a price no greater than the
cost to the affiliated entity, and at a cost that did not exceed its current fair market value as
determined by an independent expert.
At September 30, 2006, the Company had approximately $71,000 due to affiliates, which is
payable to Cole Advisors. At December 31, 2005, due to affiliates consisted of approximately
$36,000 payable to Cole Advisors for reimbursement of legal fees and approximately $5,000 payable
to Cole Capital, for commissions and dealer manager fees payable on stock issuances.
F-35
Note 8 Economic Dependency
Under various agreements, the Company has engaged or will engage the Advisor and its
affiliates to provide certain services that are essential to the Company, including asset
management services, supervision of the management and leasing of properties owned by the Company,
asset acquisition and disposition decisions, the sale of shares of the Companys common stock
available for issue, as well as other administrative responsibilities for the Company including
accounting services and investor relations.
As a result of these relationships, the Company is dependent upon the Advisor and its
affiliates. In the event that these companies were unable to provide the Company with the
respective services, the Company would be required to find alternative providers of these services.
Note 9 New Accounting Pronouncements
In December 2004, the Financial Accounting Standards Board (FASB) issued Statement of
Financial Accounting Standards (SFAS) No. 123 (revised 2004), Share-Based Payment, (SFAS
123R) which requires the measurement and recognition of compensation expense for all share-based
payment awards made to employees and directors based on estimated fair values. SFAS No. 123R is
effective for fiscal years beginning after June 15, 2005. The Company adopted the new standard on
January 1, 2006. See Note 11.
In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements (SFAS No. 157).
This statement defines fair value, establishes a framework for measuring fair value in generally
accepted accounting principles in the United States (GAAP), and expands disclosures about the use
of fair value to measure assets and liabilities. The statement emphasizes that fair value is a
market-based measurement, not an entity-specific measurement, and sets out a fair value hierarchy
with the highest priority being quoted prices in active markets. The statement requires fair value
measurements be disclosed by level within the hierarchy. This statement does not require any new
fair value measurements; however, the application of this statement may change current practice.
SFAS No. 157 becomes effective for the Company beginning January 1, 2008. We are still assessing
the impact of the adoption of SFAS No. 157. However, we do not expect SFAS No. 157 to have a
material effect on our consolidated financial statements.
In September 2006, the FASB issued Interpretation No. 48, Accounting for Uncertainty in
Income Taxes an interpretation of FASB Statement No. 109 (FIN No. 48). This interpretation
clarifies the accounting for uncertainty in income taxes recognized in financial statements in
accordance with SFAS No. 109, Accounting for Income Taxes. This statement sets forth criteria to
recognize, derecognize, and measure benefits related to income taxes and establishes disclosure
requirements pertaining to uncertainty in income tax assets and liabilities. SFAS No. 109 becomes
effective for the Company beginning January 1, 2007. We are still assessing the impact of the
adoption of FIN No. 48. However, we do not expect FIN No. 48 to have a material effect on our
consolidated financial statements.
In September 2006, the Securities and Exchange Commission (SEC) issued Staff Accounting
Bulletin No. 108 (SAB No. 108). Due to diversity in practice among registrants, SAB No. 108
expresses SEC staff views regarding the process by which misstatements in financial statements are
evaluated for purposes of determining whether financial statement restatement is necessary. SAB No.
108 is effective for fiscal years ending after November 15, 2006. The adoption of SAB No. 108 is
not expected to have a material impact on our consolidated financial statements.
Note 10 Independent Directors Stock Option Plan
The Company has a stock option plan, the Independent Directors Stock Option Plan (the
IDSOP), which authorizes the grant of non-qualified stock options to the Companys independent
directors, subject to the absolute discretion of the board of directors and the applicable
limitations of the plan. The Company intends to grant options under the IDSOP to each qualifying
director annually. The exercise price for the options granted under the IDSOP initially will be
$9.15 per share (or greater, if such higher price is necessary so that such options shall not be
considered a nonqualified deferred compensation plan under Section 409A of the Internal Revenue
Code of 1986, as amended). It is intended that the exercise price for future options granted under
the IDSOP will be at least 100% of the fair market value of the Companys common stock as of the
date the option is granted. As of September 30, 2006 and December 31, 2005, the Company had granted
options to purchase 40,000 and 10,000 shares at $9.15 per share, respectively, each with a one year
vesting period. A total of 1,000,000 shares have been authorized and reserved for issuance under
the IDSOP. On January 1, 2006, we adopted SFAS 123R which requires the measurement and recognition
of compensation expense for all share-based payment awards made to employees and directors,
including stock options related to the IDSOP, based on estimated fair values. The Company adopted
FAS 123R using the modified prospective application. Accordingly, prior period amounts have not
been restated.
During the three months and nine months ended September 30, 2006, the adoption of SFAS 123R
resulted in stock-based compensation charges of approximately $14,000 and approximately $40,000,
respectively. Stock-based compensation expense
F-36
recognized in the three months and nine months ended September 30, 2006 is based on awards
ultimately expected to vest, and has been reduced for estimated forfeitures. SFAS 123R requires
forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods
if actual forfeitures differ from those estimates. The Companys calculations do not assume any
forfeitures.
Prior to SFAS 123R we applied the intrinsic-value-based method of accounting prescribed by
Accounting Principles Board (APB) Opinion No. 25, Accounting for Stock Issued to Employees, and
related interpretations, including FASB Interpretation No. 44, Accounting for Certain Transactions
involving Stock Compensation, an interpretation of APB Opinion No. 25, issued in March 2000, to
account for our fixed-plan stock options. Under this method, compensation expense was recorded on
the date of grant only if the current market price of the underlying stock exceeded the exercise
price. No stock-based employee compensation cost was reflected in net income, as all options
granted under the plan had an exercise price equal to the market value of the underlying common
stock on the date of the grant. SFAS No. 123, Accounting for Stock-Based Compensation, as amended
by SFAS No. 148, Accounting for Stock-Based Compensation Transition and Disclosure, established
accounting and disclosure requirements using a fair-value-based method of accounting for
stock-based employee compensation plans. As allowed by SFAS No. 123, during prior periods we
elected to apply the intrinsic-value-based method of accounting described above, and adopted only
the disclosure requirements of SFAS No. 123.
During the three months and nine months ended September 30, 2005, options to purchase 0 and
10,000 shares at $9.15 per share were granted, respectively, and no options were forfeited, became
vested, or were exercised. During the three months and nine months ended September 30, 2006,
options to purchase 0 and 10,000 shares at $9.15 per share were granted, 0 and 10,000 share options
became vested, and no options were forfeited or exercised. As of September 30, 2006, options to
purchase 20,000 shares at $9.15 per share remained outstanding and options to purchase 10,000
shares options were unvested with a weighted average contractual remaining life of approximately
nine years.
In accordance with Statement 123R, the fair value of each stock option granted has been
estimated as of the date of the grant using the Black-Scholes method based on the following
assumptions; a weighted average risk-free interest rate from 4.19% to 5.07%, a projected future
dividend yield from 6.0% to 6.25%, expected volatility of 0%, and an expected life of an option of
10 years. Based on these assumptions, the fair value of the options granted during the nine months
ended September 30, 2006 and 2005 was approximately $55,000 and $60,000, respectively. As of
September 30, 2006, there was approximately $50,000 of total unrecognized compensation cost related
to unvested share-based compensation awards granted under the IDSOP. That cost is expected to be
recognized through the quarter ended September 30, 2007.
Note 11 Subsequent Events
Sale of Shares of Common Stock
As of November 10, 2006, the Company has raised approximately $232.8 million of gross proceeds
through the issuance of approximately 23.3 million shares of its common stock under the Offering
(including shares sold under the DRIP). As of November 10, 2006, approximately $219.5 million (22.0
million shares) remained available for sale to the public under the Offering, exclusive of shares
available under the DRIP.
Real Estate Acquisitions
The Company acquired the following properties subsequent to September 30, 2006:
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|
|
|
|
|
|
|
|
|
|
|
Property |
|
Location |
|
Acquisition Date |
|
Square Feet |
|
|
Purchase Price |
|
Rite Aid drugstore |
|
Glassport Borough, PA |
|
October 4, 2006 |
|
|
14,564 |
|
|
$ |
3,788,000 |
|
Davids Bridal & Radio Shack specialty
retailer |
|
Topeka, KS |
|
October 13, 2006 |
|
|
10,150 |
|
|
|
3,021,000 |
|
Rite Aid drugstore |
|
Hanover Borough, PA |
|
October 17, 2006 |
|
|
14,564 |
|
|
|
6,330,000 |
|
American TV & Appliance specialty retailer |
|
Peoria, IL |
|
October 23, 2006 |
|
|
126,850 |
|
|
|
11,300,000 |
|
Tractor Supply specialty retailer |
|
La Grange, TX |
|
November 6, 2006 |
|
|
24,727 |
|
|
|
2,580,000 |
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
|
|
|
|
190,855 |
|
|
$ |
27,019,000 |
|
|
|
|
|
|
|
|
|
|
|
|
F-37
Mortgage Notes Payable
Subsequent to September 30, 2006, the Company incurred or assumed the following mortgage notes
payable in connection with the real estate acquisitions described above:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed Rate Loan |
|
|
|
|
|
|
Property |
|
Location |
|
Amount |
|
|
Fixed Interest Rate |
|
|
Maturity Date |
Rite Aid drugstore |
|
Glassport Borough, PA |
|
$ |
2,325,000 |
|
|
|
6.10 |
% |
|
November 1, 2016 |
Rite Aid drugstore |
|
Hanover Borough, PA |
|
|
4,115,000 |
|
|
|
6.11 |
% |
|
November 1, 2016 |
American TV &
Appliance specialty
retailer |
|
Peoria, IL |
|
|
7,358,971 |
|
|
|
6.00 |
% |
|
October 1, 2018 |
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
|
$ |
13,798,971 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In addition, subsequent to September 30, 2006, the Company repaid an aggregate of
approximately $1.4 million of variable rate short-term debt related to four loans.
Extended Rate Lock Agreement
On November 3, 2006, the Company entered into an Extended Rate Lock Agreement with Bear
Stearns (Rate Lock 4) to lock an interest rate of 5.669% for up to $25.0 million in borrowings.
Under the terms of Rate Lock No. 4, the Company made a rate lock deposit of $500,000 to Bear
Stearns. The deposit is refundable to the Company in amounts equal to 2% of any loans funded under
the agreement. The rate lock expires 60 days from execution and may be extended by 30 days for a
rate lock fee of 0.25% of the loan amount or, at the borrowers election, by converting the fee
into interest rate spread.
F-38
SUMMARY FINANCIAL INFORMATION OF BUSINESSES ACQUIRED
Summary Financial Data
CVS Corporation, Inc.
CV Alpharetta Property
On December 1, 2005, we acquired an approximately 10,125 square foot single-tenant retail
building on an approximately 1.19 acre site located in Alpharetta, Georgia (the CV Alpharetta
Property), constructed in 1998. The CV Alpharetta Property is 100% leased to Mayfield CVS, Inc.,
which is a wholly-owned subsidiary of CVS Corporation (CVS), which guarantees the lease. The CV
Alpharetta Property is subject to a net lease pursuant to which the tenant is required to pay
substantially all operating expenses and capital expenditures in addition to base rent.
The purchase price of the CV Alpharetta Property was approximately $3.1 million, exclusive of
closing costs. The acquisition was funded by net proceeds from the Companys ongoing public
offering and an approximately $2.5 million loan from Wachovia Bank, National Association
(Wachovia) secured by the CV Alpharetta Property.
CV RH Property
On December 8, 2005, we acquired an approximately 10,908 square foot single-tenant retail
building on an approximately 1.41 acre site located in Richland Hills, Texas (the CV RH
Property), constructed in 1997 The CV RH Property is 100% leased to CVS EGL Grapevine N Richland
Hills Texas, LP, which is a wholly-owned subsidiary of CVS, which guarantees the lease. The CV RH
Property is subject to a net lease pursuant to which the tenant is required to pay substantially
all operating expenses and capital expenditures in addition to base rent.
The purchase price of the CV RH Property was approximately $3.7 million, exclusive of closing
costs. The acquisition was funded by net proceeds from the Companys ongoing public offering and
an approximately $2.9 million loan from Wachovia secured by the CV RH Property.
CV Scioto Trail Property
On March 8, 2006, we acquired an approximately 10,100 square foot single-tenant retail
building on an approximately .82 acre site located in Portsmouth, Ohio (the CV Scioto Trail
Property), which was constructed in 1997. The CV Scioto Trail Property is 100% leased to Revco
Discount Drug Centers, Inc. (Revco), which is a wholly-owned subsidiary of CVS. CVS is the
guarantor under the lease. The CV Scioto Trail Property is subject to a net lease pursuant to
which the tenant is required to pay substantially all operating expenses and capital expenditures
in addition to base rent.
The purchase price of the CV Scioto Trail Property was approximately $2.2 million, exclusive
of closing costs. The acquisition was funded by net proceeds from our public offering of common
stock, and an approximately $1.8 million loan from Wachovia, secured by the CV Scioto Trail
Property.
CV Madison Property
On May 26, 2006, we acquired 100% of the membership interests (the CV Madison Interests) in
Cole CV Madison MS, LLC (CV Madison). CV Madison owns, as its only asset, an approximately
13,800 square foot single-tenant retail building on an approximately 1.5 acre site located in
Madison, Mississippi (the CV Madison Property). The CV Madison Property is 100% leased to CVS
EGL Highland Madison MS, Inc. (CVS EGL), which is a wholly-owned subsidiary of CVS, which
guarantees the lease. The CV Madison Property is subject to a net lease pursuant to which the
tenant is required to pay substantially all operating expenses and capital expenditures in addition
to base rent.
The purchase price of the CV Madison Interests was approximately $4.5 million, exclusive of
closing costs. The acquisition was funded by net proceeds from our public offering of common stock
and an approximately $2.8 million loan secured by the CV Madison Property.
CV Portsmouth Property
On June 28, 2006, we acquired 100% of the membership interests (the CV Portsmouth Interests)
in Cole CV Portsmouth OH, LLC (CV Portsmouth). CV Portsmouth owns, as its only asset, an
approximately 10,600 square foot single-tenant retail building on an approximately 0.44 acre site
located in Portsmouth, Ohio (the CV Portsmouth Property). The CV
Portsmouth
F-39
Property is 100% leased to Revco Discount Drug Centers, Inc., which is a
wholly-owned subsidiary of CVS, which guarantees the lease. The CV Portsmouth Property is subject
to a net lease pursuant to which the tenant is required to pay substantially all operating expenses
and capital expenditures in addition to base rent.
The purchase price of the CV Portsmouth Interests was approximately $2.1 million, exclusive of
closing costs. The acquisition was funded by net proceeds from our public offering of common
stock.
CV Okeechobee Property
On July 7, 2006, we acquired 100% of the membership interests (the CV Okeechobee Interests)
in Cole CV Okeechobee FL, LLC (CV Okeechobee). CV Okeechobee owns, as its only asset, an
approximately 13,000 square foot single-tenant retail building on an approximately 1.7 acre site
located in Okeechobee, Florida (the CV Okeechobee Property). The CV Okeechobee Property is 100%
leased to CVS EGL Parrot Okeechobee FL, LLC, which is a wholly-owned subsidiary of CVS, which
guarantees the lease. The CV Okeechobee Property is subject to a net lease pursuant to which the
tenant is required to pay substantially all operating expenses and capital expenditures in addition
to base rent.
The purchase price of the CV Okeechobee Interests was approximately $6.5 million, exclusive of
closing costs. The acquisition was funded by net proceeds from our public offering of common stock
and the assumption of an approximately $4.1 million loan from Wachovia secured by the property.
CV Orlando Property
On July 12, 2006, we acquired 100% of the membership interests (the CV Orlando Interests) in
Cole CV Orlando FL, LLC (CV Orlando). CV Orlando owns, as its only asset, an approximately
14,000 square foot single-tenant retail building on an approximately 1.4 acre site located in
Orlando, Florida (the CV Orlando Property). The CV Orlando Property is 100% leased to CVS EGL
Lake Pickett FL, LLC, which is a wholly-owned subsidiary of CVS, which guarantees the lease. The
CV Orlando Property is subject to a net lease pursuant to which the tenant is required to pay
substantially all operating expenses and capital expenditures in addition to base rent.
The purchase price of the CV Orlando Interests was approximately $4.95 million, exclusive of
closing costs. The acquisition was funded by net proceeds from our public offering of common stock
and the assumption of an approximately $3.0 million loan from Wachovia secured by the property.
CV Gulfport Property
On August 10, 2006, we acquired 100% of the membership interests (the CV Gulfport Interests)
in Cole CV Gulfport MS, LLC (CV Gulfport). CV Gulfport owns, as its only asset, an approximately
11,000 square foot single-tenant retail building on an approximately 1.2 acre site located in
Gulfport, Mississippi (the CV Gulfport Property). The CV Gulfport Property is 100% leased to CVS
EGL East Pass Gulfport MS, Inc., which is a wholly-owned subsidiary CVS, which guarantees the
lease. The CV Gulfport Property is subject to a net lease pursuant to which the tenant is required
to pay substantially all operating expenses and capital expenditures in addition to base rent.
The purchase price of the CV Gulfport Interests was approximately $4.4 million, exclusive of
closing costs. The acquisition was funded by net proceeds from our public offering of common stock
and the assumption of an approximately $2.6 million loan from Wachovia secured by the property.
CV Clinton Property
On August 24, 2006, we acquired 100% of the membership interests (the CV Clinton Interests)
in Meadow Street Development, LLC (Meadow Street). Meadow Street owns, as its only asset, an
approximately 10,000 square foot single-tenant retail building on an approximately 1.6 acre site
located in Clinton, New York (the CV Clinton Property). The CV Clinton Property is 100% leased
to CVS BDI, Inc, which is a wholly-owned subsidiary of CVS. CVS is the guarantor under the lease.
The CV Clinton Property is subject to a net lease pursuant to which the tenant is required to pay
substantially all operating expenses and capital expenditures in addition to base rent.
The purchase price of the CV Clinton Property was approximately $3.1 million, exclusive of
closing costs. The acquisition was funded by net proceeds from the our public offering of common
stock, and an approximately $2.4 million loan from Wachovia, secured by the CV Clinton Property.
F-40
CVS operates over 5,000 stores in 36 states. CVS has a Standard & Poors credit rating of
A- and the companys stock is publicly traded on the New York Stock Exchange under the ticker
symbol CVS.
In evaluating the CV Alpharetta Property, CV RH Property, CV Scioto Trail Property, CV Madison
Property, CV Portsmouth Property, CV Okeechobee Property, CV Orlando Property, CV Gulfport Property
and CV Clinton Property as potential acquisitions and determining the appropriate amount of
consideration to be paid for our interests therein, a variety of factors were considered, including
our consideration of property condition reports; unit-level store performance; property location,
visibility and access; age of the property, physical condition and curb appeal; neighboring
property uses; local market conditions, including vacancy rates; area demographics, including trade
area population and average household income; neighborhood growth patterns and economic conditions;
and the presence of demand generators. After reasonable inquiry, we are not aware of any material
factors relating to the properties, other than those discussed above, that would cause the reported
financial information not to be necessarily indicative of future operating results.
Because the CV Alpharetta Property, CV RH Property, CV Scioto Trail Property, CV Madison
Property, CV Portsmouth Property, CV Okeechobee Property, CV Orlando Property, CV Gulfport Property
and CV Clinton Property each is 100% leased to a single tenant on a long-term basis under a net
lease that transfers substantially all of the operating costs to the tenant, we believe that the
financial condition and results of operations of the lessee, CVS, are more relevant to investors
than the financial statements of the property acquired in order to enable investors to evaluate the
credit-worthiness of the lessee. Additionally, because the property is subject to a net lease, the
historical property financial statements provide limited information other than rental income,
which is disclosed in the section captioned Investment Objectives and Policies Real Property
Investments beginning on page 82 of the prospectus. As a result, pursuant to guidance provided by
the Securities and Exchange Commission, we have not provided audited financial statements of the
properties acquired.
CVS currently files its financial statements in reports filed with the Securities and Exchange
Commission, and the following summary financial data regarding CVS are taken from its previously
filed public reports:
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For the Nine |
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Months Ended |
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For the Fiscal Year Ended |
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9/30/2006 |
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12/31/2005 |
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1/1/2005 |
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1/3/2004 |
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(in millions) |
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Consolidated Statements of Operations |
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Revenues |
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$ |
31,747.5 |
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$ |
37,006.2 |
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$ |
30,594.3 |
|
|
$ |
26,588.0 |
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Operating Income |
|
|
1,692.3 |
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|
|
2,019.5 |
|
|
|
1,454.7 |
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|
|
1,423.6 |
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Net Income |
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|
941.2 |
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|
|
1,224.7 |
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|
918.8 |
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|
847.3 |
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As of the Fiscal Year Ended |
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As of 9/30/2006 |
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12/31/2005 |
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1/1/2005 |
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1/3/2004 |
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(in millions) |
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Consolidated Balance Sheets |
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Total Assets |
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$ |
21,127.4 |
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$ |
15,283.4 |
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$ |
14,546.8 |
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$ |
10,543.1 |
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Long-term Debt |
|
|
3,279.9 |
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|
|
1,594.1 |
|
|
|
1,925.9 |
|
|
|
753.1 |
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Stockholders Equity |
|
|
9,434.4 |
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8.331.2 |
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|
6,987.2 |
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|
|
6,021.8 |
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For more detailed financial information regarding CVS, please refer to its financial
statements, which are publicly available with the Securities and Exchange Commission at
http://www.sec.gov.
F-41
Summary Financial Data
Advance Stores Company Incorporated
AA Greenfield Property
On June 29, 2006, we acquired an approximately 7,000 square foot single-tenant retail building
on an approximately 1.1 acre site located in Greenfield, Indiana (the AA Greenfield Property),
which was constructed in 2003. The AA Greenfield Property is 100% leased to Advance Stores Company
Incorporated (Advance Auto). The AA Greenfield Property is subject to a net lease pursuant to
which the tenant is required to pay substantially all operating expenses and capital expenditures
in addition to base rent.
The purchase price of the AA Greenfield Property was approximately $1.4 million, exclusive of
closing costs. The acquisition was funded by net proceeds from our public offering of common
stock.
AA Trenton Property
On June 29, 2006, we acquired an approximately 7,000 square foot single-tenant retail building
on an approximately 1.1 acre site located in Trenton, Ohio (the AA Trenton Property), which was
constructed in 2003. The AA Trenton Property is 100% leased to Advance Auto. The AA Trenton
Property is subject to a net lease pursuant to which the tenant is required to pay substantially
all operating expenses and capital expenditures in addition to base rent.
The purchase price of the AA Trenton Property was approximately $1.1 million, exclusive of
closing costs. The acquisition was funded by net proceeds from our public offering of common
stock.
AA Columbia Heights Property
On July 6, 2006, we acquired an approximately 7,000 square foot single-tenant retail building
on an approximately .79 acre site located in Columbia Heights, Minnesota (the AA Columbia Heights
Property), which was constructed in 2005. The AA Columbia Heights Property is 100% leased to
Advance Auto. The AA Columbia Heights Property is subject to a net lease pursuant to which the
tenant is required to pay substantially all operating expenses and capital expenditures in addition
to base rent.
The purchase price of the AA Columbia Heights Property was approximately $1.7 million,
exclusive of closing costs. The acquisition was funded by net proceeds from our public offering of
common stock and an approximately $1.4 million loan from Wachovia secured by the AA Columbia
Heights Property.
AA Fergus Falls Property
On July 6, 2006, we acquired an approximately 7,000 square foot single-tenant retail building
on an approximately .74 acre site located in Fergus Falls, Minnesota (the AA Fergus Falls
Property), which was constructed in 2005. The AA Fergus Falls Property is 100% leased to Advance
Auto. The AA Fergus Falls Property is subject to a net lease pursuant to which the tenant is
required to pay substantially all operating expenses and capital expenditures in addition to base
rent.
The purchase price of the AA Fergus Falls Property was approximately $1.2 million, exclusive
of closing costs. The acquisition was funded by net proceeds from our public offering of common
stock and an approximately $963,000 loan from Wachovia secured by the AA Fergus Falls Property.
AA Holland Property
On July 12, 2006, we acquired 100% of the membership interests (the AA Holland Interests) in
Cole AA Holland MI, LLC (AA Holland). AA Holland owns, as its only asset, an approximately 7,000
square foot single-tenant retail building on an approximately 1.06 acre site located in Holland,
Michigan (the AA Holland Property). The AA Holland Property is 100% leased to Advance Auto. The
AA Holland Property is subject to a net lease pursuant to which the tenant is required to pay
substantially all operating expenses and capital expenditures in addition to base rent.
The purchase price of the AA Holland Interests was approximately $2.1 million, exclusive of
closing costs. The acquisition was funded by net proceeds from our public offering of common stock
and the assumption of an approximately $1.2 million loan from Wachovia secured by the property.
F-42
AA Holland Township Property
On July 12, 2006, we acquired 100% of the membership interests (the AA Holland Township
Interests) in Cole AA Holland Township MI, LLC (AA Holland Township). AA Holland Township owns,
as its only asset, an approximately 7,000 square foot single-tenant retail building on an
approximately 1.44 acre site located in Holland Township, Michigan (the AA Holland Township
Property). The AA Holland Township Property is 100% leased to Advance Auto. The AA Holland
Township Property is subject to a net lease pursuant to which the tenant is required to pay
substantially all operating expenses and capital expenditures in addition to base rent.
The purchase price of the AA Holland Township Interests was approximately $2.1 million,
exclusive of closing costs. The acquisition was funded by net proceeds from our public offering of
common stock and the assumption of an approximately $1.2 million loan from Wachovia secured by the
property.
AA Zeeland Property
On July 12, 2006, we acquired 100% of the membership interests (the AA Zeeland Interests) in
Cole AA Zeeland MI, LLC (AA Zeeland). AA Zeeland owns, as its only asset, an approximately 7,000
square foot single-tenant retail building on an approximately .98 acre site located in Zeeland,
Michigan (the AA Zeeland Property). The AA Zeeland Property is 100% leased to Advance Auto. The
AA Zeeland Property is subject to a net lease pursuant to which the tenant is required to pay
substantially all operating expenses and capital expenditures in addition to base rent.
The purchase price of the AA Zeeland Interests was approximately $1.8 million, exclusive of
closing costs. The acquisition was funded by net proceeds from our public offering of common stock
and the assumption of an approximately $1.1 million loan from Wachovia secured by the property.
AA Grand Forks Property
On August 15, 2006, we acquired an approximately 7,000 square foot single-tenant retail
building on an approximately 1.2 acre site located in Grand Forks, North Dakota (the AA Grand
Forks Property), which was constructed in 2005. The AA Grand Forks Property is 100% leased to
Advance Auto. The AA Grand Forks Property is subject to a net lease pursuant to which the tenant
is required to pay substantially all operating expenses and capital expenditures in addition to
base rent.
The purchase price of the AA Grand Forks Property was approximately $1.4 million, exclusive of
closing costs. The acquisition was funded by net proceeds from our public offering of common stock
and an approximately $1.1 million loan from Wachovia secured by the AA Grand Forks Property.
AA Duluth Property
On September 8, 2006, we acquired an approximately 7,000 square foot single-tenant retail
building on an approximately .44 acre site located in Duluth, Minnesota (the AA Duluth Property),
which was constructed in 2006. The AA Duluth Property is 100% leased to Advance Auto. The AA
Duluth Property is subject to a net lease pursuant to which the tenant is required to pay
substantially all operating expenses and capital expenditures in addition to base rent.
The purchase price of the AA Duluth Property was approximately $1.4 million, exclusive of
closing costs. The acquisition was funded by net proceeds from our public offering of common stock
and an approximately $1.1 million loan from Wachovia secured by the AA Duluth Property.
AA Grand Bay Property
On September 29, 2006, we acquired an approximately 7,000 square foot single-tenant retail
building on an approximately 1.0 acre site located in Grand Bay, Alabama (the AA Grand Bay
Property), which was constructed in 2005. The AA Grand Bay Property is 100% leased to Advance
Auto. The AA Grand Bay Property is subject to a net lease pursuant to which the tenant is required
to pay substantially all operating expenses and capital expenditures in addition to base rent.
The purchase price of the AA Grand Bay Property was approximately $1.1 million, exclusive of
closing costs. The acquisition was funded by net proceeds from our public offering of common
stock.
F-43
AA Hurley Property
On September 29, 2006, we acquired an approximately 7,000 square foot single-tenant retail
building on an approximately 0.85 acre site located in Hurley, Mississippi (the AA Hurley
Property), which was constructed in 2005. The AA Hurley Property is 100% leased to Advance Auto.
The AA Hurley Property is subject to a net lease pursuant to which the tenant is required to pay
substantially all operating expenses and capital expenditures in addition to base rent.
The purchase price of the AA Hurley Property was approximately $1.1 million, exclusive of
closing costs. The acquisition was funded by net proceeds from our public offering of common
stock.
AA Rainsville Property
On September 29, 2006, we acquired an approximately 7,000 square foot single-tenant retail
building on an approximately 0.88 acre site located in Rainsville, Alabama (the AA Rainsville
Property), which was constructed in 2005. The AA Rainsville Property is 100% leased to Advance
Auto. The AA Rainsville Property is subject to a net lease pursuant to which the tenant is
required to pay substantially all operating expenses and capital expenditures in addition to base
rent.
The purchase price of the AA Rainsville Property was approximately $1.3 million, exclusive of
closing costs. The acquisition was funded by net proceeds from our public offering of common
stock.
AA Ashland Property
On November 17, 2006, we acquired an approximately 7,000 square foot single-tenant retail
building on an approximately 1.3 acre site located in Ashland, Kentucky (the AA Ashland
Property), which was constructed in 2006. The AA Ashland Property is 100% leased to Advance Stores
Company Incorporated, (Advance Auto). The AA Ashland Property is subject to a net lease pursuant
to which the tenant is required to pay substantially all operating expenses and capital
expenditures in addition to base rent.
The purchase price of the AA Ashland Property was approximately $1.7 million, exclusive of
closing costs. The acquisition was funded by net proceeds from our ongoing public offering.
AA Jackson Property
On November 17, 2006, we acquired an approximately 7,000 square foot single-tenant retail
building on an approximately 1.3 acre site located in Jackson, Ohio (the AA Jackson Property),
which was constructed in 2005. The AA Jackson Property is 100% leased to Advance Auto. The AA
Jackson Property is subject to a net lease pursuant to which the tenant is required to pay
substantially all operating expenses and capital expenditures in addition to base rent.
The purchase price of the AA Jackson Property was approximately $1.4 million, exclusive of
closing costs. The acquisition was funded by net proceeds from our ongoing public offering.
AA New Boston Property
On November 17, 2006, we acquired an approximately 7,000 square foot single-tenant retail
building on an approximately 0.71 acre site located in New Boston, Ohio (the AA New Boston
Property), which was constructed in 2005. The AA New Boston Property is 100% leased to Advance
Auto. The AA New Boston Property is subject to a net lease pursuant to which the tenant is required
to pay substantially all operating expenses and capital expenditures in addition to base rent.
The purchase price of the AA New Boston Property was approximately $1.5 million, exclusive of
closing costs. The acquisition was funded by net proceeds from our ongoing public offering.
AA Scottsburg Property
On November 17, 2006, we acquired an approximately 7,000 square foot single-tenant retail
building on an approximately 0.69 acre site located in Scottsburg, Indiana (the AA Scottsburg
Property), which was constructed in 2006. The AA Scottsburg Property is 100% leased to Advance
Auto. The AA Scottsburg Property is subject to a net lease pursuant to which the tenant is required
to pay substantially all operating expenses and capital expenditures in addition to base rent.
The purchase price of the AA Scottsburg Property was approximately $1.3 million, exclusive of
closing costs. The acquisition was funded by net proceeds from our ongoing public offering.
F-44
Advance Auto operates over 2,800 auto parts stores in 40 states, Puerto Rico and the Virgin
Islands. Advance Auto has a Standard and Poors credit rating of BB+ and its stock is publicly
traded on the New York Stock Exchange under the symbol AAP.
In evaluating the AA Greenfield Property, AA Trenton Property, AA Columbia Heights Property,
AA Fergus Falls Property, AA Holland Property, AA Holland Township Property, AA Zeeland Property,
AA Grand Forks Property, AA Duluth Property, AA Grand Bay Property, AA Hurley Property, AA
Rainsville Property, AA Ashland Property, the AA Jackson Property, the AA New Boston Property and
AA Scottsburg Property as potential acquisitions and determining the appropriate amount of
consideration to be paid for our interests therein, a variety of factors were considered, including
our consideration of property condition reports; unit-level store performance; property location,
visibility and access; age of the property, physical condition and curb appeal; neighboring
property uses; local market conditions, including vacancy rates; area demographics, including trade
area population and average household income; neighborhood growth patterns and economic conditions;
and the presence of demand generators. After reasonable inquiry, we are not aware of any material
factors relating to the properties, other than those discussed above, that would cause the reported
financial information not to be necessarily indicative of future operating results.
Because the AA Greenfield Property, AA Trenton Property, AA Columbia Heights Property, AA
Fergus Falls Property, AA Holland Property, AA Holland Township Property, AA Zeeland Property, AA
Grand Forks Property, AA Duluth Property, AA Grand Bay Property, AA Hurley Property, AA Rainsville
Property, AA Ashland Property, the AA Jackson Property, the AA New Boston Property and AA
Scottsburg Property each is 100% leased to a single tenant on a long-term basis under a net lease
that transfers substantially all of the operating costs to the tenant, we believe that the
financial condition and results of operations of the lessee, Advance Auto, are more relevant to
investors than the financial statements of the property acquired in order to enable investors to
evaluate the credit-worthiness of the lessee. Additionally, because the property is subject to a
net lease, the historical property financial statements provide limited information other than
rental income, which is disclosed in the section captioned Investment Objectives and Policies
Real Property Investments beginning on page 82 of the prospectus. As a result, pursuant to
guidance provided by the Securities and Exchange Commission, we have not provided audited financial
statements of the properties acquired.
Advance Auto currently files its financial statements in reports filed with the Securities and
Exchange Commission, and the following summary financial data regarding Advance Auto are taken from
its previously filed public reports:
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For the |
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|
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Period Ended |
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For the Fiscal Year Ended |
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|
10/7/2006 |
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12/31/2005 |
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1/1/2005 |
|
1/3/2004 |
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|
|
|
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|
|
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(in thousands) |
|
|
|
|
Consolidated Statements of Operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues |
|
$ |
3,600,353 |
|
|
$ |
4,264,971 |
|
|
$ |
3,770,297 |
|
|
$ |
3,493,696 |
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Operating Income |
|
|
339,265 |
|
|
|
408,492 |
|
|
|
328,758 |
|
|
|
288,234 |
|
Net Income |
|
|
195,964 |
|
|
|
234,725 |
|
|
|
187,988 |
|
|
|
124,935 |
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As of the Fiscal Year Ended |
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As of 10/7/2006 |
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12/31/2005 |
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1/1/2005 |
|
1/3/2004 |
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(in thousands) |
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|
Consolidated Balance Sheets |
|
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Total Assets |
|
$ |
2,661,585 |
|
|
$ |
2,542,149 |
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|
$ |
2,201,962 |
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$ |
1,983,071 |
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Long-term Debt |
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|
450,859 |
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|
|
438,800 |
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|
470,000 |
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|
445,000 |
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Stockholders Equity |
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|
990,454 |
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|
919,771 |
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|
722,315 |
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|
631,244 |
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For more detailed financial information regarding Advance Auto, please refer to its financial
statements, which are publicly available with the Securities and Exchange Commission at
http://www.sec.gov.
F-45
Summary Financial Data
Tractor Supply Company
TS Parkersburg Property
On September 26, 2005, we acquired an approximately 21,986 square foot single-tenant retail
building on an approximately 2.97 acre site located in Parkersburg, West Virginia (the TS
Parkersburg Property), which was constructed in 2005. The TS Parkersburg Property is 100% leased
to Tractor Supply Company (Tractor Supply). The TS Parkersburg Property is subject to a net
lease pursuant to which the tenant is required to pay substantially all operating expenses and
capital expenditures in addition to base rent.
The purchase price of the TS Parkersburg Property was approximately $3.3 million, exclusive of
closing costs. The acquisition was funded by net proceeds from our public offering of common stock
and an approximately $2.6 million loan from Wachovia secured by the TS Parkersburg Property.
TS La Grange Property
On November 6, 2006, we acquired an approximately 25,000 square foot single-tenant retail
building on an approximately 4.5 acre site located in La Grange, Texas (the TS La Grange
Property), which was constructed in 2006. The KO Wichita Property is 100% leased to Tractor Supply
Co. of Texas, LP (Tractor Supply Texas) a wholly-owned subsidiary of Tractor Supply Company
(Tractor Supply) which guarantees the lease. The TS La Grange Property is subject to a net lease
pursuant to which the tenant is required to pay substantially all operating expenses and capital
expenditures in addition to base rent.
The purchase price of the TS La Grange Property was approximately $2.6 million, exclusive of
closing costs. The acquisition was funded by net proceeds from our ongoing public offering and an
approximately $1.4 million loan secured by the TS New Braunfels Property, the TS La Grange
Property, the TS Livingston Property and the TS Crockett Property.
TS Livingston Property
On November 22, 2006, we acquired an approximately 25,000 square foot single-tenant retail
building on an approximately 3.8 acre site located in Livingston, Texas (the TS Livingston
Property), which was constructed in 2006. The TS Livingston Property is 100% leased to Tractor
Supply Texas a wholly-owned subsidiary of Tractor Supply which guarantees the lease. The TS
Livingston Property is subject to a net lease pursuant to which the tenant is required to pay
substantially all operating expenses and capital expenditures in addition to base rent.
The purchase price of the TS Livingston Property was approximately $3.1 million, exclusive of
closing costs. The acquisition was funded by net proceeds from our ongoing public offering and an
approximately $1.7 million loan secured by the TS New Braunfels Property, the TS La Grange
Property, the TS Livingston Property and the TS Crockett Property.
TS New Braunfels Property
On November 22, 2006, we acquired an approximately 25,000 square foot single-tenant retail
building on an approximately 3.5 acre site located in New Braunfels, Texas (the TS New Braunfels
Property), which was constructed in 2006. The TS New Braunfels Property is 100% leased to Tractor
Supply Texas a wholly-owned subsidiary of Tractor Supply which guarantees the lease. The TS New
Braunfels Property is subject to a net lease pursuant to which the tenant is required to pay
substantially all operating expenses and capital expenditures in addition to base rent.
The purchase price of the TS New Braunfels Property was approximately $3.2 million, exclusive
of closing costs. The acquisition was funded by net proceeds from our ongoing public offering and
an approximately $1.8 million loan secured by the TS New Braunfels Property, the TS La Grange
Property, the TS Livingston Property and the TS Crockett Property.
TS Crockett Property
On December 1, 2006, we acquired an approximately 25,000 square foot single-tenant retail
building on an approximately 6.2 acre site located in Crockett, Texas (the TS Crockett Property),
which was constructed in 2006. The TS Crockett Property is 100% leased to Tractor Supply Texas a
wholly-owned subsidiary of Tractor Supply which guarantees the lease. The TS Crockett Property is
subject to a net lease pursuant to which the tenant is required to pay substantially all operating
expenses and capital expenditures in addition to base rent.
F-46
The purchase price of the TS Crockett Property was approximately $2.5 million, exclusive of
closing costs. The acquisition was funded by net proceeds from our ongoing public offering and an
approximately $1.3 million loan secured by the TS New Braunfels Property, the TS La Grange
Property, the TS Livingston Property and the TS Crockett Property.
In evaluating the TS Parkersburg Property, TS La Grange Property, TS Livingston Property, TS
New Braunfels Property and TS Crockett Property as a potential acquisition and determining the
appropriate amount of consideration to be paid for our interests therein, a variety of factors were
considered, including our consideration of a property condition report; unit-level store
performance; property location, visibility and access; age of the property, physical condition and
curb appeal; neighboring property uses; local market conditions, including vacancy rates; area
demographics, including trade area population and average household income; neighborhood growth
patterns and economic conditions; and the presence of demand generators. After reasonable inquiry,
the Company is not aware of any material factors relating to the TS Parkersburg Property, other
than those discussed above, that would cause the reported financial information not to be
necessarily indicative of future operating results.
Because each of the TS Parkersburg Property, TS La Grange Property, TS Livingston Property, TS
New Braunfels Property and TS Crockett Property is 100% leased to a single tenant on a long-term
basis under a net lease that transfers substantially all of the operating costs to the tenant, we
believe that the financial condition and results of operations of the tenant, Tractor Supply, are
more relevant to investors than the financial statements of the property acquired. As a result,
pursuant to guidance provided by the Securities and Exchange Commission (SEC), we have not
provided audited financial statements of the property acquired.
Tractor Supply currently files its financial statements in reports filed with the SEC, and the
following summary financial data regarding Tractor Supply are taken from its previously filed
public reports:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Nine Months |
|
|
|
|
Ended |
|
For the Fiscal Year Ended |
|
|
9/30/2006 |
|
12/31/2005 |
|
12/25/2004 |
|
12/27/2003 |
|
|
|
|
|
|
|
|
|
|
(in thousands) |
|
|
|
|
Consolidated Statements of Operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues |
|
$ |
1,739,714 |
|
|
$ |
2,067,979 |
|
|
$ |
1,738,843 |
|
|
$ |
1,472,885 |
|
Operating Income |
|
|
99,776 |
|
|
|
136,444 |
|
|
|
101,546 |
|
|
|
95,673 |
|
Net Income |
|
|
61.511 |
|
|
|
85,669 |
|
|
|
64,069 |
|
|
|
55,694 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of |
|
As of the Fiscal Year Ended |
|
|
9/30/2006 |
|
12/31/2005 |
|
12/25/2004 |
|
12/27/2003 |
|
|
|
|
|
|
|
|
|
|
(in thousands) |
|
|
|
|
Consolidated Balance Sheets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Assets |
|
$ |
988,264 |
|
|
$ |
814,795 |
|
|
$ |
678,485 |
|
|
$ |
538,270 |
|
Long-term Debt |
|
|
33,793 |
|
|
|
10,739 |
|
|
|
34,744 |
|
|
|
21,210 |
|
Stockholders Equity |
|
|
565,023 |
|
|
|
477,698 |
|
|
|
370,584 |
|
|
|
290,991 |
|
For more detailed financial information regarding Tractor Supply, please refer to its
financial statements, which are publicly available with the SEC at http://www.sec.gov.
F-47
Summary Financial Data
Rite Aid Corporation
RA Alliance Property
On October 20, 2005, we acquired an approximately 11,325 square foot single-tenant retail
building on an approximately 1.79 acre site located in Alliance, Ohio (the RA Alliance Property),
which was constructed in 1996. The RA Alliance Property is 100% leased to RA Ohio, a wholly-owned
subsidiary of Rite Aid Corporation (Rite Aid), which guarantees the lease. The RA Alliance
Property is subject to a net lease pursuant to which the tenant is required to pay substantially
all operating expenses and capital expenditures in addition to base rent.
The purchase price of the RA Alliance Property was approximately $2.1 million, exclusive of
closing costs. The acquisition was funded by net proceeds from our public offering of common
stock.
RA Enterprise Property
On January 26, 2006, we acquired an approximately 14,564 square foot single-tenant retail
building on an approximately 2.15 acre site located in Enterprise, Ohio (the RA Enterprise
Property), which was constructed in 2005. The RA Enterprise Property is 100% leased to Harco,
Inc., a wholly-owned subsidiary of Rite Aid. Rite Aid guarantees the lease. The RA Enterprise
Property is subject to a net lease pursuant to which the tenant is required to pay substantially
all operating expenses and capital expenditures in addition to base rent.
The purchase price of the RA Enterprise Property was approximately $3.7 million, exclusive of
closing costs. The acquisition was funded by net proceeds from our public offering of common stock
and an approximately $2.9 million loan from Wachovia secured by the RA Enterprise Property.
RA Saco Property
On January 27, 2006, we acquired an approximately 11,180 square foot single-tenant retail
building on an approximately 2.24 acre site located in Saco, Maine (the RA Saco Property), which
was constructed in 1997. The RA Saco Property is 100% leased to Rite Aid of Maine, Inc., a
wholly-owned subsidiary of Rite Aid. Rite Aid guarantees the lease. The RA Saco Property is
subject to a net lease pursuant to which the tenant is required to pay substantially all operating
expenses and capital expenditures in addition to base rent.
The purchase price of the RA Saco Property was approximately $2.5 million, exclusive of
closing costs. The acquisition was funded by net proceeds from our public offering of common stock
and an approximately $2.0 million loan from Wachovia secured by the RA Saco Property.
RA Wauseon Property
On January 26, 2006, we acquired an approximately 14,564 square foot single-tenant retail
building on an approximately 2.09 acre site located in Wauseon, Ohio (the RA Wauseon Property),
which was constructed in 2005. The RA Wauseon Property is 100% leased to Rite Aid of Ohio, Inc., a
wholly-owned subsidiary of Rite Aid. Rite Aid guarantees the lease. The RA Wauseon Property is
subject to a net lease pursuant to which the tenant is required to pay substantially all operating
expenses and capital expenditures in addition to base rent.
The purchase price of the RA Wauseon Property was approximately $3.9 million, exclusive of
closing costs. The acquisition was funded by net proceeds from our public offering of common stock
and an approximately $3.1 million loan from Wachovia secured by the RA Wauseon Property.
RA Cleveland Property
On April 27, 2006, we acquired an approximately 11,300 square foot single-tenant retail
building on an approximately .97 acre site located in Cleveland, Ohio (the RA Cleveland
Property), which was constructed in 1997. The RA Cleveland Property is 100% leased to Rite Aid of
Ohio, Inc. (RA Ohio), which is a wholly-owned subsidiary of Rite Aid, which guarantees the lease.
The RA Cleveland Property is subject to a net lease pursuant to which the tenant is required to
pay substantially all operating expenses and capital expenditures in addition to base rent.
F-48
The purchase price of the RA Cleveland Property was approximately $2.6 million, exclusive of
closing costs. The acquisition was funded by net proceeds from our public offering of common stock
and an approximately $2.1 million loan from Wachovia secured by the RA Cleveland Property.
RA Fremont Property
On April 27, 2006, we acquired an approximately 11,300 square foot single-tenant retail
building on an approximately 2.17-acre site located in Fremont, Ohio (the RA Fremont Property),
which was constructed in 1997. The RA Fremont Property is 100% leased to RA Ohio, which is a
wholly-owned subsidiary of Rite Aid, which guarantees the lease. The RA Fremont Property is
subject to a net lease pursuant to which the tenant is required to pay substantially all operating
expenses and capital expenditures in addition to base rent.
The purchase price of the RA Fremont Property was approximately $2.5 million, exclusive of
closing costs. The acquisition was funded by net proceeds from our public offering of common stock
and an approximately $2.0 million loan from Wachovia secured by the RA Fremont Property.
RA Defiance Property
On May 26, 2006, we acquired 100% of the membership interests (the RA Defiance Interests) in
Cole RA Defiance OH, LLC (RA Defiance). RA Defiance owns, as its only asset, an approximately
11,300 square foot single-tenant retail building on an approximately 2.17 acre site located in
Defiance, Ohio (the RA Defiance Property). The RA Defiance Property is 100% leased to RA Ohio,
which is a wholly-owned subsidiary of Rite Aid, which guarantees the lease. The RA Defiance
Property is subject to a net lease pursuant to which the tenant is required to pay substantially
all operating expenses and capital expenditures in addition to base rent.
The purchase price of the RA Defiance Interests was approximately $4.3 million, exclusive of
closing costs. The acquisition was funded by net proceeds from our public offering of common
stock, and an approximately $2.3 million loan from Wachovia secured by the RA Defiance Property.
RA Lansing Property
On June 29, 2006, we acquired an approximately 12,000 square foot single-tenant retail
building on an approximately .48-acre site located in Lansing, Michigan (the RA Lansing
Property), which was constructed in 1950 and completely renovated in 1996 to accommodate the
current tenant. The RA Lansing Property is 100% leased to Rite Aid of Michigan, Inc. (RA
Michigan), which is a wholly-owned subsidiary of Rite Aid, which guarantees the lease. The RA
Lansing Property is subject to a net lease pursuant to which the tenant is required to pay
substantially all operating expenses and capital expenditures in addition to base rent.
The purchase price of the RA Lansing Property was approximately $1.7 million, exclusive of
closing costs. The acquisition was funded by net proceeds from our public offering of common stock
and an approximately $1.04 million loan from Bear Stearns secured by the RA Lansing Property.
RA Glassport Property
On October 4, 2006, we acquired an approximately 15,000 square foot single-tenant retail
building on an approximately 1.8-acre site located in Glassport Borough, Pennsylvania (the RA
Glassport Property), which was constructed in 2006. The RA Glassport Property is 100% leased to
Rite Aid of Pennsylvania, Inc. (RA Pennsylvania), which is a wholly-owned subsidiary of Rite Aid,
which guarantees the lease. The RA Glassport Property is subject to a net lease pursuant to which
the tenant is required to pay substantially all operating expenses and capital expenditures in
addition to base rent.
The purchase price of the RA Glassport Property was approximately $3.8 million, exclusive of
closing costs. The acquisition was funded by net proceeds from our public offering of common stock
and an approximately $2.3 million loan from Bear Stearns secured by the RA Glassport Property.
RA Hanover Property
On October 17, 2006, we acquired an approximately 15,000 square foot single-tenant retail
building on an approximately 1.8-acre site located in Hanover Borough, Pennsylvania (the RA
Hanover Property), which was constructed in 2006. The RA Hanover Property is 100% leased to RA
Pennsylvania, which is a wholly-owned subsidiary of Rite Aid, which
guarantees the lease.
F-49
The RA Hanover Property is subject to a net lease pursuant to which the
tenant is required to pay substantially all operating expenses and capital expenditures in addition
to base rent.
The purchase price of the RA Hanover Property was approximately $6.3 million, exclusive of
closing costs. The acquisition was funded by net proceeds from our public offering of common stock
and an approximately $4.1 million loan from Bear Stearns secured by the RA Hanover Property.
Rite Aid has operates over 3,300 stores in 28 states and Washington, DC. Rite Aid has a
Standard and Poors credit rating of B+ and its stock is publicly traded on the New York Stock
Exchange under the ticker symbol RAD.
In evaluating the RA Alliance Property, RA Enterprise Property, RA Saco Property, RA Wauseon
Property, RA Cleveland Property, RA Fremont Property, RA Defiance Property, RA Lansing Property, RA
Glassport Property and RA Hanover Property as a potential acquisition and determining the
appropriate amount of consideration to be paid for our interests therein, a variety of factors were
considered, including our consideration of property condition reports; unit-level store
performance; property location, visibility and access; age of the property, physical condition and
curb appeal; neighboring property uses; local market conditions, including vacancy rates; area
demographics, including trade area population and average household income; neighborhood growth
patterns and economic conditions; and the presence of demand generators. After reasonable inquiry,
we are not aware of any material factors relating to these properties, other than those discussed
above, that would cause the reported financial information not to be necessarily indicative of
future operating results.
Because the RA Alliance Property, RA Enterprise Property, RA Saco Property, RA Wauseon
Property, RA Cleveland Property, RA Fremont Property, RA Defiance Property, RA Lansing Property,
RA Glassport Property and RA Hanover Property each is leased to a single tenant on a long-term
basis under a net lease that transfers substantially all of the operating costs to the tenant, we
believe that the financial condition and results of operations of the lease guarantor, Rite Aid,
are more relevant to investors than the financial statements of the property acquired in order to
enable investors to evaluate the credit-worthiness of the lessee. Additionally, because the
property is subject to a net lease, the historical property financial statements provide limited
information other than rental income, which is disclosed in the section captioned Investment
Objectives and Policies Real Property Investments beginning on page 82 of the prospectus. As a
result, pursuant to guidance provided by the Securities and Exchange Commission, we have not
provided audited financial statements of the property acquired.
Rite Aid currently files its financial statements in reports filed with the Securities and
Exchange Commission, and the following summary financial data regarding Rite Aid has been taken
from its previously filed public reports:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Six |
|
|
|
|
Months Ended |
|
For the Fiscal Year Ended |
|
|
9/2/2006 |
|
3/4/2006 |
|
2/26/2005 |
|
2/28/2004 |
|
|
|
|
|
|
|
|
|
|
(in thousands) |
|
|
|
|
Consolidated Statements of Operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues |
|
$ |
8,625,442 |
|
|
$ |
17,270,968 |
|
|
$ |
16,816,439 |
|
|
$ |
16,600,449 |
|
Operating Income |
|
|
167,336 |
|
|
|
391,687 |
|
|
|
486,009 |
|
|
|
407,494 |
|
Net Income |
|
|
10,625 |
|
|
|
1,273,006 |
|
|
|
302,478 |
|
|
|
83,379 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of the Fiscal Year Ended |
|
|
As of 9/2/2006 |
|
3/4/2006 |
|
2/26/2005 |
|
2/28/2004 |
|
|
|
|
|
|
|
|
|
|
(in thousands) |
|
|
|
|
Consolidated Balance Sheets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Assets |
|
$ |
7,035,432 |
|
|
$ |
6,988,371 |
|
|
$ |
5,932,583 |
|
|
$ |
6,245,634 |
|
Long-term Debt |
|
|
2,299,749 |
|
|
|
2,298,706 |
|
|
|
2,680,998 |
|
|
|
3,451,352 |
|
Stockholders Equity |
|
|
1,619,633 |
|
|
|
1,606,921 |
|
|
|
322,934 |
|
|
|
(8,277 |
) |
For more detailed financial information regarding Rite Aid, please refer to its financial
statements, which are publicly available with the Securities and Exchange Commission at
http://www.sec.gov.
F-50
Summary Financial Data
Office Depot, Inc.
OD Dayton Property
On July 7, 2006, we acquired 100% of the membership interests (the OD Dayton Interests) in
Cole OD Dayton OH, LLC (OD Dayton). OD Dayton owns, as its only asset, an approximately 20,000
square foot single-tenant retail building on an approximately 2.04 acre site located in Dayton,
Ohio (the OD Dayton Property). The OD Dayton Property is 100% leased to Office Depot, Inc.
(Office Depot). The OD Dayton Property is subject to a net lease pursuant to which the tenant is
required to pay substantially all operating expenses and capital expenditures in addition to base
rent.
The purchase price of the OD Dayton Interests was approximately $3.4 million, exclusive of
closing costs. The acquisition was funded by net proceeds from our public offering of common stock
and the assumption of an approximately $2.1 million loan from Wachovia secured by the property.
OD Greenville Property
On July 12, 2006, we acquired 100% of the membership interests (the OD Greenville Interests)
in Cole OD Greenville MS, LLC (OD Greenville). OD Greenville owns, as its only asset, an
approximately 25,000 square foot single-tenant retail building on an approximately 1.9 acre site
located in Greenville, Mississippi (the OD Greenville Property). The OD Greenville Property is
100% leased to Office Depot. The OD Greenville Property is subject to a net lease pursuant to
which the tenant is required to pay substantially all operating expenses and capital expenditures
in addition to base rent.
The purchase price of the OD Greenville Interests was approximately $3.5 million, exclusive of
closing costs. The acquisition was funded by net proceeds from and the assumption of an
approximately $2.2 million loan from Wachovia secured by the property.
OD Warrensburg Property
On July 19, 2006, we acquired 100% of the membership interests (the OD Warrensburg
Interests) in Cole OD Warrensburg MO, LLC (OD Warrensburg). OD Warrensburg owns, as its only
asset, an approximately 20,000 square foot single-tenant retail building on an approximately 2.1
acre site located in Warrensburg, Missouri (the OD Warrensburg Property). The OD Warrensburg
Property is 100% leased to Office Depot. The OD Warrensburg Property is subject to a net lease
pursuant to which the tenant is required to pay substantially all operating expenses and capital
expenditures in addition to base rent.
The purchase price of the OD Warrensburg Interests was approximately $2.9 million, exclusive
of closing costs. The acquisition was funded by net proceeds from our public offering of common
stock and the assumption of an approximately $1.8 million loan from Wachovia secured by the
property.
Office Depot is a global supplier of office products and services. Office Depot has a
Standard & Poors credit rating of BBB- and its stock is publicly traded on the New York Stock
Exchange under the ticker symbol ODP.
In evaluating the OD Dayton Property, OD Greenville Property and the OD Warrensburg Property
as potential acquisitions and determining the appropriate amount of consideration to be paid for
our interests therein, a variety of factors were considered, including our consideration of
property condition reports; unit-level store performance; property location, visibility and access;
age of the property, physical condition and curb appeal; neighboring property uses; local market
conditions, including vacancy rates; area demographics, including trade area population and average
household income; neighborhood growth patterns and economic conditions; and the presence of demand
generators. After reasonable inquiry, we are not aware of any material factors relating to the
properties, other than those discussed above, that would cause the reported financial information
not to be necessarily indicative of future operating results.
Because the OD Dayton Property, OD Greenville Property and OD Warrensburg Property each is
100% leased to a single tenant on a long-term basis under a net lease that transfers substantially
all of the operating costs to the tenant, we believe that the financial condition and results of
operations of the tenant, Office Depot, are more relevant to investors than the financial
statements of the property acquired in order to enable investors to evaluate the credit-worthiness
of the lessee. Additionally, because the property is subject to a net lease, the historical
property financial statements provide limited information other than rental income, which is
disclosed in the section captioned Investment Objectives and Policies Real
Property Investments beginning on page 82 of the prospectus. As a result, pursuant to
guidance provided by the Securities and Exchange Commission, we have not provided audited financial
statements of the properties acquired.
F-51
Office Depot currently files its financial statements in reports filed with the Securities and
Exchange Commission, and the following summary financial data regarding Office Depot are taken from
its previously filed public reports:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Nine |
|
|
|
|
Months Ended |
|
For the Fiscal Year Ended |
|
|
9/30/2006 |
|
12/31/2005 |
|
1/1/2005 |
|
1/3/2004 |
|
|
|
|
|
|
|
|
|
|
(in thousands) |
|
|
|
|
Consolidated
Statements of
Operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues |
|
$ |
11,167,751 |
|
|
$ |
14,278,944 |
|
|
$ |
13,564,699 |
|
|
$ |
12,358,566 |
|
Operating Income |
|
|
554,726 |
|
|
|
348,042 |
|
|
|
529,977 |
|
|
|
465,985 |
|
Net Income |
|
|
381,095 |
|
|
|
273,792 |
|
|
|
335,504 |
|
|
|
273,515 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of the Fiscal Year Ended |
|
|
As of 9/30/2006 |
|
12/31/2005 |
|
1/1/2005 |
|
1/3/2004 |
|
|
|
|
|
|
|
|
|
|
(in thousands) |
|
|
|
|
Consolidated Balance Sheets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Assets |
|
$ |
6,401,273 |
|
|
$ |
6,098,525 |
|
|
$ |
6,794,338 |
|
|
$ |
6,194,679 |
|
Long-term Debt |
|
|
591,455 |
|
|
|
569,098 |
|
|
|
583,680 |
|
|
|
829,302 |
|
Stockholders Equity |
|
|
2,500,544 |
|
|
|
2,739,221 |
|
|
|
3,223,048 |
|
|
|
2,747,121 |
|
For more detailed financial information regarding Office Depot, please refer to its financial
statements, which are publicly available with the Securities and Exchange Commission at
http://www.sec.gov.
F-52
Summary Financial Data
Walgreen Co.
WG Brainerd Property
On October 6, 2005, we acquired an approximately 15,076-square foot single-tenant retail
building on an approximately 2.07-acre site located in Brainerd, Minnesota (the WG Brainerd
Property), constructed in 2000. The WG Brainerd Property is 100% leased to Walgreen Co.
(Walgreens) subject to a net lease pursuant to which the tenant is required to pay substantially
all operating expenses and capital expenditures in addition to base rent.
The purchase price of the WG Brainerd Property was approximately $4.3 million, exclusive of
closing costs. The acquisition was funded by net proceeds from our ongoing public offering and an
approximately $3.5 million loan from Wachovia secured by the WG Brainerd Property.
WG SL Properties
On November 2, 2005, we acquired the following properties (collectively, the WG SL
Properties): (i) an approximately 15,120-square foot single-tenant retail building on an
approximately 2.11-acre site located in St. Louis, Missouri, constructed in 2001, (ii) an
approximately 15,120-square foot single-tenant retail building on an approximately 2.13-acre site
located in St. Louis, Missouri, constructed in 2001, and (iii) an approximately 15,120-square foot
single-tenant retail building on an approximately 1.82-acre site located in Florissant, Missouri,
constructed in 2001. The WG SL Properties are 100% leased to Walgreens subject to separate net
leases pursuant to which the tenant is required to pay substantially all operating expenses and
capital expenditures in addition to base rent.
The aggregate purchase price of the WG SL Properties was approximately $16.4 million,
exclusive of closing costs. The acquisition was funded by net proceeds from the Companys ongoing
public offering and an approximately $13.1 million loan from Wachovia secured by the WG SL
Properties.
WG Olivette Property
On November 22, 2005, we acquired an approximately 15,030 square foot single-tenant retail
building on an approximately 2.40-acre site located in Olivette, Missouri (the WG Olivette
Property), constructed in 2001. The WG Olivette Property is 100% leased to Walgreens subject to a
net lease pursuant to which the tenant is required to pay substantially all operating expenses and
capital expenditures in addition to base rent.
The purchase price of the WG Olivette Property was approximately $7.8 million, exclusive of
closing costs. The acquisition was funded by net proceeds from our public offering of common stock
and an approximately $5.4 million loan from Wachovia secured by the WG Olivette Property.
WG Columbia Property
On November 22, 2005, we acquired an approximately 13,970-square foot single-tenant retail
building on an approximately 1.03 acre site located in Columbia, Missouri (the WG Columbia
Property), constructed in 2002. The WG Columbia Property is 100% leased to Walgreens subject to a
net lease pursuant to which the tenant is required to pay substantially all operating expenses and
capital expenditures in addition to base rent.
The purchase price of the WG Columbia Property was approximately $6.3 million, exclusive of
closing costs. The acquisition was funded by net proceeds from our public offering of common stock
and an approximately $4.5 million loan from Wachovia secured by the WG Columbia Property.
WG Picayune Property
On September 15, 2006, we acquired an approximately 15,000-square foot single-tenant retail
building on an approximately 1.7-acre site located in Picayune, Mississippi (the WG Picayune
Property), which was constructed in 2006. The WG Picayune Property is 100% leased to Walgreen,
Co. (Walgreens). The WG Picayune Property is subject to a net lease pursuant to which the
tenant is required to pay substantially all operating expenses and capital expenditures in addition
to base rent.
F-53
The purchase price of the WG Picayune Property was approximately $4.3 million, exclusive of
closing costs. The acquisition was funded by net proceeds from our public offering of common stock
and an approximately $3.4 million loan from Wachovia secured by the WG Picayune Property.
Walgreens operates over 4,900 stores in 45 states and Puerto Rico. Walgreens has a Standard &
Poors credit rating of A+ and the companys stock is publicly traded on the New York Stock
Exchange under the ticker symbol WAG.
In evaluating the WG Brainerd Property, WG SL Properties, WG Olivette Property, WG Colombia
Property and WG Picayune Property as a potential acquisition and determining the appropriate amount
of consideration to be paid for our interests therein, a variety of factors were considered,
including our consideration of property condition reports; unit-level store performance; property
location, visibility and access; age of the property, physical condition and curb appeal;
neighboring property uses; local market conditions, including vacancy rates; area demographics,
including trade area population and average household income; neighborhood growth patterns and
economic conditions; and the presence of demand generators. After reasonable inquiry, we are not
aware of any material factors relating to these properties, other than those discussed above, that
would cause the reported financial information not to be necessarily indicative of future operating
results.
Because the WG Brainerd Property, WG SL Properties, WG Olivette Property, WG Colombia Property
and WG Picayune Property each is 100% leased to a single tenant on a long-term basis under a net
lease that transfers substantially all of the operating costs to the tenant, we believe that the
financial condition and results of operations of the tenant, Walgreens, are more relevant to
investors than the financial statements of the property acquired in order to enable investors to
evaluate the credit-worthiness of the lessee. Additionally, because the property is subject to a
net lease, the historical property financial statements provide limited information other than
rental income, which is disclosed in the section captioned Investment Objectives and Policies
Real Property Investments beginning on page 82 of the prospectus. As a result, pursuant to
guidance provided by the Securities and Exchange Commission, we have not provided audited financial
statements of the properties acquired.
Walgreens currently files its financial statements in reports filed with the Securities and
Exchange Commission, and the following summary financial data regarding Walgreens are taken from
its previously filed public reports:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Nine |
|
|
|
|
Months Ended |
|
For the Fiscal Year Ended |
|
|
5/31/2006 |
|
8/31/2005 |
|
8/31/2004 |
|
8/31/2003 |
|
|
|
|
|
|
|
|
|
|
(in millions) |
|
|
|
|
Consolidated Statements of Operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues |
|
$ |
35,238.7 |
|
|
$ |
42,201.6 |
|
|
$ |
37,508.2 |
|
|
$ |
32,505.4 |
|
Operating Income |
|
|
2,102.7 |
|
|
|
2,455.6 |
|
|
|
2,159.7 |
|
|
|
1,871.7 |
|
Net Income |
|
|
1,338.3 |
|
|
|
1,559.5 |
|
|
|
1,349.8 |
|
|
|
1,165.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of the Fiscal Year Ended |
|
|
As of 5/31/2006 |
|
8/31/2005 |
|
8/31/2004 |
|
8/31/2003 |
|
|
|
|
|
|
|
|
|
|
(in millions) |
|
|
|
|
Consolidated Balance Sheets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Assets |
|
$ |
16,441.7 |
|
|
$ |
14,608.8 |
|
|
$ |
13,342.1 |
|
|
$ |
11,656.8 |
|
Long-term Debt |
|
|
* |
|
|
|
12.0 |
|
|
|
12.4 |
|
|
|
9.4 |
|
Stockholders Equity |
|
|
9,789.3 |
|
|
|
8,889.7 |
|
|
|
8,139.7 |
|
|
|
7,117.8 |
|
|
|
|
** |
|
- Comparative long-term debt balances were not available per the Walgreen Co. Quarterly
report as of May 31, 2006. |
For more detailed financial information regarding Walgreens, please refer to its financial
statements, which are publicly available with the Securities and Exchange Commission at
http://www.sec.gov.
F-54
Summary Financial Data
Oxford Theatre Company, Inc.
OT Oxford Property
On August 31, 2006, we acquired an approximately 35,000-square foot single-tenant retail
building on an approximately 5.76-acre site in Oxford, Mississippi (the OT Oxford Property),
constructed in 2006. The OT Oxford Property is 100% leased to Oxford Theatre Company, Inc., which
is a wholly-owned subsidiary of American Screen Works, Inc, which guarantees the lease. The OT
Oxford Property is subject to a net lease pursuant to which the tenant is required to pay
substantially all operating expenses and capital expenditures in addition to base rent.
The purchase price of the OT Oxford Property was $9.7 million, exclusive of closing costs.
The acquisition was funded by net proceeds from our public offering of common stock and a $5.2
million loan from Bear Stearns secured by the OT Oxford Property.
American Screenworks, Inc. is a wholly-owned subsidiary of Restaurant Entertainment Group
(REG). REG was founded in Orlando, Florida in 1979 and owns and operates 35 American Screen
Works cinema complexes. The theatres are in eighteen states throughout the US.
In evaluating the OT Oxford Property as a potential acquisition and determining the
appropriate amount of consideration to be paid for our interests therein, a variety of factors were
considered, including our consideration of property condition reports; unit-level store
performance; property location, visibility and access; age of the property, physical condition and
curb appeal; neighboring property uses; local market conditions, including vacancy rates; area
demographics, including trade area population and average household income; neighborhood growth
patterns and economic conditions; and the presence of demand generators. After reasonable inquiry,
we are not aware of any material factors relating to the OT Oxford Property, other than those
discussed above, that would cause the reported financial information not to be necessarily
indicative of future operating results.
The OT Oxford Property had no significant operating history prior to our acquisition of the
property on August 31, 2006. As a result, we are not required to file financial statements with
respect to the acquired property. After reasonable inquiry, we are not aware of any material
factors relating to the property, other than those discussed above, that would cause the reported
financial information not to be necessarily indicative of future operating results.
F-55
Summary Financial Data
Sportsmans Warehouse, Inc.
SP Wichita Property
On June 27, 2006, we acquired an approximately 50,000 square foot single-tenant retail
building on an approximately 4.9 acre site in Wichita, Kansas (the SP Wichita Property),
constructed in 2006. The SP Wichita Property is 100% leased to Sportsmans Warehouse, Inc., which
is a wholly-owned subsidiary of Sportsmans Warehouse Holdings, Inc., which guarantees the lease.
The SP Wichita Property is subject to a net lease pursuant to which the tenant is required to pay
substantially all operating expenses and capital expenditures in addition to base rent.
The purchase price of the SP Wichita Property was $8.2 million, exclusive of closing costs.
The acquisition was funded by net proceeds from our public offering of common stock and an
approximately $6.2 million loan from Wachovia Financial Services, Inc. secured by the SP Wichita
Property.
Sportsmans Warehouse operates retail stores across the United States that specialize in
selling outerwear, footwear, and hunting, fishing, and camping products for outdoor enthusiasts.
In evaluating the SP Wichita Property as a potential acquisition and determining the
appropriate amount of consideration to be paid for our interests therein, a variety of factors were
considered, including our consideration of property condition reports; unit-level store
performance; property location, visibility and access; age of the property, physical condition and
curb appeal; neighboring property uses; local market conditions, including vacancy rates; area
demographics, including trade area population and average household income; neighborhood growth
patterns and economic conditions; and the presence of demand generators. After reasonable inquiry,
we are not aware of any material factors relating to the SP Wichita Property, other than those
discussed above, that would cause the reported financial information not to be necessarily
indicative of future operating results.
The SP Wichita Property had no significant operating history prior to our acquisition of the
property on June 27, 2006. As a result, we are not required to file financial statements with
respect to the acquired property. After reasonable inquiry, we are not aware of any material
factors relating to the property, other than those discussed above, that would cause the reported
financial information not to be necessarily indicative of future operating results.
F-56
Summary Financial Data
Lowes Companies, Inc.
LO Enterprise Property
On December 1, 2005, we acquired an approximately 95,173 square foot single-tenant retail
building on an approximately 16.7 acre site located in Enterprise, Alabama (the LO Enterprise
Property), which was constructed in 1995. The LO Enterprise Property is 100% leased to Lowes
Home Centers, Inc. (Lowes Home Centers), which is a wholly-owned subsidiary of Lowes Companies,
Inc. (Lowes), which guarantees the lease. The LO Enterprise Property is subject to a net lease
pursuant to which the tenant is required to pay substantially all operating expenses and capital
expenditures in addition to base rent.
The purchase price of the LO Enterprise Property was approximately $7.5 million, exclusive of
closing costs. The acquisition was funded by net proceeds from our public offering of common stock
and an approximately $6.0 million loan from Wachovia secured by the LO Enterprise Property.
LO Midland Property
On September 27, 2006, we acquired an approximately 130,000 square foot single-tenant retail
building on an approximately 18.52 acre site located in Midland, Texas (the LO Midland Property),
which was constructed in 1996. The LO Midland Property is 100% leased to Lowes Home Centers,
which is a wholly-owned subsidiary of Lowes, which guarantees the lease. The LO Midland Property
is subject to a net lease pursuant to which the tenant is required to pay substantially all
operating expenses and capital expenditures in addition to base rent.
The purchase price of the LO Midland Property was approximately $11.1 million, exclusive of
closing costs. The acquisition was funded by net proceeds from our public offering of common stock
and an approximately $7.2 million loan secured by the LO Midland Property, the OT Oxford Property,
the LO Lubbock Property and the KO Wichita Property.
LO Lubbock Property
On September 27, 2006, we acquired an approximately 130,000 square foot single-tenant retail
building on an approximately 16.60 acre site located in Lubbock, Texas (the LO Lubbock Property),
which was constructed in 1996. The LO Lubbock Property is 100% leased to Lowes Home Centers,
which is a wholly-owned subsidiary of Lowes, which guarantees the lease. The LO Lubbock Property
is subject to a net lease pursuant to which the tenant is required to pay substantially all
operating expenses and capital expenditures in addition to base rent.
The purchase price of the LO Lubbock Property was approximately $11.5 million, exclusive of
closing costs. The acquisition was funded by net proceeds from our public offering of common stock
and an approximately $7.5 million loan secured by the LO Lubbock Property, the OT Oxford Property,
the LO Lubbock Property and the KO Wichita Property.
Lowes operates retail home improvement stores across the United States and Canada. Lowes
has a Standard & Poors Credit Rating of A+ and its stock is publicly traded on the New York
Stock Exchange under the ticker symbol LOW.
In evaluating the LO Enterprise Property, LO Midland Property and the LO Lubbock Property as
potential acquisitions and determining the appropriate amount of consideration to be paid for our
interests therein, a variety of factors were considered, including our consideration of property
condition reports; unit-level store performance; property location, visibility and access; age of
the property, physical condition and curb appeal; neighboring property uses; local market
conditions, including vacancy rates; area demographics, including trade area population and average
household income; neighborhood growth patterns and economic conditions; and the presence of demand
generators. After reasonable inquiry, we are not aware of any material factors relating to the
properties, other than those discussed above, that would cause the reported financial information
not to be necessarily indicative of future operating results.
Because the LO Enterprise Property, LO Midland Property and LO Lubbock Property each is 100%
leased to a single tenant on a long-term basis under a net lease that transfers substantially all
of the operating costs to the tenant, we believe that the financial condition and results of
operations of the lease guarantor, Lowes, are more relevant to investors than the financial
statements of the properties to be acquired in order to enable investors to evaluate the
credit-worthiness of the lessee. Additionally, because the properties are subject to a net lease,
the historical property financial statements provide limited
information other than rental income, which is disclosed in the section captioned Investment
Objectives and Policies Real Property Investments beginning on page 82 of
F-57
the prospectus. As a
result, pursuant to guidance provided by the Securities and Exchange Commission, we have not
provided audited financial statements of the properties to be acquired.
Lowes currently files its financial statements in reports filed with the Securities and
Exchange Commission, and the following summary financial data regarding Lowes are taken from its
previously filed public reports:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Six |
|
|
|
|
Months Ended |
|
For the Fiscal Year Ended |
|
|
8/4/2006 |
|
2/3/2006 |
|
1/28/2005 |
|
1/30/2004 |
|
|
|
|
|
|
|
|
|
|
(in millions) |
|
|
|
|
Consolidated Statements of Operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues |
|
$ |
25,310 |
|
|
$ |
43,243 |
|
|
$ |
36,464 |
|
|
$ |
30,838 |
|
Operating Income |
|
|
2,953 |
|
|
|
4,664 |
|
|
|
3,712 |
|
|
|
3,124 |
|
Net Income |
|
|
1,776 |
|
|
|
2,771 |
|
|
|
2,176 |
|
|
|
1,844 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of the Fiscal Year Ended |
|
|
As of 8/4/2006 |
|
2/3/2005 |
|
1/28/2005 |
|
1/30/2004 |
|
|
|
|
|
|
|
|
|
|
(in millions) |
|
|
|
|
Consolidated Balance Sheets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Assets |
|
$ |
26,037 |
|
|
$ |
24,639 |
|
|
$ |
21,138 |
|
|
$ |
18,751 |
|
Long-term Debt |
|
|
3,410 |
|
|
|
3,499 |
|
|
|
3,060 |
|
|
|
3,678 |
|
Stockholders Equity |
|
|
14,920 |
|
|
|
14,296 |
|
|
|
11,535 |
|
|
|
10,216 |
|
For more detailed financial information regarding Lowes, please refer to its financial
statements, which are publicly available with the Securities and Exchange Commission at
http://www.sec.gov.
F-58
Summary Financial Data
FedEx Ground Packaging System, Inc.
FE Rockford Property
On December 9, 2005, we acquired an approximately 67,295 square foot single-tenant
distribution facility on an approximately 8.55 acre site located in Rockford, Illinois (the FE
Rockford Property), which was constructed in 1994. The FE Rockford Property is 100% leased to
FedEx Ground Package System, Inc. (FDX Ground), which is a wholly-owned subsidiary of FedEx
Corporation (FDX). The FE Rockford Property is subject to a net lease pursuant to which the
tenant is required to pay substantially all operating expenses and capital expenditures in addition
to base rent.
The purchase price of the FE Rockford Property was approximately $6.2 million, exclusive of
closing costs. The acquisition was funded by net proceeds from our public offering of common stock
and an approximately $4.9 million loan from Wachovia secured by the FE Rockford Property.
In evaluating the FE Rockford Property as a potential acquisition and determining the
appropriate amount of consideration to be paid for our interest in the FE Rockford Property, a
variety of factors were considered, including our consideration of a property condition report;
property location, visibility and access; age of the property, physical condition and curb appeal;
neighboring property uses; local market conditions, including vacancy rates; area demographics,
including trade area population and average household income; neighborhood growth patterns and
economic conditions; and the presence of demand generators. After reasonable inquiry, the Company
is not aware of any material factors relating to the FE Rockford Property, other than those
discussed above, that would cause the reported financial information not to be necessarily
indicative of future operating results.
FDX Ground specializes in small-package shipping, with 100% coverage to every business address
in the United States, Canada and Puerto Rico. FDX has a Standard & Poors credit rating of BBB
and the companys stock is publicly traded on the New York Stock Exchange under the ticker symbol
FDX.
Because the FE Rockford Property is leased to a single tenant on a long-term basis under a net
lease that transfers substantially all of the operating costs to the tenant, we believe that the
financial condition and results of operations of the lessee, FDX Ground, are more relevant to
investors than the financial statements of each property acquired. As a result, pursuant to
guidance provided by the SEC, we have not provided audited financial statements of the property
acquired.
FDX currently files its financial statements in reports filed with the SEC, which include
separate, limited financial information for its FDX Ground segment, which includes its subsidiary,
FedEx Ground Package System, Inc. The following financial data and other information regarding the
FDX Ground segment are taken from FDXs previously filed public reports:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of the Three |
|
|
|
|
Months Ended |
|
As of the Fiscal Year Ended |
|
|
8/31/2006 |
|
5/31/2006 |
|
5/31/2005 |
|
5/31/2004 |
|
|
|
|
|
|
|
|
|
|
(in millions) |
|
|
|
|
Revenues |
|
$ |
1,417 |
|
|
$ |
5,306 |
|
|
$ |
4,680 |
|
|
$ |
3,910 |
|
Operating Income |
|
|
157 |
|
|
|
705 |
|
|
|
604 |
|
|
|
522 |
|
Total Assets |
|
|
|
|
|
|
3,378 |
|
|
|
2,776 |
|
|
|
2,248 |
|
For more detailed financial information regarding FDX Ground, please refer to the financial
statements of its parent FDX, which are publicly available with the SEC at
http://www.sec.gov.
F-59
Summary Financial Data
FedEx Corporation
FedEx Council Bluffs, Iowa
On November 15, 2006, we acquired an approximately 24,000 square foot single-tenant
distribution facility on an approximately 10.6 acre site located in Council Bluffs, Iowa (the FE
Council Bluffs Property), which was constructed in 1999. The FE Council Bluffs Property is 100%
leased to Fedex Freight East, Inc. (Fedex East), a wholly-owned subsidiary of Fedex Freight
Corporation (Fedex Freight), which is a wholly owned subsidiary of FedEx Corporation (FDX),
which guarantees the lease. The FE Council Bluffs Property is subject to a net lease pursuant to
which the tenant is required to pay substantially all operating expenses and capital expenditures
in addition to base rent.
The purchase price of the FE Council Bluffs Property was approximately $3.4 million, exclusive
of closing costs. The acquisition was funded by net proceeds from the Companys ongoing public
offering and an approximately $2.2 million loan secured by the FE Council Bluffs Property.
FedEx Edwardsville, Kansas
On November 15, 2006, we acquired an approximately 156,000 square foot single-tenant retail
building on an approximately 109.5 acre site located in Edwardsville, Kansas (the FE Edwardsville
Property), which was constructed in 1999. The FE Edwardsville Property is 100% leased to Fedex
East, a wholly-owned subsidiary of Fedex Freight, which is a wholly owned subsidiary of Fedex,
which guarantees the lease. The FE Edwardsville Property is subject to a net lease pursuant to
which the tenant is required to pay substantially all operating expenses and capital expenditures
in addition to base rent.
The purchase price of the FE Edwardsville Property was approximately $19.8 million, exclusive
of closing costs. The acquisition was funded by net proceeds from the Companys ongoing public
offering and an approximately $12.9 million loan secured by the FE Edwardsville Property.
Fedex Freight specializes in regional next-day and second-day and interregional
less-than-truckload freight services. FDX has a Standard & Poors credit rating of BBB and the
companys stock is publicly traded on the New York Stock Exchange under the ticker symbol FDX.
In evaluating the FE Council Bluffs Property, and the FE Edwardsville Property as potential
acquisitions and determining the appropriate amount of consideration to be paid for our interests
therein, a variety of factors were considered, including our consideration of property condition
reports; unit-level store performance; property location, visibility and access; age of the
property, physical condition and curb appeal; neighboring property uses; local market conditions,
including vacancy rates; area demographics, including trade area population and average household
income; neighborhood growth patterns and economic conditions; and the presence of demand
generators. After reasonable inquiry, we are not aware of any material factors relating to the
properties, other than those discussed above, that would cause the reported financial information
not to be necessarily indicative of future operating results.
Because the FE Council Bluffs Property, and the FE Edwardsville Property are 100% leased to a
single tenant on a long-term basis under a net lease that transfers substantially all of the
operating costs to the tenant, we believe that the financial condition and results of operations of
the lessee, Fedex, are more relevant to investors than the financial statements of the properties
acquired in order to enable investors to evaluate the credit-worthiness of the lessee.
Additionally, because the property is subject to a net lease, the historical property financial
statements provide limited information other than rental income, which is disclosed in the section
captioned Investment Objectives and Policies Real Property Investments beginning on page 82 of
the prospectus. As a result, pursuant to guidance provided by the Securities and Exchange
Commission, we have not provided audited financial statements of the properties acquired.
FDX currently files its financial statements in reports filed with the SEC, which include
separate, limited financial information for its FDX Freight segment, which includes its subsidiary,
FedEx Freight East, Inc. The following financial data and other information regarding the FDX
Freight segment are taken from FDXs previously filed public reports:
F-60
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of the Three |
|
|
|
|
Months Ended |
|
As of the Fiscal Year Ended |
|
|
8/31/2006 |
|
5/31/2006 |
|
5/31/2005 |
|
5/31/2004 |
|
|
|
|
|
|
|
|
|
|
(in millions) |
|
|
|
|
Revenues |
|
$ |
1,013 |
|
|
$ |
3,645 |
|
|
$ |
3,217 |
|
|
$ |
2,689 |
|
Operating Income |
|
|
150 |
|
|
|
485 |
|
|
|
354 |
|
|
|
244 |
|
Total Assets |
|
|
|
|
|
|
2,245 |
|
|
|
2,047 |
|
|
|
1,924 |
|
For more detailed financial information regarding FDX Freight, please refer to the financial
statements of its parent FDX, which are publicly available with the SEC at
http://www.sec.gov.
F-61
Summary Financial Data
Wawa, Inc.
Wawa Portfolio Hockessin, Delaware; Manahawkin, New Jersey; Narberth, Pennsylvania
On March 29, 2006, we acquired 100% of the membership interests (the WW II Interests) in
Cole WW II, LLC (WW II). Through certain wholly-owned subsidiaries, WW II owns a portfolio of
three separate freestanding convenience stores (the Wawa Properties). The Wawa Properties
consist of an approximately 5,200 square foot single-tenant convenience store on an approximately
1.6 acre site located in Hockessin, Delaware, an approximately 4,700 square foot single tenant
convenience store on an approximately 6.5 acre site located in Manahawkin, New Jersey, and an
approximately 4,500 square foot single tenant convenience store on an approximately 0.9 acre site
located in Narberth, Pennsylvania. The Wawa Properties are subject to a master net lease with
Wawa, Inc. (Wawa), pursuant to which the tenant is required to pay substantially all operating
expenses and capital expenditures in addition to base rent.
The purchase price of the WW II Interests was approximately $13.5 million, exclusive of
closing costs. The acquisition was funded by net proceeds from our public offering of common stock
and an approximately $7.2 million loan from SouthTrust Bank that was assumed in connection with the
acquisition.
Wawa operates over 500 convenience stores in five states, specializing in convenience foods,
grocery items and gasoline products. In determining the creditworthiness of Wawa, we considered a
variety of factors, including historical financial information and financial performance and local
market position.
In evaluating the Wawa Properties as a potential acquisition and determining the appropriate
amount of consideration to be paid for our interests therein, a variety of factors were considered,
including our consideration of property condition reports; unit-level store performance; property
location, visibility and access; age of the property, physical condition and curb appeal;
neighboring property uses; local market conditions, including vacancy rates; area demographics,
including trade area population and average household income; neighborhood growth patterns and
economic conditions; and the presence of demand generators. After reasonable inquiry, we are not
aware of any material factors relating to the Wawa Properties, other than those discussed above,
that would cause the reported financial information not to be necessarily indicative of future
operating results.
Because the Wawa Properties are 100% leased to a single tenant on a long-term basis under a
net lease that transfers substantially all of the operating costs to the tenant, we believe that
the financial condition and results of operations of the tenant, Wawa, are more relevant to
investors than the financial statements of the property acquired. As a result, pursuant to
guidance provided by the Securities and Exchange Commission, we have not provided audited financial
statements of the property acquired.
The following summary financial data regarding Wawa is taken from its previously audited
financial statements:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Fiscal Year Ended |
|
|
12/25/2005 |
|
12/26/2004 |
|
12/28/2003 |
|
|
|
|
|
|
(in thousands) |
|
|
|
|
Consolidated Statements of Operations |
|
|
|
|
|
|
|
|
|
|
|
|
Revenues |
|
$ |
4,361,615 |
|
|
$ |
3,473,610 |
|
|
$ |
2,819,201 |
|
Operating Income |
|
|
112,189 |
|
|
|
93,380 |
|
|
|
83,159 |
|
Net Income |
|
|
69,459 |
|
|
|
58,609 |
|
|
|
50,637 |
|
F-62
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of the Fiscal Year Ended |
|
|
12/25/2005 |
|
12/26/2004 |
|
12/28/2003 |
|
|
|
|
|
|
(in thousands) |
|
|
|
|
Consolidated Balance Sheets |
|
|
|
|
|
|
|
|
|
|
|
|
Total Assets |
|
$ |
1,188,915 |
|
|
$ |
1,004,644 |
|
|
$ |
932,760 |
|
Long-term Debt |
|
|
459,983 |
|
|
|
394,737 |
|
|
|
363,379 |
|
Stockholders Equity |
|
|
289,613 |
|
|
|
253,378 |
|
|
|
213,551 |
|
F-63
Summary Financial Data
Conns, Inc.
CO San Antonio Property
On May 26, 2006, we acquired 100% of the partnership interests (the CO San Antonio
Interests) in Cole CO San Antonio , LP (CO San Antonio). CO San Antonio owns, as its only
asset, an approximately 25,000 square foot single-tenant retail building on an approximately 2.5
acre site located in San Antonio, Texas (the CO San Antonio Property). The CO San Antonio
Property is 100% leased to CAI, LP which is a wholly-owned subsidiary of Conns, Inc. (Conns),
which guarantees this lease. The CO San Antonio Property is subject to a net lease pursuant to
which the tenant is required to pay substantially all operating expenses and capital expenditures
in addition to base rent.
The purchase price of the CO San Antonio Interests was approximately $4.6 million, exclusive
of closing costs. The acquisition was funded by net proceeds from our public offering of common
stock, and an approximately $3.6 million loan secured by the CO San Antonio Property.
Conns is a specialty retailer of home appliances and consumer electronics operating 57 stores
in the southwestern United States. Conns is publicly traded on the Nasdaq under the ticker symbol
CONN.
In evaluating the CO San Antonio Property as a potential acquisition and determining the
appropriate amount of consideration to be paid for our interests therein, a variety of factors were
considered, including our consideration of property condition reports; unit-level store
performance; property location, visibility and access; age of the property, physical condition and
curb appeal; neighboring property uses; local market conditions, including vacancy rates; area
demographics, including trade area population and average household income; neighborhood growth
patterns and economic conditions; and the presence of demand generators. After reasonable inquiry,
we are not aware of any material factors relating to the CO San Antonio Property, other than those
discussed above, that would cause the reported financial information not to be necessarily
indicative of future operating results.
Because the CO San Antonio Property is 100% leased to a single tenant on a long-term basis
under a net lease that transfers substantially all of the operating costs to the tenant, we believe
that the financial condition and results of operations of the lease guarantor, Conns, are more
relevant to investors than the financial statements of the property acquired. As a result,
pursuant to guidance provided by the Securities and Exchange Commission, we have not provided
audited financial statements of the properties acquired.
Conns currently files its financial statements in reports filed with the Securities and
Exchange Commission, and the following summary financial data regarding Conns are taken from its
previously filed public reports:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three |
|
|
|
|
Months Ended |
|
For the Fiscal Year Ended |
|
|
4/30/2006 |
|
1/31/2006 |
|
1/31/2005 |
|
1/31/2004 |
|
|
|
|
|
|
|
|
|
|
(in thousands) |
|
|
|
|
Consolidated Statements of Operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues |
|
$ |
192,115 |
|
|
$ |
702,422 |
|
|
$ |
567,092 |
|
|
$ |
499,310 |
|
Operating Income |
|
|
17,340 |
|
|
|
63,648 |
|
|
|
48,845 |
|
|
|
41,767 |
|
Net Income |
|
|
11,378 |
|
|
|
41,181 |
|
|
|
30,125 |
|
|
|
24,340 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of the Fiscal Year Ended |
|
|
As of 4/30/2006 |
|
1/31/2006 |
|
1/31/2005 |
|
1/31/2004 |
|
|
|
|
|
|
|
|
|
|
(in thousands) |
|
|
|
|
Consolidated Balance Sheets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Assets |
|
$ |
340,011 |
|
|
$ |
342,296 |
|
|
$ |
268,792 |
|
|
$ |
234,760 |
|
Long-term Debt |
|
|
|
|
|
|
|
|
|
|
5,003 |
|
|
|
14,174 |
|
Stockholders Equity |
|
|
258,967 |
|
|
|
245,585 |
|
|
|
200,802 |
|
|
|
166,590 |
|
For more detailed financial information regarding Conns, please refer to its financial
statements, which are publicly available with the Securities and Exchange Commission at
http://www.sec.gov.
F-64
Summary Financial Data
Furniture Brands International, Inc.
DH Hickory Property
On February 24, 2006, we acquired an approximately 261,057 square foot single-tenant
distribution center on an approximately 30.26 acre site located in Hickory, North Carolina (the DH
Hickory Property), which was constructed in 1963. The DH Hickory Property is 100% leased to
Drexel Heritage Furniture Industries, Inc. (Heritage), which is a wholly-owned subsidiary of
Furniture Brands International, Inc. (Furniture Brands). Furniture Brands is the guarantor under
the lease. The DH Hickory Property is subject to a net lease pursuant to which the tenant is
required to pay substantially all operating expenses and capital expenditures in addition to base
rent.
The purchase price of the DH Hickory Property was approximately $4.3 million, exclusive of
closing costs. The acquisition was funded by net proceeds from our public offering of common
stock, and an approximately $3.4 million loan from Wachovia secured by the DH Hickory Property.
Heritage operates a chain of furniture stores throughout the United States and
internationally. Heritage is a wholly-owned subsidiary of Furniture Brands. Furniture Brands has
a Standard & Poors credit rating of BBB and is publicly traded on the New York Stock Exchange
under the symbol FBN.
Because the DH Hickory Property is 100% leased to a single tenant on a long-term basis under a
net lease that transfers substantially all of the operating costs to the tenant, we believe that
the financial condition and results of operations of the lease guarantor, Furniture Brands, is more
relevant to investors than the financial statements of the properties acquired. As a result,
pursuant to guidance provided by the SEC, we have not provided audited financial statements of the
property acquired but have included summary financial data regarding Furniture Brands. Furniture
Brands currently files its financial statements in reports filed with the SEC, and the following
summary financial data regarding Furniture Brands are taken from its previously filed public
reports:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Nine |
|
|
|
|
Months Ended |
|
For the Fiscal Year Ended |
|
|
9/30/2005 |
|
12/31/2004 |
|
12/31/2003 |
|
12/31/2002 |
|
|
|
|
|
|
|
|
|
|
(in thousands) |
|
|
|
|
Consolidated Statements of Operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues |
|
$ |
1,793,245 |
|
|
$ |
2,447,430 |
|
|
$ |
2,434,130 |
|
|
$ |
2,458,836 |
|
Operating Income |
|
|
71,956 |
|
|
|
155,656 |
|
|
|
165,126 |
|
|
|
202,400 |
|
Net Income |
|
|
44,294 |
|
|
|
91,567 |
|
|
|
94,573 |
|
|
|
118,831 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of the Nine |
|
|
|
|
Months Ended |
|
As of the Fiscal Year Ended |
|
|
9/30/2005 |
|
12/31/2004 |
|
12/31/2003 |
|
12/31/2002 |
|
|
|
|
|
|
|
|
|
|
(in thousands) |
|
|
|
|
Consolidated Balance Sheets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Assets |
|
$ |
1,599,717 |
|
|
$ |
1,587,759 |
|
|
$ |
1,578,259 |
|
|
$ |
1,567,402 |
|
Long-term Debt |
|
|
301,600 |
|
|
|
302,400 |
|
|
|
303,200 |
|
|
|
374,800 |
|
Stockholders Equity |
|
|
936,840 |
|
|
|
957,483 |
|
|
|
966,902 |
|
|
|
869,515 |
|
For more detailed financial information regarding Furniture Brands, please refer to its
financial statements, which are publicly available with the SEC at http://www.sec.gov.
F-65
Summary Financial Data
Kohls Corporation
KO Wichita Property
On September 27, 2006, we acquired an approximately 87,000 square foot single-tenant retail
building on an approximately 9.0 acre site located in Wichita, Kansas (the KO Wichita Property),
which was constructed in 1996. The KO Wichita Property is 100% leased to Kohls Illinois, Inc., a
wholly-owned subsidiary of Kohls Corporation (Kohls) which guarantees the lease. The KO
Wichita Property is subject to a net lease pursuant to which the tenant is required to pay
substantially all operating expenses and capital expenditures in addition to base rent.
The purchase price of the KO Wichita Property was approximately $7.9 million, exclusive of
closing costs. The acquisition was funded by net proceeds from our public offering of common stock
and an approximately $5.2 million loan secured by the KO Wichita Property, the OT Oxford Property,
the LO Lubbock Property and the LO Midland Property.
Kohls currently operates approximately 730 retail department stores in 41 states. Kohls has
a Standard & Poors Credit Rating of BBB+ and its stock is publicly traded on the New York Stock
Exchange under the ticker symbol KSS.
In evaluating the KO Wichita Property as a potential acquisition and determining the
appropriate amount of consideration to be paid for our interests therein, a variety of factors were
considered, including our consideration of property condition reports; unit-level store
performance; property location, visibility and access; age of the property, physical condition and
curb appeal; neighboring property uses; local market conditions, including vacancy rates; area
demographics, including trade area population and average household income; neighborhood growth
patterns and economic conditions; and the presence of demand generators. After reasonable inquiry,
we are not aware of any material factors relating to the property, other than those discussed
above, that would cause the reported financial information not to be necessarily indicative of
future operating results.
Because the KO Wichita Property is 100% leased to a single tenant on a long-term basis under a
net lease that transfers substantially all of the operating costs to the tenant, we believe that
the financial condition and results of operations of the lease guarantor, Kohls, is more relevant
to investors than the financial statements of the property to be acquired in order to enable
investors to evaluate the credit-worthiness of the lessee. Additionally, because the property is
subject to a net lease, the historical property financial statements provide limited information
other than rental income, which is disclosed in the section captioned Investment Objectives and
Policies Real Property Investments beginning on page 82 of the prospectus. As a result,
pursuant to guidance provided by the Securities and Exchange Commission, we have not provided
audited financial statements of the property to be acquired.
Kohls currently files its financial statements in reports filed with the Securities and
Exchange Commission, and the following summary financial data regarding Kohls are taken from its
previously filed public reports:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Six |
|
|
|
|
Months Ended |
|
For the Fiscal Year Ended |
|
|
7/29/2006 |
|
1/28/2006 |
|
1/29/2005 |
|
1/31/2004 |
|
|
|
|
|
|
|
|
|
|
(in millions) |
|
|
|
|
Consolidated Statements of Operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues |
|
$ |
6,476 |
|
|
$ |
13,402 |
|
|
$ |
11,701 |
|
|
$ |
10,282 |
|
Operating Income |
|
|
658 |
|
|
|
1,416 |
|
|
|
1,193 |
|
|
|
951 |
|
Net Income |
|
|
400 |
|
|
|
842 |
|
|
|
703 |
|
|
|
546 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of the Fiscal Year Ended |
|
|
As of 7/29/2006 |
|
1/28/2006 |
|
1/29/2005 |
|
1/31/2004 |
|
|
|
|
|
|
|
|
|
|
(in millions) |
|
|
|
|
Consolidated Balance Sheets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Assets |
|
$ |
8,649 |
|
|
$ |
9,153 |
|
|
$ |
7,979 |
|
|
$ |
6,691 |
|
Long-term Debt |
|
|
1,041 |
|
|
|
1,046 |
|
|
|
1,103 |
|
|
|
1,076 |
|
Stockholders Equity |
|
|
5,319 |
|
|
|
5,957 |
|
|
|
5,034 |
|
|
|
4,212 |
|
For more detailed financial information regarding Kohls, please refer to its financial
statements, which are publicly available with the Securities and Exchange Commission at
http://www.sec.gov.
F-66
DG Crossville Property
On June 2, 2006, we acquired an approximately 24,300 square foot single-tenant retail building
on an approximately 2.73 acre site in Crossville, Tennessee (the DG Crossville Property),
constructed in 2006. The DG Crossville Property is 100% leased to Dolgencorp, Inc., which is a
wholly-owned subsidiary of Dollar General Corporation (Dollar General), which guarantees the
lease. The DG Crossville Property is subject to a net lease pursuant to which the tenant is
required to pay substantially all operating expenses and capital expenditures in addition to base
rent.
The purchase price of the DG Crossville Property was $3.0 million, exclusive of closing costs.
The acquisition was funded by net proceeds from our public offering of common stock and a $2.4
million loan from Wachovia secured by the DG Crossville Property.
Dollar General operates over 8,000 retail stores in the United States selling basic goods and
consumables. Dollar General has a Standard and Poors credit rating of BBB- and its stock is
publicly traded on the New York Stock Exchange under the symbol DG.
The DG Crossville Property had no significant operating history prior to our acquisition of
the property on June 2, 2006. As a result, we are not required to file financial statements with
respect to the acquired property. After reasonable inquiry, we are not aware of any material
factors relating to the property, other than those discussed above, that would cause the reported
financial information not to be necessarily indicative of future operating results.
DG Ardmore Property
On June 9, 2006, we acquired an approximately 24,300 square foot single-tenant retail building
on an approximately 3.8 acre site in Ardmore, Tennessee (the DG Ardmore Property), constructed in
2005. The DG Ardmore Property is 100% leased to Dolgencorp, Inc., which is a wholly-owned
subsidiary of Dollar General, which guarantees the lease. The DG Ardmore Property is subject to a
net lease pursuant to which the tenant is required to pay substantially all operating expenses and
capital expenditures in addition to base rent.
The purchase price of the DG Ardmore Property was $2.8 million, exclusive of closing costs.
The acquisition was funded by net proceeds from our public offering of common stock and an
approximately $2.2 million loan from Wachovia secured by the DG Ardmore Property.
The DG Ardmore Property had no significant operating history prior to our acquisition of the
property on June 9, 2006. As a result, we are not required to file financial statements with
respect to the acquired property. After reasonable inquiry, we are not aware of any material
factors relating to the property, other than those discussed above, that would cause the reported
financial information not to be necessarily indicative of future operating results.
DG Livingston Property
On June 12, 2006, we acquired an approximately 24,300 square foot single-tenant retail
building on an approximately 4.4 acre site in Livingston, Tennessee (the DG Livingston Property),
constructed in 2006. The DG Livingston Property is 100% leased to Dolgencorp, Inc., which is a
wholly-owned subsidiary of Dollar General, which guarantees the lease. The DG Livingston Property
is subject to a net lease pursuant to which the tenant is required to pay substantially all
operating expenses and capital expenditures in addition to base rent.
The purchase price of the DG Livingston Property was $2.9 million, exclusive of closing costs.
The acquisition was funded by net proceeds from our public offering of common stock and an
approximately $2.3 million loan from Wachovia secured by the DG Livingston Property.
The DG Livingston Property had no significant operating history prior to our acquisition of
the property on June 12, 2006. As a result, we are not required to file financial statements with
respect to the acquired property. After reasonable inquiry, we are not aware of any material
factors relating to the property, other than those discussed above, that would cause the reported
financial information not to be necessarily indicative of future operating results.
F-67
AS Macon Property
On January 6, 2006, we acquired an approximately 74,532 square foot single-tenant retail
building on an approximately 7.3 acre site located in Macon, Georgia (the AS Macon Property),
which was constructed in 2005. The AS Macon Property is 100% leased to Academy, Ltd. (Academy).
The AS Macon Property is subject to a net lease pursuant to which the tenant is required to pay
substantially all operating expenses and capital expenditures in addition to base rent.
The purchase price of the AS Macon Property was approximately $5.6 million, exclusive of
closing costs. The acquisition was funded by net proceeds from our public offering of common
stock, and an approximately $4.3 million loan from Wachovia secured by the AS Macon Property.
Academy is a sporting goods retailer, operating over 80 stores across the southeastern United
States. In determining the creditworthiness of Academy we considered a variety of factors,
including historical financial information and financial performance, regional market position, and
the forecasted financial performance of Academy.
The AS Macon Property had no operating history prior to our acquisition of the property on
January 6, 2006. Accordingly, we are not required to file financial statements with respect to the
acquired property. After reasonable inquiry, we are not aware of any material factors relating to
the property that would cause the reported financial information not to be necessarily indicative
of future operating results.
DB Lenexa Property
On January 11, 2006, we acquired an approximately 12,083 square foot single-tenant
freestanding retail building on an approximately 1.6 acre site located in Lenexa, Kansas (the DB
Lenexa Property), constructed in 2005. The DB Lenexa Property is 100 % leased to Davids Bridal,
Inc. (Davids Bridal) subject to a net lease pursuant to which the tenant is required to pay
substantially all operating expenses and capital expenditures in addition to base rent.
The purchase price of the DB Lenexa Property was approximately $3.3 million, exclusive of
closing costs. The acquisition was funded by net proceeds from our public offering of common stock
and an approximately $2.6 million loan from Wachovia secured by the DB Lenexa Property.
Davids Bridal is a bridal retailer, operating over 250 stores across the United States. In
determining the creditworthiness of Davids Bridal we considered a variety of factors, including
historical financial information and financial performance, regional market position, and the
forecasted financial performance of Davids Bridal.
The DB Lenexa Property had no operating history prior to our acquisition of the property on
January 11, 2006. As a result, we are not required to file financial statements with respect to
the acquired property. After reasonable inquiry, we are not aware of any material factors relating
to the property, other than those discussed above, that would cause the reported financial
information not to be necessarily indicative of future operating results.
WG Knoxville Property
On May 8, 2006, we acquired an approximately 15,100 square foot single-tenant retail building
on an approximately 2.07 acre site in Knoxville, Tennessee (the WG Knoxville Property),
constructed in 2000. The WG Knoxville Property is 100% leased to Walgreen Co. subject to a net
lease pursuant to which the tenant is required to pay substantially all operating expenses and
capital expenditures in addition to base rent.
The purchase price of the WG Knoxville Property was approximately $4.8 million, exclusive of
closing costs. The acquisition was funded by net proceeds from our public offering of common stock
and an approximately $3.8 million loan from Wachovia secured by the WG Knoxville Property.
Walgreens has over 4,900 stores in 45 states and Puerto Rico. Walgreens has a Standard &
Poors credit rating of A+ and its stock is publicly traded on the New York Stock Exchange under
the ticker symbol WAG.
The WG Knoxville Property is considered an insignificant acquisition. As a result, we are not
required to file financial statements with respect to the acquired property. After reasonable
inquiry, we are not aware of any material factors relating to the property, other than those
discussed above, that would cause the reported financial information not to be necessarily
indicative of future operating results.
F-68
MT Lakewood Property
On April 20, 2006, we acquired an approximately 12,800 square foot multi-tenant retail
building constructed in 1996 on an approximately .82 acre site in Lakewood, Ohio (the MT Lakewood
Property). The MT Lakewood Property is 100% leased to two tenants, Revco Drug Stores, Inc., which
is a wholly-owned subsidiary of CVS, and Charter One Bank, N.A. Revco subleases their space to
Family Dollar, Inc., while Revco remains the guarantor under the lease.
The purchase price of the MT Lakewood Property was approximately $2.5 million, exclusive of
closing costs. The acquisition was funded by net proceeds from our public offering of common stock
and an approximately $1.9 million loan from an affiliate secured by the MT Lakewood Property.
CVS operates over 5,000 stores in 36 states. CVS has a Standard & Poors credit rating of
A- and the companys stock is publicly traded on the New York Stock Exchange under the ticker
symbol CVS.
Charter One is an operating entity of Citizens Financial Group which has branches, non-branch
retail, and commercial offices in 40 states. Charter One has an S&P Credit Rating of AA-.
The MT Lakewood Property is considered an insignificant acquisition. As a result, we are not
required to file financial statements with respect to the acquired property. After reasonable
inquiry, we are not aware of any material factors relating to the property, other than those
discussed above, that would cause the reported financial information not to be necessarily
indicative of future operating results.
Office Depot Benton, Arkansas
On November 21, 2006, we acquired an approximately 21,000 square foot single-tenant retail
building on an approximately 2.04 acre site in Benton, Arkansas (the OD Benton Property),
constructed in 2001. The OD Benton Property is 100% leased to Office Depot, Inc. (Office Depot)
subject to a net lease pursuant to which the tenant is required to pay substantially all operating
expenses and capital expenditures in addition to base rent. The purchase price of the OD Benton
Property was approximately $3.3 million, exclusive of closing costs. The acquisition was funded by
net proceeds from our ongoing public offering and an approximately $2.1 million loan secured by the
OD Benton Property.
The OD Benton Property is considered an insignificant acquisition. As a result, we are not
required to file financial statements with respect to the acquired property. After reasonable
inquiry, we are not aware of any material factors relating to the property, other than those
discussed above, that would cause the reported financial information not to be necessarily
indicative of future operating results.
Office Depot Oxford, Mississippi
On December 1, 2006, we acquired an approximately 20,000 square foot single-tenant retail
building on an approximately 2.7 acre site located in Oxford, Mississippi (the OD Oxford
Property), which was constructed in 2006. The OD Oxford Property is 100% leased to Office Depot.
The OD Oxford Property is subject to a net lease pursuant to which the tenant is required to pay
substantially all operating expenses and capital expenditures in addition to base rent. The
purchase price of the OD Oxford Property was approximately $3.5 million, exclusive of closing
costs. The acquisition was funded by net proceeds from our ongoing public offering, and an
approximately $2.3 million loan secured by the OD Oxford Property.
The OD Oxford Property had no significant operating history prior to our acquisition of the
property on December 1, 2006. As a result, we are not required to file financial statements with
respect to the acquired property. After reasonable inquiry, we are not aware of any material
factors relating to the property, other than those discussed above, that would cause the reported
financial information not to be necessarily indicative of future operating results.
CVS Glenville Scotia, New York
On November 11, 2006, we acquired an approximately 13,000 square foot single-tenant retail
building on an approximately 1.8 acre site located in Glenville Scotia, New York (the CV Glenville
Scotia Property), which was constructed in 2006. The CV Glenville Scotia Property is 100% leased
to CVS Mack Drug of New York, LLC, a wholly-owned subsidiary of CVS Corporation, which guarantees
the lease. The CV Glenville Scotia Property is subject to a net lease pursuant to which the tenant
is required to pay substantially all operating expenses and capital expenditures in addition to
base rent. The purchase price of the CV Glenville Scotia Property was approximately $5.3 million,
exclusive of closing costs. The acquisition was funded by net proceeds from our ongoing public
offering, and an approximately $4.2 million loan secured by the CV Glenville Scotia Property.
F-69
The CV Glenville Scotia Property had no significant operating history prior to our acquisition
of the property on November 11, 2006. As a result, we are not required to file financial statements
with respect to the acquired property. After reasonable inquiry, we are not aware of any material
factors relating to the property, other than those discussed above, that would cause the reported
financial information not to be necessarily indicative of future operating results.
Staples Peru, Illinois
On November 9, 2006, we acquired an approximately 24,000 square foot single-tenant retail
building on an approximately 2.3 acre site in Peru, Illinois (the ST Peru Property), constructed
in 1998. The ST Peru Property is 100% leased to Staples East, subject to a net lease pursuant to
which the tenant is required to pay substantially all operating expenses and capital expenditures
in addition to base rent. The purchase price of the ST Peru Property was approximately $3.2
million, exclusive of closing costs. The acquisition was funded by net proceeds from our ongoing
public offering and an approximately $1.9 million loan secured by the ST Peru Property.
The ST Peru Property is considered an insignificant acquisition. As a result, we are not
required to file financial statements with respect to the acquired property. After reasonable
inquiry, we are not aware of any material factors relating to the property, other than those
discussed above, that would cause the reported financial information not to be necessarily
indicative of future operating results.
Old Time Pottery Fairview Heights, Illinois
On November 21, 2006, we acquired an approximately 98,000 square foot single-tenant retail
building on an approximately 8.0 acre site in Fairview Heights, Illinois (the OT Fairview Heights
Property), constructed in 1979. The OT Fairview Heights Property is 100% leased to Old Time
Pottery, Inc., subject to a net lease pursuant to which the tenant is required to pay substantially
all operating expenses and capital expenditures in addition to base rent. The purchase price of the
OT Fairview Heights Property was approximately $4.3 million, exclusive of closing costs. The
acquisition was funded by net proceeds from our ongoing public offering and an approximately $3.4
million loan secured by the OT Fairview Heights Property.
The OT Fairview Heights Property is considered an insignificant acquisition. As a result, we
are not required to file financial statements with respect to the acquired property. After
reasonable inquiry, we are not aware of any material factors relating to the property, other than
those discussed above, that would cause the reported financial information not to be necessarily
indicative of future operating results.
Infiniti Davie, Florida
On November 30, 2006, we acquired an approximately 21,000 square foot single-tenant retail
building on an approximately 3.6 acre site located in Davie, Florida (the IN Davie Property),
which was constructed in 2006. The IN Davie Property is 100% leased to Warren Henry Automobiles,
Inc. (WH Auto). The IN Davie Property is subject to a net lease pursuant to which the tenant is
required to pay substantially all operating expenses and capital expenditures in addition to base
rent. The purchase price of the IN Davie Property was approximately $9.4 million, exclusive of
closing costs. The acquisition was funded by net proceeds from our ongoing public offering.
The IN Davie Property had no significant operating history prior to our acquisition of the
property on November 30, 2006. As a result, we are not required to file financial statements with
respect to the acquired property. After reasonable inquiry, we are not aware of any material
factors relating to the property, other than those discussed above, that would cause the reported
financial information not to be necessarily indicative of future operating results.
Mercedes Benz Atlanta, Georgia
On December 15, 2006, we acquired an approximately 42,000 square foot single-tenant retail
building on an approximately 8.0 acre site located in Atlanta, Georgia (the ME Atlanta Property),
which was constructed in 2000. The ME Atlanta Property is 100% leased to Atlanta Eurocars, LLC.
(Atlanta Eurocars). The ME Atlanta Property is subject to a net lease pursuant to which the
tenant is required to pay substantially all operating expenses and capital expenditures in addition
to base rent. The purchase price of the ME Atlanta Property was approximately $11.8 million,
exclusive of closing costs. The acquisition was funded by net proceeds from our ongoing public
offering.
The ME Atlanta Property was a sale leaseback transaction. As such the ME Atlanta Property had
no significant operating history prior to our acquisition of the property on December 15, 2006. As
a result, we are not required to file financial statements with respect to the acquired property.
After reasonable inquiry, we are not aware of any material factors relating to the property, other
than those discussed above, that would cause the reported financial information not to be
necessarily indicative of future operating results.
F-70
ST Crossville Property
On January 26, 2006, we acquired an approximately 23,942 square foot single-tenant retail
building and surrounding property located in Crossville, Tennessee (the ST Crossville Property).
The ST Crossville Property was constructed in 2001 on an approximately 2.31 acre site. The ST
Crossville Property is 100% leased to Staples the Office Superstore East, Inc. (Staples East), a
wholly-owned subsidiary of Staples, Inc. (Staples), subject to a net lease pursuant to which the
tenant is required to pay substantially all operating expenses and capital expenditures in addition
to base rent.
The purchase price of the ST Crossville Property was approximately $2.9 million, exclusive of
closing costs. The acquisition was funded by net proceeds from our public offering of common stock
and an approximately $2.3 million loan from Wachovia secured by the ST Crossville Property.
Staples East operates retail office superstores. In determining the creditworthiness of
Staples East we considered a variety of factors, including historical financial information and
financial performance, regional market position, and the financial position of its parent, Staples.
Staples operates over 1,700 office superstores in 21 countries throughout North and South America,
Europe and Asia. Staples has a Standard and Poors credit rating of BBB and its stock is
publicly traded on the Nasdaq Stock Market under the symbol SPLS.
After reasonable inquiry, we are not aware of any material factors relating to the property,
that would cause the reported financial information not to be necessarily indicative of future
operating results.
F-71
Independent Auditors Report
To the Board of Directors and Stockholders of
Cole Credit Property Trust II, Inc.
Phoenix, AZ
We have audited the accompanying statement of revenues and certain operating expenses (the
Historical Summary) of the ST Crossville Property (the Property) for the year ended December
31, 2005. This Historical Summary is the responsibility of Cole Credit Property Trust II, Inc.
management. Our responsibility is to express an opinion on the Historical Summary based on our
audit.
We conducted our audit in accordance with auditing standards generally accepted in the United
States of America. Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the Historical Summary is free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in the Historical
Summary. An audit also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall presentation of the Historical Summary. We
believe that our audit provides a reasonable basis for our opinion.
The accompanying Historical Summary was prepared for the purpose of complying with the rules and
regulations of the Securities and Exchange Commission (for inclusion in the Form 8-K/A of Cole
Credit Property Trust II, Inc) as described in Note 1 to the Historical Summary and is not intended
to be a complete presentation of the Propertys revenues and expenses.
In our opinion, such Historical Summary presents fairly, in all material respects, the revenue and
certain operating expenses described in Note 1 to the Historical Summary of the ST Crossville
Property for the year ended December 31, 2005, in conformity with accounting principles generally
accepted in the United States of America.
/s/ Deloitte & Touche LLP
Phoenix, Arizona
March 23, 2006
F-72
ST Crossville Property
Statement of Revenues and Certain Operating Expenses
For the Year Ended December 31, 2005
|
|
|
|
|
Revenues: |
|
|
|
|
Rental revenue |
|
$ |
221,464 |
|
|
|
|
|
Total revenues |
|
|
221,464 |
|
|
|
|
|
|
|
|
|
|
Certain Operating Expenses: |
|
|
|
|
Property operating expenses |
|
|
2,312 |
|
|
|
|
|
Total certain operating expenses |
|
|
2,312 |
|
|
|
|
|
|
|
|
|
|
Revenues in excess of certain operating expenses |
|
$ |
219,152 |
|
|
|
|
|
See accompanying notes to statement of revenues and certain operating expenses.
F-73
ST Crossville Property
Notes to the Statement of Revenues and Certain Operating Expenses
For the Year Ended December 31, 2005
1. Basis of Presentation
On January 26, 2006, Cole Credit Property Trust II, Inc. (the Company) acquired a
single-tenant retail building containing approximately 23,942 rentable square feet located on an
approximately 2.31 acre site in Crossville, Tennessee (the ST Crossville Property). The ST
Crossville Property is 100% leased to Staples the Office Superstore East, Inc. (Staples East), a
wholly-owned subsidiary of Staples, Inc. (Staples), subject to a net lease.
The statement of revenues and certain operating expenses (the Historical Summary) has been
prepared for the purpose of complying with the provisions of Article 3-14 of Regulation S-X
promulgated by the Securities and Exchange Commission (the SEC), which requires certain
information with respect to real estate operations to be included with certain filings with the
SEC. This Historical Summary includes the historical revenues and certain operating expenses of
the ST Crossville Property, exclusive of items which may not be comparable to the proposed future
operations of ST Crossville Property. Material amounts that would not be directly attributable to
future operating results of the ST Crossville Property are excluded, and the Historical Summary is
not intended to be a complete presentation of the ST Crossville Propertys revenues and expenses.
Items excluded consist of management fees, depreciation and interest expense.
2. Significant Accounting Policies
Revenue Recognition
The lease is accounted for as an operating lease and minimum rental income is recognized on a
straight-line basis over the remaining term of the lease.
Repairs and Maintenance
Expenditures for repairs and maintenance are expensed as incurred.
Use of Estimates
The preparation of historical summaries in conformity with generally accepted accounting
principles requires the Companys management to make estimates and assumptions that affect the
reported amounts of revenues and certain operating expenses during the reporting period. Actual
results could differ from those estimates.
3. Lease
The aggregate annual minimum future rental payments on the non-cancelable operating lease in
effect as of December 31, 2005 are as follows:
|
|
|
|
|
Year ending December 31: |
|
|
|
|
2006 |
|
$ |
221,464 |
|
2007 |
|
|
221,464 |
|
2008 |
|
|
221,464 |
|
2009 |
|
|
221,464 |
|
2010 |
|
|
221,464 |
|
Thereafter |
|
|
1,218,052 |
|
|
|
|
|
Total |
|
$ |
2,325,372 |
|
|
|
|
|
4. Tenant Concentration
For the year ended December 31, 2005, Staples East accounted for 100% of the annual rental
income for the ST Crossville Property. The lease with Staples East expires on June 30, 2016. If
Staples East were to default on its lease, future revenue of the ST Crossville Property would be
materially and adversely impacted.
F-74
5. Commitments and Contingencies
Litigation
The ST Crossville Property may be subject to legal claims in the ordinary course of business
as a property owner. The Company believes that the ultimate settlement of any potential claims
will not have a material impact on the ST Crossville Propertys results of operations.
Environmental Matters
In connection with the ownership and operation of real estate, the ST Crossville Property may
be potentially liable for costs and damages related to environmental matters. The ST Crossville
Property has not been notified by any governmental authority of any non-compliance, liability or
other claim, and the Company is not aware of any other environmental condition that it believes
will have a material adverse effect on the ST Crossville Propertys results of operations.
F-75
MT Denver Property
On February 6, 2006, we acquired two single-tenant retail buildings, totaling approximately
198,477 square feet, on an approximately 17.84 acre site located in Denver, Colorado (the MT
Denver Property). The MT Denver Property was constructed in 1991.
The purchase price of the MT Denver Property was approximately $18.5 million, exclusive of
closing costs. The acquisition was funded by net proceeds from our public offering of common stock
and approximately $14.33 million under two loans secured by the MT Denver Property.
The MT Denver Property is 100% leased to two tenants, including Sams PW, Inc. (Sams Club),
a wholly-owned subsidiary of Wal-Mart Stores, Inc., and Hob-Lob Limited Partnership (Hobby
Lobby), a wholly-owned subsidiary of H.L. Management, Inc. Pursuant to the lease agreements the
tenants are required to pay substantially all operating expenses and capital expenditures in
addition to base rent.
Sams Club operates membership warehouse stores in 48 states across the United States. In
determining the creditworthiness of Sams Club, the Company considered a variety of factors,
including historical financial information and financial performance, and regional market position.
Hobby Lobby operates retail arts and crafts stores in 28 states across the United States. In
determining the creditworthiness of Hobby Lobby, the Company considered a variety of factors,
including historical financial information and financial performance, and regional market position.
After reasonable inquiry, we are not aware of any material factors relating to the MT Denver
Property, that would cause the reported financial information not to be necessarily indicative of
future operating results.
F-76
Independent Auditors Report
To the Board of Directors and Stockholders of
Cole Credit Property Trust II, Inc.
Phoenix, AZ
We have audited the accompanying statement of revenues and certain operating expenses (the
Historical Summary) of the MT Denver Property (the Property) for the year ended December 31,
2005. This Historical Summary is the responsibility of Cole Credit Property Trust II, Inc.
management. Our responsibility is to express an opinion on the Historical Summary based on our
audit.
We conducted our audit in accordance with auditing standards generally accepted in the United
States of America. Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the Historical Summary is free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in the Historical
Summary. An audit also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall presentation of the Historical Summary. We
believe that our audit provides a reasonable basis for our opinion.
The accompanying Historical Summary was prepared for the purpose of complying with the rules and
regulations of the Securities and Exchange Commission (for inclusion in the Form 8-K/A of Cole
Credit Property Trust II, Inc) as described in Note 1 to the Historical Summary and is not intended
to be a complete presentation of the Propertys revenues and expenses.
In our opinion, such Historical Summary present fairly, in all material respects, the revenue and
certain operating expenses described in Note 1 to the Historical Summary of the MT Denver Property
for the year ended December 31, 2005, in conformity with accounting principles generally accepted
in the United States of America.
/s/ Deloitte & Touche LLP
Phoenix, Arizona
March 23, 2006
F-77
MT Denver Property
Statement of Revenues and Certain Operating Expenses
For the Year Ended December 31, 2005
|
|
|
|
|
Revenues: |
|
|
|
|
Rental revenue |
|
$ |
1,418,197 |
|
Tenant reimbursement income |
|
|
70,467 |
|
|
|
|
|
Total revenues |
|
|
1,488,664 |
|
|
|
|
|
|
|
|
|
|
Certain Operating Expenses: |
|
|
|
|
Property operating expenses |
|
|
84,674 |
|
General and administrative expenses |
|
|
280 |
|
|
|
|
|
Total certain operating expenses |
|
|
84,954 |
|
|
|
|
|
|
|
|
|
|
Revenues in excess of certain operating expenses |
|
$ |
1,403,710 |
|
|
|
|
|
See accompanying notes to statement of revenues and certain operating expenses.
F-78
MT Denver Property
Notes to the Statement of Revenues and Certain Operating Expenses
For the Year Ended December 31, 2005
1. Basis of Presentation
On February 6, 2006, Cole Credit Property Trust II, Inc. (the Company) acquired two
single-tenant retail buildings, totaling approximately 198,477 rentable square feet, on an
approximately 17.84 acre site located in Denver, Colorado (the MT Denver Property). The MT
Denver Property is 100% leased to two tenants, including Sams PW, Inc. (Sams Club), a
wholly-owned subsidiary of Wal-Mart Stores, Inc., and Hob-Lob Limited Partnership (Hobby Lobby),
a wholly-owned subsidiary of H.L. Management, Inc., pursuant to net leases.
The statement of revenues and certain operating expenses (the Historical Summary) has been
prepared for the purpose of complying with the provisions of Article 3-14 of Regulation S-X
promulgated by the Securities and Exchange Commission (the SEC), which requires certain
information with respect to real estate operations to be included with certain filings with the
SEC. This Historical Summary includes the historical revenues and certain operating expenses of MT
Denver Property, exclusive of items which may not be comparable to the proposed future operations
of MT Denver Property. Material amounts that would not be directly attributable to future
operating results of the MT Denver Property are excluded, and the Historical Summary is not
intended to be a complete presentation of the MT Denver Propertys revenues and expenses. Items
excluded consist of depreciation and interest expense.
2. Significant Accounting Policies
Revenue Recognition
All leases are accounted for as operating leases and minimum rental income is recognized on a
straight-line basis over the remaining term of the respective leases. Contingent rental income,
such as percentage rents, is deferred until the specific target which triggers the contingent
rental income is achieved. Tenant reimbursements for certain operating expenses are recognized in
the period the expense is incurred.
Repairs and Maintenance
Expenditures for repairs and maintenance are expensed as incurred.
Use of Estimates
The preparation of historical summaries in conformity with generally accepted accounting
principles requires the Companys management to make estimates and assumptions that affect the
reported amounts of revenues and certain operating expenses during the reporting period. Actual
results could differ from those estimates.
3. Leases
The aggregate annual minimum future rental payments on the non-cancelable operating leases in
effect as of December 31, 2005 are as follows:
|
|
|
|
|
Year ending December 31: |
|
|
|
|
2006 |
|
$ |
1,405,245 |
|
2007 |
|
|
1,405,245 |
|
2008 |
|
|
1,405,245 |
|
2009 |
|
|
1,405,245 |
|
2010 |
|
|
1,405,245 |
|
Thereafter |
|
|
8,314,366 |
|
|
|
|
|
Total |
|
$ |
15,340,591 |
|
|
|
|
|
The minimum future rental income represents the base rent required to be paid under the terms of
the leases exclusive of charges for contingent rents and other operating cost reimbursements.
F-79
4. Tenant Concentration
For the year ended December 31, 2005, the following tenants accounted for 10% or more of the
annual rental income for the MT Denver Property:
|
|
|
|
|
|
|
|
|
|
|
Aggregate Annual |
|
%Aggregate Annual |
Tenant Name |
|
Rental Income |
|
Rental Income |
Sams Club |
|
$ |
820,245 |
|
|
|
58 |
% |
Specs |
|
|
585,000 |
|
|
|
42 |
% |
If these tenants were to default on their leases, future revenue of the MT Denver Property would be
materially and adversely impacted.
5. Commitments and Contingencies
Litigation
The MT Denver Property may be subject to legal claims in the ordinary course of business as a
property owner. The Company believes that the ultimate settlement of any potential claims will not
have a material impact on the MT Denver Propertys results of operations.
Environmental Matters
In connection with the ownership and operation of real estate, the MT Denver Property may be
potentially liable for costs and damages related to environmental matters. The MT Denver Property
has not been notified by any governmental authority of any non-compliance, liability or other
claim, and the Company is not aware of any other environmental condition that it believes will have
a material adverse effect on the MT Denver Propertys results of operations.
F-80
MF Chandler Property
On February 10, 2006, we acquired a 100% fee simple interest in an approximately 31,063 square
foot single-tenant retail building (the MF Chandler Property) located in Chandler Arizona. The
MF Chandler Property was constructed in 2001 on an approximately 2.92 acre site. The MF Chandler
Property is 100% leased to Mountainside Fitness Centers of Ocotillo, LLC., which is a wholly-owned
subsidiary of Hatten Holdings, Inc. Hatten Holdings, Inc. guarantees the lease. The MF Chandler
Property is subject to a net lease, which commenced on July 8, 2002, pursuant to which the tenant
is required to pay substantially all operating expenses and capital expenditures in addition to
base rent.
The purchase price of the MF Chandler Property was approximately $5.9 million, exclusive of
closing costs. The acquisition was funded by net proceeds from our public offering of common stock
and an approximately $4.7 million loan from an affiliate secured by the MF Chandler Property.
Mountainside operates a chain of fitness centers in the state of Arizona. Currently there are
five locations in the Phoenix metro area. In determining the creditworthiness of Mountainside, the
Company considered a variety of factors, including historical financial information and financial
performance, and local market position.
After reasonable inquiry, we are not aware of any material factors relating to the property,
that would cause the reported financial information not to be necessarily indicative of future
operating results.
F-81
Independent Auditors Report
To the Board of Directors and Stockholders of
Cole Credit Property Trust II, Inc.
Phoenix, AZ
We have audited the accompanying statement of revenues and certain operating expenses (the
Historical Summary) of the MF Chandler Property (the Property) for the year ended December 31,
2005. This Historical Summary is the responsibility of Cole Credit Property Trust II, Inc.
management. Our responsibility is to express an opinion on the Historical Summary based on our
audit.
We conducted our audit in accordance with auditing standards generally accepted in the United
States of America. Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the Historical Summary is free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in the Historical
Summary. An audit also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall presentation of the Historical Summary. We
believe that our audit provides a reasonable basis for our opinion.
The accompanying Historical Summary was prepared for the purpose of complying with the rules and
regulations of the Securities and Exchange Commission (for inclusion in the Form 8-K/A of Cole
Credit Property Trust II, Inc) as described in Note 1 to the Historical Summary and is not intended
to be a complete presentation of the Propertys revenues and expenses.
In our opinion, such Historical Summary presents fairly, in all material respects, the revenue and
certain operating expenses described in Note 1 to the Historical Summary of the MF Chandler
Property for the year ended December 31, 2005, in conformity with accounting principles generally
accepted in the United States of America.
/s/ Deloitte & Touche LLP
Phoenix, Arizona
March 23, 2006
F-82
MF Chandler Property
Statement of Revenues and Certain Operating Expenses
For the Year Ended December 31, 2005
|
|
|
|
|
Revenues: |
|
|
|
|
Rental revenue |
|
$ |
556,803 |
|
Tenant reimbursement income |
|
|
21,654 |
|
|
|
|
|
Total revenues |
|
|
578,457 |
|
|
|
|
|
|
|
|
|
|
Certain Operating Expenses: |
|
|
|
|
Property operating expenses |
|
|
21,654 |
|
|
|
|
|
Total certain operating expenses |
|
|
21,654 |
|
|
|
|
|
|
|
|
|
|
Revenues in excess of certain operating expenses |
|
$ |
556,803 |
|
|
|
|
|
See accompanying notes to statement of revenues and certain operating expenses.
F-83
MF Chandler Property
Notes to the Statement of Revenues and Certain Operating Expenses
For the Year Ended December 31, 2005
1. Basis of Presentation
On February 10, 2006, Cole Credit Property Trust II, Inc. (the Company) acquired a
single-tenant retail building containing approximately 31,063 square feet of rentable space located
on an approximately 2.92 acre site in Chandler, Arizona (the MF Chandler Property). The MF
Chandler Property is 100% leased to Mountainside Fitness Centers of Ocotillo, LLC (Mountainside),
a wholly-owned subsidiary of Hatten Holdings, Inc, which guarantees the lease, pursuant to a net
lease.
The statement of revenues and certain operating expenses (the Historical Summary) has been
prepared for the purpose of complying with the provisions of Article 3-14 of Regulation S-X
promulgated by the Securities and Exchange Commission (the SEC), which requires certain
information with respect to real estate operations to be included with certain filings with the
SEC. These Historical Summaries include the historical revenues and certain operating expenses of
the MF Chandler Property, exclusive of items which may not be comparable to the proposed future
operations of the MF Chandler Property. Material amounts that would not be directly attributable
to future operating results of the MF Chandler Property are excluded, and the financial statements
are not intended to be a complete presentation of the MF Chandler Propertys revenues and expenses.
Items excluded consist of depreciation and interest expense.
2. Significant Accounting Policies
Revenue Recognition
The lease is accounted for as an operating lease and minimum rental income is recognized on a
straight-line basis over the remaining term of the lease.
Repairs and Maintenance
Expenditures for repairs and maintenance are expensed as incurred.
Use of Estimates
The preparation of historical summaries in conformity with generally accepted accounting
principles requires the Companys management to make estimates and assumptions that affect the
reported amounts of revenues and certain operating expenses during the reporting period. Actual
results could differ from those estimates.
3. Lease
The aggregate annual minimum future rental payments on the non-cancelable operating lease in
effect as of December 31, 2005 are as follows:
|
|
|
|
|
Year ending December 31: |
|
|
|
|
2006 |
|
$ |
469,051 |
|
2007 |
|
|
493,461 |
|
2008 |
|
|
523,101 |
|
2009 |
|
|
523,101 |
|
2010 |
|
|
523,101 |
|
Thereafter |
|
|
6,983,733 |
|
|
|
|
|
Total |
|
$ |
9,515,548 |
|
|
|
|
|
The minimum future rental income represents the base rent required to be paid under the terms of
the lease exclusive of charges for contingent rents, electrical services, real estate taxes, and
operating cost escalations.
4. Tenant Concentration
For the year ended December 31, 2005, our sole tenant, Mountainside, accounted for 100% of the
annual rental income for the MF Chandler Property. If the tenant were to default on their lease,
future revenue of the MF Chandler Property would be materially and adversely impacted.
F-84
5. Commitments and Contingencies
Litigation
The MF Chandler Property may be subject to legal claims in the ordinary course of business as
a property owner. The Company believes that the ultimate settlement of any potential claims will
not have a material impact on the MF Chandler Propertys results of operations.
Environmental Matters
In connection with the ownership and operation of real estate, the MF Chandler Property may be
potentially liable for costs and damages related to environmental matters. The MF Chandler
Property has not been notified by any governmental authority of any non-compliance, liability or
other claim, and the Company is not aware of any other environmental condition that they believe
will have a material adverse effect on the MF Chandler Propertys results of operations.
F-85
MT Spring Property
On March 2, 2006, we acquired a 100% fee simple interest in an approximately 80,000 square
foot multi-tenant retail center (the MT Spring Property) in Spring, Texas. The MT Spring
Property was constructed in 1973 on an approximately 5.6 acre site.
The purchase price of the MT Spring Property was approximately $9.9 million, exclusive of
closing costs. The acquisition was funded by net proceeds from our public offering of common stock
and an approximately $5.9 million loan from Bear Stearns Commercial Mortgage, Inc. secured by the
MT Spring Property.
The MT Spring Property is 100% leased to five tenants, including, Academy Corp (Academy), CB
Jackson Co, d/b/a Specs Liquor (Specs), Hi-Lo Auto Supply, LP (Hi-Lo), Sherwin-Williams
Company, (Sherwin-Williams) and Jack in the Box Eastern Division, LP pursuant to separate net
leases under which each tenant is required to pay certain operating expenses, capital expenditures,
and a proportionate amount of common area maintenance charges in addition to base rent.
Academy is a sporting goods retailer, operating over 80 stores across the southeastern United
States. Academy leases approximately 50,500 square feet of the MT Spring Property subject to a net
lease, which commenced on October 5, 1999.
Specs is a Houston, Texas-based retailer with over 28 stores located throughout the Houston
metropolitan area. Specs leases approximately 12,300 square feet of the MT Spring Property
subject to a net lease, which commenced on August 1, 1994. The annual base rent of $125,484, is
fixed through the initial lease renewal period, which commenced on January 1, 2006 and expires on
December 31, 2008.
Hi-Lo, a subsidiary of OReilly Automotive, Inc., is an operator of automotive parts retail
stores. Hi-Lo leases approximately 8,100 square feet of the MT Spring Property subject to a net
lease, which commenced on March 5, 1993.
Sherwin-Williams core business is the manufacture, distribution and sale of paint, coatings
and related products. Sherwin-Williams has an S&P Credit Rating of A+ and is publicly traded on
the New York Stock Exchange under the symbol SHW. Sherwin-Williams leases approximately 6,500
square feet of the MT Spring Property subject to a net lease, which commenced on December 1, 1987.
Jack in the Box, Inc. (Jack in the Box), which guarantees the Jack in the Box Eastern
Division, LP lease, operates over 2,000 quick-service restaurants primarily in the western and
southwestern United States. Jack in the Box has an S&P Credit Rating of BB- and is publicly traded
on the New York Stock Exchange under the symbol JBX. Jack in the Box leases approximately 2,600
square feet of the MT Spring Property pursuant to a ground lease, which commenced on July 9, 2001.
F-86
Independent Auditors Report
To the Board of Directors and Stockholders of
Cole Credit Property Trust II, Inc.
Phoenix, AZ
We have audited the accompanying statement of revenues and certain operating expenses (the
Historical Summary) of the MT Spring Property (the Property) for the year ended December 31,
2005. This Historical Summary is the responsibility of Cole Credit Property Trust II, Inc.
management. Our responsibility is to express an opinion on the Historical Summary based on our
audit.
We conducted our audit in accordance with auditing standards generally accepted in the United
States of America. Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the Historical Summary is free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in the Historical
Summary. An audit also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall presentation of the Historical Summary. We
believe that our audit provides a reasonable basis for our opinion.
The accompanying Historical Summary was prepared for the purpose of complying with the rules and
regulations of the Securities and Exchange Commission (for inclusion in the Form 8-K/A of Cole
Credit Property Trust II, Inc) as described in Note 1 to the Historical Summary and is not intended
to be a complete presentation of the Propertys revenues and expenses.
In our opinion, such Historical Summary presents fairly, in all material respects, the revenue and
certain operating expenses described in Note 1 to the Historical Summary of the MT Spring Property
for the year ended December 31, 2005, in conformity with accounting principles generally accepted
in the United States of America.
/s/ Deloitte & Touche LLP
Phoenix, Arizona
March 23, 2006
F-87
MT Spring Property
Statement of Revenues and Certain Operating Expenses
For the Year Ended December 31, 2005
|
|
|
|
|
Revenues: |
|
|
|
|
Rental revenue |
|
$ |
715,925 |
|
Tenant reimbursement income |
|
|
177,304 |
|
|
|
|
|
Total revenues |
|
|
893,229 |
|
|
|
|
|
|
Certain Operating Expenses: |
|
|
|
|
Repairs and maintenance expense |
|
|
22,430 |
|
Utilities Expense |
|
|
17,603 |
|
General and administrative expenses |
|
|
18,979 |
|
Real estate taxes |
|
|
121,972 |
|
|
|
|
|
Total certain operating expenses |
|
|
180,984 |
|
|
|
|
|
|
Revenues in excess of certain operating expenses |
|
$ |
712,245 |
|
|
|
|
|
See accompanying notes to statement of revenues and certain operating expenses.
F-88
MT Spring Property
Notes to the Statement of Revenues and Certain Operating Expenses
For the Year Ended December 31, 2005
1. Basis of Presentation
On March 2, 2006, Cole Credit Property Trust II, Inc. (the Company) acquired a single-story
multi-tenant retail center containing approximately 80,000 square feet of rentable space located on
an approximately 5.6 acre site in Spring, Texas (the MT Spring Property). The MT Spring Property
is 100% leased to five tenants, including Academy Corp (Academy), CB Jackson Co, d/b/a Specs
Liquor (Specs), Hi-Lo Auto Supply, LP (Hi-Lo), Sherwin-Williams Company (Sherwin-Williams),
and Jack in the Box Eastern Division, LP (Jack in the Box), pursuant to separate net leases.
The statement of revenues and certain operating expenses (the Historical Summary) has been
prepared for the purpose of complying with the provisions of Article 3-14 of Regulation S-X
promulgated by the Securities and Exchange Commission (the SEC), which requires certain
information with respect to real estate operations to be included with certain filings with the
SEC. This Historical Summary includes the historical revenues and certain operating expenses of MT
Spring Property, exclusive of items which may not be comparable to the proposed future operations
of the MT Spring Property. Material amounts that would not be directly attributable to future
operating results of the MT Spring Property are excluded, and the historical summary is not
intended to be a complete presentation of the MT Spring Propertys revenues and expenses. Items
excluded consist of depreciation and interest expense.
2. Significant Accounting Policies
Revenue Recognition
All leases are accounted for as operating leases and minimum rental income is recognized on a
straight-line basis over the remaining term of the respective leases. Contingent rental income,
such as percentage rents, is deferred until the specific target which triggers the contingent
rental income is achieved. Tenant reimbursements for certain operating expenses are recognized in
the period the expense is incurred.
Repairs and Maintenance
Expenditures for repairs and maintenance are expensed as incurred.
Use of Estimates
The preparation of historical summaries in conformity with generally accepted accounting principles
requires the Companys management to make estimates and assumptions that affect the reported
amounts of revenues and certain operating expenses during the reporting period. Actual results
could differ from those estimates.
3. Leases
The aggregate annual minimum future rental payments on the non-cancelable operating leases in
effect as of December 31, 2005 are as follows:
|
|
|
|
|
Year ending December 31: |
|
|
|
|
2006 |
|
$ |
696,745 |
|
2007 |
|
|
708,459 |
|
2008 |
|
|
674,799 |
|
2009 |
|
|
536,239 |
|
2010 |
|
|
546,760 |
|
Thereafter |
|
|
6,575,525 |
|
|
|
|
|
Total |
|
$ |
9,738,527 |
|
|
|
|
|
The minimum future rental income represents the base rent required to be paid under the terms of
the leases exclusive of charges for contingent rents and operating cost reimbursements.
F-89
4. Tenant Concentration
For the year ended December 31, 2005, the following tenants accounted for 10% or more of the
annual rental income for the MT Spring Property:
|
|
|
|
|
|
|
|
|
|
|
|
|
Aggregate Annual |
|
%Aggregate Annual |
Tenant Name |
|
|
Rental Income |
|
Rental Income |
Academy |
|
$ |
386,250 |
|
|
|
54 |
% |
Specs |
|
|
115,996 |
|
|
|
16 |
% |
Jack in the Box |
|
|
75,280 |
|
|
|
11 |
% |
Sherwin Williams |
|
|
79,231 |
|
|
|
11 |
% |
If these tenants were to default on their leases, future revenue of the MT Spring Property would be
materially and adversely impacted.
5. Commitments and Contingencies
Litigation
The MT Spring Property may be subject to legal claims in the ordinary course of business as a
property owner. The Company believes that the ultimate settlement of any potential claims will not
have a material impact on the MT Spring Propertys results of operations.
Environmental Matters
In connection with the ownership and operation of real estate, the MT Spring Property may be
potentially liable for costs and damages related to environmental matters. The MT Spring Property
has not been notified by any governmental authority of any non-compliance, liability or other
claim, and the Company is not aware of any other environmental condition that is believes will have
a material adverse effect on the MT Spring Propertys results of operations.
F-90
WT Arnold Property
On June 14, 2006, we acquired an approximately 50,000 square foot single-tenant retail
building located in Arnold, Missouri (the WT Arnold Property). The WT Arnold Property was
constructed in 1998 on an approximately 9.7 acre site. The WT Arnold Property is 100% leased to
Wehrenberg, Inc., subject to a net lease pursuant to which the tenant is required to pay
substantially all operating expenses and capital expenditures in addition to base rent.
The purchase price of the WT Arnold Property was $8.2 million, exclusive of closing costs.
The acquisition was funded by net proceeds from our public offering of common stock.
Wehrenberg Theatres, headquartered in St. Louis, is the nations oldest family-owned and
operated theater company. The company was started in 1906 by Fred Wehrenberg and currently
operates 15 theatres in Missouri, Illinois, and Iowa.
In evaluating the WT Arnold Property as a potential acquisition and determining the
appropriate amount of consideration to be paid for our interests therein, a variety of factors were
considered, including our consideration of property condition reports; unit-level store
performance; property location, visibility and access; age of the property, physical condition and
curb appeal; neighboring property uses; local market conditions, including vacancy rates; area
demographics, including trade area population and average household income; neighborhood growth
patterns and economic conditions; and the presence of demand generators. After reasonable inquiry,
the Company is not aware of any material factors relating to the WT Arnold Property, other than
those discussed above, that would cause the reported financial information not to be necessarily
indicative of future operating results.
F-91
Independent Auditors Report
To the Board of Directors and Stockholders of
Cole Credit Property Trust II, Inc.
Phoenix, AZ
We have audited the accompanying statement of revenues and certain operating expenses (the
Historical Summary) of the WT Arnold Property (the Property) for the year ended October 31,
2005. This Historical Summary is the responsibility of Cole Credit Property Trust II, Inc.
management. Our responsibility is to express an opinion on the Historical Summary based on our
audit.
We conducted our audit in accordance with auditing standards generally accepted in the United
States of America. Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the Historical Summary is free of material misstatement. An audit also
includes examining, on a test basis, evidence supporting the amounts and disclosures in the
Historical Summary. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall presentation of the
Historical Summary. We believe that our audit provides a reasonable basis for our opinion.
The accompanying Historical Summary was prepared for the purpose of complying with the rules and
regulations of the Securities and Exchange Commission (for inclusion in the Post Effective
Amendment of Cole Credit Property Trust II, Inc.) as described in Note 1 to the Historical Summary
and is not intended to be a complete presentation of the Propertys revenues and expenses.
In our opinion, such Historical Summary presents fairly, in all material respects, the revenue and
certain operating expenses described in Note 1 to the Historical Summary of the WT Arnold Property
for the year ended October 31, 2005, in conformity with accounting principles generally accepted in
the United States of America.
/s/ DELOITTE & TOUCHE LLP
Phoenix, Arizona
June 23, 2006
F-92
WT Arnold Property
Statement of Revenues and Certain Operating Expenses
For the Year Ended October 31, 2005 and
the Six-Month Period Ended April 30, 2006 (unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended |
|
|
|
Year Ended |
|
|
April 30, 2006 |
|
|
|
October 31, 2005 |
|
|
(Unaudited) |
|
Revenues: |
|
|
|
|
|
|
|
|
Rental revenue |
|
$ |
807,737 |
|
|
$ |
403,868 |
|
Tenant reimbursement income |
|
|
18,827 |
|
|
|
8,758 |
|
|
|
|
|
|
|
|
Total revenues |
|
|
826,564 |
|
|
|
412,626 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Certain Operating Expenses: |
|
|
|
|
|
|
|
|
Property operating expenses |
|
|
18,827 |
|
|
|
8,758 |
|
Insurance & other expenses |
|
|
2,798 |
|
|
|
112 |
|
|
|
|
|
|
|
|
Total certain operating expenses |
|
|
21,625 |
|
|
|
8,870 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues in excess of certain operating expenses |
|
$ |
804,939 |
|
|
$ |
403,756 |
|
|
|
|
|
|
|
|
See accompanying notes to statement of revenues and certain operating expenses.
F-93
WT Arnold Property
Notes to the Statement of Revenues and Certain Operating Expenses
For the Year Ended October 31, 2005
and the Six-Month Period ended April 30, 2006 (unaudited)
1. Basis of Presentation
On June 14, 2006, Cole Credit Property Trust II, Inc. (the Company) acquired a single-tenant
retail building containing approximately 50,000 square feet of rentable space located on an
approximately 9.65 acre site in Arnold, Missouri (the WT Arnold Property). The WT Arnold
Property is 100% leased to Wehrenberg, Inc. (Wehrenberg), pursuant to a net lease.
The statement of revenues and certain operating expenses (the Historical Summary) has been
prepared for the purpose of complying with the provisions of Article 3-14 of Regulation S-X
promulgated by the Securities and Exchange Commission (the SEC), which requires certain
information with respect to real estate operations to be included with certain filings with the
SEC. These Historical Summaries include the historical revenues and certain operating expenses of
the WT Arnold Property, exclusive of items which may not be comparable to the proposed future
operations of the WT Arnold Property. Material amounts that would not be directly attributable to
future operating results of the WT Arnold Property are excluded, and the financial statements are
not intended to be a complete presentation of the WT Arnold Propertys revenues and expenses.
Items excluded consist of depreciation and interest expense.
2. Significant Accounting Policies
Revenue Recognition
The lease is accounted for as an operating lease and minimum rental income is recognized on a
straight-line basis over the remaining term of the lease.
Repairs and Maintenance
Expenditures for repairs and maintenance are expensed as incurred.
Use of Estimates
The preparation of historical summaries in conformity with generally accepted accounting
principles requires the Companys management to make estimates and assumptions that affect the
reported amounts of revenues and certain operating expenses during the reporting period. Actual
results could differ from those estimates.
3. Lease
The aggregate annual minimum future rental payments on the non-cancelable operating lease in
effect as of October 31, 2005 are as follows:
|
|
|
|
|
Year ending October 31: |
|
|
|
|
2006 |
|
$ |
784,453 |
|
2007 |
|
|
784,453 |
|
2008 |
|
|
784,453 |
|
2009 |
|
|
823,184 |
|
2010 |
|
|
836,094 |
|
Thereafter |
|
|
7,205,163 |
|
|
|
|
|
Total |
|
$ |
11,217,800 |
|
|
|
|
|
The minimum future rental income represents the base rent required to be paid under the terms of
the lease exclusive of charges for contingent rents, electrical services, real estate taxes, and
operating cost escalations.
4. Tenant Concentration
For the year ended October 31, 2005, the sole tenant, Wehrenberg, accounted for 100% of the
annual rental income for the WT Arnold Property. If the tenant were to default on their lease,
future revenue of the WT Arnold Property would be materially and adversely impacted.
F-94
5. Commitments and Contingencies
Litigation
The WT Arnold Property may be subject to legal claims in the ordinary course of business as a
property owner. The Company believes that the ultimate settlement of any potential claims will not
have a material impact on the WT Arnold Propertys results of operations.
Environmental Matters
In connection with the ownership and operation of real estate, the WT Arnold Property may be
potentially liable for costs and damages related to environmental matters. The WT Arnold Property
has not been notified by any governmental authority of any non-compliance, liability or other
claim, and the Company is not aware of any other environmental condition that they believe will
have a material adverse effect on the WT Arnold Propertys results of operations.
F-95
GG OFallon Property
On September 29, 2006, we acquired an approximately 41,000 square foot single-tenant retail
building located in OFallon, Illinois (the GG OFallon Property). The GG OFallon Property was
constructed in 2005 on an approximately 4.50 acre site. The GG OFallon Property is 100% leased to
Golds St Louis, LLC, which is a wholly-owned subsidiary of Golds Gym International, Inc. (Golds
Gym), which guarantees the lease, subject to a net lease pursuant to which the tenant is required
to pay substantially all operating expenses and capital expenditures in addition to base rent.
The purchase price of the GG OFallon Property was $7.3 million, exclusive of closing costs.
The acquisition was funded by net proceeds from our public offering of common stock and a $5.8
million loan, which is secured by the GG OFallon Property.
In evaluating the GG OFallon Property as a potential acquisition and determining the
appropriate amount of consideration to be paid for our interests therein, a variety of factors were
considered, including our consideration of property condition reports; unit-level store
performance; property location, visibility and access; age of the property, physical condition and
curb appeal; neighboring property uses; local market conditions, including vacancy rates; area
demographics, including trade area population and average household income; neighborhood growth
patterns and economic conditions; and the presence of demand generators. After reasonable inquiry,
the Company is not aware of any material factors relating to the GG OFallon Property, other than
those discussed above, that would cause the reported financial information not to be necessarily
indicative of future operating results.
F-96
Independent Auditors Report
To the Board of Directors and Stockholders of
Cole Credit Property Trust II, Inc.
Phoenix, AZ
We have audited the accompanying statement of revenues and certain operating expenses (the
Historical Summary) of the GG OFallon Property (the Property) for the year ended December 31,
2005. This Historical Summary is the responsibility of Cole Credit Property Trust II, Inc.
management. Our responsibility is to express an opinion on the Historical Summary based on our
audit.
We conducted our audit in accordance with auditing standards generally accepted in the United
States of America. Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the Historical Summary is free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in the Historical
Summary. An audit also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall presentation of the Historical Summary. We
believe that our audit provides a reasonable basis for our opinion.
The accompanying Historical Summary was prepared for the purpose of complying with the rules and
regulations of the Securities and Exchange Commission (for inclusion in the Post Effective
Amendment of Cole Credit Property Trust II, Inc) as described in Note 1 to the Historical Summary
and is not intended to be a complete presentation of the Propertys revenues and expenses.
In our opinion, such Historical Summary presents fairly, in all material respects, the revenue and
certain operating expenses described in Note 1 to the Historical Summary of the GG OFallon
Property for the year ended December 31, 2005, in conformity with accounting principles generally
accepted in the United States of America.
/s/ DELOITTE & TOUCHE LLP
Phoenix, Arizona
September 23, 2006
F-97
GG OFallon Property
Statement of Revenues and Certain Operating Expenses
For the Year Ended December 31, 2005 and
the Six Months Ended June 30, 2006 (unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended |
|
|
|
Year Ended |
|
|
June 30, 2006 |
|
|
|
December 31, 2005 |
|
|
(Unaudited) |
|
Revenues: |
|
|
|
|
|
|
|
|
Rental revenue |
|
$ |
648,461 |
|
|
$ |
304,231 |
|
Tenant reimbursement income |
|
|
588 |
|
|
|
2,298 |
|
|
|
|
|
|
|
|
Total revenues |
|
|
649,049 |
|
|
|
306,529 |
|
|
|
|
|
|
|
|
|
|
Certain Operating Expenses: |
|
|
|
|
|
|
|
|
Property operating expenses |
|
|
734 |
|
|
|
|
|
Insurance & other expenses |
|
|
|
|
|
|
2,298 |
|
|
|
|
|
|
|
|
Total certain operating expenses |
|
|
734 |
|
|
|
2,298 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues in excess of certain operating expenses |
|
$ |
648,315 |
|
|
$ |
304,231 |
|
|
|
|
|
|
|
|
See accompanying notes to statement of revenues and certain operating expenses.
F-98
GG OFallon Property
Notes to the Statement of Revenues and Certain Operating Expenses
For the Year Ended December 31, 2005
and the Six Months Ended June 30, 2006 (unaudited)
1. Basis of Presentation
Cole Acquisitions I, LLC (Cole Acquisitions), an affiliate of Cole Credit Property Trust II,
Inc. (the Company) and our advisor, Cole Operating Partnership II, LP (Cole OP II), has entered
into an agreement to purchase an approximately 41,000-square foot single-tenant retail building on
an approximately 4.5 acre site located in OFallon, Illinois (the GG OFallon Property). Subject
to satisfactory completion of certain conditions to closing, we expect that Cole Acquisitions will
assign all of its rights and obligations under the GG OFallon Agreement to a wholly-owned
subsidiary of Cole OP II prior to closing of the transaction. The GG OFallon Property is 100%
leased to Golds St. Louis, LLC, (Golds St. Louis) a wholly-owned subsidiary of Golds Gym
International, Inc. (Golds Gym) which guarantees the lease. The GG OFallon Property is subject
to a net lease pursuant to which the tenant is required to pay substantially all operating expenses
and capital expenditures in addition to base rent.
The statement of revenues and certain operating expenses (the Historical Summary) has been
prepared for the purpose of complying with the provisions of Article 3-14 of Regulation S-X
promulgated by the Securities and Exchange Commission (the SEC), which requires certain
information with respect to real estate operations to be included with certain filings with the
SEC. These Historical Summaries include the historical revenues and certain operating expenses of
the GG OFallon Property, exclusive of items which may not be comparable to the proposed future
operations of the GG OFallon Property. Material amounts that would not be directly attributable
to future operating results of the GG OFallon Property are excluded, and the financial statements
are not intended to be a complete presentation of the GG OFallon Propertys revenues and expenses.
Items excluded consist of depreciation and interest expense.
2. Significant Accounting Policies
Revenue Recognition
The lease is accounted for as an operating lease and minimum rental income is recognized on a
straight-line basis over the remaining term of the lease.
Repairs and Maintenance
Expenditures for repairs and maintenance are expensed as incurred.
Use of Estimates
The preparation of historical summaries in conformity with generally accepted accounting
principles requires the Companys management to make estimates and assumptions that affect the
reported amounts of revenues and certain operating expenses during the reporting period. Actual
results could differ from those estimates.
3. Lease
The aggregate annual minimum future rental payments on the non-cancelable operating lease in
effect as of December 31, 2005 are as follows:
|
|
|
|
|
Year ending December 31: |
|
|
|
|
2006 |
|
$ |
588,000 |
|
2007 |
|
|
588,000 |
|
2008 |
|
|
588,000 |
|
2009 |
|
|
588,000 |
|
2010 |
|
|
588,000 |
|
Thereafter |
|
|
5,260,200 |
|
|
|
|
|
Total |
|
$ |
8,200,200 |
|
|
|
|
|
The minimum future rental income represents the base rent required to be paid under the terms of
the lease exclusive of charges for contingent rents, electrical services, real estate taxes, and
operating cost escalations.
F-99
4. Tenant Concentration
As of December 31, 2005, our tenant, Golds St. Louis, accounted for 23% of the December 31,
2005 rental income for the GG OFallon Property. Prior to the lease commencement on October 1,
2005, by Golds St. Louis, a previous tenant accounted for 77% of the rental income for the same
period. If the tenant were to default on their lease, future revenue of the GG OFallon Property
would be materially and adversely impacted.
5. Commitments and Contingencies
Litigation
The GG OFallon Property may be subject to legal claims in the ordinary course of business as
a property owner. The Company believes that the ultimate settlement of any potential claims will
not have a material impact on the GG OFallon Propertys results of operations.
Environmental Matters
In connection with the ownership and operation of real estate, the GG OFallon Property may be
potentially liable for costs and damages related to environmental matters. The GG OFallon
Property has not been notified by any governmental authority of any non-compliance, liability or
other claim, and the Company is not aware of any other environmental condition that they believe
will have a material adverse effect on the GG OFallon Propertys results of operations.
F-100
AM Peoria Property
On October 23, 2006, we acquired an approximately 127,000 square foot single-tenant retail
building on an approximately 12.5 acre site located in Peoria, Illinois (the AM Peoria Property),
which was constructed in 2003. The AM Peoria Property is 100% leased to American TV & Appliance of
Madison, Inc. The AM Peoria Property is subject to a net lease pursuant to which the tenant is
required to pay substantially all operating expenses and capital expenditures in addition to base
rent.
The purchase price of the AM Peoria Property was approximately $11.3 million, exclusive of
closing costs. The acquisition was funded by net proceeds from the Companys ongoing public
offering and the assumption of an approximately $7.4 million loan secured by the AM Peoria
Property.
In evaluating the AM Peoria property as a potential acquisition and determining the
appropriate amount of consideration to be paid for our interests therein, a variety of factors were
considered, including our consideration of property condition reports; unit-level store
performance; property location, visibility and access; age of the property, physical condition and
curb appeal; neighboring property uses; local market conditions, including vacancy rates; area
demographics, including trade area population and average household income; neighborhood growth
patters and economic conditions; and the presence of demand generators. After reasonable inquiry,
the Company is not aware of any material factors relating to the AM Peoria property, other than
those discussed above, that would cause the reported financial information not to be necessarily
indicative of future operating results.
F-101
Independent Auditors Report
To the Board of Directors and Stockholders of
Cole Credit Property Trust II, Inc.
Phoenix, AZ
We have audited the accompanying statement of revenues and certain operating expenses (the
Historical Summary) of the AM Peoria Property (the Property) for the year ended December 31,
2005. This Historical Summary is the responsibility of Cole Credit Property Trust II, Inc.
management. Our responsibility is to express an opinion on the Historical Summary based on our
audit.
We conducted our audit in accordance with auditing standards generally accepted in the United
States of America. Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the Historical Summary is free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in the Historical
Summary. An audit also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall presentation of the Historical Summary. We
believe that our audit provides a reasonable basis for our opinion.
The accompanying Historical Summary was prepared for the purpose of complying with the rules and
regulations of the Securities and Exchange Commission (for inclusion in the Supplement of Cole
Credit Property Trust II, Inc) as described in Note 1 to the Historical Summary and is not intended
to be a complete presentation of the Propertys revenues and expenses.
In our opinion, such Historical Summary presents fairly, in all material respects, the revenue and
certain operating expenses described in Note 1 to the Historical Summary of the AM Peoria Property
for the year ended December 31, 2005, in conformity with accounting principles generally accepted
in the United States of America.
/s/ DELOITTE & TOUCHE LLP
Phoenix, Arizona
October 27, 2006
F-102
AM Peoria Property
Statement of Revenues and Certain Operating Expenses
For the Year Ended December 31, 2005 and
the Nine Months Ended September 30, 2006 (Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended |
|
|
|
Year Ended |
|
|
September 30, 2006 |
|
|
|
December 31, 2005 |
|
|
(Unaudited) |
|
Revenues: |
|
|
|
|
|
|
|
|
Rental revenue |
|
$ |
927,517 |
|
|
$ |
695,638 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues |
|
|
927,517 |
|
|
|
695,638 |
|
|
|
|
|
|
|
|
|
|
Expenses: |
|
|
|
|
|
|
|
|
Professional & Administrative Expenses |
|
|
13,830 |
|
|
|
7,494 |
|
|
|
|
|
|
|
|
Total certain operating expenses |
|
|
13,830 |
|
|
|
7,494 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues in excess of certain operating expenses |
|
$ |
913,687 |
|
|
$ |
688,144 |
|
|
|
|
|
|
|
|
See accompanying notes to statement of revenues and certain operating expenses.
F-103
AM Peoria Property
Notes to the Statement of Revenues and Certain Operating Expenses
For the Year Ended December 31, 2005
and the Nine Months Ended September 30, 2006 (Unaudited)
1. Basis of Presentation
On October 23, 2006, Cole Credit Property Trust II, Inc. (the Company) acquired a
single-tenant retail building containing approximately 127,000 square feet of rentable space
located on an approximately 12.5 acre site in Peoria, Illinois (the AM Peoria Property). The AM
Peoria Property is 100% leased to American TV & Appliance of Madison, Inc. (American TV),
pursuant to a net lease.
The statement of revenues and certain operating expenses (the Historical Summary) has been
prepared for the purpose of complying with the provisions of Article 3-14 of Regulation S-X
promulgated by the Securities and Exchange Commission (the SEC), which requires certain
information with respect to real estate operations to be included with certain filings with the
SEC. These Historical Summaries include the historical revenues and certain operating expenses of
the AM Peoria Property, exclusive of items which may not be comparable to the proposed future
operations of the AM Peoria Property. Material amounts that would not be directly attributable to
future operating results of the AM Peoria Property are excluded, and the financial statements are
not intended to be a complete presentation of the AM Peoria Propertys revenues and expenses. Items
excluded consist of depreciation and interest expense.
2. Significant Accounting Policies
Revenue Recognition
The lease is accounted for as an operating lease and minimum rental income is recognized on a
straight-line basis over the remaining term of the lease.
Repairs and Maintenance
Expenditures for repairs and maintenance are expensed as incurred.
Use of Estimates
The preparation of historical summaries in conformity with generally accepted accounting
principles requires the Companys management to make estimates and assumptions that affect the
reported amounts of revenues and certain operating expenses during the reporting period. Actual
results could differ from those estimates.
3. Lease
The aggregate annual minimum future rental payments on the non-cancelable operating lease in
effect as of December 31, 2005 are as follows:
|
|
|
|
|
Year ending December 31: |
|
|
|
|
2006 |
|
$ |
840,750 |
|
2007 |
|
|
840,750 |
|
2008 |
|
|
861,769 |
|
2009 |
|
|
924,825 |
|
2010 |
|
|
924,825 |
|
Thereafter |
|
|
7,629,826 |
|
|
|
|
|
Total |
|
$ |
12,022,725 |
|
|
|
|
|
The minimum future rental income represents the base rent required to be paid under the terms
of the lease exclusive of charges for contingent rents, electrical services, real estate taxes, and
operating cost escalations.
F-104
4. Tenant Concentration
For the year ended December 31, 2005, our sole tenant, American TV accounted for 100% of the
annual rental income for the AM Peoria Property. If the tenant were to default on their lease,
future revenue of the AM Peoria Property would be materially and adversely impacted.
5. Commitments and Contingencies
Litigation
The AM Peoria Property may be subject to legal claims in the ordinary course of business as a
property owner. The Company believes that the ultimate settlement of any potential claims will not
have a material impact on the AM Peoria Propertys results of operations.
Environmental Matters
In connection with the ownership and operation of real estate, the AM Peoria Property may be
potentially liable for costs and damages related to environmental matters. The AM Peoria Property
has not been notified by any governmental authority of any non-compliance, liability or other
claim, and the Company is not aware of any other environmental condition that they believe will
have a material adverse effect on the AM Peoria Propertys results of operations.
F-105
Summary Financial Information
Probable Business Acquisitions
La-Z-Boy Newington, Connecticut
Series B has entered into an agreement to purchase an approximately 21,000 square foot
single-tenant automotive retail building on an approximately 2.6 acre site located in Newington,
Connecticut (the LZ Newington Property). Subject to satisfactory completion of certain conditions
to closing, we expect that Series B will assign all of its rights and obligations under the LZ
Newington Agreement to a wholly-owned subsidiary of Cole OP II prior to closing of the transaction.
The LZ Newington Property is 100% leased to LZB Furniture Galleries of Paramus, Inc., which is a
wholly owned subsidiary of La-Z-Boy Incorporated, which guarantees the lease. The LZ Newington
Property is subject to a net lease pursuant to which the tenant is required to pay substantially
all operating expenses and capital expenditures in addition to base rent.
The purchase price of the LZ Newington Property will be approximately $6.9 million, exclusive
of closing costs. We expect to purchase the LZ Newington Property with proceeds from our ongoing
public offering and an approximately $4.1 million loan to be secured by the LZ Newington Property.
We expect the loan to be a ten-year fixed rate, interest only loan.
The LZ Newington
Property will have no significant operating history prior to our acquisition of the
property. Accordingly, we are not required to file financial statements with respect to the
potentially acquired property. After reasonable inquiry, we are not aware of any material factors
relating to the property that would cause the reported financial information not to be necessarily
indicative of future operating results.
Staples Clarksville, Indiana
Series B an affiliate of us and our advisor, has entered into an agreement to purchase an
approximately 20,000 square foot single-tenant automotive retail building on an approximately 1.98
acre site located in Clarksville, Indiana (the ST Clarksville Property). Subject to satisfactory
completion of certain conditions to closing, we expect that Series B will assign all of its rights
and obligations under the ST Clarksville Agreement to a wholly-owned subsidiary of Cole OP II prior
to closing of the transaction. The ST Clarksville Property is 100% leased to Staples the Office
Superstore East, Inc., which is a wholly-owned subsidiary of Staples. The ST Clarksville Property
is subject to a net lease pursuant to which the tenant is required to pay substantially all
operating expenses and capital expenditures in addition to base rent.
The purchase price of the ST Clarksville Property will be approximately $4.4 million,
exclusive of closing costs. We expect to purchase the ST Clarksville Property with proceeds from
our ongoing public offering and an approximately $2.9 million loan to be secured by the ST
Clarksville Property. We expect the loan to be a ten-year fixed rate, interest only loan.
The ST Clarksville Property will have no operating history prior to our acquisition of the
property. Accordingly, we are not required to file financial statements with respect to the
potentially acquired property. After reasonable inquiry, we are not aware of any material factors
relating to the property that would cause the reported financial information not to be necessarily
indicative of future operating results.
Office Depot Enterprise, Alabama
Cole Acquisitions I, LLC, (Cole Acquisitions) an affiliate of us and our advisor, has
entered into an agreement to purchase an approximately 20,000 square foot single-tenant automotive
retail building on an approximately 4.2 acre site located in Enterprise, Alabama (the OD
Enterprise Property). Subject to satisfactory completion of certain conditions to closing, we
expect that Cole Acquisitions will assign all of its rights and obligations under the OD Enterprise
Agreement to a wholly-owned subsidiary of Cole OP II prior to closing of the transaction. The OD
Enterprise Property is 100% leased to Office Depot. The OD Enterprise Property is subject to a net
lease pursuant to which the tenant is required to pay substantially all operating expenses and
capital expenditures in addition to base rent.
The purchase price of the OD Enterprise Property will be approximately $2.9 million, exclusive
of closing costs. We expect to purchase the OD Enterprise Property with proceeds from our ongoing
public offering and an approximately $1.9 million loan to be secured by the OD Enterprise Property.
We expect the loan to be a ten-year fixed rate, interest only loan.
F-106
The OD Enterprise Property will have no operating history prior to our acquisition of the
property. Accordingly, we are not required to file financial statements with respect to the
potentially acquired property. After reasonable inquiry, we are not aware of any material factors
relating to the property that would cause the reported financial information not to be necessarily
indicative of future operating results.
F-107
SE Cincinnati Property
Series B has entered into an agreement to purchase an approximately 79,000 square foot
single-tenant retail building on an approximately 7.1 acre site located in Cincinnati, Ohio (the
SE Cincinnati Property), for a purchase price of approximately $8.8 million, exclusive of closing
costs (the SE Cincinnati Agreement). Subject to the satisfactory completion of certain conditions
to closing, we expect that Series B will assign all of its rights and obligations under the SE
Cincinnati Agreement to a wholly-owned subsidiary of Cole OP II prior to the closing of the
transaction.
The SE Cincinnati Property was constructed in 1995 and is 100% leased to Sofa Express, Inc.
The SE Cincinnati Property is subject to a net lease, pursuant to which the tenant is required to
pay substantially all operating expenses and capital expenditures in addition to base rent. The
annual base rent of $769,051 increases to $847,928 on December 1, 2009 through the initial lease
term, which expires November 30, 2015.
We expect to purchase the SE Cincinnati Property with proceeds from our ongoing public
offering and an approximately $4.4 million loan to be secured by the SE Cincinnati Property. We
expect the loan to be a five-year fixed rate, interest only loan.
In evaluating the SE Cincinnati Property as a potential acquisition and determining the appropriate
amount of consideration to be paid for our interests therein, a variety of factors were considered,
including our consideration of property condition reports; unit-level store performance; property
location, visibility and access; age of the property, physical condition and curb appeal;
neighboring property uses; local market conditions, including vacancy rates; area demographics,
including trade area population and average household income; neighborhood growth patterns and
economic conditions; and the presence of demand generators. After reasonable inquiry, we are not
aware of any material factors relating to the SE Cincinnati Property, other than those discussed
above, that would cause the reported financial information to be necessarily indicative of future
operating results.
F-108
Independent Auditors Report
To the Board of Directors and Stockholders of
Cole Credit Property Trust II, Inc.
Phoenix, AZ
We have audited the accompanying statement of revenues and certain operating expenses (the
Historical Summary) of the SE Cincinnati Property (the Property) for the year ended December
31, 2005. This Historical Summary is the responsibility of Cole Credit Property Trust II, Inc.
management. Our responsibility is to express an opinion on the Historical Summary based on our
audit.
We conducted our audit in accordance with auditing standards generally accepted in the United
States of America. Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the Historical Summary is free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in the Historical
Summary. An audit also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall presentation of the Historical Summary. We
believe that our audit provides a reasonable basis for our opinion.
The accompanying Historical Summary was prepared for the purpose of complying with the rules and
regulations of the Securities and Exchange Commission (for inclusion in the Supplement of Cole
Credit Property Trust II, Inc) as described in Note 1 to the Historical Summary and is not intended
to be a complete presentation of the Propertys revenues and expenses.
In our opinion, such Historical Summary presents fairly, in all material respects, the revenue and
certain operating expenses described in Note 1 to the Historical Summary of the SE Cincinnati
Property for the year ended December 31, 2005, in conformity with accounting principles generally
accepted in the United States of America.
/s/ DELOITTE & TOUCHE LLP
Phoenix, Arizona
December 19, 2006
F-109
SE Cincinnati Property
Statement of Revenues and Certain Operating Expenses
For the Year Ended December 31, 2005 and
the Nine Months Ended September 30, 2006 (Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended |
|
|
|
Year Ended |
|
|
September 30, 2006 |
|
|
|
December 31, 2005 |
|
|
(Unaudited) |
|
Revenues: |
|
|
|
|
|
|
|
|
Rental revenue |
|
$ |
768,656 |
|
|
$ |
576,492 |
|
Tenant reimbursement income |
|
|
8,760 |
|
|
|
6,919 |
|
|
|
|
|
|
|
|
Total revenues |
|
|
777,416 |
|
|
|
583,411 |
|
|
|
|
|
|
|
|
|
|
Certain Operating Expenses: |
|
|
|
|
|
|
|
|
Repairs and maintenance |
|
|
|
|
|
|
2,644 |
|
Professional and administrative expenses |
|
|
17,925 |
|
|
|
12,524 |
|
|
|
|
|
|
|
|
Total certain operating expenses |
|
|
17,925 |
|
|
|
15,168 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues in excess of certain operating expenses |
|
$ |
759,491 |
|
|
$ |
568,243 |
|
|
|
|
|
|
|
|
See accompanying notes to statement of revenues and certain operating expenses.
F-110
SE Cincinnati Property
Notes to the Statement of Revenues and Certain Operating Expenses
For the Year Ended December 31, 2005
and the Nine Months Ended September 30, 2006 (Unaudited)
1. Basis of Presentation
Cole Credit Property Trust II, Inc. (the Company) intends to acquire a single-tenant retail
building containing approximately 79,000 square feet of rentable space located on an approximately
7.1 acre site in Cincinnati, OH (the SE Cincinnati Property). The SE Cincinnati Property is 100%
leased to Sofa Express, Inc. (Sofa Express), pursuant to a net lease.
The statement of revenues and certain operating expenses (the Historical Summary) has been
prepared for the purpose of complying with the provisions of Article 3-14 of Regulation S-X
promulgated by the Securities and Exchange Commission (the SEC), which requires certain
information with respect to real estate operations to be included with certain filings with the
SEC. These Historical Summaries include the historical revenues and certain operating expenses of
the SE Cincinnati Property, exclusive of items which may not be comparable to the proposed future
operations of the SE Cincinnati Property. Material amounts that would not be directly attributable
to future operating results of the SE Cincinnati Property are excluded, and the financial
statements are not intended to be a complete presentation of the SE Cincinnati Propertys revenues
and expenses. Items excluded consist of depreciation, amortization, bank service charges, fees
relating to a letter of credit and interest expense.
2. Significant Accounting Policies
Revenue Recognition
The lease is accounted for as an operating lease and minimum rental income is recognized on a
straight-line basis over the remaining term of the lease.
Repairs and Maintenance
Expenditures for repairs and maintenance are expensed as incurred.
Use of Estimates
The preparation of historical summaries in conformity with generally accepted accounting principles
requires the Companys management to make estimates and assumptions that affect the reported
amounts of revenues and certain operating expenses during the reporting period. Actual results
could differ from those estimates.
3. Lease
The aggregate annual minimum future rental payments on the non-cancelable operating lease in effect
as of December 31, 2005 are as follows:
|
|
|
|
|
Year ending December 31: |
|
|
|
|
2006 |
|
$ |
736,185 |
|
2007 |
|
|
769,051 |
|
2008 |
|
|
769,051 |
|
2009 |
|
|
769,051 |
|
2010 |
|
|
769,051 |
|
Thereafter |
|
|
4,560,077 |
|
|
|
|
|
Total |
|
$ |
8,372,466 |
|
|
|
|
|
The minimum future rental income represents the base rent required to be paid under the terms of
the lease exclusive of charges for contingent rents, electrical services, real estate taxes, and
operating cost escalations.
F-111
4. Tenant Concentration
For the year ended December 31, 2005, our sole tenant, Sofa Express accounted for 100% of the
annual rental income for the SE Cincinnati Property. If the tenant were to default on their lease,
future revenue of the SE Cincinnati Property would be materially and adversely impacted.
5. Commitments and Contingencies
Litigation
The SE Cincinnati Property may be subject to legal claims in the ordinary course of business as a
property owner. The Company believes that the ultimate settlement of any potential claims will not
have a material impact on the SE Cincinnati Propertys results of operations.
Environmental Matters
In connection with the ownership and operation of real estate, the SE Cincinnati Property may be
potentially liable for costs and damages related to environmental matters. The SE Cincinnati
Property has not been notified by any governmental authority of any non-compliance, liability or
other claim, and the Company is not aware of any other environmental condition that they believe
will have a material adverse effect on the SE Cincinnati Propertys results of operations.
F-112
Cole Credit Property Trust II, Inc.
Pro Forma Consolidated Balance Sheet
As of September 30, 2006
(Unaudited)
The following unaudited Pro Forma Consolidated Balance Sheet is presented as if the Company had
acquired the properties described in Note B to the Pro Forma Consolidated Balance Sheet on
September 30, 2006. Pursuant to a Registration Statement on Form S-11 under the Securities Act of
1933, as amended, the Company is offering for sale to the public on a best efforts basis a
minimum of 250,000 and a maximum of 45,000,000 shares of its common stock at a price of $10 per
share, subject to volume and other discounts (the Offering). On September 23, 2005, the Company
issued the initial shares under the Offering and commenced its principal operations. Prior to such
date, the Company was considered a development stage company and did not have any operations.
This Pro Forma Consolidated Balance Sheet should be read in conjunction with the historical
financial statements and notes thereto as filed in the Companys Quarterly Report on Form 10-Q for
the nine months ended September 30, 2006. The Pro Forma Consolidated Balance Sheet is unaudited and
is not necessarily indicative of what the actual financial position would have been had the Company
completed the above transactions on September 30, 2006, nor does it purport to represent its future
financial position.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2006 |
|
|
Current Acquisition |
|
|
Pro Forma |
|
|
|
As Reported |
|
|
Pro Forma Adjustments |
|
|
September 30, 2006 |
|
|
|
(a) |
|
|
(b) |
|
|
|
|
|
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
Real estate assets, at cost: |
|
|
|
|
|
|
|
|
|
|
|
|
Land |
|
$ |
82,839,737 |
|
|
$ |
15,371,336 |
|
|
$ |
98,211,073 |
|
Buildings and improvements, less accumulated
depreciation of $2,803,332 at September 30,
2006 |
|
|
201,752,737 |
|
|
|
64,549,045 |
|
|
|
266,301,782 |
|
Intangible lease assets, less accumulated
amortization of $1,377,600 at September 30,
2006 |
|
|
38,060,639 |
|
|
|
12,686,672 |
|
|
|
50,747,311 |
|
|
|
|
|
|
|
|
|
|
|
Total real estate assets |
|
|
322,653,113 |
|
|
|
92,607,053 |
|
|
|
415,260,166 |
|
Cash |
|
|
9,214,421 |
|
|
|
(9,214,421 |
) |
|
|
|
|
Restricted cash |
|
|
6,208,342 |
|
|
|
|
|
|
|
6,208,342 |
|
Rents and tenant receivables |
|
|
1,125,088 |
|
|
|
|
|
|
|
1,125,088 |
|
Prepaid expenses and other assets |
|
|
1,847,092 |
|
|
|
|
|
|
|
1,847,092 |
|
Deferred financing costs, less accumulated
amortization of $361,029 at September 30, 2006 |
|
|
2,897,108 |
|
|
|
807,041 |
|
|
|
3,704,149 |
|
|
|
|
|
|
|
|
|
|
|
Total assets |
|
$ |
343,945,164 |
|
|
$ |
84,199,673 |
|
|
$ |
428,144,837 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS EQUITY |
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage notes payable |
|
$ |
167,242,838 |
|
|
$ |
44,777,471 |
|
|
$ |
212,020,309 |
|
Notes payable to affiliates |
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable and accrued expenses |
|
|
1,261,762 |
|
|
|
|
|
|
|
1,261,762 |
|
Escrowed investor proceeds |
|
|
6,208,342 |
|
|
|
|
|
|
|
6,208,342 |
|
Due to affiliates |
|
|
70,635 |
|
|
|
|
|
|
|
70,635 |
|
Acquired below market lease intangibles, less
accumulated amortization of $46,357 at
September 30, 2006 |
|
|
1,954,993 |
|
|
|
464,599 |
|
|
|
2,419,592 |
|
Distributions payable |
|
|
940,028 |
|
|
|
|
|
|
|
940,028 |
|
|
|
|
|
|
|
|
|
|
|
Total liabilities |
|
|
177,678,598 |
|
|
|
45,242,070 |
|
|
|
222,920,668 |
|
|
|
|
|
|
|
|
|
|
|
Redeemable common stock |
|
|
1,811,467 |
|
|
|
|
|
|
|
1,811,467 |
|
|
|
|
|
|
|
|
|
|
|
Stockholders equity: |
|
|
|
|
|
|
|
|
|
|
|
|
Preferred stock, $.01 par value, 10,000,000
shares authorized, none issued and outstanding
at September 30, 2006 |
|
|
|
|
|
|
|
|
|
|
|
|
Common stock, $.01 par value, 90,000,000
shares authorized, 18,963,568 issued and
outstanding at September 30, 2006 |
|
|
189,636 |
|
|
|
43,286 |
|
|
|
232,922 |
|
Capital in excess of par value |
|
|
168,837,498 |
|
|
|
38,914,317 |
|
|
|
207,751,815 |
|
Accumulated distributions in excess of earnings |
|
|
(4,572,035 |
) |
|
|
|
|
|
|
(4,572,035 |
) |
|
|
|
|
|
|
|
|
|
|
Total stockholders equity |
|
|
164,455,099 |
|
|
|
38,957,603 |
|
|
|
203,412,702 |
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders equity |
|
$ |
343,945,164 |
|
|
$ |
84,199,673 |
|
|
$ |
428,144,837 |
|
|
|
|
|
|
|
|
|
|
|
F-113
Cole Credit Property Trust II, Inc.
Pro Forma Consolidated Statement of Operations
For the Period Ended September 30, 2006
(Unaudited)
The following unaudited Pro Forma Consolidated Statement of Operations is presented as if the
Company had acquired the properties described in Note C to the Pro Forma Consolidated Statements of
Operations on January 1, 2006 or the date significant operations commenced.
This Pro Forma Consolidated Statement of Operations should be read in conjunction with the
historical financial statements and notes thereto as filed in the Companys Quarterly Report on
Form 10-Q for the nine months ended September 30, 2006. The Pro Forma Consolidated Statement of
Operations is unaudited and is not necessarily indicative of what the actual results of operations
would have been had the Company completed the above transactions on January 1, 2006, nor does it
purport to represent its future operations.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the |
|
|
|
|
|
Pro Forma for |
|
|
|
Nine Months Ended |
|
|
|
|
|
the Nine Months |
|
|
|
September 30, 2006 |
|
|
Current Acquisitions |
|
|
Ended |
|
|
|
As Reported |
|
|
Pro Forma Adjustments |
|
|
September 30, 2006 |
|
|
|
(a) |
|
|
(c) |
|
|
|
|
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
Rental income |
|
$ |
11,680,020 |
|
|
$ |
11,632,391 |
(d) |
|
$ |
23,312,411 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative |
|
|
805,935 |
|
|
|
36,390 |
|
|
|
842,325 |
|
Property operating expenses |
|
|
628,977 |
|
|
|
929,655 |
|
|
|
1,558,632 |
|
Property and asset management fees |
|
|
563,180 |
|
|
|
550,822 |
(e) (f) |
|
|
1,114,002 |
|
Depreciation |
|
|
2,651,860 |
|
|
|
3,189,634 |
(g) |
|
|
5,841,494 |
|
Amortization |
|
|
1,239,242 |
|
|
|
1,175,056 |
(g) |
|
|
2,414,298 |
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses |
|
|
5,889,194 |
|
|
|
5,881,557 |
|
|
|
11,770,751 |
|
|
|
|
|
|
|
|
|
|
|
Real estate operating income |
|
|
5,790,826 |
|
|
|
5,750,834 |
|
|
|
11,541,660 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense) |
|
|
|
|
|
|
|
|
|
|
|
|
Interest income |
|
|
181,173 |
|
|
|
|
|
|
|
181,173 |
|
Interest expense |
|
|
(5,787,492 |
) |
|
|
(4,824,096 |
)(h) |
|
|
(10,611,588 |
) |
|
|
|
|
|
|
|
|
|
|
Total other income (expense) |
|
|
(5,606,319 |
) |
|
|
(4,824,096 |
) |
|
|
(10,430,415 |
) |
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
184,507 |
|
|
$ |
926,738 |
|
|
$ |
1,111,245 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of
common shares outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted |
|
|
9,424,396 |
|
|
|
9,539,172 |
(i) |
|
|
18,963,568 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per common share |
|
$ |
0.03 |
|
|
|
|
|
|
$ |
0.06 |
|
|
|
|
|
|
|
|
|
|
|
F-114
Cole Credit Property Trust II, Inc.
Notes to Pro Forma Consolidated Financial Statements
September 30, 2006
(Unaudited)
|
|
|
a. |
|
Reflects the Companys historical balance sheet as of September 30, 2006, and the
Companys historical results of operations for the nine months ended September 30, 2006. |
|
b. |
|
Reflects preliminary purchase price allocations related to the following
acquisitions (collectively the Pro Forma Properties): |
|
|
|
Completed Acquisitions |
|
|
|
The RA Glassport Property, the MT Topeka Property, the RA Hanover Property, the AM Peoria
Property, the TS La Grange Property, the ST Peru Property, the FE Council Bluffs
Property, the FE Edwardsville Property, the CV Glenville Scotia Property, the AA Ashland
Property, the AA Jackson Property, the AA New Boston Property, the AA Scottsburg
Property, the TS Livingston Property, TS New Braunfels Property, the OD Benton Property,
the OL Fairview Heights Property, the OD Oxford Property, the TS Crockett Property, the
IN Davie Property and the ME Atlanta Property. |
|
|
|
Probable Acquisitions |
|
|
|
The OD Enterprise Property, the LZ Newington Property, the SE Cincinnati Property and the
ST Clarksville Property. |
|
c. |
|
Reflects the pro forma results of operations for the nine months ended September
30, 2006 for the following properties (collectively the 2006 Acquisitions): |
|
|
|
Completed Acquisitions |
|
|
|
The AS Macon Property, the DB Lenexa Property, the CV Scioto Trail Property,
the DH Hickory Property, the RA Enterprise Property, the RA Wauseon Property, the RA
Saco Property, the ST Crossville Property, the MT Spring Property, the MT Denver
Property, the MF Chandler Property, the Wawa Portfolio Properties, the MT Lakewood
Property, the RA Cleveland Property, the RA Fremont Property, the WG Knoxville
Property, the CV Madison Property, the RA Defiance Property, the CO San Antonio
Property, the DG Crossville Property, the DG Ardmore Property, the DG Livingston
Property, the WT Arnold Property, the AA Columbia Heights Property, the AA Fergus
Falls Property, the CV Okeechobee Property, the OD Dayton Property, the AA Holland
Property, the AA Holland Township Property, the AA Zeeland Property, the CV Orlando
Property, the OD Greenville Property, the OD Warrensburg Property, the CV Gulfport
Property, the AA Grand Forks Property, the CV Clinton Property, the OT Oxford
Property, the SP Wichita Property, the CV Portsmouth Property, the AA Greenfield
Property, the AA Trenton Property, the RA Lansing Property, the AA Duluth Property,
the WG Picayune Property the AA Hurley Property, the AA Grand Bay Property, the AA
Rainsville Property, the LO Midland Property, the LO Lubbock Property, the KO
Wichita Property, the GG OFallon Property, the RA Glassport Property, the MT Topeka
Property, the RA Hanover Property the AM Peoria Property, the TS La Grange Property,
and the ST Peru Property, the FE Council Bluffs Property, the FE Edwardsville
Property, the CV Glenville Scotia Property, the AA Ashland Property, the AA Jackson
Property, the AA New Boston Property, the AA Scottsburg Property, the TS Livingston
Property, TS New Braunfels Property, the OD Benton Property, the OL Fairview Heights
Property, the OD Oxford Property, the TS Crockett Property, the IN Davie Property
and the ME Atlanta Property. |
|
|
|
Probable Acquisitions |
|
|
|
The OD Enterprise Property, the LZ Newington Property, the SE Cincinnati Property and the
ST Clarksville Property. |
|
d. |
|
Represents the straight line rental revenues for the 2006 Acquisitions in
accordance with their respective lease agreements. |
|
e. |
|
Reflects the annualized asset management fee of 0.25% (a monthly rate of
0.02083%) of the 2006 Acquisitions asset value payable to our Advisor. |
|
f. |
|
Reflects the property management fee equal to 2% of gross revenues of the 2006
Acquisitions payable to an affiliate of our Advisor. |
F-115
|
|
|
g. |
|
Represents depreciation and amortization expense for the 2006 Acquisitions.
Depreciation and amortization expense are based on the Companys preliminary purchase
price allocation. All assets are depreciated on a straight line basis. The estimated
useful lives of our assets by class are generally as follows: |
|
|
|
|
|
|
|
Building
|
|
40 years |
|
|
Tenant improvements
|
|
Lease term |
|
|
Intangible lease assets
|
|
Lesser of useful life or lease term |
|
|
|
h. |
|
Represents interest expense associated with the debt incurred to finance the
acquisitions of the 2006 Acquisitions. The loan terms are as follows: |
Fixed Rate Tranches
|
|
|
|
|
|
|
|
|
|
|
Property |
|
Loan Amount |
|
Interest Rate |
|
Maturity |
AS Macon |
|
$ |
3,478,000 |
|
|
|
5.69 |
% |
|
January 11, 2016 |
DB Lenexa |
|
|
1,799,000 |
|
|
|
5.86 |
% |
|
January 11, 2011 |
RA Enterprise |
|
|
2,043,000 |
|
|
|
5.80 |
% |
|
February 11, 2016 |
RA Wauseon |
|
|
2,142,000 |
|
|
|
5.80 |
% |
|
February 11, 2016 |
ST Crossville |
|
|
1,885,000 |
|
|
|
5.71 |
% |
|
February 11, 2011 |
RA Saco |
|
|
1,375,000 |
|
|
|
5.82 |
% |
|
February 11, 2011 |
MT Denver |
|
|
12,025,000 |
|
|
|
5.57 |
% |
|
March 1, 2011 |
DH Hickory |
|
|
2,763,000 |
|
|
|
5.80 |
% |
|
March 11, 2011 |
MT Spring |
|
|
5,940,000 |
|
|
|
5.63 |
% |
|
April 1, 2016 |
CV Scioto |
|
|
1,424,000 |
|
|
|
5.67 |
% |
|
March 11, 2011 |
MT Lakewood |
|
|
1,348,000 |
|
|
|
5.77 |
% |
|
May 11, 2011 |
RA Cleveland |
|
|
1,413,000 |
|
|
|
6.05 |
% |
|
May 11, 2011 |
RA Fremont |
|
|
1,388,000 |
|
|
|
6.05 |
% |
|
May 11, 2011 |
WG Knoxville |
|
|
3,088,000 |
|
|
|
5.80 |
% |
|
May 11, 2011 |
CO San Antonio |
|
|
2,461,000 |
|
|
|
5.86 |
% |
|
May 11, 2011 |
RA Defiance |
|
|
2,321,000 |
|
|
|
5.76 |
% |
|
January 11, 2016 |
CV Madison |
|
|
2,809,000 |
|
|
|
5.60 |
% |
|
February 11, 2016 |
DG Ardmore |
|
|
1,804,000 |
|
|
|
5.79 |
% |
|
June 11, 2016 |
DG Crossville |
|
|
1,950,000 |
|
|
|
5.75 |
% |
|
June 11, 2016 |
DG Livingston |
|
|
1,856,000 |
|
|
|
5.79 |
% |
|
July 11, 2016 |
RA Lansing |
|
|
1,041,000 |
|
|
|
5.90 |
% |
|
July 1, 2016 |
AA Columbia Heights |
|
|
1,038,000 |
|
|
|
5.83 |
% |
|
July 11, 2016 |
AA Fergus Falls |
|
|
722,000 |
|
|
|
5.83 |
% |
|
July 12, 2016 |
CV Okeechobee |
|
|
4,076,000 |
|
|
|
5.60 |
% |
|
February 11, 2016 |
OD Dayton |
|
|
2,130,000 |
|
|
|
5.73 |
% |
|
January 11, 2016 |
AA Holland |
|
|
1,193,000 |
|
|
|
5.83 |
% |
|
April 11, 2016 |
AA Holland Township |
|
|
1,231,000 |
|
|
|
5.83 |
% |
|
April 11, 2016 |
AA Zeeland |
|
|
1,057,000 |
|
|
|
5.83 |
% |
|
April 11, 2016 |
CV Orlando |
|
|
3,016,000 |
|
|
|
5.68 |
% |
|
April 11, 2016 |
OD Greenville |
|
|
2,192,000 |
|
|
|
5.76 |
% |
|
March 11, 2011 |
OD Warrensburg |
|
|
1,810,000 |
|
|
|
5.85 |
% |
|
April 11, 2011 |
CV Gulfport |
|
|
2,611,000 |
|
|
|
5.28 |
% |
|
April 11, 2016 |
AA Grand Forks |
|
|
840,000 |
|
|
|
5.87 |
% |
|
September 11, 2016 |
CV Clinton |
|
|
1,983,000 |
|
|
|
5.74 |
% |
|
September 11, 2016 |
OT Oxford |
|
|
5,175,000 |
|
|
|
6.11 |
% |
|
September 1, 2016 |
WG Picayune |
|
|
2,766,000 |
|
|
|
5.53 |
% |
|
October 11, 2016 |
LO Midland |
|
|
7,150,000 |
|
|
|
6.11 |
% |
|
September 1, 2016 |
LO Lubbock |
|
|
7,475,000 |
|
|
|
6.11 |
% |
|
September 1, 2016 |
GG OFallon |
|
|
3,650,000 |
|
|
|
5.83 |
% |
|
September 1, 2016 |
KO Wichita |
|
|
5,192,000 |
|
|
|
6.11 |
% |
|
September 1, 2016 |
AA Duluth |
|
|
860,000 |
|
|
|
5.87 |
% |
|
October 11, 2016 |
RA Glassport |
|
|
2,325,000 |
|
|
|
6.09 |
% |
|
November 1, 2016 |
RA Hanover |
|
|
4,115,000 |
|
|
|
6.11 |
% |
|
November 1, 2016 |
AM Peoria |
|
|
7,358,971 |
|
|
|
6.00 |
% |
|
October 1, 2018 |
TS La Grange |
|
|
1,405,000 |
|
|
|
5.99 |
% |
|
September 1, 2016 |
ST Peru |
|
|
1,929,000 |
|
|
|
4.99 |
% |
|
December 1, 2014 |
FE Council Bluffs |
|
|
2,815,000 |
|
|
|
5.96 |
% |
|
December 1, 2016 |
FE Edwardsville |
|
|
12,880,000 |
|
|
|
5.96 |
% |
|
December 1, 2016 |
CV Glenville Scotia |
|
|
3,413,000 |
|
|
|
5.74 |
% |
|
December 11, 2016 |
TS Livingston |
|
|
1,725,000 |
|
|
|
5.99 |
% |
|
September 1, 2016 |
TS New Braunfels |
|
|
1,750,000 |
|
|
|
5.99 |
% |
|
September 1, 2016 |
F-116
|
|
|
|
|
|
|
|
|
|
|
Property |
|
Loan Amount |
|
Interest Rate |
|
Maturity |
OD Benton |
|
|
2,130,000 |
|
|
|
5.76 |
% |
|
December 1, 2016 |
OL Fairview Heights |
|
|
2,140,000 |
|
|
|
6.31 |
% |
|
December 11, 2016 |
OD Oxford |
|
|
2,295,000 |
|
|
|
6.17 |
% |
|
December 1, 2016 |
TS Crockett |
|
|
1,325,000 |
|
|
|
5.99 |
% |
|
September 1, 2016 |
LZ Newington |
|
|
4,140,000 |
|
|
|
6.31 |
% |
|
December 1, 2016 |
SE Cincinnati |
|
|
4,500,000 |
|
|
|
6.31 |
% |
|
December 1, 2016 |
ST Clarksville |
|
|
2,879,500 |
|
|
|
6.31 |
% |
|
December 1, 2016 |
MT Topeka |
|
|
2,000,000 |
|
|
|
5.77 |
% |
|
December 1, 2016 |
Variable Rate Tranches
|
|
|
|
|
|
|
|
|
Property |
|
Loan Amount |
|
Interest Rate |
|
Maturity |
AS Macon |
|
$ |
802,000 |
|
|
Libor plus 2% |
|
April 6, 2006 |
DB Lenexa |
|
|
817,000 |
|
|
Libor plus 2% |
|
April 11, 2006 |
RA Enterprise |
|
|
928,000 |
|
|
Libor plus 2% |
|
April 26, 2006 |
RA Wauseon |
|
|
973,000 |
|
|
Libor plus 2% |
|
April 26, 2006 |
ST Crossville |
|
|
435,000 |
|
|
Libor plus 2% |
|
April 26, 2006 |
RA Saco |
|
|
625,000 |
|
|
Libor plus 2% |
|
April 27, 2006 |
MT Denver |
|
|
2,275,000 |
|
|
Libor plus 2% |
|
December 31, 2006 |
MF Chandler |
|
|
4,690,400 |
|
|
Libor plus 2% |
|
December 31, 2006 |
DH Hickory |
|
|
637,000 |
|
|
Libor plus 2% |
|
May 22, 2006 |
CV Scioto |
|
|
329,000 |
|
|
Libor plus 2% |
|
June 8, 2006 |
Wawa Portfolio |
|
|
7,234,787 |
|
|
Libor plus 2.2% |
|
February 26, 2010 |
MT Lakewood |
|
|
612,000 |
|
|
Libor plus 2% |
|
July 20, 2006 |
RA Cleveland |
|
|
642,000 |
|
|
Libor plus 2% |
|
July 27, 2006 |
RA Fremont |
|
|
632,000 |
|
|
Libor plus 2% |
|
July 27, 2006 |
WG Knoxville |
|
|
712,000 |
|
|
Libor plus 2% |
|
August 8, 2006 |
CO San Antonio |
|
|
1,119,000 |
|
|
Libor plus 2% |
|
July 25, 2006 |
DG Ardmore |
|
|
416,000 |
|
|
Libor plus 2% |
|
September 9, 2006 |
AA Columbia Heights |
|
|
346,000 |
|
|
Libor plus 2% |
|
October 6, 2006 |
AA Fergus Falls |
|
|
241,000 |
|
|
Libor plus 2% |
|
October 6, 2006 |
AA Grand Forks |
|
|
280,000 |
|
|
Libor plus 2% |
|
November 15, 2006 |
CV Clinton |
|
|
457,000 |
|
|
Libor plus 2% |
|
December 24, 2006 |
WG Picayune |
|
|
638,000 |
|
|
Libor plus 2% |
|
January 12, 2007 |
GG OFallon |
|
|
2,190,000 |
|
|
Libor plus 2% |
|
January 12, 2007 |
AA Duluth |
|
|
286,000 |
|
|
Libor plus 2% |
|
December 22, 2006 |
CV Glenville Scotia |
|
|
787,000 |
|
|
Libor plus 2% |
|
March 16, 2007 |
OL Fairview Heights |
|
|
1,284,000 |
|
|
Libor plus 2% |
|
March 21, 2007 |
SP Wichita |
|
|
6,173,250 |
|
|
Libor plus 2% |
|
December 27, 2006 |
DG Crossville |
|
|
450,000 |
|
|
Libor plus 2% |
|
August 26, 2006 |
DG Livingston |
|
|
416,000 |
|
|
Libor plus 2% |
|
October 12, 2006 |
|
|
|
|
|
The variable rate tranches have a 90 day repayment term. As such, the interest
expense for the six months ended June 30, 2006 include 90 days of interest expense
relating to the variable rate tranches as they are scheduled to be paid down 90 days
after the acquisition of the Pro Forma Properties. |
|
i. |
|
Represents a pro forma adjustment to the weighted average common shares
outstanding to reflect all shares outstanding on September 30, 2006 as though they were
issued on January 1, 2005. As the Company had insufficient capital at January 1, 2005 to
acquire the respective properties which are included in the pro forma results of
operations, it is necessary to assume all of the shares outstanding as of September 30,
2006 were outstanding on January 1, 2005. |
F-117
Cole Credit Property Trust II, Inc.
Pro Forma Consolidated Statement of Operations
For the Year Ended December 31, 2005
(Unaudited)
The following unaudited Pro Forma Consolidated Statement of Operations is presented as if the
Company had acquired the properties indicated in Note B and Note C to the Pro Forma Consolidated
Statement of Operations on January 1, 2005 or the date significant operations commenced.
This Pro Forma Consolidated Statement of Operations should be read in conjunction with the
historical financial statements and notes thereto as filed in the Companys Annual Report on Form
10-K for the year ended December 31, 2005. The Pro Forma Consolidated Statement of Operations is
unaudited and is not necessarily indicative of what the actual results of operations would have
been had the Company completed the above transactions on January 1, 2005, nor does it purport to
represent its future operations.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Year |
|
|
|
|
|
|
|
|
|
|
Pro Forma, |
|
|
|
Ended |
|
|
Total |
|
|
Total |
|
|
For the Year |
|
|
|
December 31, |
|
|
2005 Acquisitions |
|
|
2006 Acquisitions |
|
|
Ended |
|
|
|
2005 |
|
|
Pro Forma |
|
|
Pro Forma |
|
|
December 31, |
|
|
|
As Reported |
|
|
Adjustments |
|
|
Adjustments |
|
|
2005 |
|
|
|
(a) |
|
|
(b) |
|
|
(c) |
|
|
|
|
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rental income |
|
$ |
741,669 |
|
|
$ |
3,801,847 |
(d) |
|
$ |
18,230,399 |
(d) |
|
$ |
22,773,915 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative |
|
|
156,252 |
|
|
|
53,333 |
(k) |
|
|
86,167 |
|
|
|
295,752 |
|
Property operating expenses |
|
|
|
|
|
|
203,555 |
|
|
|
1,295,428 |
|
|
|
1,498,983 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property and asset management fees |
|
|
38,768 |
|
|
|
222,128 |
(e) (f) |
|
|
875,784 |
(e) (f) |
|
|
1,136,680 |
|
Depreciation |
|
|
151,472 |
|
|
|
870,723 |
(g) |
|
|
4,791,502 |
(g) |
|
|
5,813,697 |
|
Amortization |
|
|
69,939 |
|
|
|
479,926 |
(g) |
|
|
1,938,399 |
(g) |
|
|
2,488,264 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses |
|
|
416,431 |
|
|
|
1,829,665 |
|
|
|
8,987,280 |
|
|
|
11,233,376 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate operating income |
|
|
325,238 |
|
|
|
1,972,182 |
|
|
|
9,243,119 |
|
|
|
11,540,539 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Income (Expense): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income |
|
|
27,557 |
|
|
|
|
|
|
|
|
|
|
|
27,557 |
|
Interest expense |
|
|
(467,386 |
) |
|
|
(2,009,479 |
)(i) |
|
|
(7,735,188 |
)(h) |
|
|
(10,212,053 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total other income (expense) |
|
|
(439,829 |
) |
|
|
(2,009,479 |
) |
|
|
(7,735,188 |
) |
|
|
(10,184,496 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income (Loss) |
|
$ |
(114,591 |
) |
|
$ |
(37,297 |
) |
|
$ |
1,507,931 |
|
|
$ |
1,356,043 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of common
shares outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and Diluted |
|
|
411,909 |
|
|
|
1,810,145 |
(j) |
|
|
13,136,635 |
(j) |
|
|
15,358,690 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per common share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and Diluted |
|
$ |
(0.28 |
) |
|
|
|
|
|
|
|
|
|
$ |
0.09 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-118
Cole Credit Property Trust II, Inc.
Notes to Pro Forma Consolidated Financial Statements
December 31, 2005
(Unaudited)
|
|
|
a. |
|
Reflects the Companys historical results of operations for the year ended
December 31, 2005. On September 23, 2005, the Company issued the initial shares under
the Offering and commenced its principal operations. Prior to such date, the Company was
considered a development stage company and did not have any operations. |
|
b. |
|
Reflects the proforma results of operations for the year ended December 31, 2005
for the following properties (collectively, the 2005 Acquisitions): the TS Parkersburg
Property, the WG Brainerd Property, the PT Auburn Hills Property, the RA Alliance
Property, the WG SL Properties, the WG Olivette Property, the WG Columbia Property, the
CV Alpharetta Property, the CV Richland Hills Property, the LO Enterprise Property, the
FE Rockford Property, and the LZ Glendale Property. |
|
c. |
|
Reflects the Pro Forma results of operations for the year ended December 31, 2005
for the following properties (collectively, the 2006 Acquisitions): |
|
|
|
Completed Acquisitions |
|
|
|
The AS Macon Property, the DB Lenexa Property, the CV Scioto Trail Property, the DH
Hickory Property, the RA Enterprise Property, the RA Wauseon Property, the RA Saco
Property, the ST Crossville Property, the MT Spring Property, the MT Denver Property, the
MF Chandler Property, the Wawa Portfolio Properties, the MT Lakewood Property, the RA
Cleveland Property, the RA Fremont Property, the WG Knoxville Property, the CV Madison
Property, the RA Defiance Property, the CO San Antonio Property, the DG Crossville
Property, the DG Ardmore Property, the DG Livingston Property, the WT Arnold Property,
the AA Columbia Heights Property, the AA Fergus Falls Property, the CV Okeechobee
Property, the OD Dayton Property, the AA Holland Property, the AA Holland Township
Property, the AA Zeeland Property, the CV Orlando Property, the OD Greenville Property,
the OD Warrensburg Property, the CV Gulfport Property, the AA Grand Forks Property, the
CV Clinton Property, the OT Oxford Property, the SP Wichita Property, the CV Portsmouth
Property, the AA Greenfield Property, the AA Trenton Property, the RA Lansing Property,
the AA Duluth Property, the WG Picayune Property the AA Hurley Property, the AA Grand Bay
Property, the AA Rainsville Property, the LO Midland Property, the LO Lubbock Property,
the KO Wichita Property, the GG OFallon Property, the RA Glassport Property, the MT
Topeka Property, the RA Hanover Property, the AM Peoria Property, the TS La Grange
Property, the ST Peru Property, the FE Council Bluffs Property, the FE Edwardsville
Property, the CV Glenville Scotia Property, the AA Ashland Property, the AA Jackson
Property, the AA New Boston Property, the AA Scottsburg Property, the TS Livingston
Property, the TS New Braunfels Property, the OD Benton Property, the OL Fairview Heights
Property, the IN Davie Property, the OD Oxford Property, the TS Crockett Property and the
ME Atlanta Property. |
|
|
|
Probable Acquisitions |
|
|
|
The OD Enterprise Property, the LZ Newington Property, the SE Cincinnati Property, and
the ST Clarksville Property. |
|
d. |
|
Represents the straight line rental revenues for the 2005 Acquisitions and the
2006 acquisitions in accordance with their respective lease agreements. |
|
e. |
|
Reflects the annualized asset management fee of 0.25% (a monthly rate of
0.02083%) of the 2005 Acquisitions and 2006 Acquisitions Property asset value payable to
our Advisor. |
|
f. |
|
Reflects the property management fee equal to 2% of gross revenues of the 2005
Acquisitions and 2006 Acquisitions payable to an affiliate of our Advisor. |
|
g. |
|
Represents depreciation and amortization expense for the 2005 Acquisitions and
2006 Acquisitions. Depreciation and amortization expense are based on the Companys
preliminary purchase price allocation. All assets are depreciated on a straight line
basis. The estimated useful lives of our assets by class are generally as follows: |
|
|
|
|
|
|
|
Building
|
|
40 years |
|
|
Tenant improvements
|
|
Lease term |
|
|
Intangible lease assets
|
|
Lesser of useful life or lease term |
F-119
|
|
|
h. |
|
Represents interest expense associated with the debt incurred to finance the
acquisitions of the 2006 Acquisitions. The loan terms are as follows: |
|
|
|
Fixed Rate Tranches |
|
|
|
|
|
|
|
|
|
|
|
Property |
|
Loan Amount |
|
|
Interest Rate |
|
|
Maturity |
AS Macon |
|
$ |
3,478,000 |
|
|
|
5.69 |
% |
|
January 11, 2016 |
DB Lenexa |
|
|
1,799,000 |
|
|
|
5.86 |
% |
|
January 11, 2011 |
RA Enterprise |
|
|
2,043,000 |
|
|
|
5.80 |
% |
|
February 11, 2016 |
RA Wauseon |
|
|
2,142,000 |
|
|
|
5.80 |
% |
|
February 11, 2016 |
ST Crossville |
|
|
1,885,000 |
|
|
|
5.71 |
% |
|
February 11, 2011 |
RA Saco |
|
|
1,375,000 |
|
|
|
5.82 |
% |
|
February 11, 2011 |
MT Denver |
|
|
12,025,000 |
|
|
|
5.57 |
% |
|
March 1, 2011 |
DH Hickory |
|
|
2,763,000 |
|
|
|
5.80 |
% |
|
March 11, 2011 |
MT Spring |
|
|
5,940,000 |
|
|
|
5.63 |
% |
|
April 1, 2016 |
CV Scioto |
|
|
1,424,000 |
|
|
|
5.67 |
% |
|
March 11, 2011 |
MT Lakewood |
|
|
1,348,000 |
|
|
|
5.77 |
% |
|
May 11, 2011 |
RA Cleveland |
|
|
1,413,000 |
|
|
|
6.05 |
% |
|
May 11, 2011 |
RA Fremont |
|
|
1,388,000 |
|
|
|
6.05 |
% |
|
May 11, 2011 |
WG Knoxville |
|
|
3,088,000 |
|
|
|
5.80 |
% |
|
May 11, 2011 |
CO San Antonio |
|
|
2,461,000 |
|
|
|
5.86 |
% |
|
May 11, 2011 |
RA Defiance |
|
|
2,321,000 |
|
|
|
5.76 |
% |
|
January 11, 2016 |
CV Madison |
|
|
2,809,000 |
|
|
|
5.60 |
% |
|
February 11, 2016 |
DG Ardmore |
|
|
1,804,000 |
|
|
|
5.79 |
% |
|
June 11, 2016 |
DG Crossville |
|
|
2,400,000 |
|
|
|
5.75 |
% |
|
June 11, 2016 |
DG Livingston |
|
|
2,285,000 |
|
|
|
5.79 |
% |
|
July 11, 2016 |
RA Lansing |
|
|
1,041,000 |
|
|
|
5.90 |
% |
|
July 1, 2016 |
AA Columbia Heights |
|
|
1,038,000 |
|
|
|
5.83 |
% |
|
July 11, 2016 |
AA Fergus Falls |
|
|
722,000 |
|
|
|
5.83 |
% |
|
July 12, 2016 |
CV Okeechobee |
|
|
4,076,000 |
|
|
|
5.60 |
% |
|
February 11, 2016 |
OD Dayton |
|
|
2,130,000 |
|
|
|
5.73 |
% |
|
January 11, 2016 |
AA Holland |
|
|
1,193,000 |
|
|
|
5.83 |
% |
|
April 11, 2016 |
AA Holland Township |
|
|
1,231,000 |
|
|
|
5.83 |
% |
|
April 11, 2016 |
AA Zeeland |
|
|
1,057,000 |
|
|
|
5.83 |
% |
|
April 11, 2016 |
CV Orlando |
|
|
3,016,000 |
|
|
|
5.68 |
% |
|
April 11, 2016 |
OD Greenville |
|
|
2,192,000 |
|
|
|
5.76 |
% |
|
March 11, 2011 |
OD Warrensburg |
|
|
1,810,000 |
|
|
|
5.85 |
% |
|
April 11, 2011 |
CV Gulfport |
|
|
2,611,000 |
|
|
|
5.28 |
% |
|
April 11, 2016 |
AA Grand Forks |
|
|
840,000 |
|
|
|
5.87 |
% |
|
September 11, 2016 |
CV Clinton |
|
|
1,983,000 |
|
|
|
5.74 |
% |
|
September 11, 2016 |
OT Oxford |
|
|
5,175,000 |
|
|
|
6.11 |
% |
|
September 1, 2016 |
WG Picayune |
|
|
2,766,000 |
|
|
|
5.53 |
% |
|
October 11, 2016 |
LO Midland |
|
|
7,150,000 |
|
|
|
6.11 |
% |
|
September 1, 2016 |
LO Lubbock |
|
|
7,475,000 |
|
|
|
6.11 |
% |
|
September 1, 2016 |
GG OFallon |
|
|
3,650,000 |
|
|
|
5.83 |
% |
|
September 1, 2016 |
KO Wichita |
|
|
5,192,000 |
|
|
|
6.11 |
% |
|
September 1, 2016 |
AA Duluth |
|
|
860,000 |
|
|
|
5.87 |
% |
|
October 11, 2016 |
RA Glassport |
|
|
2,325,000 |
|
|
|
6.09 |
% |
|
November 1, 2016 |
RA Hanover |
|
|
4,115,000 |
|
|
|
6.11 |
% |
|
November 1, 2016 |
AM Peoria |
|
|
7,358,971 |
|
|
|
6.00 |
% |
|
October 1, 2018 |
TS La Grange |
|
|
1,405,000 |
|
|
|
5.99 |
% |
|
December 1, 2016 |
ST Peru |
|
|
1,929,000 |
|
|
|
4.99 |
% |
|
December 1, 2014 |
FE Council Bluffs |
|
|
2,815,000 |
|
|
|
5.96 |
% |
|
December 1, 2016 |
F-120
|
|
|
|
|
|
|
|
|
|
|
Property |
|
Loan Amount |
|
|
Interest Rate |
|
|
Maturity |
FE Edwardsville |
|
|
12,880,000 |
|
|
|
5.96 |
% |
|
December 1, 2016 |
CV Glenville Scotia |
|
|
3,413,000 |
|
|
|
5.74 |
% |
|
December 11, 2016 |
TS Livingston |
|
|
1,725,000 |
|
|
|
5.99 |
% |
|
September 1, 2016 |
TS New Braunfels |
|
|
1,750,000 |
|
|
|
5.99 |
% |
|
September 1, 2016 |
OD Benton |
|
|
2,130,000 |
|
|
|
5.76 |
% |
|
December 1, 2016 |
OL Fairview Heights |
|
|
2,140,000 |
|
|
|
6.31 |
% |
|
December 11, 2016 |
OD Oxford |
|
|
2,295,000 |
|
|
|
6.17 |
% |
|
December 1, 2016 |
TS Crockett |
|
|
1,325,000 |
|
|
|
5.99 |
% |
|
September 1, 2016 |
LZ Newington |
|
|
4,140,000 |
|
|
|
6.31 |
% |
|
December 1, 2016 |
SE Cincinnati |
|
|
4,500,000 |
|
|
|
6.31 |
% |
|
December 1, 2016 |
ST Clarksville |
|
|
2,879,500 |
|
|
|
6.31 |
% |
|
December 1, 2016 |
|
|
|
|
|
|
|
|
|
|
|
Loan |
|
|
|
|
Property |
|
Amount |
|
Interest Rate |
|
Maturity |
AS Macon |
|
$ |
802,000 |
|
|
Libor plus 2 |
% |
April 6, 2006 |
DB Lenexa |
|
|
817,000 |
|
|
Libor plus 2 |
% |
April 11, 2006 |
RA Enterprise |
|
|
928,000 |
|
|
Libor plus 2 |
% |
April 26, 2006 |
RA Wauseon |
|
|
973,000 |
|
|
Libor plus 2 |
% |
April 26, 2006 |
ST Crossville |
|
|
435,000 |
|
|
Libor plus 2 |
% |
April 26, 2006 |
RA Saco |
|
|
625,000 |
|
|
Libor plus 2 |
% |
April 27, 2006 |
MT Denver |
|
|
2,275,000 |
|
|
Libor plus 2 |
% |
December 31, 2006 |
MF Chandler |
|
|
4,690,400 |
|
|
Libor plus 2 |
% |
December 31, 2006 |
DH Hickory |
|
|
637,000 |
|
|
Libor plus 2 |
% |
May 22, 2006 |
CV Scioto |
|
|
329,000 |
|
|
Libor plus 2 |
% |
June 8, 2006 |
Wawa Portfolio |
|
|
7,234,787 |
|
|
Libor plus 2.2 |
% |
February 26, 2010 |
MT Lakewood |
|
|
612,000 |
|
|
Libor plus 2 |
% |
July 20, 2006 |
RA Cleveland |
|
|
642,000 |
|
|
Libor plus 2 |
% |
July 27, 2006 |
RA Fremont |
|
|
632,000 |
|
|
Libor plus 2 |
% |
July 27, 2006 |
WG Knoxville |
|
|
712,000 |
|
|
Libor plus 2 |
% |
August 8, 2006 |
CO San Antonio |
|
|
1,119,000 |
|
|
Libor plus 2 |
% |
July 25, 2006 |
DG Ardmore |
|
|
416,000 |
|
|
Libor plus 2 |
% |
September 9, 2006 |
AA Columbia Heights |
|
|
346,000 |
|
|
Libor plus 2 |
% |
October 6, 2006 |
AA Fergus Falls |
|
|
241,000 |
|
|
Libor plus 2 |
% |
October 6, 2006 |
AA Grand Forks |
|
|
280,000 |
|
|
Libor plus 2 |
% |
November 15, 2006 |
CV Clinton |
|
|
457,000 |
|
|
Libor plus 2 |
% |
December 24, 2006 |
WG Picayune |
|
|
638,000 |
|
|
Libor plus 2 |
% |
January 12, 2007 |
GG OFallon |
|
|
2,190,000 |
|
|
Libor plus 2 |
% |
January 12, 2007 |
AA Duluth |
|
|
286,000 |
|
|
Libor plus 2 |
% |
December 22, 2006 |
CV Glenville Scotia |
|
|
787,000 |
|
|
Libor plus 2 |
% |
March 16, 2007 |
OL Fairview Heights |
|
|
1,284,000 |
|
|
Libor plus 2 |
% |
March 21, 2007 |
|
|
|
|
|
The variable rate tranches have a 90 day repayment term. As such, the interest
expense for the nine months ended September 30, 2006 include 90 days of interest
expense relating to the variable rate tranches as they are scheduled to be paid down
90 days after the acquisition of the Pro Forma Properties. |
|
i. |
|
Represents interest expense associated with the debt incurred to finance the
acquisitions of the 2005 Acquisitions. The loan terms are as follows: |
F-121
|
|
|
|
|
|
|
|
|
|
|
Property |
|
Loan Amount |
|
Interest Rate |
|
Maturity |
TS Parkersburg Property |
|
$ |
1,793,000 |
|
|
5.57% |
|
October 11, 2015 |
WG Brainerd Property |
|
|
2,814,000 |
|
|
5.44% |
|
October 11, 2015 |
WG SL Properties |
|
|
10,660,000 |
|
|
5.48% |
|
November 11, 2015 |
WG Olivette Property |
|
|
5,386,432 |
|
|
5.15% |
|
July 11, 2008 |
WG Columbia Property |
|
|
4,493,973 |
|
|
5.15% |
|
July 11, 2008 |
CV Alpharetta Property |
|
|
2,015,000 |
|
|
5.52% |
|
December 11, 2010 |
CV RH Property |
|
|
2,379,000 |
|
|
5.52% |
|
December 11, 2010 |
LO Enterprise Property |
|
|
4,859,000 |
|
|
5.52% |
|
December 11, 2010 |
FE Rockford Property |
|
|
3,998,000 |
|
|
5.61% |
|
December 11, 2010 |
LZ Glendale Property |
|
|
3,415,000 |
|
|
5.76% |
|
November 11, 2010 |
|
|
|
|
|
|
|
|
|
|
|
Property |
|
Loan Amount |
|
Interest Rate |
|
Maturity |
TS Parkersburg Property |
|
$ |
814,000 |
|
|
Libor plus 2% |
|
December 26, 2005 |
WG Brainerd Property |
|
|
649,000 |
|
|
Libor plus 2% |
|
January 4, 2006 |
PT Auburn Hills Property |
|
|
12,980,000 |
|
|
Libor plus 2% |
|
December 14, 2006 |
PT Auburn Hills Property |
|
|
4,720,000 |
|
|
Libor plus 2% |
|
April 14, 2006 |
WG SL Properties |
|
|
2,460,000 |
|
|
Libor plus 2% |
|
February 2, 2006 |
CV Alpharetta Property |
|
|
465,000 |
|
|
Libor plus 2% |
|
March 1, 2006 |
CV RH Property |
|
|
549,000 |
|
|
Libor plus 2% |
|
March 8, 2006 |
LO Enterprise Property |
|
|
1,121,000 |
|
|
Libor plus 2% |
|
March 1, 2006 |
FE Rockford Property |
|
|
922,000 |
|
|
Libor plus 2% |
|
March 10, 2006 |
LZ Glendale Property |
|
|
1,138,000 |
|
|
Libor plus 2% |
|
January 25, 2006 |
Related
Party Notes |
|
|
4,453,000 |
|
|
Libor plus 2% |
|
June 30, 2006 |
|
|
|
j. |
|
Represents a pro forma adjustment to the weighted average common shares
outstanding to reflect the acceptance of shares of common stock needed to provide for
the cash purchase price of the Prior Year Acquisitions. As the Company had insufficient
capital at January 1, 2005 to acquire the respective properties which are included in
the pro forma results of operations, it is necessary to assume all of the shares
outstanding as of December 31, 2005 were outstanding on January 1, 2005. |
|
k. |
|
Included in general and administrative expenses is $30,000 of unrecognized
compensation expense. Had SFAS No. 123R been implemented in 2005, we would have
experienced a $30,000 reduction in net income. |
F-122
APPENDIX A
PRIOR PERFORMANCE TABLES
The prior performance tables that follow present certain information regarding private real
estate programs previously sponsored by related entities. Twenty-four related partnerships formed
from January 1, 1996 to December 31, 2005 have or had similar investment objectives to ours and
purchased an aggregate of 20 retail centers, with an aggregate of approximately 1,743,000 square
feet, one garden office building with an aggregate of approximately 30,000 square feet and 23
single-tenant retail properties with an aggregate of approximately 544,000 square feet. One
partnership purchased two land parcels for development with an aggregate of approximately 452,000
square feet. The prior performance tables also include the activity of Cole Credit Property Trust,
Inc. (CCPT), Cole Collateralized Senior Notes, LLC (CCSN), Cole Collateralized Senior Notes II, LLC
(CCSN II), Cole Collateralized Senior Notes III, LLC (CCSN III), Cole Collateralized Senior Notes
IV (CCSN IV), and the various offerings related to Cole Capital Partners Tenants in Common and
Delaware Statutory Trust (DST) programs.
As of December 31, 2005, CCPT had raised approximately $100.9 million and had acquired 41
single-tenant commercial properties, with an aggregate of approximately 1.0 million square feet
As of December 31, 2005, CCSN had issued approximately $28.0 million in promissory notes and
acquired 45 single-tenant commercial properties, with an aggregate of approximately 802,000
rentable square feet. As of December 31, 2005, CCSN had sold 37 properties, 11 of which were sold
as part of Cole Capital Partners Tenants in Common and DST programs and three of which were sold
to CCPT. On April 28, 2006, CCSN redeemed, at par, all of its approximately $28.0 million in
outstanding promissory notes.
As of December 31, 2005, CCSN II had issued approximately $28.7 million in promissory notes
and acquired 33 single-tenant commercial properties with an aggregate of approximately 784,000
rentable square feet. As of December 31, 2005, CCSN II had sold 30 properties, 17 of which were
sold as part of Cole Capital Partners Tenants in Common and DST programs and five of which were
sold to CCPT.
As of December 31, 2005, CCSN III had issued approximately $28.7 million in promissory notes
and had acquired 13 single-tenant commercial properties with an aggregate of approximately 190,000
rentable square feet. As of December 31, 2005, CCSN III had sold eight properties, seven of which
were sold as part of Cole Capital Partners DST program.
As of December 31, 2005, CCSN IV had issued approximately $26.9 million in promissory notes
and had acquired one single-tenant commercial property with an aggregate of approximately 25,000
rentable square feet.
In addition, as of December 31, 2005, CCSN, CCSN II, CCSN III, and CCSN IV each owned
interests in three single-tenant retail properties through a joint venture. The properties have an
aggregate of approximately 345,000 rentable square feet.
Cole Partnerships, Inc., an entity affiliated with the officers of Cole Capital Advisors, has
raised $5 million in a debt offering for general corporate purposes, including investments in joint
ventures with affiliates, which has been repaid. This program is not considered to have similar
investment objectives to this offering.
In addition, Cole Capital Partners, through affiliated entities, offers properties to Section
1031 exchange investors in the form of the sale of tenant-in-common ownership interests in such
properties. As of December 31, 2005, aggregate ownership interests of $96.6 million had been sold
in 22 private offerings of properties located in 13 states. In addition, there is one private
offering of tenant-in-common interests with an aggregate offering amount of approximately $20.4
million for which no amounts had been raised as of March 31, 2006. In addition, Cole Capital
Partners through affiliated entities, offers properties through the DST Program whereby beneficial
interests are offered in trusts that acquire real property. As of December 31, 2005, aggregate
ownership interests of approximately $50.6 had been sold in 17 private offerings of properties
located in nine states. In addition, there are three private offerings of DST interests, with an
aggregate offering amount of approximately $11.4 million, for which no amounts had been raised as
of December 31, 2005.
The investment objectives of previous private real estate programs
formed from 1979 through 1992 are not similar to the investment objectives of the above programs
due to the fact that those properties have been held for capital appreciation in the value of
the underlying property.
These tables contain information that may aid a potential investor in evaluating the
program presented. However, the information contained in these tables does not relate to the
properties held or to be held by us, and the purchase of shares will not create any ownership
interest in the programs included in these tables.
A-1
These tables are presented on a tax basis rather than on a GAAP basis. Tax basis accounting
does not take certain income or expense accruals into consideration at the end of each fiscal year.
Income may be understated in the tables, as GAAP accounting would require certain amortization or
leveling of rental revenue, the amount of which is undetermined at this time. Expenses may be
understated by monthly operating expenses, which typically are paid in arrears.
Past performance is not necessarily indicative of future results.
A-2
TABLE I
EXPERIENCE IN RAISING AND INVESTING FUNDS (UNAUDITED)
This table provides a summary of the experience of the sponsors of Prior Real Estate Programs
for which offerings have been initiated since January 1, 2003. Information is provided with regard
to the manner in which the proceeds of the offerings have been applied. Also set forth below is
information pertaining to the timing and length of these offerings and the time period over which
the proceeds have been invested in the properties. All figures are as of December 31, 2005.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cole Credit Property |
|
|
Cole Collateralized |
|
|
Cole Collateralized |
|
|
|
Fund II LP |
|
|
Senior Notes, LLC (6) |
|
|
Senior Notes II, LLC (6) |
|
Dollar amount offered |
|
$ |
25,000,000 |
|
|
$ |
28,750,000 |
(1) |
|
$ |
28,750,000 |
(1) |
Dollar amount raised |
|
|
24,494,500 |
|
|
|
28,038,500 |
|
|
|
28,750,000 |
|
Less offering expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
Selling commissions and discounts retained by
affiliates |
|
|
1,961,560 |
|
|
|
1,401,925 |
|
|
|
1,437,500 |
|
Organizational expenses (4) |
|
|
449,873 |
|
|
|
660,585 |
|
|
|
645,882 |
|
Other |
|
|
|
|
|
|
|
|
|
|
|
|
Reserves |
|
|
451,175 |
|
|
|
5,668,960 |
|
|
|
3,784,574 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percent available for investment |
|
|
90 |
% |
|
|
93 |
% |
|
|
93 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition costs: |
|
|
|
|
|
|
|
|
|
|
|
|
Prepaid items and fees related to purchase of property |
|
|
213,578 |
|
|
|
537,738 |
|
|
|
501,369 |
|
Cash down payment |
|
|
20,273,063 |
|
|
|
22,306,921 |
|
|
|
19,485,354 |
|
Acquisition fees (5) |
|
|
1,137,801 |
|
|
|
1,317,486 |
|
|
|
1,716,968 |
|
Other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total acquisition cost |
|
$ |
21,624,442 |
|
|
$ |
24,162,145 |
|
|
$ |
21,703,691 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percent leverage |
|
|
65 |
% |
|
|
65 |
% |
|
|
50 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Date offering began |
|
|
07/01/03 |
|
|
|
09/15/03 |
|
|
|
02/01/04 |
|
Length of offering (in months) |
|
|
9 |
|
|
|
9 |
|
|
|
12 |
|
Months to invest 90% of amount available for investment |
|
|
15 |
|
|
|
5 |
|
|
|
7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cole Collateralized |
|
|
Cole Collateralized |
|
|
Cole Credit |
|
|
|
Senior Notes III, LLC (6) |
|
|
Senior Notes IV, LLC |
|
|
Property Trust, Inc. |
|
Dollar amount offered |
|
$ |
28,750,000 |
(1) |
|
$ |
28,750,000 |
(1) |
|
$ |
110,000,000 |
|
Dollar amount raised |
|
|
28,658,500 |
|
|
|
26,862,610 |
|
|
|
100,972,510 |
|
Less offering expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
Selling commissions and discounts retained by
affiliates |
|
|
1,432,925 |
|
|
|
1,343,196 |
|
|
|
6,402,966 |
|
Organizational expenses (4) |
|
|
600,234 |
|
|
|
561,716 |
|
|
|
3,309,792 |
|
Other |
|
|
|
|
|
|
|
|
|
|
|
|
Reserves |
|
|
7,781,946 |
|
|
|
11,266,017 |
|
|
|
1,063,092 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percent available for investment |
|
|
93 |
% |
|
|
93 |
% |
|
|
90 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition costs: |
|
|
|
|
|
|
|
|
|
|
|
|
Prepaid items and fees related to purchase of property |
|
|
495,855 |
|
|
|
12,120 |
|
|
|
1,274,741 |
|
Cash down payment |
|
|
14,706,851 |
|
|
|
4,475,000 |
|
|
|
82,198,983 |
|
Acquisition fees (5) |
|
|
1,574,807 |
|
|
|
89,500 |
|
|
|
4,437,000 |
|
Other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total acquisition cost |
|
$ |
16,777,513 |
|
|
$ |
4,576,620 |
|
|
$ |
87,910,724 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percent leverage |
|
|
68 |
% |
|
|
0 |
% |
|
|
58 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Date offering began |
|
|
01/03/05 |
|
|
|
05/20/05 |
|
|
|
04/06/04 |
|
Length of offering (months) |
|
|
7 |
|
|
Ongoing |
|
|
|
17 |
|
Months to invest 90% of amount available for investment |
|
|
7 |
|
|
|
N/A |
|
|
|
18 |
|
Past performance is not necessarily indicative of future results.
A-3
TABLE I
EXPERIENCE IN RAISING AND INVESTING FUNDS (UNAUDITED) (cont.)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cole Credit |
|
Staples in |
|
Mimis Café in |
|
|
Property Trust II, Inc. |
|
Tulsa, OK (2) (3) |
|
Lone Tree, CO (2) (3) |
|
|
|
Dollar amount offered |
|
$ |
500,000,000 |
|
|
$ |
4,136,000 |
|
|
$ |
2,446,000 |
|
Dollar amount raised |
|
|
28,109,121 |
|
|
|
4,136,000 |
|
|
|
2,446,000 |
|
Less offering expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
Selling commissions and
discounts retained by
affiliates |
|
|
1,953,921 |
|
|
|
248,160 |
|
|
|
146,760 |
|
Organizational expenses (4) |
|
|
1,117,704 |
|
|
|
41,360 |
|
|
|
24,460 |
|
Other |
|
|
|
|
|
|
|
|
|
|
|
|
Reserves |
|
|
4,502,440 |
|
|
|
26,957 |
|
|
|
14,698 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percent available for investment |
|
|
89 |
% |
|
|
93 |
% |
|
|
93 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition costs: |
|
|
|
|
|
|
|
|
|
|
|
|
Prepaid items and fees
related to purchase of
property |
|
|
288,085 |
|
|
|
30,000 |
|
|
|
60,280 |
|
Cash down payment |
|
|
18,600,821 |
|
|
|
3,760,640 |
|
|
|
2,150,000 |
|
Acquisition fees (5) |
|
|
1,681,002 |
|
|
|
55,840 |
|
|
|
64,500 |
|
Other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total acquisition cost |
|
$ |
20,569,908 |
|
|
$ |
3,846,480 |
|
|
$ |
2,274,780 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percent leverage |
|
|
76 |
% |
|
|
0 |
% |
|
|
0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Date offering began |
|
|
06/27/05 |
|
|
|
02/13/04 |
|
|
|
04/20/04 |
|
Length of offering (months) |
|
Ongoing |
|
|
|
7 |
|
|
|
4 |
|
Months to invest 90% of amount
available for investment |
|
|
N/A |
|
|
|
4 |
|
|
|
3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Walgreens in |
|
Walgreens in |
|
Walgreens in |
|
|
Windsor, CO (2) (3) |
|
Goldsboro, NC (2) (3) |
|
Hamilton, OH (2) (3) |
|
|
|
Dollar amount offered |
|
$ |
2,669,000 |
|
|
$ |
2,570,000 |
|
|
$ |
2,966,000 |
|
Dollar amount raised |
|
|
2,669,000 |
|
|
|
2,570,000 |
|
|
|
2,966,000 |
|
Less offering expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
Selling commissions and
discounts retained by
affiliates |
|
|
160,140 |
|
|
|
154,200 |
|
|
|
177,960 |
|
Organizational expenses (4) |
|
|
26,690 |
|
|
|
25,700 |
|
|
|
29,660 |
|
Other |
|
|
|
|
|
|
|
|
|
|
|
|
Reserves |
|
|
40,667 |
|
|
|
18,589 |
|
|
|
29,573 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percent available for investment |
|
|
93 |
% |
|
|
93 |
% |
|
|
93 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition costs: |
|
|
|
|
|
|
|
|
|
|
|
|
Prepaid items and fees
related to purchase of
property |
|
|
60,000 |
|
|
|
60,000 |
|
|
|
60,000 |
|
Cash down payment |
|
|
2,393,460 |
|
|
|
2,303,985 |
|
|
|
2,668,047 |
|
Acquisition fees (5) |
|
|
|
|
|
|
|
|
|
|
|
|
Other |
|
|
28,710 |
|
|
|
26,115 |
|
|
|
30,333 |
|
|
|
|
Total acquisition cost |
|
$ |
2,482,170 |
|
|
$ |
2,390,100 |
|
|
$ |
2,758,380 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percent leverage |
|
|
52 |
% |
|
|
50 |
% |
|
|
51 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Date offering began |
|
|
06/03/04 |
|
|
|
06/30/04 |
|
|
|
07/01/04 |
|
Length of offering (months) |
|
|
3 |
|
|
|
3 |
|
|
|
4 |
|
Months to invest 90% of amount
available for investment |
|
|
3 |
|
|
|
3 |
|
|
|
3 |
|
Past performance is not necessarily indicative of future results.
A-4
TABLE I
EXPERIENCE IN RAISING AND INVESTING FUNDS (UNAUDITED) (cont.)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Walgreens in |
|
Walgreens in |
|
Walgreens in |
|
|
Carlsbad, NM (2)(3) |
|
Willimantic, CT (2)(3) |
|
Edgewood, NM (2)(3) |
|
|
|
Dollar amount offered |
|
$ |
2,289,739 |
|
|
$ |
2,746,000 |
|
|
$ |
2,134,000 |
|
Dollar amount raised |
|
|
2,289,739 |
|
|
|
2,746,000 |
|
|
|
2,134,000 |
|
Less offering expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
Selling commissions and
discounts retained by
affiliates |
|
|
137,384 |
|
|
|
164,760 |
|
|
|
128,040 |
|
Organizational expenses (4) |
|
|
22,898 |
|
|
|
27,460 |
|
|
|
21,340 |
|
Other |
|
|
|
|
|
|
|
|
|
|
|
|
Reserves |
|
|
24,005 |
|
|
|
37,601 |
|
|
|
19,940 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percent available for investment |
|
|
93 |
% |
|
|
93 |
% |
|
|
93 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition costs: |
|
|
|
|
|
|
|
|
|
|
|
|
Prepaid items and fees
related to purchase of
property |
|
|
60,000 |
|
|
|
60,000 |
|
|
|
60,000 |
|
Cash down payment |
|
|
2,046,107 |
|
|
|
2,466,690 |
|
|
|
1,903,340 |
|
Acquisition fees (5) |
|
|
|
|
|
|
|
|
|
|
|
|
Other |
|
|
23,350 |
|
|
|
27,090 |
|
|
|
21,280 |
|
|
|
|
Total acquisition cost |
|
$ |
2,129,457 |
|
|
$ |
2,553,780 |
|
|
$ |
1,984,620 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percent leverage |
|
|
50 |
% |
|
|
50 |
% |
|
|
50 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Date offering began |
|
|
07/13/04 |
|
|
|
09/15/04 |
|
|
|
09/15/04 |
|
Length of offering (months) |
|
|
5 |
|
|
|
2 |
|
|
|
4 |
|
Months to invest 90% of amount
available for investment |
|
|
3 |
|
|
|
2 |
|
|
|
3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Walgreens in |
|
Walgreens in |
|
Walgreens in |
|
|
Fairborn, OH (2) (3) |
|
Slidell, LA (2) (3) |
|
Westheimer, TX (2) (3) |
|
|
|
Dollar amount offered |
|
$ |
2,644,000 |
|
|
$ |
2,212,000 |
|
|
$ |
3,900,000 |
|
Dollar amount raised |
|
|
2,644,000 |
|
|
|
2,212,000 |
|
|
|
3,900,000 |
|
Less offering expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
Selling commissions and
discounts retained by
affiliates |
|
|
158,640 |
|
|
|
132,720 |
|
|
|
234,000 |
|
Organizational expenses (4) |
|
|
26,440 |
|
|
|
22,120 |
|
|
|
39,000 |
|
Other |
|
|
|
|
|
|
|
|
|
|
|
|
Reserves |
|
|
26,668 |
|
|
|
19,900 |
|
|
|
34,827 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percent available for investment |
|
|
93 |
% |
|
|
93 |
% |
|
|
93 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition costs: |
|
|
|
|
|
|
|
|
|
|
|
|
Prepaid items and fees
related to purchase of
property |
|
|
60,000 |
|
|
|
60,000 |
|
|
|
60,000 |
|
Cash down payment |
|
|
2,372,750 |
|
|
|
1,975,240 |
|
|
|
3,526,680 |
|
Acquisition fees (5) |
|
|
|
|
|
|
|
|
|
|
|
|
Other |
|
|
26,170 |
|
|
|
21,920 |
|
|
|
40,320 |
|
|
|
|
Total acquisition cost |
|
$ |
2,458,920 |
|
|
$ |
2,057,160 |
|
|
$ |
3,627,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percent leverage |
|
|
50 |
% |
|
|
50 |
% |
|
|
51 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Date offering began |
|
|
09/30/04 |
|
|
|
11/02/04 |
|
|
|
10/15/04 |
|
Length of offering (months) |
|
|
2 |
|
|
|
8 |
|
|
|
3 |
|
Months to invest 90% of amount
available for investment |
|
|
2 |
|
|
|
7 |
|
|
|
2 |
|
Past performance is not necessarily indicative of future results.
A-5
TABLE I
EXPERIENCE IN RAISING AND INVESTING FUNDS (UNAUDITED) (cont.)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Walgreens in |
|
Home Depot in |
|
Walgreens in |
|
|
Richmond, OH (2) (3) |
|
Spokane, WA (2) (3) |
|
Covington, TN (2) (3) |
|
|
|
Dollar amount offered |
|
$ |
3,388,000 |
|
|
$ |
11,532,000 |
|
|
$ |
2,141,000 |
|
Dollar amount raised |
|
|
3,388,000 |
|
|
|
11,532,000 |
|
|
|
2,141,000 |
|
Less offering expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
Selling commissions and
discounts retained by
affiliates |
|
|
203,280 |
|
|
|
691,920 |
|
|
|
128,460 |
|
Organizational expenses (4) |
|
|
33,880 |
|
|
|
115,320 |
|
|
|
21,410 |
|
Other |
|
|
|
|
|
|
|
|
|
|
|
|
Reserves |
|
|
28,405 |
|
|
|
160,266 |
|
|
|
23,283 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percent available for investment |
|
|
93 |
% |
|
|
93 |
% |
|
|
93 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition costs: |
|
|
|
|
|
|
|
|
|
|
|
|
Prepaid items and fees
related to purchase of
property |
|
|
60,000 |
|
|
|
430,050 |
|
|
|
60,000 |
|
Cash down payment |
|
|
3,056,970 |
|
|
|
10,283,250 |
|
|
|
1,910,170 |
|
Acquisition fees (5) |
|
|
|
|
|
|
|
|
|
|
|
|
Other |
|
|
33,870 |
|
|
|
11,460 |
|
|
|
20,960 |
|
|
|
|
Total acquisition cost |
|
$ |
3,150,840 |
|
|
$ |
10,724,760 |
|
|
$ |
1,991,130 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percent leverage |
|
|
50 |
% |
|
|
50 |
% |
|
|
50 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Date offering began |
|
|
10/26/04 |
|
|
|
11/09/04 |
|
|
|
11/19/04 |
|
Length of offering (months) |
|
|
11 |
|
|
|
7 |
|
|
|
6 |
|
Months to invest 90% of amount
available for investment |
|
|
2 |
|
|
|
6 |
|
|
|
6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Walgreens in |
|
Walgreens in |
|
Walgreens in |
|
|
Orlando, FL (2)(3) |
|
Glen Burnie, MD (2)(3) |
|
Garfield Heights, OH (2)(3) |
|
|
|
Dollar amount offered |
|
$ |
2,486,000 |
|
|
$ |
3,485,000 |
|
|
$ |
2,930,000 |
|
Dollar amount raised |
|
|
2,486,000 |
|
|
|
3,485,000 |
|
|
|
2,930,000 |
|
Less offering expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
Selling commissions and
discounts retained by
affiliates |
|
|
149,160 |
|
|
|
209,100 |
|
|
|
175,800 |
|
Organizational expenses (4) |
|
|
24,860 |
|
|
|
34,850 |
|
|
|
29,300 |
|
Other |
|
|
|
|
|
|
|
|
|
|
|
|
Reserves |
|
|
20,555 |
|
|
|
28,974 |
|
|
|
36,623 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percent available for investment |
|
|
93 |
% |
|
|
93 |
% |
|
|
93 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition costs: |
|
|
|
|
|
|
|
|
|
|
|
|
Prepaid items and fees
related to purchase of
property |
|
|
92,000 |
|
|
|
200,685 |
|
|
|
60,000 |
|
Cash down payment |
|
|
2,195,810 |
|
|
|
3,006,675 |
|
|
|
2,664,900 |
|
Acquisition fees (5) |
|
|
|
|
|
|
|
|
|
|
|
|
Other |
|
|
24,170 |
|
|
|
33,690 |
|
|
|
|
|
|
|
|
Total acquisition cost |
|
$ |
2,311,980 |
|
|
$ |
3,241,050 |
|
|
$ |
2,724,900 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percent leverage |
|
|
50 |
% |
|
|
50 |
% |
|
|
52 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Date offering began |
|
|
11/30/04 |
|
|
|
12/01/04 |
|
|
|
12/09/04 |
|
Length of offering (months) |
|
|
6 |
|
|
|
9 |
|
|
|
8 |
|
Months to invest 90% of amount
available for investment |
|
|
6 |
|
|
|
6 |
|
|
|
8 |
|
Past performance is not necessarily indicative of future results.
A-6
TABLE I
EXPERIENCE I7N RAISING AND INVESTING FUNDS (UNAUDITED) (cont.)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Walgreens in |
|
Home Depot in |
|
Walgreens in |
|
|
Ponca City, OK (2) (3) |
|
Tacoma, WA (2) (3) |
|
Pineville, LA (3) (7) |
|
|
|
Dollar amount offered |
|
$ |
2,327,000 |
|
|
$ |
12,175,000 |
|
|
$ |
2,092,000 |
|
Dollar amount raised |
|
|
2,327,000 |
|
|
|
12,175,000 |
|
|
|
2,092,000 |
|
Less offering expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
Selling commissions and
discounts retained by
affiliates |
|
|
116,350 |
|
|
|
730,521 |
|
|
|
125,520 |
|
Organizational expenses (4) |
|
|
23,270 |
|
|
|
121,754 |
|
|
|
20,920 |
|
Other |
|
|
|
|
|
|
|
|
|
|
|
|
Reserves |
|
|
29,641 |
|
|
|
56,380 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percent available for investment |
|
|
94 |
% |
|
|
93 |
% |
|
|
93 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition costs: |
|
|
|
|
|
|
|
|
|
|
|
|
Prepaid items and fees
related to purchase of
property |
|
|
30,000 |
|
|
|
585,000 |
|
|
|
45,000 |
|
Cash down payment |
|
|
2,132,950 |
|
|
|
10,564,495 |
|
|
|
1,871,330 |
|
Acquisition fees (5) |
|
|
|
|
|
|
|
|
|
|
|
|
Other |
|
|
24,430 |
|
|
|
173,230 |
|
|
|
29,230 |
|
|
|
|
Total acquisition cost |
|
$ |
2,187,380 |
|
|
$ |
11,322,725 |
|
|
$ |
1,945,560 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percent leverage |
|
|
51 |
% |
|
|
59 |
% |
|
|
58 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Date offering began |
|
|
12/10/04 |
|
|
|
02/08/05 |
|
|
|
04/27/05 |
|
Length of offering (months) |
|
|
8 |
|
|
|
4 |
|
|
|
2 |
|
Months to invest 90% of amount
available for investment |
|
|
8 |
|
|
|
4 |
|
|
|
2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Walgreens in |
|
Walgreens in |
|
Walgreens in |
|
|
Bartlett, TN (3)(7) |
|
Sidney, OH (3)(7) |
|
Wichita Falls, TX (3)(7) |
|
|
|
Dollar amount offered |
|
$ |
2,022,000 |
|
|
$ |
1,975,000 |
|
|
$ |
2,020,000 |
|
Dollar amount raised |
|
|
2,022,000 |
|
|
|
1,975,000 |
|
|
|
2,020,000 |
|
Less offering expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
Selling commissions and
discounts retained by
affiliates |
|
|
121,320 |
|
|
|
118,500 |
|
|
|
121,200 |
|
Organizational expenses (4) |
|
|
20,220 |
|
|
|
19,750 |
|
|
|
20,200 |
|
Other |
|
|
|
|
|
|
|
|
|
|
|
|
Reserves |
|
|
|
|
|
|
18,245 |
|
|
|
18,827 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percent available for investment |
|
|
93 |
% |
|
|
93 |
% |
|
|
93 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition costs: |
|
|
|
|
|
|
|
|
|
|
|
|
Prepaid items and fees
related to purchase of
property |
|
|
45,000 |
|
|
|
53,920 |
|
|
|
55,000 |
|
Cash down payment |
|
|
1,805,960 |
|
|
|
1,619,749 |
|
|
|
1,794,010 |
|
Acquisition fees (5) |
|
|
|
|
|
|
|
|
|
|
|
|
Other |
|
|
29,500 |
|
|
|
28,990 |
|
|
|
29,590 |
|
|
|
|
Total acquisition cost |
|
$ |
1,880,460 |
|
|
$ |
1,702,659 |
|
|
$ |
1,878,600 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percent leverage |
|
|
59 |
% |
|
|
59 |
% |
|
|
59 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Date offering began |
|
|
04/20/05 |
|
|
|
04/29/05 |
|
|
|
05/05/05 |
|
Length of offering (months) |
|
|
2 |
|
|
|
4 |
|
|
|
3 |
|
Months to invest 90% of amount
available for investment |
|
|
2 |
|
|
|
3 |
|
|
|
3 |
|
Past performance is not necessarily indicative of future results.
A-7
TABLE I
EXPERIENCE IN RAISING AND INVESTING FUNDS (UNAUDITED) (cont.)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Walgreens in |
|
Walgreens in |
|
Walgreens in |
|
|
Chicago, IL (3) (7) |
|
Southington, CT (3) (7) |
|
Nashville, TN (3) (7) |
|
|
|
Dollar amount offered |
|
$ |
3,235,000 |
|
|
$ |
2,836,000 |
|
|
$ |
2,544,000 |
|
Dollar amount raised |
|
|
3,235,000 |
|
|
|
2,836,000 |
|
|
|
2,544,000 |
|
Less offering expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
Selling commissions and
discounts retained by
affiliates |
|
|
194,100 |
|
|
|
170,160 |
|
|
|
152,640 |
|
Organizational expenses (4) |
|
|
32,350 |
|
|
|
28,360 |
|
|
|
25,440 |
|
Other |
|
|
|
|
|
|
|
|
|
|
|
|
Reserves |
|
|
30,140 |
|
|
|
25,823 |
|
|
|
23,787 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percent available for investment |
|
|
93 |
% |
|
|
93 |
% |
|
|
93 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition costs: |
|
|
|
|
|
|
|
|
|
|
|
|
Prepaid items and fees
related to purchase of
property |
|
|
116,000 |
|
|
|
147,063 |
|
|
|
45,000 |
|
Cash down payment |
|
|
2,846,300 |
|
|
|
2,450,608 |
|
|
|
2,284,000 |
|
Acquisition fees (5) |
|
|
|
|
|
|
|
|
|
|
|
|
Other |
|
|
46,250 |
|
|
|
39,810 |
|
|
|
36,920 |
|
|
|
|
Total acquisition cost |
|
$ |
3,008,550 |
|
|
$ |
2,637,481 |
|
|
$ |
2,365,920 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percent leverage |
|
|
59 |
% |
|
|
58 |
% |
|
|
59 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Date offering began |
|
|
05/27/05 |
|
|
|
06/01/05 |
|
|
|
06/09/05 |
|
Length of offering (months) |
|
|
3 |
|
|
|
4 |
|
|
|
3 |
|
Months to invest 90% of amount
available for investment |
|
|
3 |
|
|
|
3 |
|
|
|
3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Walgreens in |
|
Gander Mountain |
|
Walgreens in |
|
|
Derby, KS (3) (7) |
|
in Spring, TX (2) (3) |
|
Blue Springs, MO (3) (7) |
|
|
|
Dollar amount offered |
|
$ |
2,341,000 |
|
|
$ |
13,150,000 |
|
|
$ |
1,891,000 |
|
Dollar amount raised |
|
|
2,341,000 |
|
|
|
13,150,000 |
|
|
|
1,891,000 |
|
Less offering expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
Selling commissions and
discounts retained by
affiliates |
|
|
140,460 |
|
|
|
789,000 |
|
|
|
113,460 |
|
Organizational expenses (4) |
|
|
23,410 |
|
|
|
131,500 |
|
|
|
18,910 |
|
Other |
|
|
|
|
|
|
|
|
|
|
|
|
Reserves |
|
|
23,122 |
|
|
|
83,019 |
|
|
|
15,758 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percent available for investment |
|
|
93 |
% |
|
|
93 |
% |
|
|
93 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition costs: |
|
|
|
|
|
|
|
|
|
|
|
|
Prepaid items and fees
related to purchase of
property |
|
|
45,000 |
|
|
|
60,000 |
|
|
|
45,000 |
|
Cash down payment |
|
|
2,098,910 |
|
|
|
12,169,500 |
|
|
|
1,686,830 |
|
Acquisition fees (5) |
|
|
|
|
|
|
|
|
|
|
|
|
Other |
|
|
33,220 |
|
|
|
|
|
|
|
26,800 |
|
|
|
|
Total acquisition cost |
|
$ |
2,177,130 |
|
|
$ |
12,229,500 |
|
|
$ |
1,758,630 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percent leverage |
|
|
59 |
% |
|
|
0 |
% |
|
|
59 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Date offering began |
|
|
06/13/05 |
|
|
|
06/15/05 |
|
|
|
06/15/05 |
|
Length of offering (months) |
|
|
4 |
|
|
|
3 |
|
|
|
4 |
|
Months to invest 90% of amount
available for investment |
|
|
4 |
|
|
|
3 |
|
|
|
4 |
|
Past performance is not necessarily indicative of future results.
A-8
TABLE I
EXPERIENCE IN RAISING AND INVESTING FUNDS (UNAUDITED) (cont.)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Walgreens in |
|
Walgreens in |
|
Walgreens in |
|
|
Garden City, KS (3) (7) |
|
Pittsburgh, KS (3) (7) |
|
Gladstone, MO (3) (7) |
|
|
|
Dollar amount offered |
|
$ |
2,259,000 |
|
|
$ |
2,016,000 |
|
|
$ |
2,530,000 |
|
Dollar amount raised |
|
|
2,259,000 |
|
|
|
2,016,000 |
|
|
|
2,530,000 |
|
Less offering expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
Selling commissions and
discounts retained by
affiliates |
|
|
135,540 |
|
|
|
120,960 |
|
|
|
151,800 |
|
Organizational expenses (4) |
|
|
22,590 |
|
|
|
20,160 |
|
|
|
23,500 |
|
Other |
|
|
|
|
|
|
|
|
|
|
|
|
Reserves |
|
|
20,396 |
|
|
|
30,006 |
|
|
|
35,544 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percent available for investment |
|
|
93 |
% |
|
|
93 |
% |
|
|
93 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition costs: |
|
|
|
|
|
|
|
|
|
|
|
|
Prepaid items and fees
related to purchase of
property |
|
|
45,000 |
|
|
|
45,000 |
|
|
|
45,000 |
|
Cash down payment |
|
|
2,023,760 |
|
|
|
1,801,540 |
|
|
|
2,269,960 |
|
Acquisition fees (5) |
|
|
|
|
|
|
|
|
|
|
|
|
Other |
|
|
32,110 |
|
|
|
28,340 |
|
|
|
37,940 |
|
|
|
|
Total acquisition cost |
|
$ |
2,100,870 |
|
|
$ |
1,874,880 |
|
|
$ |
2,352,900 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percent leverage |
|
|
59 |
% |
|
|
58 |
% |
|
|
60 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Date offering began |
|
|
06/17/05 |
|
|
|
06/20/05 |
|
|
|
06/21/05 |
|
Length of offering (months) |
|
|
3 |
|
|
|
3 |
|
|
|
4 |
|
Months to invest 90% of amount
available for investment |
|
|
3 |
|
|
|
3 |
|
|
|
4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Walgreens in |
|
Walgreens in |
|
Walgreens in |
|
|
Salt Lake City, UT (3)(7) |
|
Sandy, UT (3) (7) |
|
Midvale, UT (3) (7) |
|
|
|
Dollar amount offered |
|
$ |
3,207,000 |
|
|
$ |
3,203,000 |
|
|
$ |
2,325,000 |
|
Dollar amount raised |
|
|
3,207,000 |
|
|
|
3,203,000 |
|
|
|
2,293,000 |
|
Less offering expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
Selling commissions and
discounts retained by
affiliates |
|
|
192,420 |
|
|
|
192,180 |
|
|
|
137,580 |
|
Organizational expenses (4) |
|
|
32,070 |
|
|
|
32,030 |
|
|
|
22,930 |
|
Other |
|
|
|
|
|
|
|
|
|
|
|
|
Reserves |
|
|
13,831 |
|
|
|
11,071 |
|
|
|
7,634 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percent available for investment |
|
|
93 |
% |
|
|
93 |
% |
|
|
93 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition costs: |
|
|
|
|
|
|
|
|
|
|
|
|
Prepaid items and fees
related to purchase of
property |
|
|
45,000 |
|
|
|
45,000 |
|
|
|
44,381 |
|
Cash down payment |
|
|
2,889,420 |
|
|
|
2,886,440 |
|
|
|
2,054,844 |
|
Acquisition fees (5) |
|
|
|
|
|
|
|
|
|
|
|
|
Other |
|
|
48,090 |
|
|
|
47,350 |
|
|
|
33,266 |
|
|
|
|
Total acquisition cost |
|
$ |
2,982,510 |
|
|
$ |
2,978,790 |
|
|
$ |
2,132,491 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percent leverage |
|
|
60 |
% |
|
|
60 |
% |
|
|
60 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Date offering began |
|
|
07/22/05 |
|
|
|
07/28/05 |
|
|
|
08/03/05 |
|
Length of offering (months) |
|
|
3 |
|
|
|
3 |
|
|
Ongoing |
Months to invest 90% of amount
available for investment |
|
|
3 |
|
|
|
3 |
|
|
|
N/A |
|
Past performance is not necessarily indicative of future results.
A-9
TABLE I
EXPERIENCE IN RAISING AND INVESTING FUNDS (UNAUDITED) (cont.)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Walgreens in |
|
Wal-Mart in |
|
Gander Mountain in |
|
|
Metairie, LA (3) (7) |
|
Hazard, KY (3) (7) |
|
Hermantown, MN (2) (3) |
|
|
|
Dollar amount offered |
|
$ |
3,694,000 |
|
|
$ |
12,649,000 |
|
|
$ |
11,723,000 |
|
Dollar amount raised |
|
|
1,441,000 |
|
|
|
12,649,000 |
|
|
|
11,168,000 |
|
Less offering expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
Selling commissions and
discounts retained by
affiliates |
|
|
86,460 |
|
|
|
758,940 |
|
|
|
670,080 |
|
Organizational expenses (4) |
|
|
14,410 |
|
|
|
126,490 |
|
|
|
111,680 |
|
Other |
|
|
|
|
|
|
|
|
|
|
|
|
Reserves |
|
|
4,355 |
|
|
|
278,219 |
|
|
|
91,878 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percent available for investment |
|
|
93 |
% |
|
|
93 |
% |
|
|
93 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition costs: |
|
|
|
|
|
|
|
|
|
|
|
|
Prepaid items and fees
related to purchase of
property |
|
|
17,554 |
|
|
|
55,000 |
|
|
|
79,709 |
|
Cash down payment |
|
|
1,301,511 |
|
|
|
11,511,420 |
|
|
|
10,306,531 |
|
Acquisition fees (5) |
|
|
|
|
|
|
|
|
|
|
|
|
Other |
|
|
21,065 |
|
|
|
197,150 |
|
|
|
|
|
|
|
|
Total acquisition cost |
|
$ |
1,340,130 |
|
|
$ |
11,763,570 |
|
|
$ |
10,386,240 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percent leverage |
|
|
59 |
% |
|
|
61 |
% |
|
|
0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Date offering began |
|
|
08/09/05 |
|
|
|
09/15/05 |
|
|
|
09/22/05 |
|
Length of offering (months) |
|
Ongoing |
|
|
|
3 |
|
|
Ongoing |
|
Months to invest 90% of amount
available for investment |
|
|
N/A |
|
|
|
3 |
|
|
|
N/A |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Best Buy in |
|
Walgreens in |
|
Kohls in |
|
|
Baytown, TX (2) (3) |
|
Natchitoches, LA (7) |
|
Lakewood, CO (7) |
|
|
|
Dollar amount offered |
|
$ |
8,323,000 |
|
|
$ |
|
|
|
$ |
|
|
Dollar amount raised |
|
|
1,149,000 |
|
|
|
|
|
|
|
|
|
Less offering expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
Selling commissions and
discounts retained by
affiliates |
|
|
68,940 |
|
|
|
|
|
|
|
|
|
Organizational expenses (4) |
|
|
11,490 |
|
|
|
|
|
|
|
|
|
Other |
|
|
|
|
|
|
|
|
|
|
|
|
Reserves |
|
|
6,561 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percent available for investment |
|
|
93 |
% |
|
|
0 |
% |
|
|
0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition costs: |
|
|
|
|
|
|
|
|
|
|
|
|
Prepaid items and fees
related to purchase of
property |
|
|
6,212 |
|
|
|
|
|
|
|
|
|
Cash down payment |
|
|
1,062,358 |
|
|
|
|
|
|
|
|
|
Acquisition fees (5) |
|
|
|
|
|
|
|
|
|
|
|
|
Other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total acquisition cost |
|
$ |
1,068,570 |
|
|
$ |
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percent leverage |
|
|
0 |
% |
|
|
0 |
% |
|
|
0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Date offering began |
|
|
10/27/05 |
|
|
|
11/18/05 |
|
|
|
11/30/05 |
|
Length of offering (months) |
|
Ongoing |
|
|
Ongoing |
|
Ongoing |
Months to invest 90% of amount
available for investment |
|
|
N/A |
|
|
|
N/A |
|
|
|
N/A |
|
Past performance is not necessarily indicative of future results.
A-10
TABLE I
EXPERIENCE IN RAISING AND INVESTING FUNDS (UNAUDITED) (cont.)
|
|
|
|
|
|
|
The Shoppes at North |
|
|
|
Village (2) |
|
Dollar amount offered |
|
$ |
|
|
Dollar amount raised |
|
|
|
|
Less offering expenses: |
|
|
|
|
Selling commissions and discounts retained by
affiliates |
|
|
|
|
Organizational expenses (4) |
|
|
|
|
Other |
|
|
|
|
Reserves |
|
|
|
|
|
|
|
|
|
Percent available for investment |
|
|
0 |
% |
|
|
|
|
|
Acquisition costs: |
|
|
|
|
Prepaid items and fees related to purchase of
property |
|
|
|
|
Cash down payment |
|
|
|
|
Acquisition fees (5) |
|
|
|
|
Other |
|
|
|
|
|
|
|
|
Total acquisition cost |
|
$ |
|
|
|
|
|
|
|
Percent leverage |
|
|
0 |
% |
|
Date offering began |
|
|
12/22/05 |
|
Length of offering (months) |
|
Ongoing |
|
Months to invest 90% of amount available for
investment |
|
|
N/A |
|
Past performance is not necessarily indicative of future results.
A-11
NOTES TO TABLE I
(1) |
|
Amount includes an over allotment of $3,750,000 available under the offering. |
(2) |
|
The Offering is a Section 1031 Program sponsored by Cole Capital Partners, which consists of
the sale of tenant-in-common interests in properties owned by subsidiaries of Cole
Collateralized Senior Notes, LLC or Cole Collateralized Senior Notes II, LLC, Cole
Collateralized Senior Notes III, LLC, or Cole collateralized Senior Notes IV, LLC. |
(3) |
|
Acquisition cost amounts represent the costs paid by the tenant-in-common or Delaware
statutory trust investors to acquire interest in the properties. |
(4) |
|
Organizational expenses include legal, accounting, printing, escrow, filing, recording and
other related expenses associated with the formation and original organization of the Program
and also includes fees paid to the sponsor and to affiliates. |
(5) |
|
Acquisition fees include fees paid to the sponsor or affiliates based upon the terms of the
memorandum. |
(6) |
|
Amounts herein relate to initial investments of capital raised and do not include any
properties acquired through reinvested amounts. |
(7) |
|
The Offering is a Delaware Statutory Trust program sponsored by Cole Capital Partners which
consists of the sale of Delaware statutory trust interest in properties owned by subsidiaries
of Cole Collateralized Senior Notes, LLC, Cole Collateralized Senior Notes II, LLC, Cole
Collateralized Senior Notes III, LLC, or Cole Collateralized Senior Notes IV, LLC. |
(8) |
|
The amount includes an over allotment of $10,000,000 available under the offering. |
Past performance is not necessarily indicative of future results.
A-12
TABLE II
COMPENSATION TO SPONSOR AND AFFILIATES (UNAUDITED)
This table sets forth the compensation paid to the sponsor and its affiliates during the three
years ended December 31, 2005. Prior Real Estate programs whose offerings have closed since
January 1, 2003 are shown separately and all other programs have been aggregated. The table
includes compensation paid out of the offering proceeds and compensation paid in connection with
the ongoing operations of Prior Real Estate Programs, the offerings of which have been initiated
since January 1, 2002. Each of the Prior Real Estate Programs for which information is presented
below has similar or identical investment objectives to this program. All amounts are as of
December 31, 2005.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cole Credit Property |
|
Cole Collateralized |
|
Cole Collateralized |
|
|
Fund II, LP |
|
Senior Notes, LLC |
|
Senior Notes II, LLC |
Date offering commenced |
|
|
07/01/03 |
|
|
|
09/15/03 |
|
|
|
2/1/04 |
|
Dollar amount raised |
|
$ |
24,494,500 |
|
|
$ |
28,038,500 |
|
|
$ |
28,750,000 |
|
Amount paid to sponsor from proceeds of offering: |
|
|
|
|
|
|
|
|
|
|
|
|
Underwriting fees |
|
|
163,043 |
|
|
|
858,483 |
|
|
|
877,866 |
|
Acquisition fees (1) |
|
|
|
|
|
|
|
|
|
|
|
|
Real estate commissions |
|
|
1,137,801 |
|
|
|
6,774,651 |
|
|
|
5,660,456 |
|
Advisory fees |
|
|
|
|
|
|
|
|
|
|
|
|
Other (2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dollar amount of cash generated from operations before
deducting payments to sponsor |
|
|
5,310,638 |
|
|
|
211,979 |
|
|
|
(1,470,681 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount paid to sponsor from operations: |
|
|
|
|
|
|
|
|
|
|
|
|
Property management fees |
|
|
131,432 |
|
|
|
391,689 |
|
|
|
223,876 |
|
Partnership management fees |
|
|
|
|
|
|
|
|
|
|
|
|
Reimbursements |
|
|
207 |
|
|
|
|
|
|
|
|
|
Leasing commissions |
|
|
|
|
|
|
|
|
|
|
|
|
Other (3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dollar amount of property sales and refinancing before
deducting payments to sponsor |
|
|
|
|
|
|
|
|
|
|
|
|
Cash |
|
|
|
|
|
|
|
|
|
|
|
|
Notes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount paid to sponsor from property sales and refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
Incentive fees |
|
|
|
|
|
|
|
|
|
|
|
|
Real estate commissions |
|
|
|
|
|
|
|
|
|
|
|
|
Other (4) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cole Collateralized |
|
Cole Collateralized |
|
Cole Credit |
|
|
Senior Notes III, LLC |
|
Senior Notes IV, LLC |
|
Property Trust, Inc. |
Date offering commenced |
|
|
01/03/05 |
|
|
|
05/20/05 |
|
|
|
04/06/04 |
|
Dollar amount raised |
|
$ |
28,658,500 |
|
|
$ |
26,862,610 |
|
|
$ |
100,972,510 |
|
Amount paid to sponsor from proceeds of offering: |
|
|
|
|
|
|
|
|
|
|
|
|
Underwriting fees |
|
|
384,075 |
|
|
|
255,465 |
|
|
|
1,927,311 |
|
Acquisition fees (1) |
|
|
|
|
|
|
|
|
|
|
|
|
Real estate commissions |
|
|
1,921,109 |
|
|
|
|
|
|
|
4,730,912 |
|
Advisory fees |
|
|
|
|
|
|
|
|
|
|
|
|
Other (2) |
|
|
|
|
|
|
|
|
|
|
1,262,663 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dollar amount of cash generated from operations before
deducting payments to sponsor |
|
|
(802,669 |
) |
|
|
(455,170 |
) |
|
|
6,253,221 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount paid to sponsor from operations: |
|
|
|
|
|
|
|
|
|
|
|
|
Property management fees |
|
|
72,491 |
|
|
|
|
|
|
|
332,108 |
|
Partnership management fees |
|
|
|
|
|
|
|
|
|
|
496,262 |
|
Reimbursements |
|
|
|
|
|
|
|
|
|
|
|
|
Leasing commissions |
|
|
|
|
|
|
|
|
|
|
|
|
Other (3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dollar amount of property sales and refinancing before
deducting payments to sponsor |
|
|
|
|
|
|
|
|
|
|
|
|
Cash |
|
|
|
|
|
|
|
|
|
|
|
|
Notes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount paid to sponsor from property sales and refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
Incentive fees |
|
|
|
|
|
|
|
|
|
|
|
|
Real estate commissions |
|
|
|
|
|
|
|
|
|
|
|
|
Other (4) |
|
|
|
|
|
|
|
|
|
|
|
|
Past performance is not necessarily indicative of future results.
A-13
TABLE II
COMPENSATION TO SPONSOR AND AFFILIATES (UNAUDITED) (cont.)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cole Credit |
|
Staples in |
|
Mimis in |
|
|
Property Trust II, Inc. |
|
Tulsa, OK |
|
Lone Tree, CO |
Date offering commenced |
|
|
06/27/05 |
|
|
|
02/13/04 |
|
|
|
04/20/04 |
|
Dollar amount raised |
|
$ |
28,109,121 |
|
|
$ |
4,136,000 |
|
|
$ |
2,446,000 |
|
Amount paid to sponsor from proceeds of offering: |
|
|
|
|
|
|
|
|
|
|
|
|
Underwriting fees |
|
|
420,944 |
|
|
|
41,360 |
|
|
|
24,460 |
|
Acquisition fees (1) |
|
|
|
|
|
|
|
|
|
|
|
|
Real estate commissions |
|
|
1,683,369 |
|
|
|
55,840 |
|
|
|
64,500 |
|
Advisory fees |
|
|
|
|
|
|
|
|
|
|
|
|
Other (2) |
|
|
319,330 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dollar amount of cash generated from operations before
deducting payments to sponsor |
|
|
145,588 |
|
|
|
512,719 |
|
|
|
278,192 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount paid to sponsor from operations: |
|
|
|
|
|
|
|
|
|
|
|
|
Property management fees |
|
|
13,737 |
|
|
|
|
|
|
|
|
|
Partnership management fees |
|
|
25,031 |
|
|
|
4,079 |
|
|
|
5,500 |
|
Reimbursements |
|
|
|
|
|
|
|
|
|
|
|
|
Leasing commissions |
|
|
|
|
|
|
|
|
|
|
|
|
Other (3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dollar amount of property sales and refinancing before
deducting payments to sponsor |
|
|
|
|
|
|
|
|
|
|
|
|
Cash |
|
|
|
|
|
|
|
|
|
|
|
|
Notes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount paid to sponsor from property sales and refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
Incentive fees |
|
|
|
|
|
|
|
|
|
|
|
|
Real estate commissions |
|
|
|
|
|
|
|
|
|
|
|
|
Other (4) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Walgreens in |
|
Walgreens in |
|
Walgreens in |
|
|
Windsor, CO |
|
Goldsboro, NC |
|
Hamilton, OH |
Date offering commenced |
|
|
06/03/04 |
|
|
|
06/03/04 |
|
|
|
07/01/04 |
|
Dollar amount raised |
|
$ |
2,669,000 |
|
|
$ |
2,570,000 |
|
|
$ |
2,966,000 |
|
Amount paid to sponsor from proceeds of offering: |
|
|
|
|
|
|
|
|
|
|
|
|
Underwriting fees |
|
|
26,690 |
|
|
|
25,700 |
|
|
|
29,660 |
|
Acquisition fees (1) |
|
|
|
|
|
|
|
|
|
|
|
|
Real estate commissions |
|
|
|
|
|
|
|
|
|
|
|
|
Advisory fees |
|
|
|
|
|
|
|
|
|
|
|
|
Other (2) |
|
|
28,710 |
|
|
|
26,115 |
|
|
|
30,333 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dollar amount of cash generated from operations before
deducting payments to sponsor |
|
|
271,013 |
|
|
|
246,790 |
|
|
|
294,619 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount paid to sponsor from operations: |
|
|
|
|
|
|
|
|
|
|
|
|
Property management fees |
|
|
|
|
|
|
|
|
|
|
|
|
Partnership management fees |
|
|
4,984 |
|
|
|
4,710 |
|
|
|
10,954 |
|
Reimbursements |
|
|
|
|
|
|
|
|
|
|
|
|
Leasing commissions |
|
|
|
|
|
|
|
|
|
|
|
|
Other (3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dollar amount of property sales and refinancing before
deducting payments to sponsor |
|
|
|
|
|
|
|
|
|
|
|
|
Cash |
|
|
|
|
|
|
|
|
|
|
|
|
Notes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount paid to sponsor from property sales and refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
Incentive fees |
|
|
|
|
|
|
|
|
|
|
|
|
Real estate commissions |
|
|
|
|
|
|
|
|
|
|
|
|
Other (4) |
|
|
|
|
|
|
|
|
|
|
|
|
Past performance is not necessarily indicative of future results.
A-14
TABLE II
COMPENSATION TO SPONSOR AND AFFILIATES (UNAUDITED) (cont.)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Walgreens in |
|
Walgreens in |
|
Walgreens in |
|
|
Carlsbad, NM |
|
Willimantic, CT |
|
Edgewood, NM |
Date offering commenced |
|
|
07/13/04 |
|
|
|
09/15/04 |
|
|
|
09/15/04 |
|
Dollar amount raised |
|
$ |
2,289,739 |
|
|
$ |
2,746,000 |
|
|
$ |
2,134,000 |
|
Amount paid to sponsor from proceeds of offering: |
|
|
|
|
|
|
|
|
|
|
|
|
Underwriting fees |
|
|
22,898 |
|
|
|
27,460 |
|
|
|
21,340 |
|
Acquisition fees (1) |
|
|
|
|
|
|
|
|
|
|
|
|
Real estate commissions |
|
|
|
|
|
|
|
|
|
|
|
|
Advisory fees |
|
|
|
|
|
|
|
|
|
|
|
|
Other (2) |
|
|
23,350 |
|
|
|
27,090 |
|
|
|
21,280 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dollar amount of cash generated from operations before
deducting payments to sponsor |
|
|
210,688 |
|
|
|
240,369 |
|
|
|
177,493 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount paid to sponsor from operations: |
|
|
|
|
|
|
|
|
|
|
|
|
Property management fees |
|
|
|
|
|
|
|
|
|
|
|
|
Partnership management fees |
|
|
11,562 |
|
|
|
18,720 |
|
|
|
13,233 |
|
Reimbursements |
|
|
|
|
|
|
|
|
|
|
|
|
Leasing commissions |
|
|
|
|
|
|
|
|
|
|
|
|
Other (3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dollar amount of property sales and refinancing before
deducting payments to sponsor |
|
|
|
|
|
|
|
|
|
|
|
|
Cash |
|
|
|
|
|
|
|
|
|
|
|
|
Notes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount paid to sponsor from property sales and refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
Incentive fees |
|
|
|
|
|
|
|
|
|
|
|
|
Real estate commissions |
|
|
|
|
|
|
|
|
|
|
|
|
Other (4) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Walgreens in |
|
Walgreens in |
|
Walgreens in |
|
|
Fairborn, OH |
|
Slidell, LA |
|
Westheimer, TX |
Date offering commenced |
|
|
09/30/04 |
|
|
|
11/02/04 |
|
|
|
10/15/04 |
|
Dollar amount raised |
|
$ |
2,644,000 |
|
|
$ |
2,212,000 |
|
|
$ |
3,900,000 |
|
Amount paid to sponsor from proceeds of offering: |
|
|
|
|
|
|
|
|
|
|
|
|
Underwriting fees |
|
|
26,440 |
|
|
|
22,120 |
|
|
|
39,000 |
|
Acquisition fees (1) |
|
|
|
|
|
|
|
|
|
|
|
|
Real estate commissions |
|
|
|
|
|
|
|
|
|
|
|
|
Advisory fees |
|
|
|
|
|
|
|
|
|
|
|
|
Other (2) |
|
|
26,170 |
|
|
|
21,920 |
|
|
|
40,320 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dollar amount of cash generated from operations before
deducting payments to sponsor |
|
|
219,520 |
|
|
|
142,994 |
|
|
|
292,597 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount paid to sponsor from operations: |
|
|
|
|
|
|
|
|
|
|
|
|
Property management fees |
|
|
|
|
|
|
|
|
|
|
|
|
Partnership management fees |
|
|
19,850 |
|
|
|
9,135 |
|
|
|
19,253 |
|
Reimbursements |
|
|
|
|
|
|
|
|
|
|
|
|
Leasing commissions |
|
|
|
|
|
|
|
|
|
|
|
|
Other (3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dollar amount of property sales and refinancing before
deducting payments to sponsor |
|
|
|
|
|
|
|
|
|
|
|
|
Cash |
|
|
|
|
|
|
|
|
|
|
|
|
Notes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount paid to sponsor from property sales and refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
Incentive fees |
|
|
|
|
|
|
|
|
|
|
|
|
Real estate commissions |
|
|
|
|
|
|
|
|
|
|
|
|
Other (4) |
|
|
|
|
|
|
|
|
|
|
|
|
Past performance is not necessarily indicative of future results.
A-15
TABLE II
COMPENSATION TO SPONSOR AND AFFILIATES (UNAUDITED) (cont.)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Walgreens in |
|
Home Depot in |
|
Walgreens in |
|
|
Richmond, OH |
|
Spokane, WA |
|
Covington, TN |
Date offering commenced |
|
|
10/26/04 |
|
|
|
11/09/04 |
|
|
|
11/19/04 |
|
Dollar amount raised |
|
$ |
3,388,000 |
|
|
$ |
11,532,000 |
|
|
$ |
2,141,000 |
|
Amount paid to sponsor from proceeds of offering: |
|
|
|
|
|
|
|
|
|
|
|
|
Underwriting fees |
|
|
33,880 |
|
|
|
115,320 |
|
|
|
21,410 |
|
Acquisition fees (1) |
|
|
|
|
|
|
|
|
|
|
|
|
Real estate commissions |
|
|
|
|
|
|
|
|
|
|
|
|
Advisory fees |
|
|
|
|
|
|
|
|
|
|
|
|
Other (2) |
|
|
33,870 |
|
|
|
11,460 |
|
|
|
20,960 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dollar amount of cash generated from operations before
deducting payments to sponsor |
|
|
247,970 |
|
|
|
612,222 |
|
|
|
142,197 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount paid to sponsor from operations: |
|
|
|
|
|
|
|
|
|
|
|
|
Property management fees |
|
|
|
|
|
|
|
|
|
|
|
|
Partnership management fees |
|
|
16,028 |
|
|
|
4,629 |
|
|
|
8,925 |
|
Reimbursements |
|
|
|
|
|
|
|
|
|
|
|
|
Leasing commissions |
|
|
|
|
|
|
|
|
|
|
|
|
Other (3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dollar amount of property sales and refinancing before
deducting payments to sponsor |
|
|
|
|
|
|
|
|
|
|
|
|
Cash |
|
|
|
|
|
|
|
|
|
|
|
|
Notes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount paid to sponsor from property sales and refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
Incentive fees |
|
|
|
|
|
|
|
|
|
|
|
|
Real estate commissions |
|
|
|
|
|
|
|
|
|
|
|
|
Other (4) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Walgreens in |
|
Walgreens in |
|
Walgreens in |
|
|
Orlando, FL |
|
Glen Burnie, MD |
|
Garfield Heights, OH |
Date offering commenced |
|
|
11/30/04 |
|
|
|
12/01/04 |
|
|
|
12/09/04 |
|
Dollar amount raised |
|
$ |
2,486,000 |
|
|
$ |
3,485,000 |
|
|
$ |
2,930,000 |
|
Amount paid to sponsor from proceeds of offering: |
|
|
|
|
|
|
|
|
|
|
|
|
Underwriting fees |
|
|
24,860 |
|
|
|
34,850 |
|
|
|
175,800 |
|
Acquisition fees (1) |
|
|
|
|
|
|
|
|
|
|
|
|
Real estate commissions |
|
|
|
|
|
|
|
|
|
|
|
|
Advisory fees |
|
|
|
|
|
|
|
|
|
|
|
|
Other (2) |
|
|
24,170 |
|
|
|
33,690 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dollar amount of cash generated from operations before
deducting payments to sponsor |
|
|
140,439 |
|
|
|
191,382 |
|
|
|
89,922 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount paid to sponsor from operations: |
|
|
|
|
|
|
|
|
|
|
|
|
Property management fees |
|
|
|
|
|
|
|
|
|
|
1,099 |
|
Partnership management fees |
|
|
8,748 |
|
|
|
11,742 |
|
|
|
|
|
Reimbursements |
|
|
|
|
|
|
|
|
|
|
|
|
Leasing commissions |
|
|
|
|
|
|
|
|
|
|
|
|
Other (3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dollar amount of property sales and refinancing before
deducting payments to sponsor |
|
|
|
|
|
|
|
|
|
|
|
|
Cash |
|
|
|
|
|
|
|
|
|
|
|
|
Notes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount paid to sponsor from property sales and refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
Incentive fees |
|
|
|
|
|
|
|
|
|
|
|
|
Real estate commissions |
|
|
|
|
|
|
|
|
|
|
|
|
Other (4) |
|
|
|
|
|
|
|
|
|
|
|
|
Past performance is not necessarily indicative of future results.
A-16
TABLE II
COMPENSATION TO SPONSOR AND AFFILIATES (UNAUDITED) (cont.)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Walgreens in |
|
Home Depot in |
|
Walgreens in |
|
|
Ponca City, OK |
|
Tacoma, WA |
|
Pineville, LA |
Date offering commenced |
|
|
12/10/04 |
|
|
|
02/08/05 |
|
|
|
04/27/05 |
|
Dollar amount raised |
|
$ |
2,327,000 |
|
|
$ |
12,175,000 |
|
|
$ |
2,092,000 |
|
Amount paid to sponsor from proceeds of offering: |
|
|
|
|
|
|
|
|
|
|
|
|
Underwriting fees |
|
|
116,350 |
|
|
|
121,754 |
|
|
|
20,920 |
|
Acquisition fees (1) |
|
|
|
|
|
|
|
|
|
|
|
|
Real estate commissions |
|
|
|
|
|
|
|
|
|
|
|
|
Advisory fees |
|
|
|
|
|
|
|
|
|
|
|
|
Other (2) |
|
|
24,430 |
|
|
|
173,230 |
|
|
|
29,230 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dollar amount of cash generated from operations before
deducting payments to sponsor |
|
|
72,711 |
|
|
|
570,247 |
|
|
|
86,088 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount paid to sponsor from operations: |
|
|
|
|
|
|
|
|
|
|
|
|
Property management fees |
|
|
866 |
|
|
|
|
|
|
|
2,351 |
|
Partnership management fees |
|
|
|
|
|
|
16,379 |
|
|
|
|
|
Reimbursements |
|
|
|
|
|
|
|
|
|
|
|
|
Leasing commissions |
|
|
|
|
|
|
|
|
|
|
|
|
Other (3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dollar amount of property sales and refinancing before
deducting payments to sponsor |
|
|
|
|
|
|
|
|
|
|
|
|
Cash |
|
|
|
|
|
|
|
|
|
|
|
|
Notes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount paid to sponsor from property sales and refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
Incentive fees |
|
|
|
|
|
|
|
|
|
|
|
|
Real estate commissions |
|
|
|
|
|
|
|
|
|
|
|
|
Other (4) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Walgreens in |
|
Walgreens in |
|
Walgreens in |
|
|
Bartlett, TN |
|
Sidney, OH |
|
Wichita Falls, TX |
Date offering commenced |
|
|
04/20/05 |
|
|
|
04/29/05 |
|
|
|
05/05/05 |
|
Dollar amount raised |
|
$ |
2,022,000 |
|
|
$ |
1,975,000 |
|
|
$ |
2,020,000 |
|
Amount paid to sponsor from proceeds of offering: |
|
|
|
|
|
|
|
|
|
|
|
|
Underwriting fees |
|
|
20,220 |
|
|
|
19,750 |
|
|
|
20,200 |
|
Acquisition fees (1) |
|
|
|
|
|
|
|
|
|
|
|
|
Real estate commissions |
|
|
|
|
|
|
|
|
|
|
|
|
Advisory fees |
|
|
|
|
|
|
|
|
|
|
|
|
Other (2) |
|
|
29,500 |
|
|
|
28,990 |
|
|
|
29,590 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dollar amount of cash generated from operations before
deducting payments to sponsor |
|
|
81,555 |
|
|
|
82,770 |
|
|
|
84,774 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount paid to sponsor from operations: |
|
|
|
|
|
|
|
|
|
|
|
|
Property management fees |
|
|
1,408 |
|
|
|
|
|
|
|
|
|
Partnership management fees |
|
|
|
|
|
|
2,300 |
|
|
|
2,351 |
|
Reimbursements |
|
|
|
|
|
|
|
|
|
|
|
|
Leasing commissions |
|
|
|
|
|
|
|
|
|
|
|
|
Other (3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dollar amount of property sales and refinancing before
deducting payments to sponsor |
|
|
|
|
|
|
|
|
|
|
|
|
Cash |
|
|
|
|
|
|
|
|
|
|
|
|
Notes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount paid to sponsor from property sales and refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
Incentive fees |
|
|
|
|
|
|
|
|
|
|
|
|
Real estate commissions |
|
|
|
|
|
|
|
|
|
|
|
|
Other (4) |
|
|
|
|
|
|
|
|
|
|
|
|
Past performance is not necessarily indicative of future results.
A-17
TABLE II
COMPENSATION TO SPONSOR AND AFFILIATES (UNAUDITED) (cont.)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Walgreens in |
|
Walgreens in |
|
Walgreens in |
|
|
Chicago, IL |
|
Southington, CT |
|
Nashville, TN |
Date offering commenced |
|
|
05/27/05 |
|
|
|
06/01/05 |
|
|
|
06/09/05 |
|
Dollar amount raised |
|
$ |
3,235,000 |
|
|
$ |
2,836,000 |
|
|
$ |
2,544,000 |
|
Amount paid to sponsor from proceeds of offering: |
|
|
|
|
|
|
|
|
|
|
|
|
Amount paid to sponsor from proceeds of offering: |
|
|
|
|
|
|
|
|
|
|
|
|
Underwriting fees |
|
|
32,350 |
|
|
|
28,360 |
|
|
|
25,440 |
|
Acquisition fees (1) |
|
|
|
|
|
|
|
|
|
|
|
|
Real estate commissions |
|
|
|
|
|
|
|
|
|
|
|
|
Advisory fees |
|
|
|
|
|
|
|
|
|
|
|
|
Other (2) |
|
|
46,250 |
|
|
|
39,810 |
|
|
|
36,920 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dollar amount of cash generated from operations before
deducting payments to sponsor |
|
|
126,836 |
|
|
|
110,866 |
|
|
|
88,349 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount paid to sponsor from operations: |
|
|
|
|
|
|
|
|
|
|
|
|
Property management fees |
|
|
|
|
|
|
|
|
|
|
|
|
Partnership management fees |
|
|
3,513 |
|
|
|
2,983 |
|
|
|
2,417 |
|
Reimbursements |
|
|
|
|
|
|
|
|
|
|
|
|
Leasing commissions |
|
|
|
|
|
|
|
|
|
|
|
|
Other (3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dollar amount of property sales and refinancing before
deducting payments to sponsor |
|
|
|
|
|
|
|
|
|
|
|
|
Cash |
|
|
|
|
|
|
|
|
|
|
|
|
Notes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount paid to sponsor from property sales and refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
Incentive fees |
|
|
|
|
|
|
|
|
|
|
|
|
Real estate commissions |
|
|
|
|
|
|
|
|
|
|
|
|
Other (4) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Walgreens in |
|
Gander Mountain |
|
Walgreens in |
|
|
Derby, KS |
|
in Spring, TX |
|
Blue Springs, MO |
Date offering commenced |
|
|
06/13/05 |
|
|
|
06/15/05 |
|
|
|
06/15/05 |
|
Dollar amount raised |
|
$ |
2,341,000 |
|
|
$ |
13,150,000 |
|
|
$ |
1,891,000 |
|
Amount paid to sponsor from proceeds of offering: |
|
|
|
|
|
|
|
|
|
|
|
|
Underwriting fees |
|
|
23,410 |
|
|
|
131,500 |
|
|
|
18,910 |
|
Acquisition fees (1) |
|
|
|
|
|
|
|
|
|
|
|
|
Real estate commissions |
|
|
|
|
|
|
|
|
|
|
|
|
Advisory fees |
|
|
|
|
|
|
|
|
|
|
|
|
Other (2) |
|
|
33,220 |
|
|
|
|
|
|
|
26,800 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dollar amount of cash generated from operations before
deducting payments to sponsor |
|
|
76,099 |
|
|
|
334,421 |
|
|
|
53,775 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount paid to sponsor from operations: |
|
|
|
|
|
|
|
|
|
|
|
|
Property management fees |
|
|
|
|
|
|
|
|
|
|
|
|
Partnership management fees |
|
|
4,093 |
|
|
|
2,823 |
|
|
|
3,130 |
|
Reimbursements |
|
|
|
|
|
|
|
|
|
|
|
|
Leasing commissions |
|
|
|
|
|
|
|
|
|
|
|
|
Other (3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dollar amount of property sales and refinancing before
deducting payments to sponsor |
|
|
|
|
|
|
|
|
|
|
|
|
Cash |
|
|
|
|
|
|
|
|
|
|
|
|
Notes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount paid to sponsor from property sales and refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
Incentive fees |
|
|
|
|
|
|
|
|
|
|
|
|
Real estate commissions |
|
|
|
|
|
|
|
|
|
|
|
|
Other (4) |
|
|
|
|
|
|
|
|
|
|
|
|
Past performance is not necessarily indicative of future results.
A-18
TABLE II
COMPENSATION TO SPONSOR AND AFFILIATES (UNAUDITED) (cont.)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Walgreens in |
|
Walgreens in |
|
Walgreens in |
|
|
Garden City, KS |
|
Pittsburgh, KS |
|
Gladstone, MO |
Date offering commenced |
|
|
06/17/05 |
|
|
|
06/20/05 |
|
|
|
06/21/05 |
|
Dollar amount raised |
|
$ |
2,259,000 |
|
|
$ |
2,016,000 |
|
|
$ |
2,530,000 |
|
Amount paid to sponsor from proceeds of offering: |
|
|
|
|
|
|
|
|
|
|
|
|
Underwriting fees |
|
|
22,590 |
|
|
|
20,160 |
|
|
|
25,300 |
|
Acquisition fees (1) |
|
|
|
|
|
|
|
|
|
|
|
|
Real estate commissions |
|
|
|
|
|
|
|
|
|
|
|
|
Advisory fees |
|
|
|
|
|
|
|
|
|
|
|
|
Other (2) |
|
|
32,110 |
|
|
|
28,340 |
|
|
|
37,940 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dollar amount of cash generated from operations before
deducting payments to sponsor |
|
|
73,003 |
|
|
|
65,028 |
|
|
|
83,813 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount paid to sponsor from operations: |
|
|
|
|
|
|
|
|
|
|
|
|
Property management fees |
|
|
|
|
|
|
|
|
|
|
|
|
Partnership management fees |
|
|
3,948 |
|
|
|
3,145 |
|
|
|
5,108 |
|
Reimbursements |
|
|
|
|
|
|
|
|
|
|
|
|
Leasing commissions |
|
|
|
|
|
|
|
|
|
|
|
|
Other (3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dollar amount of property sales and refinancing before
deducting payments to sponsor |
|
|
|
|
|
|
|
|
|
|
|
|
Cash |
|
|
|
|
|
|
|
|
|
|
|
|
Notes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount paid to sponsor from property sales and refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
Incentive fees |
|
|
|
|
|
|
|
|
|
|
|
|
Real estate commissions |
|
|
|
|
|
|
|
|
|
|
|
|
Other (4) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Walgreens in |
|
Walgreens in |
|
Walgreens in |
|
|
Salt Lake City, UT |
|
Sandy, UT |
|
Midvale, UT |
Date offering commenced |
|
|
07/22/05 |
|
|
|
07/28/05 |
|
|
|
08/03/05 |
|
Dollar amount raised |
|
$ |
3,207,000 |
|
|
$ |
3,203,000 |
|
|
$ |
2,293,000 |
|
Amount paid to sponsor from proceeds of offering: |
|
|
|
|
|
|
|
|
|
|
|
|
Underwriting fees |
|
|
32,070 |
|
|
|
32,030 |
|
|
|
22,930 |
|
Acquisition fees (1) |
|
|
|
|
|
|
|
|
|
|
|
|
Real estate commissions |
|
|
|
|
|
|
|
|
|
|
|
|
Advisory fees |
|
|
|
|
|
|
|
|
|
|
|
|
Other (2) |
|
|
48,090 |
|
|
|
47,350 |
|
|
|
33,266 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dollar amount of cash generated from operations before
deducting payments to sponsor |
|
|
58,794 |
|
|
|
55,931 |
|
|
|
40,146 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount paid to sponsor from operations: |
|
|
|
|
|
|
|
|
|
|
|
|
Property management fees |
|
|
|
|
|
|
|
|
|
|
|
|
Partnership management fees |
|
|
4,138 |
|
|
|
4,083 |
|
|
|
2,913 |
|
Reimbursements |
|
|
|
|
|
|
|
|
|
|
|
|
Leasing commissions |
|
|
|
|
|
|
|
|
|
|
|
|
Other (3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dollar amount of property sales and refinancing before
deducting payments to sponsor |
|
|
|
|
|
|
|
|
|
|
|
|
Cash |
|
|
|
|
|
|
|
|
|
|
|
|
Notes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount paid to sponsor from property sales and refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
Incentive fees |
|
|
|
|
|
|
|
|
|
|
|
|
Real estate commissions |
|
|
|
|
|
|
|
|
|
|
|
|
Other (4) |
|
|
|
|
|
|
|
|
|
|
|
|
Past performance is not necessarily indicative of future results.
A-19
TABLE II
COMPENSATION TO SPONSOR AND AFFILIATES (UNAUDITED) (cont.)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Walgreens in |
|
Wal-Mart in |
|
Gander Mountain in |
|
|
Metairie, LA |
|
Hazard, KY |
|
Hermantown, MN |
Date offering commenced |
|
|
08/09/05 |
|
|
|
09/15/05 |
|
|
|
09/22/05 |
|
Dollar amount raised |
|
$ |
1,441,000 |
|
|
$ |
12,649,000 |
|
|
$ |
11,168,000 |
|
Amount paid to sponsor from proceeds of offering: |
|
|
|
|
|
|
|
|
|
|
|
|
Underwriting fees |
|
|
14,410 |
|
|
|
126,490 |
|
|
|
111,680 |
|
Acquisition fees (1) |
|
|
|
|
|
|
|
|
|
|
|
|
Real estate commissions |
|
|
|
|
|
|
|
|
|
|
|
|
Advisory fees |
|
|
|
|
|
|
|
|
|
|
|
|
Other (2) |
|
|
21,065 |
|
|
|
197,150 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dollar amount of cash generated from operations before
deducting payments to sponsor |
|
|
4,355 |
|
|
|
192,782 |
|
|
|
94,643 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount paid to sponsor from operations: |
|
|
|
|
|
|
|
|
|
|
|
|
Property management fees |
|
|
|
|
|
|
|
|
|
|
|
|
Partnership management fees |
|
|
|
|
|
|
5,233 |
|
|
|
2,765 |
|
Reimbursements |
|
|
|
|
|
|
|
|
|
|
|
|
Leasing commissions |
|
|
|
|
|
|
|
|
|
|
|
|
Other (3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dollar amount of property sales and refinancing before
deducting payments to sponsor |
|
|
|
|
|
|
|
|
|
|
|
|
Cash |
|
|
|
|
|
|
|
|
|
|
|
|
Notes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount paid to sponsor from property sales and refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
Incentive fees |
|
|
|
|
|
|
|
|
|
|
|
|
Real estate commissions |
|
|
|
|
|
|
|
|
|
|
|
|
Other (4) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Best Buy in |
|
11 Other |
|
|
Baytown, TX |
|
Programs (5) |
Date offering commenced |
|
|
10/27/05 |
|
|
|
|
|
Dollar amount raised |
|
$ |
1,149,000 |
|
|
$ |
|
|
Amount paid to sponsor from proceeds of offering: |
|
|
|
|
|
|
|
|
Underwriting fees |
|
|
11,490 |
|
|
|
|
|
Acquisition fees (1) |
|
|
|
|
|
|
|
|
Real estate commissions |
|
|
|
|
|
|
3,509 |
|
Advisory fees |
|
|
|
|
|
|
|
|
Other (2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dollar amount of cash generated from operations before
deducting payments to sponsor |
|
|
108,073 |
|
|
|
1,321,173 |
|
|
|
|
|
|
|
|
|
|
Amount paid to sponsor from operations: |
|
|
|
|
|
|
|
|
Property management fees |
|
|
|
|
|
|
298,692 |
|
Partnership management fees |
|
|
|
|
|
|
840,979 |
|
Reimbursements |
|
|
|
|
|
|
80,254 |
|
Leasing commissions |
|
|
|
|
|
|
24,516 |
|
Other (3) |
|
|
|
|
|
|
90,394 |
|
|
|
|
|
|
|
|
|
|
Dollar amount of property sales and refinancing before
deducting payments to sponsor |
|
|
|
|
|
|
|
|
Cash |
|
|
|
|
|
|
35,997,640 |
|
|
Notes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount paid to sponsor from property sales and refinancing |
|
|
|
|
|
|
|
|
Incentive fees |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate commissions |
|
|
|
|
|
|
1,554,700 |
|
Other (4) |
|
|
|
|
|
|
|
|
Past performance is not necessarily indicative of future results.
A-20
NOTES TO TABLE II
(1) |
|
Properties are acquired with a combination of funds from offering proceeds and debt. The
acquisition and development fees and the leasing commissions reported in this table include
the total amount of fees paid to the sponsor or its affiliates regardless of the funding
source for these costs. |
|
(2) |
|
Amounts primarily relate to loan coordination fees, a development fee, and reimbursement of
certain offering costs paid by the sponsor. |
|
(3) |
|
Amounts primarily relate to construction management fees. |
|
(4) |
|
Amounts primarily relate to asset management fees. |
|
(5) |
|
The offerings of the prior programs aggregated herein were not closed within the past three
years and therefore do not include any amounts raised or underwriting fees. The programs have
similar investment objectives to this program. |
Past performance is not necessarily indicative of future results.
A-21
TABLE III
ANNUAL OPERATING RESULTS OF PRIOR REAL ESTATE PROGRAMS (UNAUDITED)
The following sets forth the unaudited operating results of Prior Real Estate Programs
sponsored by affiliates of the sponsor of this program, the offerings of which have been closed
since January 1, 2001. The information relates only to programs with investment objectives similar
to this program. All amounts are as of December 31 of the year indicated, except as noted.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Santa Fe Square Investors LP (Sold) |
|
|
June 1999 |
|
|
2001 |
|
2002 |
|
2003 |
|
2004 |
|
2005 |
|
|
|
Gross revenues |
|
$ |
2,398,989 |
|
|
$ |
1,272,655 |
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Profit (loss) on sale of properties |
|
|
|
|
|
|
5,547,845 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses (4) |
|
|
818,962 |
|
|
|
876,085 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
|
257,632 |
|
|
|
203,924 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization (3) |
|
|
287,320 |
|
|
|
203,285 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) Tax basis (6) |
|
$ |
1,035,075 |
|
|
$ |
5,537,206 |
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxable income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operations |
|
$ |
1,035,075 |
|
|
$ |
(10,639 |
) |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
from gain on sale |
|
|
|
|
|
|
5,547,845 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operations (5) |
|
|
1,322,395 |
|
|
|
192,646 |
|
|
|
|
|
|
|
|
|
|
|
|
|
from sales |
|
|
|
|
|
|
3,451,259 |
|
|
|
|
|
|
|
|
|
|
|
|
|
from refinancing |
|
|
|
|
|
|
11,531,507 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated from operations, sales and
refinancing |
|
|
1,322,395 |
|
|
|
15,175,412 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Cash distributions to investors |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operating cash flow |
|
|
880,000 |
|
|
|
696,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
from sales and refinancing |
|
|
|
|
|
|
13,502,268 |
|
|
|
|
|
|
|
|
|
|
|
|
|
from other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated (deficiency) after cash
distributions |
|
|
442,395 |
|
|
|
977,144 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Special items (not including sales and
refinancing) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated (deficiency) after cash
distributions and special items |
|
$ |
442,395 |
|
|
$ |
977,144 |
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax and Distribution Data Per $1,000 Invested
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal income tax results: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary income (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operations |
|
$ |
95.84 |
|
|
$ |
(0.99 |
) |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
from recapture |
|
|
|
|
|
|
68.92 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital gain (loss) |
|
|
|
|
|
|
444.77 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash distributions to investors: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Source (on tax basis) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
investment income |
|
|
81.48 |
|
|
|
314.65 |
|
|
|
|
|
|
|
|
|
|
|
|
|
return of capital |
|
|
|
|
|
|
1,000.00 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Source (on cash basis) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
sales |
|
|
|
|
|
|
1,250.21 |
|
|
|
|
|
|
|
|
|
|
|
|
|
refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
operations |
|
|
81.48 |
|
|
|
64.44 |
|
|
|
|
|
|
|
|
|
|
|
|
|
other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount (in percentage terms) remaining invested in
program properties at the end of last year
reported in the table |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0 |
% |
Past performance is not necessarily indicative of future results.
A-22
TABLE III
ANNUAL OPERATING RESULTS OF PRIOR REAL ESTATE PROGRAMS (UNAUDITED) (cont.)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cole Southwest Opportunity Fund LP (Sold) |
|
|
April 2000 |
|
|
2001 |
|
2002 |
|
2003 |
|
2004 |
|
2005 |
|
|
|
Gross revenues |
|
$ |
99,913 |
|
|
$ |
21,844 |
|
|
$ |
5,025 |
|
|
$ |
2,223 |
|
|
$ |
11,697 |
|
Profit (loss) on sale of properties |
|
|
|
|
|
|
(579,289 |
) |
|
|
|
|
|
|
398,081 |
|
|
|
4,715,721 |
|
Less: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses (4) |
|
|
30,885 |
|
|
|
452,248 |
|
|
|
390,459 |
|
|
|
259,940 |
|
|
|
148,396 |
|
Interest expense |
|
|
|
|
|
|
206,664 |
|
|
|
110,938 |
|
|
|
49,563 |
|
|
|
15,018 |
|
Depreciation and amortization (3) |
|
|
3,638 |
|
|
|
1,436,399 |
|
|
|
1,112,258 |
|
|
|
545,576 |
|
|
|
329,857 |
|
|
|
|
Net income (loss) Tax basis (6) |
|
$ |
65,390 |
|
|
$ |
(2,652,756 |
) |
|
$ |
(1,608,630 |
) |
|
$ |
(454,775 |
) |
|
$ |
4,234,147 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxable income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operations |
|
$ |
65,390 |
|
|
$ |
(2,073,467 |
) |
|
$ |
(1,608,630 |
) |
|
$ |
(852,856 |
) |
|
$ |
(481,574 |
) |
from gain on sale |
|
|
|
|
|
|
(579,289 |
) |
|
|
|
|
|
|
398,081 |
|
|
|
4,715,721 |
|
Cash generated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operations (5) |
|
|
69,028 |
|
|
|
(637,068 |
) |
|
|
(496,372 |
) |
|
|
(307,280 |
) |
|
|
(151,717 |
) |
from sales |
|
|
|
|
|
|
2,393,644 |
|
|
|
|
|
|
|
1,211,546 |
|
|
|
10,880,860 |
|
from refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated from operations, sales and
refinancing |
|
|
69,028 |
|
|
|
1,756,576 |
|
|
|
(496,372 |
) |
|
|
904,266 |
|
|
|
10,729,143 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Cash distributions to investors |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operating cash flow |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from sales and refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,532,122 |
|
from other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated (deficiency) after cash
distributions |
|
|
69,028 |
|
|
|
1,756,576 |
|
|
|
(496,372 |
) |
|
|
904,266 |
|
|
|
(802,979 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Special items (not including sales and
refinancing) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated (deficiency) after cash
distributions and special items |
|
$ |
69,028 |
|
|
$ |
1,756,576 |
|
|
$ |
(496,372 |
) |
|
$ |
904,266 |
|
|
$ |
(802,979 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax and Distribution Data Per $1,000 Invested |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal income tax results: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary income (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operations |
|
$ |
4.70 |
|
|
$ |
(149.11 |
) |
|
$ |
(115.68 |
) |
|
$ |
(61.33 |
) |
|
$ |
(34.63 |
) |
from recapture |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
246.58 |
|
Capital gain (loss) |
|
|
|
|
|
|
(41.66 |
) |
|
|
|
|
|
|
28.63 |
|
|
|
92.54 |
|
Cash distributions to investors: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Source (on tax basis) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
investment income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
return of capital |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
829.30 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Source (on cash basis) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount (in percentage terms) remaining invested in
program properties at the end of last year
reported in the table |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0 |
% |
Past performance is not necessarily indicative of future results.
A-23
TABLE III
ANNUAL OPERATING RESULTS OF PRIOR REAL ESTATE PROGRAMS (UNAUDITED) (cont.)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cole Desert Palms Power Center LP (Sold) |
|
|
|
November 2001 |
|
|
|
2001 |
|
|
2002 |
|
|
2003 |
|
|
2004 |
|
|
2005 |
|
|
|
|
Gross revenues |
|
$ |
317,225 |
|
|
$ |
3,412,505 |
|
|
$ |
3,412,222 |
|
|
$ |
11,505 |
|
|
$ |
|
|
Profit (loss) on sale of properties |
|
|
|
|
|
|
|
|
|
|
4,321,425 |
|
|
|
87,537 |
|
|
|
|
|
Less: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses (4) |
|
|
97,390 |
|
|
|
954,504 |
|
|
|
1,151,491 |
|
|
|
116,733 |
|
|
|
12,594 |
|
Interest expense |
|
|
148,106 |
|
|
|
1,638,384 |
|
|
|
1,612,813 |
|
|
|
|
|
|
|
|
|
Depreciation and amortization (3) |
|
|
53,595 |
|
|
|
1,011,006 |
|
|
|
815,795 |
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) Tax basis (6) |
|
$ |
18,134 |
|
|
$ |
(191,389 |
) |
|
$ |
4,153,548 |
|
|
$ |
(17,691 |
) |
|
$ |
,594 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxable income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operations |
|
$ |
18,134 |
|
|
$ |
(191,389 |
) |
|
$ |
(167,877 |
) |
|
$ |
(105,228 |
) |
|
$ |
(12,594 |
) |
from gain on sale |
|
|
|
|
|
|
|
|
|
|
4,321,425 |
|
|
|
87,537 |
|
|
|
|
|
Cash generated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operations (5) |
|
|
71,729 |
|
|
|
819,617 |
|
|
|
647,918 |
|
|
|
(105,228 |
) |
|
|
(12,594 |
) |
from sales |
|
|
|
|
|
|
|
|
|
|
9,219,079 |
|
|
|
|
|
|
|
|
|
from refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated from operations, sales and
refinancing |
|
|
71,729 |
|
|
|
819,617 |
|
|
|
9,866,997 |
|
|
|
(105,228 |
) |
|
|
(12,594 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Cash distributions to investors |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operating cash flow |
|
|
576 |
|
|
|
459,561 |
|
|
|
599,375 |
|
|
|
306,250 |
|
|
|
|
|
from sales and refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,082,375 |
|
|
|
|
|
from other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated (deficiency) after cash
distributions |
|
|
71,153 |
|
|
|
360,056 |
|
|
|
9,267,622 |
|
|
|
(8,493,853 |
) |
|
|
(12,594 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Special items (not including sales and
refinancing) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated (deficiency) after cash
distributions and special items |
|
$ |
71,153 |
|
|
$ |
360,056 |
|
|
$ |
9,267,622 |
|
|
$ |
(8,493,853 |
) |
|
$ |
(12,594 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax and Distribution Data Per $1,000 Invested |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal income tax results: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary income (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operations |
|
$ |
2.59 |
|
|
$ |
(27.34 |
) |
|
$ |
(23.98 |
) |
|
$ |
(15.03 |
) |
|
$ |
(1.80 |
) |
from recapture |
|
|
|
|
|
|
|
|
|
|
215.86 |
|
|
|
|
|
|
|
|
|
Capital gain (loss) |
|
|
|
|
|
|
|
|
|
|
401.49 |
|
|
|
12.51 |
|
|
|
|
|
Cash distributions to investors: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Source (on tax basis) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
investment income |
|
|
0.08 |
|
|
|
65.65 |
|
|
|
85.63 |
|
|
|
43.75 |
|
|
|
|
|
return of capital |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Source (on cash basis) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,154.63 |
|
|
|
|
|
refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
operations |
|
|
0.08 |
|
|
|
65.65 |
|
|
|
85.63 |
|
|
|
43.75 |
|
|
|
|
|
other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount (in percentage terms) remaining invested in
program properties at the end of last year
reported in the table |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0 |
% |
Past performance is not necessarily indicative of future results.
A-24
TABLE III
ANNUAL OPERATING RESULTS OF PRIOR REAL ESTATE PROGRAMS (UNAUDITED) (cont.)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cole Blvd. Sq. Investors LP (Sold) |
|
|
May 2002 |
|
|
2002 |
|
2003 |
|
2004 |
|
2005 |
|
|
|
Gross revenues |
|
$ |
1,885,886 |
|
|
$ |
4,404,802 |
|
|
$ |
3,444,830 |
|
|
$ |
165,124 |
|
Profit (loss) on sale of properties |
|
|
|
|
|
|
|
|
|
|
8,521,296 |
|
|
|
|
|
Less: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses (4) |
|
|
686,067 |
|
|
|
1,511,374 |
|
|
|
1,204,787 |
|
|
|
34,079 |
|
Interest expense |
|
|
912,735 |
|
|
|
2,028,457 |
|
|
|
1,390,517 |
|
|
|
|
|
Depreciation and amortization (3) |
|
|
486,358 |
|
|
|
1,354,613, |
|
|
|
1,236,383 |
|
|
|
|
|
|
|
|
Net income (loss) Tax basis (6) |
|
$ |
(199,274 |
) |
|
$ |
(489,642 |
) |
|
$ |
8,134,439 |
|
|
$ |
131,045 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxable income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operations |
|
$ |
(199,274 |
) |
|
$ |
(489,642 |
) |
|
$ |
(386,857 |
) |
|
$ |
131,045 |
|
from gain on sale |
|
|
|
|
|
|
|
|
|
|
8,521,296 |
|
|
|
|
|
Cash generated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operations (5) |
|
|
287,084 |
|
|
|
864,971 |
|
|
|
849,526 |
|
|
|
131,045 |
|
from sales |
|
|
|
|
|
|
|
|
|
|
14,423,979 |
|
|
|
|
|
from refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated from operations, sales and
refinancing |
|
|
287,084 |
|
|
|
864,971 |
|
|
|
15,273,505 |
|
|
|
131,045 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Cash distributions to investors |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operating cash flow |
|
|
102,209 |
|
|
|
1,057,611 |
|
|
|
850,000 |
|
|
|
|
|
from sales and refinancing |
|
|
|
|
|
|
|
|
|
|
12,837,500 |
|
|
|
420,000 |
|
from other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated (deficiency) after cash
distributions |
|
|
184,875 |
|
|
|
(192,640 |
) |
|
|
1,586,005 |
|
|
|
(288,955 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Special items (not including sales and
refinancing) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated (deficiency) after cash
distributions and special items |
|
$ |
184,875 |
|
|
$ |
(192,640 |
) |
|
$ |
1,586,005 |
|
|
$ |
(288,955 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax and Distribution Data Per $1,000 Invested |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal income tax results: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary income (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operations |
|
$ |
(19.93 |
) |
|
$ |
(48.96 |
) |
|
$ |
(38.69 |
) |
|
$ |
13.10 |
|
from recapture |
|
|
|
|
|
|
|
|
|
|
246.21 |
|
|
|
|
|
Capital gain (loss) |
|
|
|
|
|
|
|
|
|
|
605.92 |
|
|
|
|
|
Cash distributions to investors: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Source (on tax basis) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
investment income |
|
|
10.22 |
|
|
|
105.76 |
|
|
|
85.00 |
|
|
|
|
|
return of capital |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Source (on cash basis) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
sales |
|
|
|
|
|
|
|
|
|
|
1,283.75 |
|
|
|
42.00 |
|
refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
operations |
|
|
10.22 |
|
|
|
105.76 |
|
|
|
85.00 |
|
|
|
|
|
other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount (in percentage terms) remaining invested in
program properties at the end of last year
reported in the table |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0 |
% |
Past performance is not necessarily indicative of future results.
A-25
TABLE III
ANNUAL OPERATING RESULTS OF PRIOR REAL ESTATE PROGRAMS (UNAUDITED) (cont.)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cole Santa Fe Investors LP |
|
|
September 2002 |
|
|
2002 |
|
2003 |
|
2004 |
|
2005 |
|
|
|
Gross revenues |
|
$ |
1,293,152 |
|
|
$ |
2,545,914 |
|
|
$ |
2,252,104 |
|
|
$ |
2,380,191 |
|
Profit (loss) on sale of properties |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses (4) |
|
|
431,161 |
|
|
|
883,118 |
|
|
|
839,177 |
|
|
|
939,120 |
|
Interest expense |
|
|
581,968 |
|
|
|
1,144,762 |
|
|
|
1,142,336 |
|
|
|
1,123,891 |
|
Depreciation and amortization (3) |
|
|
247,530 |
|
|
|
895,291 |
|
|
|
758,595 |
|
|
|
475,149 |
|
|
|
|
Net income (loss) Tax basis (6) |
|
$ |
32,493 |
|
|
$ |
(377,257 |
) |
|
$ |
(488,004 |
) |
|
$ |
(157,969 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxable income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operations |
|
$ |
32,493 |
|
|
$ |
(377,257 |
) |
|
$ |
(488,004 |
) |
|
$ |
(157,969 |
) |
from gain on sale |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operations (5) |
|
|
280,023 |
|
|
|
518,034 |
|
|
|
270,591 |
|
|
|
317,180 |
|
from sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated from operations, sales and
refinancing |
|
|
280,023 |
|
|
|
518,034 |
|
|
|
270,591 |
|
|
|
317,180 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Cash distributions to investors |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operating cash flow |
|
|
6,253 |
|
|
|
568,574 |
|
|
|
|
|
|
|
|
|
from sales and refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated (deficiency) after cash
distributions |
|
|
273,770 |
|
|
|
(50,540 |
) |
|
|
270,591 |
|
|
|
317,180 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Special items (not including sales and
refinancing) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated (deficiency) after cash
distributions and special items |
|
$ |
273,770 |
|
|
$ |
(50,540 |
) |
|
$ |
270,591 |
|
|
$ |
317,180 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax and Distribution Data Per $1,000 Invested |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal income tax results: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary income (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operations |
|
$ |
5.26 |
|
|
$ |
(61.04 |
) |
|
$ |
(78.97 |
) |
|
$ |
(25.56 |
) |
from recapture |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital gain (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash distributions to investors: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Source (on tax basis) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
investment income |
|
|
1.01 |
|
|
|
92.00 |
|
|
|
|
|
|
|
|
|
return of capital |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Source (on cash basis) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
operations |
|
|
1.01 |
|
|
|
92.00 |
|
|
|
|
|
|
|
|
|
other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount (in percentage terms) remaining invested in
program properties at the end of last year
reported in the table |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100 |
% |
Past performance is not necessarily indicative of future results.
A-26
TABLE III
ANNUAL OPERATING RESULTS OF PRIOR REAL ESTATE PROGRAMS (UNAUDITED) (cont.)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cole Credit Property Fund LP |
|
|
November 2002 |
|
|
2002 |
|
2003 |
|
2004 |
|
2005 |
|
|
|
Gross revenues |
|
$ |
|
|
|
$ |
3,360,284 |
|
|
$ |
4,457,358 |
|
|
$ |
5,127,208 |
|
Profit (loss) on sale of properties |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses (4) |
|
|
762 |
|
|
|
222,734 |
|
|
|
289,925 |
|
|
|
214,973 |
|
Interest expense |
|
|
|
|
|
|
849,115 |
|
|
|
1,470,906 |
|
|
|
1,554,842 |
|
Depreciation and amortization (3) |
|
|
|
|
|
|
1,351,646 |
|
|
|
1,805,318 |
|
|
|
1,503,075 |
|
|
|
|
Net income (loss) Tax basis (6) |
|
$ |
(762 |
) |
|
$ |
936,789 |
|
|
$ |
891,209 |
|
|
$ |
1,854,318 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxable income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operations |
|
$ |
(762 |
) |
|
$ |
936,789 |
|
|
$ |
891,209 |
|
|
$ |
1,854,318 |
|
from gain on sale |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operations (5) |
|
|
(762 |
) |
|
|
2,288,435 |
|
|
|
2,696,527 |
|
|
|
3,357,393 |
|
from sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated from operations, sales and
refinancing |
|
|
(762 |
) |
|
|
2,288,435 |
|
|
|
2,696,527 |
|
|
|
3,357,393 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Cash distributions to investors |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operating cash flow |
|
|
|
|
|
|
1,400,125 |
|
|
|
2,187,497 |
|
|
|
2,124,998 |
|
from sales and refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated (deficiency) after cash
distributions |
|
|
(762 |
) |
|
|
883,310 |
|
|
|
509,030 |
|
|
|
1,232,395 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Special items (not including sales and
refinancing) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated (deficiency) after cash
distributions and special items |
|
$ |
(762 |
) |
|
$ |
888,310 |
|
|
$ |
509,030 |
|
|
$ |
1,232,395 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax and Distribution Data Per $1,000 Invested |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal income tax results: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary income (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operations |
|
$ |
(0.47 |
) |
|
$ |
37.47 |
|
|
$ |
35.65 |
|
|
$ |
74.17 |
|
from recapture |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital gain (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash distributions to investors: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Source (on tax basis) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
investment income |
|
|
|
|
|
|
56.01 |
|
|
|
87.50 |
|
|
|
85.00 |
|
return of capital |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Source (on cash basis) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
operations |
|
|
|
|
|
|
56.01 |
|
|
|
87.50 |
|
|
|
85.00 |
|
other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount (in percentage terms) remaining invested in
program properties at the end of last year
reported in the table |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100 |
% |
Past performance is not necessarily indicative of future results.
A-27
TABLE III
ANNUAL OPERATING RESULTS OF PRIOR REAL ESTATE PROGRAMS (UNAUDITED) (cont.)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cole Credit Property Fund II LP |
|
Cole Collateralized Senior Notes, LLC |
|
|
July 2003 |
|
September 2003 |
|
|
2003 |
|
2004 |
|
2005 |
|
2003 |
|
2004 |
|
2005 |
|
|
|
Gross revenues |
|
$ |
128,655 |
|
|
$ |
3,758,639 |
|
|
$ |
5,073,379 |
|
|
$ |
162,409 |
|
|
$ |
5,087,274 |
|
|
$ |
3,782,391 |
|
Profit (loss) on sale of properties |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,332,735 |
|
|
|
1,768,268 |
|
Less: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses (4) |
|
|
8,574 |
|
|
|
165,315 |
|
|
|
346,715 |
|
|
|
7,327 |
|
|
|
304,377 |
|
|
|
247,031 |
|
Interest expense |
|
|
6,438 |
|
|
|
1,345,798 |
|
|
|
1,908,834 |
|
|
|
248,806 |
|
|
|
4,128,321 |
|
|
|
4,275,922 |
|
Depreciation and amortization (3) |
|
|
21,234 |
|
|
|
1,667,189 |
|
|
|
1,527,717 |
|
|
|
52,656 |
|
|
|
1,574,516 |
|
|
|
1,045,629 |
|
|
|
|
Net income (loss) Tax basis (6) |
|
$ |
92,409 |
|
|
$ |
580,337 |
|
|
$ |
1,290,113 |
|
|
$ |
(146,380 |
) |
|
$ |
5,412,795 |
|
|
$ |
(17,923 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxable income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- from operations |
|
$ |
92,409 |
|
|
$ |
580,337 |
|
|
$ |
1,290,113 |
|
|
$ |
(146,380 |
) |
|
$ |
(919,940 |
) |
|
$ |
(1,786,191 |
) |
- from gain on sale |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,332,735 |
|
|
|
1,768,268 |
|
Cash generated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- from operations (5) |
|
|
113,643 |
|
|
|
2,247,526 |
|
|
|
2,817,830 |
|
|
|
(93,724 |
) |
|
|
654,576 |
|
|
|
(740,562 |
) |
- from sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,913,341 |
|
|
|
51,725,072 |
|
- from refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated from operations, sales and
refinancing |
|
|
113,643 |
|
|
|
2,247,526 |
|
|
|
2,817,830 |
|
|
|
(93,724 |
) |
|
|
26,567,917 |
|
|
|
50,984,510 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Cash distributions to investors |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- from operating cash flow |
|
|
18,795 |
|
|
|
1,567,247 |
|
|
|
2,398,417 |
|
|
|
|
|
|
|
|
|
|
|
|
(2) |
- from sales and refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- from other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated (deficiency) after cash distributions |
|
|
94,848 |
|
|
|
680,279 |
|
|
|
419,413 |
|
|
|
(93,724 |
) |
|
|
26,567,917 |
|
|
|
50,984,510 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Special items (not including sales and
refinancing) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated (deficiency) after cash
distributions and special items |
|
$ |
94,848 |
|
|
$ |
680,279 |
|
|
$ |
419,413 |
|
|
$ |
(93,724 |
) |
|
$ |
26,567,917 |
|
|
$ |
50,984,510 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax and Distribution Data Per $1,000 Invested |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal income tax results: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary income (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- from operations |
|
$ |
6.56 |
|
|
$ |
23.69 |
|
|
$ |
52.67 |
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
(2) |
- from recapture |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital gain (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash distributions to investors: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Source (on tax basis) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- investment income |
|
|
1.33 |
|
|
|
63.98 |
|
|
|
97.92 |
|
|
|
|
|
|
|
|
|
|
|
|
(2) |
- return of capital |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Source (on cash basis) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- operations |
|
|
1.33 |
|
|
|
63.98 |
|
|
|
97.92 |
|
|
|
|
|
|
|
|
|
|
|
|
|
- other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount (in percentage terms) remaining invested in
program properties at the end of last year reported
in the table |
|
|
|
|
|
|
|
|
|
|
100 |
% |
|
|
|
|
|
|
|
|
|
|
100 |
% |
Past performance is not necessarily indicative of future results.
A-28
TABLE III
ANNUAL OPERATING RESULTS OF PRIOR REAL ESTATE PROGRAMS (UNAUDITED) (cont.)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cole |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Collateralized |
|
Cole |
|
|
|
|
|
|
Senior Notes |
|
Collateralized |
|
|
|
|
Cole Collateralized Senior Notes II, LLC |
|
III, LLC |
|
Senior Notes IV, |
|
Cole Credit Property Trust, Inc. |
|
|
February 2004 |
|
January 2005 |
|
LLC May 2005 |
|
April 2004 |
|
|
2004 |
|
2005 |
|
2005 |
|
2005 |
|
2004 |
|
2005 |
|
|
|
Gross revenues |
|
$ |
1,822,545 |
|
|
$ |
3,323,749 |
|
|
$ |
1,810,020 |
|
|
$ |
91,908 |
|
|
$ |
951,220 |
|
|
$ |
10,867,693 |
|
Profit (loss) on sale of properties |
|
|
|
|
|
|
1,433,092 |
|
|
|
289,643 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses (4) |
|
|
98,921 |
|
|
|
238,585 |
|
|
|
116,560 |
|
|
|
8,700 |
|
|
|
169,619 |
|
|
|
1,357,842 |
|
Interest expense |
|
|
2,095,747 |
|
|
|
4,407,598 |
|
|
|
2,568,620 |
|
|
|
538,378 |
|
|
|
322,238 |
|
|
|
4,544,363 |
|
Depreciation and amortization (3) |
|
|
379,572 |
|
|
|
932,584 |
|
|
|
353,305 |
|
|
|
|
|
|
|
296,514 |
|
|
|
3,638,794 |
|
|
|
|
Net income (loss) Tax basis (6) |
|
$ |
(751,695 |
) |
|
$ |
(821,926 |
) |
|
$ |
(938,822 |
) |
|
$ |
(455,170 |
) |
|
$ |
162,849 |
(1) |
|
$ |
1,326,694 |
(1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxable income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- from operations |
|
$ |
(751,695 |
) |
|
$ |
(2,255,018 |
) |
|
$ |
(1,228,465 |
) |
|
$ |
(455,170 |
) |
|
$ |
162,849 |
|
|
$ |
1,326,694 |
|
- from gain on sale |
|
|
|
|
|
|
1,433,092 |
|
|
|
289,643 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- from operations (5) |
|
|
(372,123 |
) |
|
|
(1,322,434 |
) |
|
|
(875,160 |
) |
|
|
(455,170 |
) |
|
|
459,363 |
|
|
|
4,965,488 |
|
- from sales |
|
|
16,927,937 |
|
|
|
45,870,163 |
|
|
|
17,711,704 |
|
|
|
1,975,851 |
|
|
|
|
|
|
|
|
|
- from refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated from operations, sales and
refinancing |
|
|
16,555,814 |
|
|
|
44,547,729 |
|
|
|
16,836,544 |
|
|
|
1,520,681 |
|
|
|
459,363 |
|
|
|
4,965,488 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Cash distributions to investors |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- from operating cash flow |
|
|
|
|
|
|
|
(2) |
|
|
|
(2) |
|
|
|
(2) |
|
|
132,344 |
|
|
|
4,751,612 |
|
- from sales and refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- from other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated (deficiency) after cash
distributions |
|
|
16,555,814 |
|
|
|
44,547,729 |
|
|
|
16,836,544 |
|
|
|
1,520,681 |
|
|
|
327,019 |
|
|
|
213,876 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Special items (not including sales and
refinancing) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated (deficiency) after cash
distributions and special items |
|
$ |
16,555,814 |
|
|
$ |
44,547,729 |
|
|
$ |
16,836,544 |
|
|
$ |
1,520,681 |
|
|
$ |
327,019 |
|
|
$ |
213,876 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax and Distribution Data Per $1,000 Invested |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal income tax results: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary income (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- from operations |
|
|
|
|
|
|
|
(2) |
|
$ |
|
(2) |
|
$ |
|
(2) |
|
$ |
5.73 |
|
|
$ |
13.14 |
|
- from recapture |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital gain (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash distributions to investors: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Source (on tax basis) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- investment income |
|
|
|
|
|
|
|
(2) |
|
|
|
(2) |
|
|
|
(2) |
|
|
4.66 |
|
|
|
47.06 |
|
- return of capital |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Source (on cash basis) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4.66 |
|
|
|
47.06 |
|
- other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount (in percentage terms) remaining invested in
program properties at the end of last year
reported in the table |
|
|
|
|
|
|
100 |
% |
|
|
100 |
% |
|
|
100 |
% |
|
|
|
|
|
|
100 |
% |
Past performance is not necessarily indicative of future results.
A-29
TABLE III
ANNUAL OPERATING RESULTS OF PRIOR REAL ESTATE PROGRAMS (UNAUDITED) (cont.)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cole Credit Property |
|
Staples- |
|
|
|
|
Trust II, Inc. |
|
Tulsa, OK |
|
Mimis Café- |
|
|
June 2005 |
|
February 2004 |
|
Lone Tree, CO April 2004 |
|
|
2005 |
|
2004 |
|
2005 |
|
2004 |
|
2005 |
|
|
|
Gross
revenues |
|
$ |
741,669 |
|
|
$ |
189,058 |
|
|
$ |
324,241 |
|
|
$ |
92,614 |
|
|
$ |
185,632 |
|
Profit (loss) on sale of
properties |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses (4) |
|
|
195,020 |
|
|
|
1,579 |
|
|
|
3,080 |
|
|
|
1,900 |
|
|
|
3,654 |
|
Interest expense |
|
|
439,829 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization (3) |
|
|
221,411 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) Tax basis (6) |
|
$ |
(114,591 |
)(1) |
|
$ |
187,479 |
|
|
$ |
321,161 |
|
|
$ |
90,714 |
|
|
$ |
181,978 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxable income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- from operations |
|
$ |
(114,591 |
) |
|
$ |
187,479 |
|
|
$ |
321,161 |
|
|
$ |
90,714 |
|
|
$ |
181,978 |
|
- from gain on sale |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- from operations (5) |
|
|
106,280 |
|
|
|
187,479 |
|
|
|
321,161 |
|
|
|
90,714 |
|
|
|
181,978 |
|
- from sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- from refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated from operations, sales and
refinancing |
|
|
106,820 |
|
|
|
187,479 |
|
|
|
321,161 |
|
|
|
90,714 |
|
|
|
181,978 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Cash distributions to investors |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- from operating cash flow |
|
|
|
|
|
|
158,709 |
|
|
|
289,515 |
|
|
|
76,045 |
|
|
|
171,252 |
|
- from sales and refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- from other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated (deficiency) after cash
distributions |
|
|
106,820 |
|
|
|
28,770 |
|
|
|
31,646 |
|
|
|
14,669 |
|
|
|
10,726 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Special items (not including sales
and refinancing) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated (deficiency) after cash
distributions and special
items |
|
$ |
106,820 |
|
|
$ |
28,770 |
|
|
$ |
31,646 |
|
|
$ |
14,669 |
|
|
$ |
10,726 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax and Distribution Data Per $1,000
Invested |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal income tax results: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary income (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- from operations |
|
$ |
(4.08 |
) |
|
$ |
45.33 |
|
|
$ |
77.65 |
|
|
$ |
37.09 |
|
|
$ |
74.40 |
|
- from recapture |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital gain (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash distributions to investors: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Source (on tax basis) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- investment income |
|
|
|
|
|
|
38.37 |
|
|
|
70.00 |
|
|
|
31.09 |
|
|
|
70.01 |
|
- return of capital |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Source (on cash basis) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- operations |
|
|
|
|
|
|
38.37 |
|
|
|
70.00 |
|
|
|
31.09 |
|
|
|
70.01 |
|
- other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount (in percentage terms) remaining
invested in program properties at the end
of last year reported in the
table |
|
|
100 |
% |
|
|
|
|
|
|
100 |
% |
|
|
|
|
|
|
100 |
% |
Past performance is not necessarily indicative of future results.
A-30
TABLE III
ANNUAL OPERATING RESULTS OF PRIOR REAL ESTATE PROGRAMS (UNAUDITED) (cont.)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Walgreens- |
|
Walgreens- |
|
Walgreens- |
|
|
Windsor, CO |
|
Goldsboro, NC |
|
Hamilton, OH |
|
|
June 2004 |
|
June 2004 |
|
July 2004 |
|
|
2004 |
|
2005 |
|
2004 |
|
2005 |
|
2004 |
|
2005 |
|
|
|
Gross revenues |
|
$ |
135,696 |
|
|
$ |
353,024 |
|
|
$ |
101,750 |
|
|
$ |
330,000 |
|
|
$ |
126,522 |
|
|
$ |
386,000 |
|
Profit (loss) on sale of properties |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses (4) |
|
|
1,684 |
|
|
|
6,339 |
|
|
|
1,416 |
|
|
|
5,920 |
|
|
|
3,060 |
|
|
|
10,773 |
|
Interest expense |
|
|
53,114 |
|
|
|
161,554 |
|
|
|
36,706 |
|
|
|
145,628 |
|
|
|
45,878 |
|
|
|
169,146 |
|
Depreciation and amortization (3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) Tax basis (6) |
|
$ |
80,898 |
|
|
$ |
185,131 |
|
|
$ |
63,628 |
|
|
$ |
178,452 |
|
|
$ |
77,584 |
|
|
$ |
206,081 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxable income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- from operations |
|
$ |
80,898 |
|
|
$ |
185,131 |
|
|
$ |
63,628 |
|
|
$ |
178,452 |
|
|
$ |
77,584 |
|
|
$ |
206,081 |
|
- from gain on sale |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- from operations (5) |
|
|
80,898 |
|
|
|
185,131 |
|
|
|
63,628 |
|
|
|
178,452 |
|
|
|
77,584 |
|
|
|
206,081 |
|
- from sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- from refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated from operations, sales and
refinancing |
|
|
80,898 |
|
|
|
185,131 |
|
|
|
63,628 |
|
|
|
178,452 |
|
|
|
77,584 |
|
|
|
206,081 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Cash distributions to investors |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- from operating cash flow |
|
|
56,436 |
|
|
|
186,840 |
|
|
|
40,334 |
|
|
|
179,892 |
|
|
|
34,958 |
|
|
|
207,624 |
|
- from sales and refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- from other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated (deficiency) after cash
distributions |
|
|
24,462 |
|
|
|
(1,709 |
) |
|
|
23,294 |
|
|
|
(1,440 |
) |
|
|
42,626 |
|
|
|
(1,543 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Special items (not including sales and
refinancing) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated (deficiency) after cash
distributions and special items |
|
$ |
24,462 |
|
|
$ |
(17,279 |
) |
|
$ |
23,294 |
|
|
$ |
(1,440 |
) |
|
$ |
42,626 |
|
|
$ |
(1,543 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax and Distribution Data Per $1,000 Invested |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal income tax results: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary income (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- from operations |
|
$ |
30.31 |
|
|
$ |
69.36 |
|
|
$ |
24.76 |
|
|
$ |
69.44 |
|
|
$ |
26.16 |
|
|
$ |
69.48 |
|
- from recapture |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital gain (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash distributions to investors: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Source (on tax basis) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- investment income |
|
|
21.14 |
|
|
|
70.00 |
|
|
|
15.69 |
|
|
|
70.00 |
|
|
|
11.79 |
|
|
|
70.00 |
|
- return of capital |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Source (on cash basis) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- operations |
|
|
21.14 |
|
|
|
70.00 |
|
|
|
15.69 |
|
|
|
70.00 |
|
|
|
11.79 |
|
|
|
70.00 |
|
- other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount (in percentage terms) remaining invested in
program properties at the end of last year
reported in the table |
|
|
|
|
|
|
100 |
% |
|
|
|
|
|
|
100 |
% |
|
|
|
|
|
|
100 |
% |
Past performance is not necessarily indicative of future results.
A-31
TABLE III
ANNUAL OPERATING RESULTS OF PRIOR REAL ESTATE PROGRAMS (UNAUDITED) (cont.)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Walgreens- |
|
Walgreens- |
|
Walgreens- |
|
|
Carlsbad, NM |
|
Willimantic, CT |
|
Edgewood, NM |
|
|
July 2004 |
|
September 2004 |
|
September 2004 |
|
|
2004 |
|
2005 |
|
2004 |
|
2005 |
|
2004 |
|
2005 |
|
|
|
Gross revenues |
|
$ |
73,750 |
|
|
$ |
295,000 |
|
|
$ |
55,160 |
|
|
$ |
354,600 |
|
|
$ |
28,330 |
|
|
$ |
275,640 |
|
Profit (loss) on sale of properties |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses (4) |
|
|
2,537 |
|
|
|
11,550 |
|
|
|
2,660 |
|
|
|
19,487 |
|
|
|
1,326 |
|
|
|
14,191 |
|
Interest expense |
|
|
25,328 |
|
|
|
130,209 |
|
|
|
14,900 |
|
|
|
151,064 |
|
|
|
5,527 |
|
|
|
118,666 |
|
Depreciation and amortization (3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) Tax basis (6) |
|
$ |
45,885 |
|
|
$ |
153,241 |
|
|
$ |
37,600 |
|
|
$ |
184,049 |
|
|
$ |
21,477 |
|
|
$ |
142,783 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxable income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- from operations |
|
$ |
45,885 |
|
|
$ |
153,241 |
|
|
$ |
37,600 |
|
|
$ |
184,049 |
|
|
$ |
21,477 |
|
|
$ |
142,783 |
|
- from gain on sale |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- from operations (5) |
|
|
45,885 |
|
|
|
153,241 |
|
|
|
37,600 |
|
|
|
184,049 |
|
|
|
21,477 |
|
|
|
142,783 |
|
- from sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- from refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated from operations, sales and
refinancing |
|
|
45,885 |
|
|
|
153,241 |
|
|
|
37,600 |
|
|
|
184,049 |
|
|
|
21,477 |
|
|
|
142,783 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Cash distributions to investors |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- from operating cash flow |
|
|
26,006 |
|
|
|
154,559 |
|
|
|
|
|
|
|
185,376 |
|
|
|
|
|
|
|
144,070 |
|
- from sales and refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- from other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated (deficiency) after cash
distributions |
|
|
19,879 |
|
|
|
(1,318 |
) |
|
|
37,600 |
|
|
|
(1,327 |
) |
|
|
21,477 |
|
|
|
(1,287 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Special items (not including sales and
refinancing) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated (deficiency) after cash
distributions and special items |
|
$ |
19,879 |
|
|
$ |
(1,318 |
) |
|
$ |
37,600 |
|
|
$ |
(1,327 |
) |
|
$ |
21,477 |
|
|
$ |
(1,287 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax and Distribution Data Per $1,000 Invested |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal income tax results: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary income (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- from operations |
|
$ |
20.04 |
|
|
$ |
66.93 |
|
|
$ |
13.69 |
|
|
$ |
67.02 |
|
|
$ |
11.64 |
|
|
$ |
66.91 |
|
- from recapture |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital gain (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash distributions to investors: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Source (on tax basis) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- investment income |
|
|
11.36 |
|
|
|
67.50 |
|
|
|
|
|
|
|
67.51 |
|
|
|
|
|
|
|
67.51 |
|
- return of capital |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Source (on cash basis) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- operations |
|
|
11.36 |
|
|
|
67.50 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
67.51 |
|
- other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount (in percentage terms) remaining invested in
program properties at the end of last year
reported in the table |
|
|
|
|
|
|
100 |
% |
|
|
|
|
|
|
100 |
% |
|
|
|
|
|
|
100 |
% |
Past performance is not necessarily indicative of future results.
A-32
TABLE III
ANNUAL OPERATING RESULTS OF PRIOR REAL ESTATE PROGRAMS (UNAUDITED) (cont.)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Walgreens- |
|
Walgreens- |
|
Walgreens- |
|
|
Fairborn, OH |
|
Slidell, LA |
|
Westheimer, TX |
|
|
September 2004 |
|
November 2004 |
|
October 2004 |
|
|
2004 |
|
2005 |
|
2004 |
|
2005 |
|
2004 |
|
2005 |
|
|
|
Gross revenues |
|
$ |
30,209 |
|
|
$ |
344,500 |
|
|
$ |
|
|
|
$ |
243,899 |
|
|
$ |
14,637 |
|
|
$ |
495,000 |
|
Profit (loss) on sale of properties |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses (4) |
|
|
1,943 |
|
|
|
20,365 |
|
|
|
|
|
|
|
11,336 |
|
|
|
580 |
|
|
|
21,003 |
|
Interest expense |
|
|
6,797 |
|
|
|
145,934 |
|
|
|
|
|
|
|
98,704 |
|
|
|
|
|
|
|
214,710 |
|
Depreciation and amortization (3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) Tax basis (6) |
|
$ |
21,469 |
|
|
$ |
178,201 |
|
|
$ |
|
|
|
$ |
133,859 |
|
|
$ |
14,057 |
|
|
$ |
259,287 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxable income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- from operations |
|
$ |
21,469 |
|
|
$ |
178,201 |
|
|
$ |
|
|
|
$ |
133,859 |
|
|
$ |
14,057 |
|
|
$ |
259,287 |
|
- from gain on sale |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- from operations (5) |
|
|
21,469 |
|
|
|
178,201 |
|
|
|
|
|
|
|
133,859 |
|
|
|
14,057 |
|
|
|
259,287 |
|
- from sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- from refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated from operations, sales and
refinancing |
|
|
21,469 |
|
|
|
178,201 |
|
|
|
|
|
|
|
133,859 |
|
|
|
14,057 |
|
|
|
259,287 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Cash distributions to investors |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- from operating cash flow |
|
|
|
|
|
|
178,488 |
|
|
|
|
|
|
|
114,918 |
|
|
|
|
|
|
|
240,014 |
|
- from sales and refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- from other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated (deficiency) after cash
distributions |
|
|
21,469 |
|
|
|
(287 |
) |
|
|
|
|
|
|
18,941 |
|
|
|
14,057 |
|
|
|
19,273 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Special items (not including sales and
refinancing) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated (deficiency) after cash
distributions and special items |
|
$ |
21,469 |
|
|
$ |
(287 |
) |
|
$ |
|
|
|
$ |
18,941 |
|
|
$ |
14,057 |
|
|
$ |
19,273 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax and Distribution Data Per $1,000 Invested |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal income tax results: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary income (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- from operations |
|
$ |
8.12 |
|
|
$ |
67.40 |
|
|
$ |
|
|
|
$ |
60.51 |
|
|
$ |
4.11 |
|
|
$ |
66.48 |
|
- from recapture |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital gain (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash distributions to investors: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Source (on tax basis) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- investment income |
|
|
|
|
|
|
67.51 |
|
|
|
|
|
|
|
51.95 |
|
|
|
|
|
|
|
61.54 |
|
- return of capital |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Source (on cash basis) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- operations |
|
|
|
|
|
|
67.51 |
|
|
|
|
|
|
|
51.95 |
|
|
|
|
|
|
|
61.54 |
|
- other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount (in percentage terms) remaining invested in
program properties at the end of last year
reported in the table |
|
|
|
|
|
|
100 |
% |
|
|
|
|
|
|
100 |
% |
|
|
|
|
|
|
100 |
% |
Past performance is not necessarily indicative of future results.
A-33
TABLE III
ANNUAL OPERATING RESULTS OF PRIOR REAL ESTATE PROGRAMS (UNAUDITED) (cont.)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Walgreens- |
|
Home Depot- |
|
Walgreens- |
|
|
Richmond Heights, OH |
|
Spokane, WA |
|
Orlando, FL |
|
|
October 2004 |
|
November 2004 |
|
November 2004 |
|
|
2004 |
|
2005 |
|
2004 |
|
2005 |
|
2004 |
|
2005 |
|
|
|
Gross revenues |
|
$ |
|
|
|
$ |
423,387 |
|
|
$ |
|
|
|
$ |
1,014,839 |
|
|
$ |
|
|
|
$ |
232,208 |
|
Profit (loss) on sale of properties |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses (4) |
|
|
|
|
|
|
18,416 |
|
|
|
|
|
|
|
12,592 |
|
|
|
|
|
|
|
10,463 |
|
Interest expense |
|
|
|
|
|
|
173,029 |
|
|
|
|
|
|
|
394,654 |
|
|
|
|
|
|
|
90,054 |
|
Depreciation and amortization (3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) Tax basis (6) |
|
$ |
|
|
|
$ |
231,942 |
|
|
$ |
|
|
|
$ |
607,593 |
|
|
$ |
|
|
|
$ |
131,691 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxable income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- from operations |
|
$ |
|
|
|
$ |
231,942 |
|
|
$ |
|
|
|
$ |
607,593 |
|
|
$ |
|
|
|
$ |
131,691 |
|
- from gain on sale |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- from operations (5) |
|
|
|
|
|
|
231,942 |
|
|
|
|
|
|
|
607,593 |
|
|
|
|
|
|
|
131,691 |
|
- from sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- from refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated from operations, sales and
refinancing |
|
|
|
|
|
|
231,942 |
|
|
|
|
|
|
|
607,593 |
|
|
|
|
|
|
|
131,691 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Cash distributions to investors |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- from operating cash flow |
|
|
|
|
|
|
203,676 |
|
|
|
|
|
|
|
514,099 |
|
|
|
|
|
|
|
111,711 |
|
- from sales and refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- from other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated (deficiency) after cash
distributions |
|
|
|
|
|
|
28,266 |
|
|
|
|
|
|
|
93,494 |
|
|
|
|
|
|
|
19,980 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Special items (not including sales and
refinancing) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated (deficiency) after cash
distributions and special items |
|
$ |
|
|
|
$ |
28,266 |
|
|
$ |
|
|
|
$ |
93,494 |
|
|
$ |
|
|
|
$ |
19,980 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax and Distribution Data Per $1,000 Invested |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal income tax results: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary income (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- from operations |
|
$ |
|
|
|
$ |
68.46 |
|
|
$ |
|
|
|
$ |
52.69 |
|
|
$ |
|
|
|
$ |
52.97 |
|
- from recapture |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital gain (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash distributions to investors: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Source (on tax basis) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- investment income |
|
|
|
|
|
|
60.12 |
|
|
|
|
|
|
|
44.58 |
|
|
|
|
|
|
|
44.94 |
|
- return of capital |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Source (on cash basis) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- operations |
|
|
|
|
|
|
60.12 |
|
|
|
|
|
|
|
44.58 |
|
|
|
|
|
|
|
44.94 |
|
- other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount (in percentage terms) remaining invested in
program properties at the end of last year
reported in the table |
|
|
|
|
|
|
100 |
% |
|
|
|
|
|
|
100 |
% |
|
|
|
|
|
|
100 |
% |
Past performance is not necessarily indicative of future results.
A-34
TABLE III
ANNUAL OPERATING RESULTS OF PRIOR REAL ESTATE PROGRAMS (UNAUDITED) (cont.)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Walgreens- |
|
Walgreens- |
|
Walgreens- |
|
|
Glen Burnie, MD |
|
Covington, TN |
|
Garfield Heights, OH |
|
|
November 2004 |
|
December 2004 |
|
December 2004 |
|
|
2004 |
|
2005 |
|
2004 |
|
2005 |
|
2004 |
|
2005 |
|
|
|
Gross revenues |
|
$ |
|
|
|
$ |
312,387 |
|
|
$ |
|
|
|
$ |
237,696 |
|
|
$ |
|
|
|
$ |
145,569 |
|
Profit (loss) on sale of properties |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses (4) |
|
|
|
|
|
|
13,428 |
|
|
|
|
|
|
|
10,629 |
|
|
|
|
|
|
|
1,893 |
|
Interest expense |
|
|
|
|
|
|
119,319 |
|
|
|
|
|
|
|
93,795 |
|
|
|
|
|
|
|
54,853 |
|
Depreciation and amortization (3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) Tax basis (6) |
|
$ |
|
|
|
$ |
179,640 |
|
|
$ |
|
|
|
$ |
133,272 |
|
|
$ |
|
|
|
$ |
88,823 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxable income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- from operations |
|
$ |
|
|
|
$ |
179,640 |
|
|
$ |
|
|
|
$ |
133,272 |
|
|
$ |
|
|
|
$ |
88,823 |
|
- from gain on sale |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- from operations (5) |
|
|
|
|
|
|
179,640 |
|
|
|
|
|
|
|
133,272 |
|
|
|
|
|
|
|
88,823 |
|
- from sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- from refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated from operations, sales and
refinancing |
|
|
|
|
|
|
179,640 |
|
|
|
|
|
|
|
133,272 |
|
|
|
|
|
|
|
88,823 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Cash distributions to investors |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- from operating cash flow |
|
|
|
|
|
|
151,637 |
|
|
|
|
|
|
|
114,287 |
|
|
|
|
|
|
|
62,999 |
|
- from sales and refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- from other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated (deficiency) after cash
distributions |
|
|
|
|
|
|
28,003 |
|
|
|
|
|
|
|
18,985 |
|
|
|
|
|
|
|
25,824 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Special items (not including sales and
refinancing) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated (deficiency) after cash
distributions and special items |
|
$ |
|
|
|
$ |
28,003 |
|
|
$ |
|
|
|
$ |
18,985 |
|
|
$ |
|
|
|
$ |
25,824 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax and Distribution Data Per $1,000 Invested |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal income tax results: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary income (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- from operations |
|
$ |
|
|
|
$ |
51.55 |
|
|
$ |
|
|
|
$ |
62.25 |
|
|
$ |
|
|
|
$ |
30.32 |
|
- from recapture |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital gain (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash distributions to investors: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Source (on tax basis) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- investment income |
|
|
|
|
|
|
43.51 |
|
|
|
|
|
|
|
53.38 |
|
|
|
|
|
|
|
21.50 |
|
- return of capital |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Source (on cash basis) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- operations |
|
|
|
|
|
|
43.51 |
|
|
|
|
|
|
|
53.38 |
|
|
|
|
|
|
|
21.50 |
|
- other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount (in percentage terms) remaining invested in
program properties at the end of last year
reported in the table |
|
|
|
|
|
|
100 |
% |
|
|
|
|
|
|
100 |
% |
|
|
|
|
|
|
100 |
% |
Past performance is not necessarily indicative of future results.
A-35
TABLE III
ANNUAL OPERATING RESULTS OF PRIOR REAL ESTATE PROGRAMS (UNAUDITED) (cont.)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Walgreens- |
|
Home Depot- |
|
Walgreens- |
|
Walgreens- |
|
Walgreens- |
|
|
Ponca City, OK |
|
Tacoma, WA |
|
Pineville, LA |
|
Bartlett, TN |
|
Sidney, OH |
|
|
December 2004 |
|
February 2005 |
|
April 2005 |
|
April 2005 |
|
April 2005 |
|
|
2004 |
|
2005 |
|
2005 |
|
2005 |
|
2005 |
|
2005 |
|
|
|
Gross revenues |
|
$ |
|
|
|
$ |
118,085 |
|
|
$ |
1,051,101 |
|
|
$ |
155,136 |
|
|
$ |
148,334 |
|
|
$ |
150,793 |
|
Profit (loss) on sale of properties |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses (4) |
|
|
|
|
|
|
1,477 |
|
|
|
35,286 |
|
|
|
5,636 |
|
|
|
4,352 |
|
|
|
4,562 |
|
Interest expense |
|
|
|
|
|
|
44,763 |
|
|
|
461,947 |
|
|
|
65,763 |
|
|
|
63,835 |
|
|
|
65,761 |
|
Depreciation and amortization (3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) Tax basis (6) |
|
$ |
|
|
|
$ |
71,845 |
|
|
$ |
553,868 |
|
|
$ |
83,737 |
|
|
$ |
80,147 |
|
|
$ |
80,470 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxable income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- from operations |
|
$ |
|
|
|
$ |
71,845 |
|
|
$ |
553,868 |
|
|
$ |
83,737 |
|
|
$ |
80,147 |
|
|
$ |
80,470 |
|
- from gain on sale |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- from operations (5) |
|
|
|
|
|
|
71,845 |
|
|
|
553,868 |
|
|
|
83,737 |
|
|
|
80,147 |
|
|
|
80,470 |
|
- from sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- from refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated from operations, sales and
refinancing |
|
|
|
|
|
|
71,845 |
|
|
|
553,868 |
|
|
|
83,737 |
|
|
|
80,147 |
|
|
|
80,470 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Cash distributions to investors |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- from operating cash flow |
|
|
|
|
|
|
50,034 |
|
|
|
426,665 |
|
|
|
64,858 |
|
|
|
61,482 |
|
|
|
61,230 |
|
- from sales and refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- from other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated (deficiency) after cash
distributions |
|
|
|
|
|
|
21,811 |
|
|
|
127,203 |
|
|
|
18,879 |
|
|
|
18,665 |
|
|
|
19,240 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Special items (not including sales and
refinancing) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated (deficiency) after cash
distributions and special items |
|
$ |
|
|
|
$ |
21,811 |
|
|
$ |
127,203 |
|
|
$ |
18,879 |
|
|
$ |
18,665 |
|
|
$ |
19,240 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax and Distribution Data Per $1,000 Invested |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal income tax results: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary income (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- from operations |
|
$ |
|
|
|
$ |
30.87 |
|
|
$ |
45.49 |
|
|
$ |
40.03 |
|
|
$ |
39.64 |
|
|
$ |
40.74 |
|
- from recapture |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital gain (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash distributions to investors: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Source (on tax basis) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- investment income |
|
|
|
|
|
|
21.50 |
|
|
|
35.04 |
|
|
|
31.00 |
|
|
|
30.41 |
|
|
|
31.00 |
|
- return of capital |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Source (on cash basis) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- operations |
|
|
|
|
|
|
21.50 |
|
|
|
35.04 |
|
|
|
31.00 |
|
|
|
30.41 |
|
|
|
31.00 |
|
- other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount (in percentage terms) remaining invested in
program properties at the end of last year
reported in the table |
|
|
|
|
|
|
100 |
% |
|
|
100 |
% |
|
|
100 |
% |
|
|
100 |
% |
|
|
100 |
% |
Past performance is not necessarily indicative of future results.
A-36
TABLE III
ANNUAL OPERATING RESULTS OF PRIOR REAL ESTATE PROGRAMS (UNAUDITED) (cont.)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Walgreens- |
|
Walgreens- |
|
Walgreens- |
|
Walgreens- |
|
Walgreens- |
|
Gander Mountain- |
|
|
Wichita Falls, TX |
|
Chicago, IL |
|
Southington, CT |
|
Nashville, TN |
|
Derby, KS |
|
Spring, TX |
|
|
May 2005 |
|
May 2005 |
|
June 2005 |
|
June 2005 |
|
June 2005 |
|
June 2005 |
|
|
2005 |
|
2005 |
|
2005 |
|
2005 |
|
2005 |
|
2005 |
|
|
|
Gross revenues |
|
$ |
153,348 |
|
|
$ |
228,585 |
|
|
$ |
198,989 |
|
|
$ |
158,605 |
|
|
$ |
134,493 |
|
|
$ |
335,027 |
|
Profit (loss) on sale of properties |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses (4) |
|
|
4,352 |
|
|
|
7,058 |
|
|
|
6,140 |
|
|
|
5,122 |
|
|
|
6,648 |
|
|
|
3,429 |
|
Interest expense |
|
|
66,573 |
|
|
|
98,204 |
|
|
|
84,966 |
|
|
|
67,551 |
|
|
|
55,839 |
|
|
|
|
|
Depreciation and amortization (3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) Tax basis (6) |
|
$ |
82,423 |
|
|
$ |
123,323 |
|
|
$ |
107,883 |
|
|
$ |
85,932 |
|
|
$ |
72,006 |
|
|
$ |
331,598 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxable income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- from operations |
|
$ |
82,423 |
|
|
$ |
123,323 |
|
|
$ |
107,883 |
|
|
$ |
85,932 |
|
|
$ |
72,006 |
|
|
$ |
331,598 |
|
- from gain on sale |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- from operations (5) |
|
|
82,423 |
|
|
|
123,323 |
|
|
|
107,883 |
|
|
|
85,932 |
|
|
|
72,006 |
|
|
|
331,598 |
|
- from sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- from refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated from operations, sales and
refinancing |
|
|
82,423 |
|
|
|
123,323 |
|
|
|
107,883 |
|
|
|
85,932 |
|
|
|
72,006 |
|
|
|
331,598 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Cash distributions to investors |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- from operating cash flow |
|
|
62,626 |
|
|
|
93,600 |
|
|
|
82,056 |
|
|
|
61,775 |
|
|
|
50,396 |
|
|
|
249,273 |
|
- from sales and refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- from other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated (deficiency) after cash
distributions |
|
|
19,797 |
|
|
|
29,723 |
|
|
|
25,827 |
|
|
|
24,157 |
|
|
|
21,610 |
|
|
|
82,325 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Special items (not including sales and
refinancing) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated (deficiency) after cash
distributions and special items |
|
$ |
19,797 |
|
|
$ |
29,723 |
|
|
$ |
25,827 |
|
|
$ |
24,157 |
|
|
$ |
21,610 |
|
|
$ |
82,325 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax and Distribution Data Per $1,000 Invested |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal income tax results: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary income (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- from operations |
|
$ |
40.76 |
|
|
$ |
38.12 |
|
|
$ |
38.04 |
|
|
$ |
33.78 |
|
|
$ |
30.76 |
|
|
$ |
25.22 |
|
- from recapture |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital gain (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash distributions to investors: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Source (on tax basis) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- investment income |
|
|
30.97 |
|
|
|
28.93 |
|
|
|
28.93 |
|
|
|
24.28 |
|
|
|
21.53 |
|
|
|
18.96 |
|
- return of capital |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Source (on cash basis) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- operations |
|
|
30.97 |
|
|
|
28.93 |
|
|
|
28.93 |
|
|
|
24.28 |
|
|
|
21.53 |
|
|
|
18.96 |
|
- other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount (in percentage terms) remaining invested in
program properties at the end of last year
reported in the table |
|
|
100 |
% |
|
|
100 |
% |
|
|
100 |
% |
|
|
100 |
% |
|
|
100 |
% |
|
|
100 |
% |
Past performance is not necessarily indicative of future results.
A-37
TABLE III
ANNUAL OPERATING RESULTS OF PRIOR REAL ESTATE PROGRAMS (UNAUDITED) (cont.)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Walgreens- |
|
Walgreens- |
|
Walgreens- |
|
Walgreens- |
|
Walgreens |
|
Walgreens- |
|
|
Blue Springs, MO |
|
Garden City, KS |
|
Pittsburgh, KS |
|
Gladstone, MO |
|
Salt Lake City, UT |
|
Sandy, UT |
|
|
June 2005 |
|
June 2005 |
|
June 2005 |
|
June 2005 |
|
July 2005 |
|
July 2005 |
|
|
2005 |
|
2005 |
|
2005 |
|
2005 |
|
2005 |
|
2005 |
|
|
|
Gross revenues |
|
$ |
102,520 |
|
|
$ |
129,075 |
|
|
$ |
102,883 |
|
|
$ |
132,411 |
|
|
$ |
124,866 |
|
|
$ |
122,931 |
|
Profit (loss) on sale of
properties |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses (4) |
|
|
5,767 |
|
|
|
6,489 |
|
|
|
5,512 |
|
|
|
7,731 |
|
|
|
7,013 |
|
|
|
7,049 |
|
Interest expense |
|
|
46,108 |
|
|
|
53,531 |
|
|
|
35,488 |
|
|
|
45,975 |
|
|
|
63,197 |
|
|
|
64,034 |
|
Depreciation and amortization (3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) Tax basis (6) |
|
$ |
50,645 |
|
|
$ |
69,055 |
|
|
$ |
61,883 |
|
|
$ |
78,705 |
|
|
$ |
54,656 |
|
|
$ |
51,848 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxable income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- from operations |
|
$ |
50,645 |
|
|
$ |
69,055 |
|
|
$ |
61,883 |
|
|
$ |
78,705 |
|
|
$ |
54,656 |
|
|
$ |
51,848 |
|
- from gain on sale |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- from operations (5) |
|
|
50,645 |
|
|
|
69,055 |
|
|
|
61,883 |
|
|
|
78,705 |
|
|
|
54,656 |
|
|
|
51,848 |
|
- from sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- from refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated from operations, sales and
refinancing |
|
|
50,645 |
|
|
|
69,055 |
|
|
|
61,883 |
|
|
|
78,705 |
|
|
|
54,656 |
|
|
|
51,848 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Cash distributions to investors |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- from operating cash flow |
|
|
37,809 |
|
|
|
48,197 |
|
|
|
37,600 |
|
|
|
55,486 |
|
|
|
40,825 |
|
|
|
40,776 |
|
- from sales and refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- from other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated (deficiency) after cash
distributions |
|
|
12,836 |
|
|
|
20,858 |
|
|
|
24,283 |
|
|
|
23,219 |
|
|
|
13,831 |
|
|
|
11,072 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Special items (not including sales
and refinancing) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated (deficiency) after cash
distributions and special
items |
|
$ |
12,836 |
|
|
$ |
20,858 |
|
|
$ |
24,283 |
|
|
$ |
23,219 |
|
|
$ |
13,831 |
|
|
$ |
11,072 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax and Distribution Data Per $1,000
Invested |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal income tax results: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary income (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- from operations |
|
$ |
26.78 |
|
|
$ |
30.57 |
|
|
$ |
30.70 |
|
|
$ |
31.11 |
|
|
$ |
17.04 |
|
|
$ |
16.19 |
|
- from recapture |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital gain (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash distributions to investors: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Source (on tax basis) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- investment income |
|
|
19.99 |
|
|
|
21.34 |
|
|
|
18.65 |
|
|
|
21.93 |
|
|
|
12.73 |
|
|
|
12.73 |
|
- return of capital |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Source (on cash basis) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- operations |
|
|
19.99 |
|
|
|
21.34 |
|
|
|
18.65 |
|
|
|
21.93 |
|
|
|
12.73 |
|
|
|
12.73 |
|
- other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount (in percentage terms) remaining
invested in program properties at the end
of last year reported in the
table |
|
|
100 |
% |
|
|
100 |
% |
|
|
100 |
% |
|
|
100 |
% |
|
|
100 |
% |
|
|
100 |
% |
Past performance is not necessarily indicative of future results.
A-38
TABLE III
ANNUAL OPERATING RESULTS OF PRIOR REAL ESTATE PROGRAMS (UNAUDITED) (cont.)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Walgreens- |
|
Walgreens- |
|
Wal-Mart- |
|
Gander Mountain- |
|
Best Buy- |
|
|
Midvale, UT |
|
Metairie, LA |
|
Hazard, KY |
|
Hermantown, MN |
|
Baytown, TX |
|
|
August 2005 |
|
August 2005 |
|
September 2005 |
|
September 2005 |
|
September 2005 |
|
|
2005 |
|
2005 |
|
2005 |
|
2005 |
|
2005 |
|
|
|
Gross revenues |
|
$ |
87,586 |
|
|
$ |
4,355 |
|
|
$ |
319,334 |
|
|
$ |
94,643 |
|
|
$ |
109,094 |
|
Profit (loss) on sale of
properties |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses (4) |
|
|
5,676 |
|
|
|
|
|
|
|
11,436 |
|
|
|
2,765 |
|
|
|
1,021 |
|
Interest expense |
|
|
44,677 |
|
|
|
|
|
|
|
120,349 |
|
|
|
|
|
|
|
|
|
Depreciation and amortization (3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) Tax basis (6) |
|
$ |
37,233 |
|
|
$ |
4,355 |
|
|
$ |
187,549 |
|
|
$ |
91,878 |
|
|
$ |
108,073 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxable income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- from operations |
|
$ |
37,233 |
|
|
$ |
4,355 |
|
|
$ |
187,549 |
|
|
$ |
91,878 |
|
|
$ |
108,073 |
|
- from gain on sale |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- from operations (5) |
|
|
37,233 |
|
|
|
4,355 |
|
|
|
187,549 |
|
|
|
91,878 |
|
|
|
108,073 |
|
- from sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- from refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated from operations, sales and
refinancing |
|
|
37,233 |
|
|
|
4,355 |
|
|
|
187,549 |
|
|
|
91,878 |
|
|
|
108,073 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Cash distributions to investors |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- from operating cash flow |
|
|
29,597 |
|
|
|
|
|
|
|
66,413 |
|
|
|
18,885 |
|
|
|
|
|
- from sales and refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- from other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated (deficiency) after cash distributions |
|
|
7,636 |
|
|
|
4,355 |
|
|
|
121,136 |
|
|
|
72,993 |
|
|
|
108,073 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Special items (not including sales and
refinancing) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated (deficiency) after cash distributions and
special items |
|
$ |
7,636 |
|
|
$ |
4,355 |
|
|
$ |
121,136 |
|
|
$ |
72,993 |
|
|
$ |
108,073 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax and Distribution Data Per $1,000 Invested |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal income tax results: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary income (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- from operations |
|
$ |
16.24 |
|
|
$ |
3.02 |
|
|
$ |
14.83 |
|
|
$ |
8.23 |
|
|
$ |
9.68 |
|
- from recapture |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital gain (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash distributions to investors: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Source (on tax basis) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- investment income |
|
|
12.91 |
|
|
|
|
|
|
|
5.25 |
|
|
|
1.69 |
|
|
|
|
|
- return of capital |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Source (on cash basis) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- operations |
|
|
12.91 |
|
|
|
|
|
|
|
5.25 |
|
|
|
1.69 |
|
|
|
|
|
- other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount (in percentage terms) remaining invested in
program properties at the end of last year reported in
the table |
|
|
0 |
% |
|
|
0 |
% |
|
|
0 |
% |
|
|
0 |
% |
|
|
0 |
% |
Past performance is not necessarily indicative of future results.
A-39
NOTES TO TABLE III
|
|
|
(1) |
|
Cole Credit Property Trust, Inc. and Cole Credit Property Trust II, Inc. maintain their books
on a GAAP basis of accounting rather than a tax basis. |
|
(2) |
|
Investors in this program receive interest at a specified rate per annum, which is included
in interest expense. Therefore, tax and cash distribution data per $1,000 invested is not
applicable. |
|
(3) |
|
Amortization of organizational costs is computed over a period of 60 months. Depreciation of
commercial real property is determined on the straight-line method over an estimated useful
life of 39 years. Leasehold interests are amortized over the life of the lease. |
|
(4) |
|
Operating expenses include management fees paid to affiliates for such services as
accounting, property supervision, etc. |
|
(5) |
|
Cash generated from operations generally includes net income plus depreciation and
amortization plus any decreases in accounts receivable and accrued rental income or increases
in accounts payable minus any increases in accounts receivable and accrued rental income or
decreases in accounts payable. In addition, cash generated from operations is reduced for any
property costs related to development projects and is increased by proceeds when the project
is sold (usually in less than twelve months). |
|
(6) |
|
The partnerships maintain their books on a tax basis of accounting rather than a GAAP basis.
There are several potential differences in tax and GAAP basis, including, among others; (a)
tax basis accounting does not take certain income or expense accruals into consideration at
the end of each fiscal year, (b) rental income is recorded on a tax basis, as it is received
where it is accrued on a straight-line basis over the life of the lease for GAAP, and (c) all
properties are recorded at cost and depreciated over their estimated useful life on a tax
basis even if they qualify as a direct financing lease for GAAP purposes. These differences
generally result in timing differences between fiscal years but total operating income over
the life of the partnership will not be significantly different between the two basis of
accounting. |
Past performance is not necessarily indicative of future results.
A-40
TABLE IV
RESULTS OF COMPLETED PROGRAMS (UNAUDITED)
The following table presents summary information on the results of Prior Real Estate Programs
that completed operations since January 1, 2001 and that had similar or identical investment
objectives to those of this program. All amounts are from the inception of the program to the date
the program was completed.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Alta Mesa |
|
Thunderbird |
|
|
|
|
|
|
|
|
|
McCormick |
|
Cole Arizona |
|
|
Retail Income |
|
Plaza Value |
|
McRay Plaza |
|
Fiesta Palms |
|
Ranch Office Income |
|
Retail Income |
Program Name |
|
Investors LP |
|
Enhancement LP |
|
Investors LP |
|
Investors LP |
|
Investors LP |
|
Investors LP |
|
Dollar amount raised |
|
$ |
2,575,000 |
|
|
$ |
3,025,000 |
|
|
$ |
2,275,000 |
|
|
$ |
700,000 |
|
|
$ |
735,000 |
|
|
$ |
3,200,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of properties purchased |
|
|
1 |
|
|
|
1 |
|
|
|
1 |
|
|
|
1 |
|
|
|
1 |
|
|
|
2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Date of closing of offering |
|
|
02/25/97 |
|
|
|
11/24/97 |
|
|
|
03/13/96 |
|
|
|
01/05/95 |
|
|
|
12/16/94 |
|
|
|
09/02/97 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Date of first sale of property |
|
|
02/06/01 |
|
|
|
03/28/01 |
|
|
|
04/11/01 |
|
|
|
06/12/01 |
|
|
|
06/29/01 |
|
|
|
03/23/01 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Date of final sale of property |
|
|
02/06/01 |
|
|
|
03/28/01 |
|
|
|
04/11/01 |
|
|
|
06/12/01 |
|
|
|
06/29/01 |
|
|
|
07/11/01 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax and Distribution Data Per $1,000
Investment Through 12/31/05 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal income tax results: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary income (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- from operations |
|
|
301 |
|
|
|
193 |
|
|
|
496 |
|
|
|
(229 |
) |
|
|
337 |
|
|
|
261 |
|
- from recapture |
|
|
68 |
|
|
|
132 |
|
|
|
237 |
|
|
|
347 |
|
|
|
279 |
|
|
|
63 |
|
Capital gain (loss) |
|
|
233 |
|
|
|
478 |
|
|
|
438 |
|
|
|
782 |
|
|
|
1,981 |
|
|
|
493 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred gain |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- Capital |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- Ordinary |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash distributions to investors |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Source (on Tax Basis) (1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- Investment income |
|
|
1,223,459 |
|
|
|
1,927,417 |
|
|
|
2,140,048 |
|
|
|
660,604 |
|
|
|
1,464,634 |
|
|
|
1,973,564 |
|
- Return of capital |
|
|
2,575,000 |
|
|
|
3,025,000 |
|
|
|
2,275,000 |
|
|
|
700,000 |
|
|
|
735,000 |
|
|
|
3,200,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Source (on cash basis) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- Sales |
|
|
2,720,301 |
|
|
|
2,817,910 |
|
|
|
3,074,119 |
|
|
|
856,030 |
|
|
|
1,636,551 |
|
|
|
4,014,352 |
|
- Refinancing |
|
|
|
|
|
|
1,650,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- Operations |
|
|
1,078,158 |
|
|
|
484,507 |
|
|
|
1,340,929 |
|
|
|
504,574 |
|
|
|
563,083 |
|
|
|
1,159,212 |
|
- Other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Receivable on net purchase money
financing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Past performance is not necessarily indicative of future results.
A-41
TABLE IV
RESULTS OF COMPLETED PROGRAMS (UNAUDITED) (cont.)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Regal Square |
|
|
|
|
|
|
Sun City Grand |
|
3001 East |
|
|
|
|
|
Value |
|
Scottsdale |
|
Santa Fe |
|
|
Retail Income |
|
Camelback |
|
Mesa Retail Income |
|
Enhancement |
|
Retail Income |
|
Square |
Program Name |
|
Investors LP |
|
Investors LP |
|
Investors LP |
|
Investors LP |
|
Investors LP |
|
Investors LP |
|
Dollar amount raised |
|
$ |
2,750,000 |
|
|
$ |
600,000 |
|
|
$ |
1,100,000 |
|
|
$ |
2,300,000 |
|
|
$ |
6,500,000 |
|
|
$ |
10,800,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of properties purchased |
|
|
1 |
|
|
|
1 |
|
|
|
1 |
|
|
|
1 |
|
|
|
1 |
|
|
|
1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Date of closing of offering |
|
|
01/15/98 |
|
|
|
11/04/94 |
|
|
|
04/26/96 |
|
|
|
05/19/97 |
|
|
|
01/07/97 |
|
|
|
06/14/00 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Date of first sale of property |
|
|
01/29/02 |
|
|
|
02/05/02 |
|
|
|
05/31/02 |
|
|
|
06/19/02 |
|
|
|
07/12/02 |
|
|
|
02/14/02 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Date of final sale of property |
|
|
01/29/02 |
|
|
|
02/05/02 |
|
|
|
05/31/02 |
|
|
|
06/19/02 |
|
|
|
07/12/02 |
|
|
|
09/26/02 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax and Distribution Data Per $1,000
Investment Through 12/31/05 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal income tax results: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary income (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- from operations |
|
|
325 |
|
|
|
(162 |
) |
|
|
366 |
|
|
|
419 |
|
|
|
379 |
|
|
|
230 |
|
- from recapture |
|
|
71 |
|
|
|
420 |
|
|
|
102 |
|
|
|
90 |
|
|
|
105 |
|
|
|
69 |
|
Capital gain (loss) |
|
|
309 |
|
|
|
1,284 |
|
|
|
504 |
|
|
|
485 |
|
|
|
221 |
|
|
|
445 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred gain |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- Capital |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- Ordinary |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash distributions to investors |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Source (on Tax Basis) (1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- Investment income |
|
|
1,495,964 |
|
|
|
786,060 |
|
|
|
874,280 |
|
|
|
1,788,779 |
|
|
|
3,868,802 |
|
|
|
5,363,615 |
|
- Return of capital |
|
|
2,750,000 |
|
|
|
600,000 |
|
|
|
1,100,000 |
|
|
|
2,300,000 |
|
|
|
6,500,000 |
|
|
|
10,800,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Source (on cash basis) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- Sales |
|
|
3,164,836 |
|
|
|
1,021,266 |
|
|
|
1,246,616 |
|
|
|
2,873,330 |
|
|
|
6,500,000 |
|
|
|
13,502,268 |
|
- Refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- Operations |
|
|
1,081,128 |
|
|
|
364,794 |
|
|
|
727,664 |
|
|
|
1,215,449 |
|
|
|
3,868,802 |
|
|
|
2,661,347 |
|
- Other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Receivable on net purchase money
financing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Past performance is not necessarily indicative of future results.
A-42
TABLE IV
RESULTS OF COMPLETED PROGRAMS (UNAUDITED) (cont.)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
North Phoenix |
|
Arden Square |
|
|
|
|
Sun Valley Value |
|
|
|
|
|
|
|
|
|
Value |
|
Value |
|
Cole Desert |
|
|
Enhancement |
|
Dobson Square |
|
Grand Canyon |
|
Enhancement |
|
Enhancement |
|
Palms Power |
Program Name |
|
Investors LP |
|
Investors LP |
|
Office Investors LP |
|
Investors LP |
|
Investors LP |
|
Center LP |
|
Dollar amount raised |
|
$ |
2,500,000 |
|
|
$ |
1,800,000 |
|
|
$ |
1,070,000 |
|
|
$ |
2,050,000 |
|
|
$ |
2,000,000 |
|
|
$ |
7,500,000 |
(2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of properties purchased |
|
|
1 |
|
|
|
1 |
|
|
|
1 |
|
|
|
1 |
|
|
|
1 |
|
|
|
1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Date of closing of offering |
|
|
01/11/99 |
|
|
|
09/25/95 |
|
|
|
10/12/95 |
|
|
|
02/28/97 |
|
|
|
08/25/97 |
|
|
|
12/31/01 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Date of first sale of property |
|
|
10/25/02 |
|
|
|
12/24/02 |
|
|
|
04/28/03 |
|
|
|
04/30/03 |
|
|
|
12/16/02 |
|
|
|
12/30/03 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Date of final sale of property |
|
|
12/30/02 |
|
|
|
12/24/02 |
|
|
|
04/28/03 |
|
|
|
04/30/03 |
|
|
|
12/16/02 |
|
|
|
12/30/03 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax and Distribution Data Per $1,000
Investment Through 12/31/05 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal income tax results: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary income (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- from operations |
|
|
136 |
|
|
|
781 |
|
|
|
161 |
|
|
|
617 |
|
|
|
272 |
|
|
|
(64 |
) |
- from recapture |
|
|
59 |
|
|
|
136 |
|
|
|
338 |
|
|
|
103 |
|
|
|
106 |
|
|
|
216 |
|
Capital gain (loss) |
|
|
480 |
|
|
|
851 |
|
|
|
1,454 |
|
|
|
381 |
|
|
|
370 |
|
|
|
414 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred gain |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- Capital |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- Ordinary |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash distributions to investors |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Source (on Tax Basis) (1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- Investment income |
|
|
1,186,350 |
|
|
|
2,261,340 |
|
|
|
1,682,452 |
|
|
|
1,900,289 |
|
|
|
1,222,229 |
|
|
|
2,448,137 |
|
- Return of capital |
|
|
2,500,000 |
|
|
|
1,800,000 |
|
|
|
1,070,000 |
|
|
|
2,050,000 |
|
|
|
2,000,000 |
|
|
|
7,000,000 |
(3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Source (on cash basis) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- Sales |
|
|
3,167,600 |
|
|
|
2,592,864 |
|
|
|
2,088,640 |
|
|
|
2,409,980 |
|
|
|
2,189,600 |
|
|
|
8,082,375 |
|
- Refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- Operations |
|
|
518,750 |
|
|
|
1,468,476 |
|
|
|
663,812 |
|
|
|
1,540,309 |
|
|
|
1,032,629 |
|
|
|
1,365,762 |
|
- Other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Receivable on net purchase money
financing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Past performance is not necessarily indicative of future results.
A-43
TABLE IV
RESULTS OF COMPLETED PROGRAMS (UNAUDITED) (cont.)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cole |
|
|
|
|
Siete Square |
|
Boulevard |
|
Cole Southwest |
|
|
Retail Income |
|
Square |
|
Opportunity |
Program Name |
|
Investors LP |
|
Investors LP |
|
Fund LP |
|
Dollar amount raised |
|
$ |
1,875,000 |
|
|
$ |
10,000,000 |
|
|
$ |
13,905,850 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of properties purchased |
|
|
1 |
|
|
|
1 |
|
|
|
2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Date of closing of offering |
|
|
09/14/98 |
|
|
|
11/25/02 |
|
|
|
10/10/01 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Date of first sale of property |
|
|
02/20/04 |
|
|
|
09/10/04 |
|
|
|
06/01/02 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Date of final sale of property |
|
|
02/20/04 |
|
|
|
09/10/04 |
|
|
|
04/06/05 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax and Distribution Data Per $1,000
Investment Through 12/31/05 |
|
|
|
|
|
|
|
|
|
|
|
|
Federal income tax results: |
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary income (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
- from operations |
|
|
(154 |
) |
|
|
(108 |
) |
|
|
(344 |
) |
- from recapture |
|
|
1,313 |
|
|
|
246 |
|
|
|
247 |
|
Capital gain (loss) |
|
|
(578 |
) |
|
|
606 |
|
|
|
80 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred gain |
|
|
|
|
|
|
|
|
|
|
|
|
- Capital |
|
|
|
|
|
|
|
|
|
|
|
|
- Ordinary |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash distributions to investors |
|
|
|
|
|
|
|
|
|
|
|
|
Source (on Tax Basis) (1) |
|
|
|
|
|
|
|
|
|
|
|
|
- Investment income |
|
|
837,544 |
|
|
|
4,847,320 |
|
|
|
|
|
- Return of capital |
|
|
1,875,000 |
|
|
|
10,000,000 |
|
|
|
11,548,720 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Source (on cash basis) |
|
|
|
|
|
|
|
|
|
|
|
|
- Sales |
|
|
1,899,975 |
|
|
|
12,837,500 |
|
|
|
11,532,122 |
|
- Refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
- Operations |
|
|
812,569 |
|
|
|
2,009,820 |
|
|
|
16,598 |
|
- Other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Receivable on net purchase money
financing |
|
|
|
|
|
|
|
|
|
|
|
|
Past performance is not necessarily indicative of future results.
A-44
NOTES TO TABLE IV
(1) |
|
The partnerships maintain their books on a tax basis of accounting rather than on a GAAP
basis. There are potential differences in accounting for cash distributions on a tax basis
and GAAP basis, the most significant of which is that partnership syndication costs, which
includes securities commissions and other costs, would be recorded as a reduction of capital
for GAAP purposes, which would result in lower return of capital and higher investment income
amounts on a GAAP basis than on a tax basis. |
|
(2) |
|
Amount includes $500,000 in equity from a joint venture partner. |
|
(3) |
|
Amounts represent distributions to limited partnership investors and excludes the $500,000
investment from a joint venture partner. |
Past performance is not necessarily indicative of future results.
A-45
TABLE V
RESULTS OF SALES OR DISPOSALS OF PROPERTIES (UNAUDITED)
This table provides summary information on the results of sales or disposals of properties
since January 1, 2003 by Prior Real Estate Programs having similar investment objectives to those
of this program. All amounts are through December 31, 2005.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling Price, Net of Closing Costs and GAAP Adjustments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments |
|
|
|
|
|
|
|
|
Cash Received |
|
Mortgage |
|
Purchase Money |
|
Resulting from |
|
|
|
|
Date |
|
Date |
|
Net of |
|
Balance at |
|
Mortgage Taken Back |
|
Application |
|
|
Property |
|
Acquired |
|
of Sale |
|
Closing Costs |
|
Time of Sale |
|
by Program |
|
of GAAP (7) |
|
Total (4) |
|
Grand Canyon Office Investors LP
|
|
3/95
|
|
4/03
|
|
|
1,629,802 |
|
|
|
1,824,070 |
|
|
|
|
|
|
|
3,453,872 |
|
North Phoenix Value Enhancement
Investors LP
|
|
11/96
|
|
4/03
|
|
|
2,282,924 |
|
|
|
|
|
|
|
|
|
|
|
2,282,924 |
|
Cole Desert Palms Power Center LP
|
|
11/01
|
|
12/03
|
|
|
9,219,079 |
|
|
|
21,041,765 |
|
|
|
|
|
|
|
30,260,844 |
|
Cole Southwest Opportunity Fund
LP Las Vegas Telecom Land Sale
|
|
11/00
|
|
1/04
|
|
|
702,856 |
|
|
|
|
|
|
|
|
|
|
|
702,856 |
|
Siete Square Retail Income
Investors LP
|
|
7/98
|
|
2/04
|
|
|
2,825,034 |
|
|
|
1,632,235 |
|
|
|
|
|
|
|
4,457,269 |
|
Cole Boulevard Square Investors LP
|
|
7/02
|
|
9/04
|
|
|
14,423,979 |
|
|
|
27,205,776 |
|
|
|
|
|
|
|
41,629,755 |
|
Cole Southwest Opportunity Fund
LP Las Vegas Telecom Land Sale
|
|
11/00
|
|
10/04
|
|
|
508,690 |
|
|
|
|
|
|
|
|
|
|
|
508,690 |
(5) |
Cole Southwest Opportunity Fund
LP Phoenix Switch X
|
|
8/00
|
|
4/05
|
|
|
10,880,860 |
|
|
|
1,500,000 |
|
|
|
|
|
|
|
12,380,860 |
|
Walgreens Marion, IL
|
|
2/05
|
|
6/05
|
|
|
1,743,425 |
|
|
|
2,665,000 |
|
|
|
|
|
|
|
4,408,425 |
|
Walgreens Columbus, OH
|
|
12/04
|
|
6/05
|
|
|
2,665,670 |
|
|
|
2,868,000 |
|
|
|
|
|
|
|
5,533,670 |
|
Walgreens Jacksonville, AR
|
|
11/04
|
|
8/05
|
|
|
2,277,370 |
|
|
|
2,431,000 |
|
|
|
|
|
|
|
4,708,370 |
|
Walgreens Spring, TX
|
|
12/04
|
|
8/05
|
|
|
1,817,910 |
|
|
|
1,973,000 |
|
|
|
|
|
|
|
3,790,910 |
|
Walgreens Warrensburg, MO
|
|
4/05
|
|
8/05
|
|
|
1,975,851 |
|
|
|
2,870,000 |
|
|
|
|
|
|
|
4,845,851 |
|
Past performance is not necessarily indicative of future results.
A-46
TABLE V
RESULTS OF SALES OR DISPOSALS OF PROPERTIES (UNAUDITED) (cont.)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of Properties Including Closing and Soft Costs |
|
|
|
|
Original |
|
Total Acquisition Cost, |
|
|
|
|
|
Excess (Deficiency) of |
|
|
Mortgage |
|
Capital Improvements, |
|
|
|
|
|
Property Operating Cash |
Property |
|
Financing |
|
Closing and Soft Costs (5) |
|
Total |
|
Receipts Over Cash Expenditures |
|
Grand Canyon Office Investors LP |
|
$ |
|
|
|
$ |
2,314,208 |
|
|
$ |
2,314,208 |
|
|
|
898,878 |
|
North Phoenix Value Enhancement
Investors LP |
|
|
|
|
|
|
1,640,448 |
|
|
|
1,640,448 |
|
|
|
1,551,353 |
|
Cole Desert Palms Power Center LP |
|
|
21,400,000 |
|
|
|
6,468,210 |
|
|
|
27,868,210 |
|
|
|
1,434,036 |
|
Cole Southwest Opportunity Fund
LP Las Vegas Telecom Land Sale |
|
|
|
|
|
|
554,072 |
|
|
|
554,072 |
|
|
|
(11,742 |
) |
Siete Square Retail Income
Investors LP |
|
|
1,800,000 |
|
|
|
1,659,816 |
|
|
|
3,459,816 |
|
|
|
410,455 |
|
Cole Boulevard Square Investors LP |
|
|
27,720,000 |
|
|
|
7,984,871 |
|
|
|
35,704,871 |
|
|
|
2,001,581 |
|
Cole Southwest Opportunity Fund
LP Las Vegas Telecom Land Sale |
|
|
|
|
|
|
400,973 |
|
|
|
400,973 |
|
|
|
7,668 |
|
Cole Southwest Opportunity Fund
LP Phoenix Switch X |
|
|
|
|
|
|
14,307,553 |
|
|
|
14,307,553 |
|
|
|
(1,338,079 |
) |
Walgreens Marion, IL |
|
|
3,690,000 |
|
|
|
676,256 |
|
|
|
4,366,256 |
|
|
|
104,923 |
|
Walgreens Columbus, OH |
|
|
4,135,018 |
|
|
|
1,245,096 |
|
|
|
5,380,114 |
|
|
|
265,670 |
|
Walgreens Jacksonville, AR |
|
|
3,600,000 |
|
|
|
1,005,294 |
|
|
|
4,605,294 |
|
|
|
219,970 |
|
Walgreens Spring, TX |
|
|
2,880,000 |
|
|
|
851,174 |
|
|
|
3,731,174 |
|
|
|
152,146 |
|
Walgreens Warrensburg, MO |
|
|
3,973,000 |
|
|
|
719,004 |
|
|
|
4,692,004 |
|
|
|
199,382 |
|
Past performance is not necessarily indicative of future results.
A-47
TABLE V
RESULTS OF SALES OR DISPOSALS OF PROPERTIES (UNAUDITED) (cont.)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling Price, Net of Closing Costs and GAAP Adjustments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments |
|
|
|
|
|
|
|
|
|
|
|
|
Cash Received |
|
|
|
|
|
Purchase Money |
|
Resulting from |
|
|
|
|
Date |
|
Date |
|
Net of |
|
Mortgage Balance |
|
Mortgage Taken |
|
Application |
|
|
Property |
|
Acquired |
|
of Sale |
|
Closing Costs |
|
at Time of Sale |
|
Back by Program |
|
of GAAP (7) |
|
Total (4) |
|
Cole Collateralized Senior |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes, LLC |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restaurant sales (3) |
|
|
12/03 |
|
|
|
6/04-6/05 |
|
|
$ |
28,111,983 |
|
|
$ |
11,600,067 |
|
|
$ |
|
|
|
$ |
|
|
|
$ |
39,712,050 |
(6) |
TIC interests in Staples in
Tulsa, OK |
|
|
12/03 |
|
|
|
6/04 |
|
|
|
773,335 |
|
|
|
2,800,000 |
|
|
|
|
|
|
|
|
|
|
|
3,573,335 |
(7) |
TIC interests in Mimis Café
Lone Tree, CO |
|
|
12/03 |
|
|
|
6/04 |
|
|
|
278,141 |
|
|
|
1,361,168 |
|
|
|
|
|
|
|
|
|
|
|
1,639,309 |
(7) |
TIC interests in Walgreens
Westheimer, TX |
|
|
10/04 |
|
|
|
12/04 |
|
|
|
3,526,680 |
|
|
|
4,032,000 |
|
|
|
|
|
|
|
|
|
|
|
7,558,680 |
(7) |
TIC interests in Walgreens
Slidell, LA |
|
|
10/04 |
|
|
|
5/05 |
|
|
|
1,975,240 |
|
|
|
2,192,000 |
|
|
|
|
|
|
|
|
|
|
|
4,167,240 |
(7) |
TIC interests in Home Depot
Spokane, WA |
|
|
10/04 |
|
|
|
5/05 |
|
|
|
10,283,250 |
|
|
|
11,460,000 |
|
|
|
|
|
|
|
|
|
|
|
21,743,250 |
(7) |
TIC interests in Walgreens
Covington, TN |
|
|
10/04 |
|
|
|
5/05 |
|
|
|
1,910,170 |
|
|
|
2,096,000 |
|
|
|
|
|
|
|
|
|
|
|
4,006,170 |
(7) |
TIC interests in Walgreens
Glen Burnie, MD |
|
|
11/04 |
|
|
|
5/05 |
|
|
|
3,006,675 |
|
|
|
3,369,000 |
|
|
|
|
|
|
|
|
|
|
|
6,375,675 |
(7) |
TIC interests in Walgreens
Chicago, IL |
|
|
3/05 |
|
|
|
7/05 |
|
|
|
2,846,300 |
|
|
|
4,625,000 |
|
|
|
|
|
|
|
|
|
|
|
7,471,300 |
(12) |
DST interests in Walgreens
Southington, CT |
|
|
4/05 |
|
|
|
7/05 |
|
|
|
2,450,608 |
|
|
|
3,981,000 |
|
|
|
|
|
|
|
|
|
|
|
6,431,608 |
(12) |
TIC interests in Gander Mountain
Spring, TX |
|
|
5/05 |
|
|
|
8/05 |
|
|
|
12,169,500 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,169,500 |
(7) |
TIC interests in Gander Mountain
Hermantown, MN |
|
|
8/05 |
|
|
|
11/05 |
|
|
|
10,306,531 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,306,531 |
(7) |
Cole Collateralized Senior
Notes II, LLC |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TIC interests in Walgreens
Windsor, CO |
|
|
6/04 |
|
|
|
9/04 |
|
|
|
2,393,460 |
|
|
|
2,871,000 |
|
|
|
|
|
|
|
|
|
|
|
5,264,460 |
(7) |
TIC interests in Walgreens
Goldsboro, NC |
|
|
6/04 |
|
|
|
11/04 |
|
|
|
2,303,985 |
|
|
|
2,611,510 |
|
|
|
|
|
|
|
|
|
|
|
4,915,495 |
(7) |
TIC interests in Walgreens
Hamilton, OH |
|
|
7/04 |
|
|
|
10/04 |
|
|
|
2,668,047 |
|
|
|
3,033,250 |
|
|
|
|
|
|
|
|
|
|
|
5,701,297 |
(7) |
TIC interests in Walgreens
Carlsbad, NM |
|
|
7/04 |
|
|
|
12/04 |
|
|
|
2,046,107 |
|
|
|
2,335,000 |
|
|
|
|
|
|
|
|
|
|
|
4,381,107 |
(7) |
TIC interests in Walgreens
Willimantic, CT |
|
|
9/04 |
|
|
|
11/04 |
|
|
|
2,466,690 |
|
|
|
2,709,000 |
|
|
|
|
|
|
|
|
|
|
|
5,175,690 |
(7) |
TIC interests in Walgreens
Fairborn, OH |
|
|
9/04 |
|
|
|
11/04 |
|
|
|
2,372,750 |
|
|
|
2,617,000 |
|
|
|
|
|
|
|
|
|
|
|
4,989,750 |
(7) |
TIC interests in Walgreens
Edgewood, NM |
|
|
9/04 |
|
|
|
11/04 |
|
|
|
1,903,340 |
|
|
|
2,128,000 |
|
|
|
|
|
|
|
|
|
|
|
4,031,340 |
(7) |
TIC interests in Walgreens
Richmond, OH |
|
|
10/04 |
|
|
|
5/05 |
|
|
|
3,056,970 |
|
|
|
3,387,000 |
|
|
|
|
|
|
|
|
|
|
|
6,443,970 |
(7) |
TIC interests in Walgreens
Orlando, FL |
|
|
10/04 |
|
|
|
5/05 |
|
|
|
2,195,810 |
|
|
|
2,417,000 |
|
|
|
|
|
|
|
|
|
|
|
4,612,810 |
(7) |
TIC interests in Home Depot
Tacoma, WA |
|
|
1/05 |
|
|
|
6/05 |
|
|
|
10,564,495 |
|
|
|
17,323,000 |
|
|
|
|
|
|
|
|
|
|
|
27,887,495 |
(7) |
DST interests in Walgreens
Pineville, LA |
|
|
1/05 |
|
|
|
6/05 |
|
|
|
1,871,330 |
|
|
|
2,923,000 |
|
|
|
|
|
|
|
|
|
|
|
4,794,330 |
(12) |
DST interests in Walgreens
Bartlett, TN |
|
|
1/05 |
|
|
|
6/05 |
|
|
|
1,805,960 |
|
|
|
2,950,000 |
|
|
|
|
|
|
|
|
|
|
|
4,755,960 |
(12) |
DST interests in Walgreens
Sidney, OH |
|
|
1/05 |
|
|
|
6/05 |
|
|
|
1,753,840 |
|
|
|
2,899,000 |
|
|
|
|
|
|
|
|
|
|
|
4,652,840 |
(12) |
DST interests in Walgreens
Wichita Falls, TX |
|
|
2/05 |
|
|
|
6/05 |
|
|
|
1,794,010 |
|
|
|
2,959,000 |
|
|
|
|
|
|
|
|
|
|
|
4,753,010 |
(12) |
DST interests in Walgreens
Nashville, TN |
|
|
5/05 |
|
|
|
8/05 |
|
|
|
2,284,000 |
|
|
|
3,692,000 |
|
|
|
|
|
|
|
|
|
|
|
5,976,000 |
(12) |
DST interests in Walgreens
Metairie, LA |
|
|
7/05 |
|
|
|
12/05 |
|
|
|
1,301,511 |
|
|
|
2,106,497 |
|
|
|
|
|
|
|
|
|
|
|
3,408,008 |
(12) |
DST interests in Wal-Mart
Hazard, KY |
|
|
9/05 |
|
|
|
10/05 |
|
|
|
11,511,420 |
|
|
|
19,715,000 |
|
|
|
|
|
|
|
|
|
|
|
31,226,420 |
(12) |
Past performance is not necessarily indicative of future results.
A-48
TABLE V
RESULTS OF SALES OR DISPOSALS OF PROPERTIES (UNAUDITED) (cont.)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of Properties Including Closing and Soft Costs |
|
|
|
|
Original |
|
Total Acquisition Cost, |
|
|
|
|
|
Excess (Deficiency) of |
|
|
Mortgage |
|
Capital Improvements, |
|
|
|
|
|
Property Operating Cash |
Property |
|
Financing |
|
Closing and Soft Costs (2) |
|
Total |
|
Receipts Over Cash Expenditures |
|
Cole Collateralized Senior Notes, LLC |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restaurant sales (3) |
|
$ |
21,627,215 |
|
|
|
10,312,634 |
|
|
|
31,939,849 |
|
|
|
1,689,803 |
|
TIC interests in Staples in
Tulsa, OK |
|
|
2,800,000 |
|
|
|
773,335 |
|
|
|
3,573,335 |
|
|
|
87,156 |
|
TIC interests in Mimis Café
Lone Tree, CO |
|
|
1,361,168 |
|
|
|
278,141 |
|
|
|
1,639,309 |
|
|
|
56,390 |
|
TIC interests in Walgreens
Westheimer, TX |
|
|
5,800,000 |
|
|
|
1,758,679 |
|
|
|
7,558,679 |
|
|
|
(2,136 |
) |
TIC interests in Walgreens
Slidell, LA |
|
|
3,200,000 |
|
|
|
967,240 |
|
|
|
4,167,240 |
|
|
|
23,507 |
|
TIC interests in Home Depot
Spokane, WA |
|
|
16,760,000 |
|
|
|
4,983,250 |
|
|
|
21,743,250 |
|
|
|
121,196 |
|
TIC interests in Walgreens
Covington, TN |
|
|
3,064,000 |
|
|
|
942,170 |
|
|
|
4,006,170 |
|
|
|
40,574 |
|
TIC interests in Walgreens
Glen Burnie, MD |
|
|
3,369,000 |
|
|
|
3,006,675 |
|
|
|
6,375,675 |
|
|
|
68,054 |
|
TIC interests in Walgreens
Chicago, IL |
|
|
6,404,000 |
|
|
|
1,067,300 |
|
|
|
7,471,300 |
|
|
|
62,699 |
|
DST interests in Walgreens
Southington, CT |
|
|
5,513,000 |
|
|
|
918,607 |
|
|
|
6,431,607 |
|
|
|
39,300 |
|
TIC interests in Gander Mountain
Spring, TX |
|
|
7,052,400 |
|
|
|
5,117,100 |
|
|
|
12,169,500 |
|
|
|
162,315 |
|
TIC interests in Gander Mountain
Hermantown, MN |
|
|
6,291,600 |
|
|
|
4,014,931 |
|
|
|
10,306,531 |
|
|
|
119,627 |
|
Cole Collateralized Senior
Notes II, LLC |
TIC interests in Walgreens
Windsor, CO |
|
|
3,900,000 |
|
|
|
1,364,460 |
|
|
|
5,264,460 |
|
|
|
48,793 |
|
TIC interests in Walgreens
Goldsboro, NC |
|
|
3,691,000 |
|
|
|
1,224,495 |
|
|
|
4,915,495 |
|
|
|
41,197 |
|
TIC interests in Walgreens
Hamilton, OH |
|
|
4,321,000 |
|
|
|
1,380,298 |
|
|
|
5,701,298 |
|
|
|
49,394 |
|
TIC interests in Walgreens
Carlsbad, NM |
|
|
3,298,000 |
|
|
|
1,083,107 |
|
|
|
4,381,107 |
|
|
|
39,608 |
|
TIC interests in Walgreens
Willimantic, CT |
|
|
4,000,000 |
|
|
|
1,175,689 |
|
|
|
5,175,689 |
|
|
|
35,170 |
|
TIC interests in Walgreens
Fairborn, OH |
|
|
3,944,000 |
|
|
|
1,045,750 |
|
|
|
4,989,750 |
|
|
|
37,949 |
|
TIC interests in Walgreens
Edgewood, NM |
|
|
3,200,000 |
|
|
|
831,340 |
|
|
|
4,031,340 |
|
|
|
36,744 |
|
TIC interests in Walgreens
Richmond, OH |
|
|
4,800,000 |
|
|
|
1,643,970 |
|
|
|
6,443,970 |
|
|
|
15,139 |
|
TIC interests in Walgreens
Orlando, FL |
|
|
3,490,709 |
|
|
|
1,122,101 |
|
|
|
4,612,810 |
|
|
|
51,187 |
|
TIC interests in Home Depot
Tacoma, WA |
|
|
21,320,000 |
|
|
|
6,567,495 |
|
|
|
27,887,495 |
|
|
|
367,279 |
|
DST interests in Walgreens
Pineville, LA |
|
|
4,047,000 |
|
|
|
747,330 |
|
|
|
4,794,330 |
|
|
|
64,220 |
|
DST interests in Walgreens
Bartlett, TN |
|
|
4,084,000 |
|
|
|
671,961 |
|
|
|
4,755,961 |
|
|
|
58,721 |
|
DST interests in Walgreens
Sidney, OH |
|
|
4,014,000 |
|
|
|
638,840 |
|
|
|
4,652,840 |
|
|
|
53,334 |
|
DST interests in Walgreens
Wichita Falls, TX |
|
|
4,097,000 |
|
|
|
656,010 |
|
|
|
4,753,010 |
|
|
|
41,590 |
|
DST interests in Walgreens
Nashville, TN |
|
|
5,112,000 |
|
|
|
864,000 |
|
|
|
5,976,000 |
|
|
|
45,014 |
|
DST interests in Walgreens
Metairie, LA |
|
|
5,400,000 |
|
|
|
3,336,420 |
|
|
|
8,736,420 |
|
|
|
105,965 |
|
DST interests in Wal-Mart
Hazard, KY |
|
|
24,264,000 |
|
|
|
6,962,420 |
|
|
|
31,226,420 |
|
|
|
103,267 |
|
Past performance is not necessarily indicative of future results.
A-49
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling Price, Net of Closing Costs and GAAP Adjustments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments |
|
|
|
|
|
|
|
|
|
|
|
|
Cash Received |
|
|
|
|
|
Purchase Money |
|
Resulting from |
|
|
|
|
Date |
|
Date |
|
Net of |
|
Mortgage Balance |
|
Mortgage Taken |
|
Application |
|
|
Property |
|
Acquired |
|
of Sale |
|
Closing Costs |
|
at Time of Sale |
|
Back by Program |
|
of GAAP (7) |
|
Total (4) |
|
Cole Collateralized Senior
Notes III, LLC |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DST interests in Walgreens
Derby, KS |
|
|
4/05 |
|
|
|
8/05 |
|
|
$ |
2,098,910 |
|
|
$ |
3,322,000 |
|
|
$ |
|
|
|
$ |
|
|
|
$ |
5,420,910 |
(12) |
DST interests in Walgreens
Blue Springs, MO |
|
|
4/05 |
|
|
|
8/05 |
|
|
|
1,686,830 |
|
|
|
2,680,000 |
|
|
|
|
|
|
|
|
|
|
|
4,366,830 |
(12) |
DST interests in Walgreens
Garden City, KS |
|
|
4/05 |
|
|
|
8/05 |
|
|
|
2,023,760 |
|
|
|
3,211,000 |
|
|
|
|
|
|
|
|
|
|
|
5,234,760 |
(12) |
DST interests in Walgreens
Pittsburgh, KS |
|
|
4/05 |
|
|
|
8/05 |
|
|
|
1,801,540 |
|
|
|
2,834,000 |
|
|
|
|
|
|
|
|
|
|
|
4,635,540 |
(12) |
DST interests in Walgreens
Gladstone, MO |
|
|
4/05 |
|
|
|
8/05 |
|
|
|
2,269,960 |
|
|
|
3,794,000 |
|
|
|
|
|
|
|
|
|
|
|
6,063,960 |
(12) |
DST interests in Walgreens
Salt Lake City, UT |
|
|
6/05 |
|
|
|
9/05 |
|
|
|
2,889,420 |
|
|
|
4,809,000 |
|
|
|
|
|
|
|
|
|
|
|
7,698,420 |
(12) |
DST interests in Walgreens
Sandy, UT |
|
|
6/05 |
|
|
|
9/05 |
|
|
|
2,886,440 |
|
|
|
4,735,000 |
|
|
|
|
|
|
|
|
|
|
|
7,621,440 |
(12) |
DST interests in Walgreens
Midvale, UT (13) |
|
|
6/05 |
|
|
|
9/05 |
|
|
|
2,054,844 |
|
|
|
3,326,576 |
|
|
|
|
|
|
|
|
|
|
|
5,381,240 |
(12) |
TIC interests in Best Buy
Baytown, TX (15) |
|
|
10/05 |
|
|
|
12/05 |
|
|
|
1,062,358 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,062,358 |
(7) |
Past performance is not necessarily indicative of future results.
A-50
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of Properties Including Closing and Soft Costs |
|
Excess (Deficiency) of |
|
|
Original |
|
Total Acquisition Cost, |
|
|
|
|
|
Property Operating Cash |
|
|
Mortgage |
|
Capital Improvements, |
|
|
|
|
|
Receipts Over |
Property |
|
Financing |
|
Closing and Soft Costs (2) |
|
Total |
|
Cash Expenditures |
|
Cole Collateralized
Senior Notes III,
LLC |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DST interests in
Walgreens Derby,
KS |
|
$ |
4,600,000 |
|
|
|
820,910 |
|
|
|
5,420,910 |
|
|
|
35,171 |
|
DST interests in
Walgreens Blue
Springs, MO |
|
|
3,711,000 |
|
|
|
655,829 |
|
|
|
4,366,829 |
|
|
|
29,473 |
|
DST interests in
Walgreens Garden
City, KS |
|
|
4,445,000 |
|
|
|
789,760 |
|
|
|
5,234,760 |
|
|
|
36,290 |
|
DST interests in
Walgreens
Pittsburgh,
KS |
|
|
3,925,000 |
|
|
|
710,539 |
|
|
|
4,635,539 |
|
|
|
37,866 |
|
DST interests in
Walgreens
Gladstone, MO |
|
|
5,253,000 |
|
|
|
810,960 |
|
|
|
6,063,960 |
|
|
|
47,512 |
|
DST interests in
Walgreens Salt Lake
City, UT |
|
|
6,615,000 |
|
|
|
1,083,420 |
|
|
|
7,698,420 |
|
|
|
68,428 |
|
DST interests in
Walgreens Sandy,
UT |
|
|
6,556,000 |
|
|
|
1,065,440 |
|
|
|
7,621,440 |
|
|
|
68,824 |
|
DST interests in
Walgreens Midvale,
UT (13) |
|
|
4,671,000 |
|
|
|
785,520 |
|
|
|
5,456,520 |
|
|
|
50,442 |
|
TIC interests in
Best Buy Baytown,
TX (15) |
|
|
|
|
|
|
7,695,390 |
|
|
|
7,695,390 |
|
|
|
108,073 |
|
Past performance is not necessarily indicative of future results.
A-51
NOTES TO TABLE V
(1) None of the amounts are being reported for tax purposes on the installment basis. See
Table IV for allocation of the taxable gains between ordinary and capital income for all sales
except as noted in footnotes (5), (6), and (10).
(2) The amounts shown do not include a pro rata share of the original offering costs. There were
no carried interests received in lieu of commissions in connection with the acquisition of the
property.
(3) Amounts represent the combined amounts of twenty-two restaurants sold in separate transactions.
(4) As the financial statements are prepared on an income tax basis, there are no GAAP adjustments
included herein.
(5) The sale resulted in no ordinary income and a capital gain of approximately $291,000.
(6) The sales resulted in no ordinary income and capital gains totaling approximately
$6,333,000.
(7) Amounts herein relate to the sale of tenant-in-common interests in a single-tenant commercial
property. There was no gain or loss related to the sales as the interests in the property were
sold at cost, with each purchaser acquiring their interest with cash and the assumption of a
pro-rata portion of any existing loan on the property.
(8) Amounts relate to the sale of an aggregate 95% interest in the property to various
tenant-in-common investors through the Cole Capital Partners Tenant-In-Common Program.
(9) Amounts relate to the sale of an aggregate 99% interest in the property to various Delaware
statutory trust investors through the Cole Capital Partners Delaware Statutory Trust Program.
(10) The sale resulted in no ordinary income and a capital gain of approximately $107,000.
(11) Amounts relate to the sale of an aggregate 14% interest in the property to various
tenant-in-common investors through the Cole Capital Partners Tenant in Common Program.
(12) Amounts herein relate to the sale of Delaware Statutory Trust interests in a
single-tenant commercial property. There was no gain or loss related to the sales as the interests
in the property were sold at cost, with each purchaser acquiring their interest with cash and the
assumption of a pro-rata portion of any existing debt on the property.
Past performance is not necessarily indicative of future results.
A-52
APPENDIX C
AMENDED AND RESTATED
DISTRIBUTION REINVESTMENT PLAN
COLE CREDIT PROPERTY TRUST II, INC.
Effective as of December 31, 2005
Cole Credit Property Trust II, Inc., a Maryland corporation (the Company), has adopted this
Amended and Restated Distribution Reinvestment Plan (the Plan), to be administered by the Company
or an unaffiliated third party (the Administrator) as agent for participants in the Plan
(Participants), on the terms and conditions set forth below.
1. Election to Participate. Any purchaser of shares of common stock of the Company, par
value $.01 per share (the Shares), may become a Participant by making a written election to
participate on such purchasers subscription agreement at the time of subscription for Shares. Any
stockholder who has not previously elected to participate in the Plan, and subject to Section 8(b)
herein, any participant in any previous or subsequent publicly offered limited partnership, real
estate investment trust or other real estate program sponsored by the Company or its affiliates (an
Affiliated Program), may so elect at any time by completing and executing an authorization form
obtained from the Administrator or any other appropriate documentation as may be acceptable to the
Administrator. Participants in the Plan generally are required to have the full amount of their
cash distributions (other than Excluded Distributions as defined below) with respect to all
Shares or shares of stock or units of limited partnership interest of an Affiliated Program
(collectively Securities) owned by them reinvested pursuant to the Plan. However, the
Administrator shall have the sole discretion, upon the request of a Participant, to accommodate a
Participants request for less than all of the Participants Securities to be subject to
participation in the Plan.
2. Distribution Reinvestment. The Administrator will receive all cash distributions (other
than Excluded Distributions) paid by the Company or an Affiliated Participant with respect to
Securities of Participants (collectively, the Distributions). Participation will commence with
the next Distribution payable after receipt of the Participants election pursuant to Paragraph 1
hereof, provided it is received at least ten (10) days prior to the last day of the period to which
such Distribution relates. Subject to the preceding sentence, regardless of the date of such
election, a holder of Securities will become a Participant in the Plan effective on the first day
of the period following such election, and the election will apply to all Distributions
attributable to such period and to all periods thereafter. As used in this Plan, the term
Excluded Distributions shall mean those cash or other distributions designated as Excluded
Distributions by the Board of the Company or the board or general partner of an Affiliated Program,
as applicable.
3. General Terms of Plan Investments.
(a) The Company intends to offer Shares pursuant to the Plan at the higher of 95% of the
estimated value of one share as estimated by the Companys board of directors or $9.50 per share,
regardless of the price per Security paid by the Participant for the Securities in respect of which
the Distributions are paid. A stockholder may not participate in the Plan through distribution
channels that would be eligible to purchase shares in the public offering of shares pursuant to the
Companys prospectus outside of the Plan at prices below $9.50 per share.
(b) Selling commissions will not be paid for the Shares purchased pursuant to the Plan.
(c) Dealer manager fees will not be paid for the Shares purchased pursuant to the Plan.
(d) For each Participant, the Administrator will maintain an account which shall reflect for
each period in which Distributions are paid (a Distribution Period) the Distributions received by
the Administrator on behalf of such Participant. A Participants account shall be reduced as
purchases of Shares are made on behalf of such Participant.
(e) Distributions shall be invested in Shares by the Administrator promptly following the
payment date with respect to such Distributions to the extent Shares are available for purchase
under the Plan. If sufficient Shares are not available, any such funds that have not been invested
in Shares within 30 days after receipt by the Administrator and, in any event, by the end of the
fiscal quarter in which they are received, will be distributed to Participants. Any interest
earned on such accounts will be paid to the Company and will become property of the Company.
(f) Participants may acquire fractional Shares so that 100% of the Distributions will be used
to acquire Shares. The ownership of the Shares shall be reflected on the books of the Company or
its transfer agent.
C-1
4. Absence of Liability. Neither the Company nor the Administrator shall have any
responsibility or liability as to the value of the Shares or any change in the value of the Shares
acquired for the Participants account. Neither the Company nor the Administrator shall be liable
for any act done in good faith, or for any good faith omission to act hereunder.
5. Suitability. Each Participant shall notify the Administrator in the event that, at any
time during his participation in the Plan, there is any material change in the Participants
financial condition or inaccuracy of any representation under the Subscription Agreement for the
Participants initial purchase of Shares. A material change shall include any anticipated or
actual decrease in net worth or annual gross income or any other change in circumstances that would
cause the Participant to fail to meet the suitability standards set forth in the Companys
prospectus for the Participants initial purchase of Shares.
6. Reports to Participants. Within ninety (90) days after the end of each calendar year, the
Administrator will mail to each Participant a statement of account describing, as to such
Participant, the Distributions received, the number of Shares purchased and the per Share purchase
price for such Shares pursuant to the Plan during the prior year. Each statement also shall advise
the Participant that, in accordance with Section 5 hereof, the Participant is required to notify
the Administrator in the event there is any material change in the Participants financial
condition or if any representation made by the Participant under the subscription agreement for the
Participants initial purchase of Securities becomes inaccurate. Tax information regarding a
Participants participation in the Plan will be sent to each Participant by the Company or the
Administrator at least annually.
7. Taxes. Taxable Participants may incur a tax liability for Distributions even though they
have elected not to receive their Distributions in cash but rather to have their Distributions
reinvested in Shares under the Plan.
8. Reinvestment in Subsequent Programs.
(a) After the termination of the Companys initial public offering of Shares pursuant to the
Companys prospectus dated June 27, 2005 (the Initial Offering), the Company may determine, in
its sole discretion, to cause the Administrator to provide to each Participant notice of the
opportunity to have some or all of such Participants Distributions (at the discretion of the
Administrator and, if applicable, the Participant) invested through the Plan in any publicly
offered limited partnership, real estate investment trust or other real estate program sponsored by
the Company or an Affiliated Program (a Subsequent Program). If the Company makes such an
election, Participants may invest Distributions in equity securities issued by such Subsequent
Program through the Plan only if the following conditions are satisfied:
(i) prior to the time of such reinvestment, the Participant has received the final
prospectus and any supplements thereto offering interests in the Subsequent Program and
such prospectus allows investment pursuant to a distribution reinvestment plan;
(ii) a registration statement covering the interests in the Subsequent Program has
been declared effective under the Securities Act of 1933, as amended;
(iii) the offering and sale of such interests are qualified for sale under the
applicable state securities laws;
(iv) the Participant executes the subscription agreement included with the prospectus
for the Subsequent Program; and
(v) the Participant qualifies under applicable investor suitability standards as
contained in the prospectus for the Subsequent Program.
(b) The Company may determine, in its sole discretion, to cause the Administrator to allow one
or more participants of an Affiliated Program to become a Participant. If the Company makes such
an election, such Participants may invest distributions received from the Affiliated Program in
Shares through this Plan, if the following conditions are satisfied:
(i) prior to the time of such reinvestment, the Participant has received the final
prospectus and any supplements thereto offering interests in the Subsequent Program and
such prospectus allows investment pursuant to a distribution reinvestment plan;
(ii) a registration statement covering the interests in the Subsequent Program has
been declared effective under the Securities Act of 1933, as amended;
C-2
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the offering and sale of such interests are qualified for sale under the
applicable state securities laws; |
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the Participant executes the subscription agreement included with the prospectus
for the Subsequent Program; and |
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the Participant qualifies under applicable investor suitability standards as
contained in the prospectus for the Subsequent Program. |
9. Termination.
(a) A Participant may terminate or modify his participation in the Plan at any time by written
notice to the Administrator. To be effective for any Distribution, such notice must be received by
the Administrator at least ten (10) days prior to the last day of the Distribution Period to which
it relates.
(b) Prior to the listing of the Shares on a national securities exchange or inclusion of the
Shares for quotation on The Nasdaq National Market, a Participants transfer of Shares will
terminate participation in the Plan with respect to such transferred Shares as of the first day of
the Distribution Period in which such transfer is effective, unless the transferee of such Shares
in connection with such transfer demonstrates to the Administrator that such transferee meets the
requirements for participation hereunder and affirmatively elects participation by delivering an
executed authorization form or other instrument required by the Administrator.
10. State Regulatory Restrictions. The Administrator is authorized to deny participation in
the Plan to residents of any state or foreign jurisdiction that imposes restrictions on
participation in the Plan that conflict with the general terms and provisions of this Plan,
including, without limitation, any general prohibition on the payment of broker-dealer commissions
for purchases under the Plan.
11. Amendment or Termination by Company.
(a) The terms and conditions of this Plan may be amended by the Company at any time, including
but not limited to an amendment to the Plan to substitute a new Administrator to act as agent for
the Participants, by mailing an appropriate notice at least ten (10) days prior to the effective
date thereof to each Participant.
(b) The Administrator may terminate a Participants individual participation in the Plan and
the Company may terminate the Plan itself, at any time by providing ten (10) days prior written
notice to a Participant, or to all Participants, as the case may be.
(c) After termination of the Plan or termination of a Participants participation in the Plan,
the Administrator will send to each Participant a check for the amount of any Distributions in the
Participations account that have not been invested in Shares. Any future Distributions with
respect to such former Participants Shares made after the effective date of the termination of the
Participants participation will be sent directly to the former Participant.
12. Participation by Limited Partners of Cole Operating Partnership II, LP. For purposes of
this Plan, stockholders shall be deemed to include limited partners of Cole Operating Partnership
II, LP (the Partnership), Participants shall be deemed to include limited partners of the
Partnership that elect to participate in the Plan, and Distribution, when used with respect to a
limited partner of the Partnership, shall mean cash distributions on limited partnership interests
held by such limited partner.
13. Governing Law. This Plan and the Participants election to participate in the Plan shall
be governed by the laws of the State of Maryland.
14. Notice. Any notice or other communication required or permitted to be given by any
provision of this Plan shall be in writing and, if to the Administrator, addressed to Investor
Services Department, 2555 East Camelback Road, Suite 400, Phoenix, Arizona 85016, or such other
address as may be specified by the Administrator by written notice to all Participants. Notices to
a Participant may be given by letter addressed to the Participant at the Participants last address
of record with the Administrator. Each Participant shall notify the Administrator promptly in
writing of any changes of address.
C-3
APPENDIX D
s
COLE s CREDIT PROPERTY TRUST II, INC.
Additional Investment Subscription Agreement
This form may be used by any current Investor (the Investor) in
Cole Credit Property Trust II, Inc. (the Company), who desires
to purchase additional shares of the Companys common stock
pursuant to the Additional Subscription Agreement and who
purchased their shares directly from the Company. Investors who
acquired shares other than through use of a Subscription Agreement
(e.g., through a transfer of ownership or TOD) and who wish to
make additional investments must complete the Cole Credit
Property Trust II, Inc. Subscription Agreement.
Minimum Additional Investment: $1,000
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$
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Total $ Invested |
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Total Shares |
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Total shares may vary if this is a non-commission sale
or if volume discounts apply. |
SUBSCRIBER INFORMATION
Subscriber Name
o Mr.
o Mrs.
o Ms.
Account
#
Social Security # or Taxpayer ID # ooo-oo-oooo Date of Birth or Date of Incorporation oo-oo-
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Mailing Address City State
ZIP
Home Telephone No. ooo-ooo-oooo Business Telephone No. ooo-ooo-
oooo
SUBSCRIBER SIGNATURES
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I hereby acknowledge and/or represent (or in the case of fiduciary accounts, the person authorized to sign on my behalf) the following: |
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Owner |
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Joint Owner |
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a.
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I have received the prospectus as supplemented to date relating to the shares, wherein the terms and conditions of the offering of the shares are described.
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a.
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Initials
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Initials |
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b.
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I (we) either: (i) have a net worth (excluding home, home furnishings and automobiles) of at least $45,000 and had during the last year or estimate that I (we)
will have in the current year gross income of at least $45,000; or (ii) have a net worth (excluding home, home furnishings and automobiles) of at least $150,000,
or that I (we) meet such higher suitability requirements as may be required by my state of residence and set forth in the
prospectus under Suitability Standards. In the case of sales to fiduciary accounts, the suitability standards must be met by the beneficiary, the fiduciary
account or by the donor or grantor who directly or indirectly supplies the funds for the purchase of the shares.
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b.
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Initials
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Initials |
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c.
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If I am a resident of Arizona, California, Iowa, Michigan or Tennessee, I have either (i) a net worth of at least $225,000 or (ii) a gross
annual income of at least $60,000 and a net worth of at least $60,000.
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c.
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Initials
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d.
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If I am a resident of Maine, I have either (i) a net worth of at least $200,000 or (ii) a gross annual income of at least $50,000 and a net worth of at least $60,000.
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d.
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Initials
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e.
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If I am a resident of Kansas, I acknowledge that it is recommended that I should invest no more than 10% of my liquid net worth in the shares
and the securities of other real estate investment trusts.
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e.
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Initials
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f.
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If I an a
resident of Ohio, Massachusetts[, North Carolina] or Pennsylvania, I have either (i) a net worth of at least $250,000 or (ii) a minimum gross annual income of at
least $70,000 and a minimum net worth of at least $70,000 and my maximum investment in the Company and its affiliates will not exceed 10% of my net worth.
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f.
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Initials
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g.
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I am purchasing the shares for my own account or I am (we are) purchasing shares on behalf of a trust or other entity of which I am (we are) trustee(s) or
authorized agent(s), I (we) have due authority to execute this Additional Subscription Agreement and do hereby legally bind the trust or other entity of which
I am (we are) trustee(s) or authorized agent(s).
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g.
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Initials
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h.
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I acknowledge that the shares are not liquid.
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h.
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Initials
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SUBSTITUTE W-9: I HEREBY CERTIFY under penalty of perjury (i) that the taxpayer identification
number shown on this Additional Subscription Agreement is true, correct and complete, (ii) that I
am not subject to backup withholding either because I have not been notified that I am subject to
backup withholding as a result of a failure to report all interest or distributions, or the
Internal Revenue Service has notified me that I am no longer subject to backup withholding, and
(iii) I am a U.S. person.
NOTICE IS HEREBY GIVEN TO EACH SUBSCRIBER THAT BY EXECUTING THIS AGREEMENT YOU ARE NOT WAIVING ANY
RIGHTS YOU MAY HAVE UNDER THE SECURITIES ACT OF 1933 AND ANY STATE SECURITIES LAWS.
D-1
A SALE OF THE SHARES MAY NOT BE COMPLETED UNTIL AT LEAST FIVE BUSINESS DAYS AFTER THE DATE THE
SUBSCRIBER RECEIVES THE PROSPECTUS.
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Signature of Subscriber
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Signature of Co-Subscriber, if applicable
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Authorized Signature (Custodian or Trustee, if applicable)
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Date |
s COLE s CREDIT
PROPERTY TRUST II, INC. 2401 Kerner
Boulevard San
Rafael, CA 94901
Phone: 866-341-2653
COLE CREDIT PROPERTY TRUST II, INC.
SUPPLEMENT NO. 14 DATED JANUARY 11, 2007
TO THE PROSPECTUS DATED JUNE 27, 2005
This document supplements, and should be read in conjunction with, the prospectus of Cole
Credit Property Trust II, Inc. dated June 27, 2005 and Supplement No. 13 dated December 20, 2006.
Supplement 13 supersedes and replaces all prior supplements to the prospectus. Unless otherwise
defined in this supplement, capitalized terms used in this supplement shall have the same meanings
as set forth in the prospectus.
The purpose of this supplement is to describe the following:
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the status of the offering of shares in Cole Credit Property Trust II, Inc.; |
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the acquisition of a single-tenant, net leased commercial retail property,
containing approximately 56,000 rentable square feet in Amherst, New York; |
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the acquisition of a single-tenant, net leased commercial restaurant
property, containing approximately 7,000 rentable square feet in Paris,
Texas; |
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the acquisition of a single-tenant, net leased commercial retail property,
containing approximately 20,000 rentable square feet in Clarksville,
Indiana; |
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the acquisition of a single-tenant, net leased commercial retail property,
containing approximately 122,000 rentable square feet in Fargo, North
Dakota; |
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the acquisition of a single-tenant, net leased commercial retail property,
containing approximately 21,000 rentable square feet in Newington,
Connecticut; |
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the potential acquisition of a single-tenant, net leased commercial retail
property, containing approximately 61,000 rentable square feet in Peoria,
Illinois; |
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the potential acquisition of a single-tenant, net leased commercial retail
property, containing approximately 19,000 rentable square feet in Ankeny,
Iowa; |
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the potential acquisition of a single-tenant, net leased commercial retail
property, containing approximately 7,000 rentable square feet in Maryland
Heights, Missouri; |
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the potential acquisition of a corporate headquarters and distribution
facility, containing approximately 1.45 million rentable square feet in
Katy, Texas; |
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the potential acquisition of a multi-tenant, net leased commercial retail
property, containing approximately 65,000 rentable square feet in Dallas,
Texas; |
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the potential acquisition of a single-tenant, net leased commercial retail
property, containing approximately 75,000 rentable square feet in Sherwood,
Arkansas; |
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the potential acquisition of a multi-tenant, net leased commercial retail
shopping center, containing approximately 92,000 rentable square feet in
Omaha, Nebraska; |
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the potential acquisition of a multi-tenant, net leased commercial retail
property, containing approximately 87,000 rentable square feet in Victoria,
Texas; and |
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the termination of a purchase agreement for a single-tenant, net leased
commercial retail property containing approximately 79,000 rentable square
feet in Cincinnati, Ohio. |
Status of the Offering
We commenced our initial public offering of shares of our common stock on June 27, 2005. We
have accepted investors subscriptions received through January 9, 2007 and have issued an
aggregate of approximately 32.0 million shares of our common stock to stockholders, with gross
proceeds of approximately $319.3 million distributed to us. For additional information, see the
Plan of Distribution Subscription Process section of the prospectus beginning on page 133.
Real Property Investments
The section captioned Investment Objectives and Policies Real Property Investments
beginning on page 82 of the prospectus is supplemented with the following information:
Dicks Sporting Goods Amherst, New York
On December 20, 2006, Cole DK Amherst NY, LLC, a Delaware limited liability company (DK
Amherst), a wholly-owned subsidiary of Cole OP II, acquired a 100% fee simple interest in an
approximately 56,000 square foot single-tenant retail building (the DK Amherst Property) from BG
Maple Road, LLC, which is not affiliated with us, our subsidiaries or affiliates. The DK Amherst
Property was constructed in 1986 on an approximately 5.8 acre site in Amherst, New York. The area
surrounding the DK Amherst Property is shared by commercial, retail and residential developments.
The purchase price of the DK Amherst Property was approximately $9.7 million, exclusive of
closing costs. The acquisition was funded by net proceeds from our ongoing public offering. In
connection with the acquisition, we paid an affiliate of our advisor an acquisition fee of
approximately $195,000.
The DK Amherst Property is 100% leased to Dicks Sporting Goods, Inc. (Dicks). The DK
Amherst Property is subject to a net lease, which commenced on December 1, 2000, pursuant to which
Dicks is required to pay substantially all operating expenses and capital expenditures in addition
to base rent. The current aggregate annual base rent of $762,592 increases to $790,464 on November
30, 2010, through the remainder of the initial lease term, which expires November 30, 2015. Dicks
has three options to renew the lease, each for an additional five-year term beginning on December
1, 2015, with annual base rent of $655,004, which increases approximately 4.0% at the beginning of
each subsequent five-year renewal term.
Dicks is a full-line sporting goods retailer that offers brand name sporting goods equipment,
apparel, and footwear in a specialty store environment. Dicks operates over 255 stores in 34
states, the majority of which are located primarily throughout the eastern half of the United
States. Dicks stock is publicly traded on the New York Stock Exchange under the symbol DKS. In
determining the credit worthiness of Dicks we considered a variety of factors, including
historical financial information and financial performance and regional market position.
Cole Realty has the sole and exclusive right to manage, operate, lease and supervise the
overall maintenance of the DK Amherst Property and will receive a property management fee of 2.0%
of the monthly gross revenue from the DK Amherst Property. We currently have no plans for any
renovations, improvements or development of the DK Amherst Property. We believe the DK Amherst
Property is adequately insured.
Chilis Paris, Texas
On December 28, 2006, Cole CH Paris TX, LP, a Delaware limited partnership (CH Paris), in
which Cole OP II is the sole limited partner and a wholly-owned subsidiary of Cole OP II is the
sole general partner, acquired a 100% fee simple interest in an approximately 7,000 square foot
single-tenant restaurant building (the CH Paris Property) from Moondance Investments, Ltd., which
is not affiliated with us, our subsidiaries or affiliates. The CH Paris Property was constructed in
1999 on an approximately 2.2 acre site in Paris, Texas. The area surrounding the CH Paris Property
is shared by commercial and residential developments.
The purchase price of the CH Paris Property was approximately $2.8 million, exclusive of
closing costs. The acquisition was funded by net proceeds from our ongoing public offering and an
approximately $1.8 million loan (the CH Paris Loan) from Bear Stearns Commercial Mortgage, Inc.
(Bear Stearns), which is secured by the CH Paris Property. In connection with the acquisition, we
paid an affiliate of our advisor an acquisition fee of $55,000 and our advisor a finance
coordination fee of approximately $18,000.
The CH Paris Property is 100% leased to Brinker Texas, L.P. (Brinker Texas), a wholly-owned
subsidiary of Brinker International, Inc. (Brinker International), which guarantees the lease.
The CH Paris Property is subject to a net lease, which commenced on November 3, 2005, pursuant to
which Brinker Texas is required to pay substantially all operating expenses and capital
expenditures in addition to base rent. The current aggregate annual base rent of $200,913 is fixed
through the initial lease term, which expires November 30, 2025. Brinker Texas has two options to
renew the lease, each for an additional five-year term beginning on December 1, 2025, with rental
escalations of 15.0% at the beginning of each five-year renewal term.
Brinker International is a multi-concept restaurant operator which develops, operates and
franchises the Chilis Grill & Bar, Romanos Macaroni Grill, Maggianos Little Italy and On the
Border Mexican Grill & Cantina restaurant brands. Brinker International has a Standard and Poors
credit rating of BBB- and its stock is publicly traded on the New York Stock Exchange under the
symbol EAT.
2
Cole Realty has the sole and exclusive right to manage, operate, lease and supervise the
overall maintenance of the CH Paris
Property and will receive a property management fee of 2.0% of the monthly gross revenue from
the CH Paris Property. We currently have no plans for any renovations, improvements or development
of the CH Paris Property. We believe the CH Paris Property is adequately insured.
The CH Paris Loan has a fixed interest rate of 5.65% per annum with monthly interest-only
payments. The outstanding principal and any accrued and unpaid interest is due on January 1, 2017
(the CH Paris Maturity Date). The CH Paris Loan is generally non-recourse to CH Paris and Cole OP
II, but both are liable for customary non-recourse carveouts.
The CH Paris Loan may not be prepaid, in whole or in part, except under the following
circumstances: (i) full prepayment may be made on any of the three (3) monthly payment dates
occurring immediately prior to the CH Paris Maturity Date and (ii) partial prepayments resulting
from Bear Stearns election to apply insurance or condemnation proceeds may be made to reduce the
outstanding principal balance of the CH Paris Loan. Notwithstanding the prepayment limitations, CH
Paris may sell the CH Paris Property to a buyer that assumes the CH Paris Loan. The transfer shall
be subject to Bear Stearns approval of the proposed buyer and the payment of Bear Stearns costs
and expenses associated with the sale of the CH Paris Property.
In the event the CH Paris Loan is not paid off on the CH Paris Maturity Date, the CH Paris
Loan includes hyperamortization provisions. The CH Paris Maturity Date, pursuant to the
hyperamortization provisions, will be extended by twenty (20) years. During such period, Bear
Stearns will apply 100% of the rents collected to (i) all payments due to Bear Stearns under the CH
Paris Loan, including any payments to escrows or reserve accounts, (ii) any operating expenses of
the CH Paris Property pursuant to an approved annual budget, (iii) any extraordinary expenses and
(iv) any accrued interest under the CH Paris Loan. The interest rate during the hyperamortization
period shall be the greater of (x) the fixed interest rate of 5.65% plus two percent (2.0%) per
annum or (y) the Treasury Constant Maturity Yield Index plus two percent (2.0%) per annum, not to
exceed 10.65% per annum. Notwithstanding the forgoing, failure to make any required payments under
the CH Paris Loan in a timely manner will cause an event of default, which will result in a 4.0%
default interest rate in excess of the applicable interest rate, late charges equal to 5.0% of the
amount of such overdue payment, and all interest and principal becoming immediately due and payable
in full.
Staples Clarksville, Indiana
On December 29, 2006, Cole ST Clarksville IN, LLC, a Delaware limited liability company (ST
Clarksville), a wholly-owned subsidiary of Cole OP II, acquired a 100% fee simple interest in an
approximately 20,000 square foot single-tenant retail building (the ST Clarksville Property) from
Clarksville Exchange, LLC, which is not affiliated with us, our subsidiaries or affiliates. The ST
Clarksville Property was constructed in 2006 on an approximately 2.0 acre site in Clarksville,
Indiana. The area surrounding the ST Clarksville Property is shared by retail developments.
The purchase price of the ST Clarksville Property was approximately $4.4 million, exclusive of
closing costs. The acquisition was funded by net proceeds from our ongoing public offering and an
approximately $2.9 million loan (the ST Clarksville Loan) from JP Morgan Chase Bank, NA (JP
Morgan), which is secured by the ST Clarksville Property. In connection with the acquisition, we
paid an affiliate of our advisor an acquisition fee of approximately $89,000 and our advisor a
finance coordination fee of $29,000.
The ST Clarksville Property is 100% leased to Staples the Office Superstore East, Inc.
(Staples East), a wholly-owned subsidiary of Staples, Inc. (Staples). The ST Clarksville
Property is subject to a net lease, which commenced on October 28, 2006, pursuant to which Staples
East is required to pay substantially all operating expenses and capital expenditures in addition
to base rent. The current aggregate annual base rent of $326,208 is fixed through the first
five-years of the initial lease term, with a rental escalation of approximately 9.0% during the
last five-years of the initial lease term, which expires October 31, 2016. Staples East has three
options to renew the lease, each for an additional five-year term beginning on November 1, 2016,
with rental escalations descending in a range from approximately 9.0% to approximately 7.0% at the
beginning of each five-year renewal term.
Staples East operates retail office superstores. In determining the credit worthiness of
Staples East we considered a variety of factors, including historical financial information and
financial performance, regional market position, and the financial position of its parent, Staples.
Staples operates over 1,700 office superstores in 21 countries throughout North and South America,
Europe and Asia. Staples has a Standard & Poors credit rating of BBB and its stock is publicly
traded on the Nasdaq Stock Market under the symbol PLS.
Cole Realty has the sole and exclusive right to manage, operate, lease and supervise the
overall maintenance of the ST Clarksville Property and will receive a property management fee of
2.0% of the monthly gross revenue from the ST Clarksville Property. We currently have no plans for
any renovations, improvements or development of the ST Clarksville Property. We believe the ST
Clarksville Property is adequately insured.
The ST Clarksville Loan has a fixed interest rate of 5.78% per annum with monthly
interest-only payments. The outstanding principal and any accrued and unpaid interest is due on
January 1, 2017 (the ST Clarksville Maturity Date). The ST Clarksville Loan is generally
non-recourse to ST Clarksville and Cole OP II, but both are liable for customary non-recourse
carveouts.
3
The ST Clarksville Loan may not be prepaid, in whole or in part, except under the following
circumstances: (i) full prepayment may be made on any of the three (3) monthly payment dates
occurring immediately prior to the ST Clarksville Maturity Date and (ii) partial prepayments
resulting from JP Morgans election to apply insurance or condemnation proceeds may be made to
reduce the outstanding principal balance of the ST Clarksville Loan. Notwithstanding the prepayment
limitations, ST Clarksville may sell the ST Clarksville Property to a buyer that assumes the ST
Clarksville Loan. The transfer shall be subject to JP Morgans approval of the proposed buyer and
the payment of JP Morgans costs and expenses associated with the sale of the ST Clarksville
Property.
In the event the ST Clarksville Loan is not paid off on the ST Clarksville Maturity Date, the
ST Clarksville Loan includes default provisions. Upon the occurrence of an event of default,
interest on the ST Clarksville Loan will accrue at an annual default interest rate equal to the
lesser of (a) the maximum rate permitted by applicable law, or (b) 10.78%. In addition, ST
Clarksville will be required to pay a prepayment consideration in an amount equal to the greater of
1.0% of the outstanding principal balance of the ST Clarksville Loan, or the present value of the
remaining scheduled payments of principal and interest from the date such payment is received
through the ST Clarksville Maturity Date at the time any payment is received by JP Morgan.
HOM Furniture Fargo, North Dakota
On January 4, 2007, Cole OP II acquired 100% of the membership interests (the HM Fargo
Interests) in CRW Fargo, LLC (CRW) from Wayne Johansen, Rodney Johansen, and Carl Nyberg,
persons that are not affiliated with us, our subsidiaries or affiliates. CRW owns, as its only
asset, a retail building (the HM Fargo Property), leased to HOM Furniture, Inc. (HOM) The HM
Fargo Property was built in 2004 and consists of an approximately 122,000 square foot single-tenant
retail building on an approximately 5.9 acre site located in Fargo, North Dakota. The area
surrounding the HM Fargo Property is primarily surrounded by commercial developments.
The purchase price of the HM Fargo Interests was $12.0 million, exclusive of closing costs.
The acquisition was funded by net proceeds from our ongoing public offering and a $4.8 million loan
from Bear Stearns, which is secured by the HM Fargo Property (the HM Fargo Loan). In connection
with the acquisition, we paid an affiliate of our advisor an acquisition fee of $240,000 and our
advisor a finance coordination fee of $48,000.
The HM Fargo Property is 100% leased to HOM. The HM Fargo Property is subject to a net lease,
which commenced on January 4, 2007, pursuant to which HOM is required to pay substantially all
operating expenses and capital expenditures in addition to base rent. The current aggregate annual
base rent of $968,000 is fixed through the first five years of the initial lease term, with rental
escalations of approximately 5.0% every five years thereafter through the remainder of the initial
lease term, which expires January 31, 2022. HOM has the option to renew the lease through April 30,
2025, and for four additional terms of five years each, with rental escalations of approximately
4.0% at the beginning of each renewal term.
HOM is a privately owned company headquartered in Minneapolis, Minnesota. HOM operates 11
furniture showrooms in the states of Minnesota, South Dakota, North Dakota, Iowa and Wisconsin. HOM
carries a full line of furniture including rugs, mattresses, accessories and patio furniture. In
determining the credit worthiness of HOM we considered a variety of factors, including historical
financial information and financial performance and local market position.
Cole Realty has the sole and exclusive right to manage, operate, lease and supervise the
overall maintenance of the HM Fargo Property and will receive a property management fee of 2.0% of
the monthly gross revenue from the HM Fargo Property. We currently have no plans for any
renovations, improvements or development of the HM Fargo Property. We believe the HM Fargo Property
is adequately insured.
The HM Fargo Loan has a fixed interest rate of 5.56% per annum with monthly interest-only
payments. The outstanding principal and any accrued and unpaid interest is due on February 1, 2017
(the HM Fargo Maturity Date). The HM Fargo Loan is generally non-recourse to HM Fargo and Cole OP
II, but both are liable for customary non-recourse carveouts.
The HM Fargo Loan may not be prepaid, in whole or in part, except under the following
circumstances: (i) full prepayment may be made on any of the three (3) monthly payment dates
occurring immediately prior to the HM Fargo Maturity Date and (ii) partial prepayments resulting
from Bear Stearns election to apply insurance or condemnation proceeds may be made to reduce the
outstanding principal balance of the HM Fargo Loan. Notwithstanding the prepayment limitations, HM
Fargo may sell the HM Fargo Property to a buyer that assumes the HM Fargo Loan. The transfer shall
be subject to Bear Stearns approval of the proposed buyer and the payment of Bear Stearns costs
and expenses associated with the sale of the HM Fargo Property.
In the event the HM Fargo Loan is not paid off on the HM Fargo Maturity Date, the HM Fargo
Loan includes hyperamortization provisions. The HM Fargo Maturity Date, pursuant to the
hyperamortization provisions, will be extended by twenty (20) years. During such period, Bear
Stearns will apply 100% of the rents collected to (i) all payments due to Bear Stearns under the HM
Fargo Loan, including any payments to escrows or reserve accounts, (ii) any operating expenses of
the HM Fargo Property pursuant to an approved
4
annual budget, (iii) any extraordinary expenses and (iv) any accrued interest under the HM
Fargo Loan. The interest rate during the hyperamortization period shall be the greater of (x) the
fixed interest rate of 5.56% plus two percent (2.0%) per annum or (y) the Treasury Constant
Maturity Yield Index plus two percent (2.0%) per annum, not to exceed 10.56% per annum.
Notwithstanding the forgoing, failure to make any required payments under the HM Fargo Loan in a
timely manner will cause an event of default, which will result in a 4.0% default interest rate in
excess of the applicable interest rate, late charges equal to 5.0% of the amount of such overdue
payment, and all interest and principal becoming immediately due and payable in full.
La-Z-Boy Newington, Connecticut
On January 5, 2007, Cole LZ Newington CT, LLC, a Delaware limited liability company (LZ
Newington), a wholly-owned subsidiary of Cole OP II, acquired a 100% fee simple interest in an
approximately 21,000 square foot single-tenant retail building (the LZ Newington Property) from
NNN TRS, Inc., which is not affiliated with us, our subsidiaries or affiliates. The LZ Newington
Property was constructed in 2006 on an approximately 2.6 acre site in Newington, Connecticut. The
area surrounding the LZ Newington Property is shared by primarily commercial developments.
The purchase price of the LZ Newington Property was $6.9 million, exclusive of closing costs.
The acquisition was funded by net proceeds from our ongoing public offering and an approximately
$4.1 million loan (the LZ Newington Loan) from Bear Stearns, which is secured by the LZ Newington
Property. In connection with the acquisition, we paid an affiliate of our advisor an acquisition
fee of $138,000 and our advisor a finance coordination fee of approximately $41,000.
The LZ Newington Property is 100% leased to LZB Furniture Galleries of Paramus, Inc. (LZB
Paramus), a wholly-owned subsidiary of La-Z-Boy Incorporated, (La-Z-Boy), which guarantees the
lease. The LZ Newington Property is subject to a net lease, which commenced on December 27, 2006,
pursuant to which LZB Paramus is required to pay substantially all operating expenses and capital
expenditures in addition to base rent. The current aggregate annual base rent of $496,824 is fixed
through the first ten years of the initial lease term and increases to $558,927 in the eleventh
year through the remainder of the initial lease term, which expires December 26, 2021. LZB Paramus
has two options to renew the lease, each for an additional five-year term beginning on December 27,
2021, with rental escalations of approximately 13.0% and approximately 10.0% at the beginning of
each five-year renewal term, respectively.
La-Z-Boy operates retail furniture stores in the United States. In determining the credit
worthiness of La-Z-Boy we considered a variety of factors, including historical financial
information and financial performance, and regional market position. La-Z-Boys stock is publicly
traded on the New York Stock Exchange under the symbol LZB.
Cole Realty has the sole and exclusive right to manage, operate, lease and supervise the
overall maintenance of the LZ Newington Property and will receive a property management fee of 2.0%
of the monthly gross revenue from the LZ Newington Property. We currently have no plans for any
renovations, improvements or development of the LZ Newington Property. We believe the LZ Newington
Property is adequately insured.
The LZ Newington Loan has a fixed interest rate of 5.60% per annum with monthly interest-only
payments. The outstanding principal and any accrued and unpaid interest is due on January 1, 2012
(the LZ Newington Maturity Date). The LZ Newington Loan is generally non-recourse to LZ Newington
and Cole OP II, but both are liable for customary non-recourse carveouts.
The LZ Newington Loan may not be prepaid, in whole or in part, except under the following
circumstances: (i) full prepayment may be made on any of the three (3) monthly payment dates
occurring immediately prior to the LZ Newington Maturity Date and (ii) partial prepayments
resulting from Bear Stearns election to apply insurance or condemnation proceeds may be made to
reduce the outstanding principal balance of the LZ Newington Loan. Notwithstanding the prepayment
limitations, LZ Newington may sell the LZ Newington Property to a buyer that assumes the LZ
Newington Loan. The transfer shall be subject to Bear Stearns approval of the proposed buyer and
the payment of Bear Stearns costs and expenses associated with the sale of the LZ Newington
Property.
In the event the LZ Newington Loan is not paid off on the LZ Newington Maturity Date, the LZ
Newington Loan includes hyperamortization provisions. The LZ Newington Maturity Date, pursuant to
the hyperamortization provisions, will be extended by twenty (20) years. During such period, Bear
Stearns will apply 100% of the rents collected to (i) all payments due to Bear Stearns under the LZ
Newington Loan, including any payments to escrows or reserve accounts, (ii) any operating expenses
of the LZ Newington Property pursuant to an approved annual budget, (iii) any extraordinary
expenses and (iv) any accrued interest under the LZ Newington Loan. The interest rate during the
hyperamortization period shall be the greater of (x) the fixed interest rate of 5.60% plus two
percent (2.0%) per annum or (y) the Treasury Constant Maturity Yield Index plus two percent (2.0%)
per annum, not to exceed 10.60% per annum. Notwithstanding the forgoing, failure to make any
required payments under the LZ Newington Loan in a timely manner will cause an event of default,
which will result in a 4.0% default interest rate in excess of the applicable interest rate, late
charges equal to 5.0% of the amount of such overdue payment, and all interest and principal
becoming immediately due and payable in full.
5
Potential Property Investments
Our advisor has identified the following properties as potential suitable investments for us.
The acquisition of each such property is subject to a number of conditions. A significant condition
to acquiring any one of these potential acquisitions is our ability to raise sufficient proceeds in
this offering to pay a portion of the purchase price. An additional condition to acquiring these
properties will be our securing debt financing to pay the balance of the purchase price. Such
financing may not be available on acceptable terms or at all.
Our evaluation of a property as a potential acquisition, including the appropriate purchase
price, will include our consideration of a property condition report; unit-level store performance;
property location, visibility and access; age of the property, physical condition and curb appeal;
neighboring property uses; local market conditions, including vacancy rates; area demographics,
including trade area population and average household income; neighborhood growth patterns and
economic conditions; and the presence of demand generators.
We will decide whether to acquire these properties generally based upon:
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satisfaction of the conditions to the acquisitions contained in the respective contracts; |
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no material adverse change occurring relating to the properties, the tenants or in the local economic conditions; |
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our receipt of sufficient net proceeds from the offering of our common stock to the public and financing
proceeds to make these acquisitions; and |
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our receipt of satisfactory due diligence information including appraisals, environmental reports and tenant and
lease information. |
Other properties may be identified in the future that we may acquire before or instead of
these properties. Due to the considerable conditions to the consummation of the acquisition of
these properties, we cannot make any assurances that the closing of these acquisitions is probable.
Gordmans Peoria, Illinois
Series B, LLC (Series B) an affiliate of our advisor, has entered into an agreement to
purchase an approximately 61,000 square foot single-tenant retail building on an approximately 4.4
acre site located in Peoria, Illinois (the GO Peoria Property), for a purchase price of $9.0
million, exclusive of closing costs (the GO Peoria Agreement). Subject to the satisfactory
completion of certain conditions to closing, we expect that Series B will assign all of its rights
and obligations under the GO Peoria Agreement to a wholly-owned subsidiary of Cole OP II prior to
the closing of the transaction.
The GO Peoria Property was constructed in 2006 and is 100% leased to Gordmans, Inc.
(Gordmans). The GO Peoria Property is subject to a net lease, pursuant to which Gordmans is
required to pay substantially all operating expenses and capital expenditures in addition to base
rent. The annual base rent of $685,654 is fixed through the first five years of the initial lease
term and increases to $716,127 in the sixth year through the remainder of the initial lease term,
which expires December 31, 2015. Gordmans has four options to renew the lease, each for an
additional five-year term beginning on January 1, 2016, with rental escalations of 4.0% at the
beginning of each five-year renewal term.
We expect to purchase the GO Peoria Property with proceeds from our ongoing public offering
and an approximately $5.0 million loan to be secured by the GO Peoria Property (the GO Peoria
Property Loan). We expect the GO Peoria Property Loan to be a ten-year fixed rate, interest only
loan.
Tractor Supply Ankeny, Iowa
Series B has entered into an agreement to purchase an approximately 19,000 square foot
single-tenant retail building on an approximately 2.7 acre site located in Ankeny, Iowa (the TS
Ankeny Property), for a purchase price of $3.0 million, exclusive of closing costs (the TS Ankeny
Agreement). Subject to the satisfactory completion of certain conditions to closing, we expect
that Series B will assign all of its rights and obligations under the TS Ankeny Agreement to a
wholly-owned subsidiary of Cole OP II prior to the closing of the transaction.
The TS Ankeny Property was constructed in 2006 and is 100% leased to Tractor Supply Company
(Tractor Supply). The TS Ankeny Property is subject to a net lease, pursuant to which Tractor
Supply is required to pay substantially all operating expenses and capital expenditures in addition
to base rent. The annual base rent of $213,253 is fixed through the first five years of the initial
lease term with rental escalations of 10.0% in the sixth and eleventh year of the initial lease
term, which expires December 31, 2020. Tractor Supply has four options to renew the lease, each for
an additional five-year term beginning on January 1, 2021, with rental escalations of 10.0% at the
beginning of each five-year renewal term.
6
We expect to purchase the TS Ankeny Property with proceeds from our ongoing public offering
and an approximately $2.0 million loan to be secured by the TS Ankeny Property (the TS Ankeny
Property Loan). We expect the TS Ankeny Property Loan to be a ten-year fixed rate, interest only
loan.
Advance Auto Maryland Heights, Missouri
Cole MP-AA Midwest Portfolio, LLC a wholly-owned subsidiary of Cole OP II, has entered into an
agreement to purchase an approximately 7,000 square foot single-tenant retail building on an
approximately 1.3 acre site located in Maryland Heights, Missouri (the AA Maryland Heights
Property), for a purchase price of approximately $1.9 million, exclusive of closing costs (the AA
Maryland Heights Agreement).
The AA Maryland Heights Property was constructed in 2005 and is 100% leased to Advance Stores
Company, Inc. (Advance Auto). The AA Maryland Heights Property is subject to a net lease,
pursuant to which Advance Auto is required to pay substantially all operating expenses and capital
expenditures in addition to base rent. The annual base rent of $132,000 has a rental escalation of
5.0% beginning on the eleventh year through the initial lease term, which expires February 28,
2021. Advance Auto has three options to renew the lease, each for an additional five-year term
beginning on March 1, 2021, with rental escalations of 5.0% at the beginning of each five-year
renewal term.
We expect to purchase the AA Maryland Heights Property with proceeds from our ongoing public
offering.
Academy Sports Distribution Center Katy, Texas
Series D, LLC (Series D), an affiliate of our advisor, has entered into an agreement to
purchase an approximately 1.45 million square foot corporate headquarters and distribution facility
on an approximately 93.8 acre site located in Katy, Texas (the AS Katy Property), for a purchase
price of approximately $102.0 million, exclusive of closing costs (the AS Katy Agreement).
Subject to the satisfactory completion of certain conditions to closing, we expect that Series D
will assign all of its rights and obligations under the AS Katy Agreement to a wholly-owned
subsidiary of Cole OP II prior to the closing of the transaction.
The AS Katy Property was constructed in four phases between 1976 and 2006 and will be 100%
leased to Academy, Ltd. (Academy). The AS Katy Property is subject to a net lease, pursuant to
which Academy is required to pay substantially all operating expenses and capital expenditures in
addition to base rent. The annual base rent of $7,038,000 increases 1.50% each year of the initial
lease term, which expires January 31, 2027 and all renewal options. Academy has four options to
renew the lease, each for an additional five-year term beginning on February 1, 2027.
We expect to purchase the AS Katy Property with proceeds from our ongoing public offering and
an approximately $68.3 million loan to be secured by the AS Katy Property (the AS Katy Property
Loan). We expect the AS Katy Property Loan to be a ten-year fixed rate, interest only loan.
Sack N Save & OReilly Auto Supply Dallas, Texas
Series B has entered into an agreement to purchase an approximately 65,000 square foot
multi-tenant retail building on an approximately 6.4 acre site located in Dallas, Texas (the SS
Dallas Property), for a purchase price of approximately $5.1 million, exclusive of closing costs
(the SS Dallas Agreement). Subject to the satisfactory completion of certain conditions to
closing, we expect that Series B will assign all of its rights and obligations under the SS Dallas
Agreement to a wholly-owned subsidiary of Cole OP II prior to the closing of the transaction.
The SS Dallas Property was constructed in 1970 and is 100% leased to two tenants, Minyard Food
Stores, Inc., d/b/a Sack N Save (Minyard) and Hi-Lo Auto Supply, L.P., d/b/a OReilly Auto
Supply (Hi-Lo).
The lease to Minyard is subject to a net lease, pursuant to which Minyard is required to pay
substantially all operating expenses and capital expenditures in addition to base rent. The annual
base rent of $375,648 has a rental escalation of 5.5% beginning on the eleventh year through the
initial lease term, which expires December 31, 2020. Minyard has four options to renew the lease,
each for an additional five-year term beginning on January 1, 2021, with rental escalations of 7.0%
at the beginning of each of the first and second renewal terms.
The lease to Hi-Lo is subject to a net lease, pursuant to which Hi-Lo is required to pay
substantially all operating expenses and capital expenditures in addition to base rent. The annual
base rent of $25,920 has rental escalations of 8.0% beginning on the sixth and eleventh year
through the initial lease term, which expires July 31, 2021. Hi-Lo has three options to renew the
lease, each for an additional five-year term beginning on August 1, 2021, with rental escalations
of 8.0% at the beginning of each five-year renewal term.
7
We expect to purchase the SS Dallas Property with proceeds from our ongoing public offering
and an approximately $3.3 million loan to be secured by the SS Dallas Property (the SS Dallas
Property Loan). We expect the SS Dallas Property Loan to be a ten-year fixed rate, interest only
loan.
Academy Sports Sherwood, AR
Cole Acquisitions I, LLC (Cole Acquisitions), an affiliate of our advisor, has entered into
an agreement to purchase an approximately 75,000 square foot retail building on an approximately
6.0 acre site located in Sherwood, Arkansas (the AS Sherwood Property), for a purchase price of
approximately $6.8 million, exclusive of closing costs (the AS Sherwood Agreement). Subject to
the satisfactory completion of certain conditions to closing, we expect that Cole Acquisitions will
assign all of its rights and obligations under the AS Sherwood Agreement to a wholly-owned
subsidiary of Cole OP II prior to the closing of the transaction.
The AS Sherwood Property was constructed in 2006 and is 100% leased to Academy. The AS
Sherwood Property is subject to a net lease, pursuant to which Academy is required to pay
substantially all operating expenses and capital expenditures in addition to base rent. The annual
base rent of $494,716 increases to $520,951 on February 1, 2016 through the remainder of the
initial lease term, which expires June 30, 2019. Academy has three options to renew the lease,
each for an additional five-year term beginning on January 31, 2021, with rental escalations of
5.0% at the beginning of each five-year renewal term.
We expect to purchase the AS Sherwood Property with proceeds from our ongoing public offering
and an approximately $4.1 million loan to be secured by the AS Sherwood Property. We expect the
loan to be a ten-year fixed rate, interest only loan.
One Pacific Place, Omaha, Nebraska
Series B has entered into an agreement to purchase an approximately 92,000 square foot
multi-tenant commercial retail shopping center on an approximately 10.0 acre site located in Omaha,
Nebraska (the MT Omaha Property), for a purchase price of approximately $36.0 million, exclusive
of closing costs (the MT Omaha Agreement). Subject to the satisfactory completion of certain
conditions to closing, we expect that Series B will assign all of its rights and obligations under
the MT Omaha Agreement to a wholly-owned subsidiary of Cole OP II prior to the closing of the
transaction.
The MT Omaha Property was constructed in 1988 and is approximately 95% leased to 24 tenants.
No single tenant accounts for more than 10.0% of the rentable square feet of the MT Omaha Property.
The MT Omaha Property is subject to 24 net leases (the MT Omaha Leases), pursuant to which each
tenant is required to pay substantially all operating expenses, capital expenditures and a
proportionate amount of common area maintenance charges in addition to base rent. The MT Omaha
Leases have total annual aggregate base rent of approximately $2.6 million and rental increases and
renewal options specific to each tenant with lease terms ranging in length from approximately one
year to approximately 25.0 years.
We expect to purchase the MT Omaha Property with proceeds from our ongoing public offering and
an approximately $23.4 million loan to be secured by the MT Omaha Property (the MT Omaha Property
Loan). We expect the loan to be a ten-year fixed rate, interest only loan.
Victoria Crossing Victoria, Texas
Series B has entered into an agreement to purchase an approximately 87,000 square foot
multi-tenant commercial retail building on an approximately 9.2 acre site located in Victoria,
Texas (the VC Victoria Property), for a purchase price of approximately $12.8 million, exclusive
of closing costs (the VC Victoria Agreement). Subject to the satisfactory completion of certain
conditions to closing, we expect that Series B will assign all of its rights and obligations under
the VC Victoria Agreement to a wholly-owned subsidiary of Cole OP II prior to the closing of the
transaction.
The VC Victoria Property was constructed in 2006 and is approximately 92% leased to 4 tenants.
Three tenants occupy greater than 10.0% of the rentable square footage of the VC Victoria Property
including Ross Dress for Less, Inc. (Ross), Bed Bath & Beyond, Inc. (Bed Bath & Beyond), and
Petsmart, Inc. (Petsmart).
Ross occupies approximately 30,000 rentable square feet of the VC Victoria Property subject to
a net lease (the Ross Lease). Pursuant to the Ross Lease, Ross is required to pay substantially
all operating expenses, capital expenditures and a proportionate amount of common area maintenance
charges in addition to base rent. The current aggregate annual base rent of $279,230 is fixed
through the first five years of the initial lease term and increases to $286,777 for the remainder
of the initial lease term, which expires January 31, 2017. Ross has five options to renew the
lease, each for an additional five-year term beginning on February 1, 2017, with rental escalations
of approximately 5.0% at the beginning of each five-year renewal term.
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Bed Bath & Beyond occupies approximately 23,000 rentable square feet of the VC Victoria
Property subject to a net lease (the Bed Bath & Beyond Lease). Pursuant to the Bed Bath & Beyond
Lease, Bed Bath & Beyond is required to pay substantially all operating expenses, capital
expenditures and a proportionate amount of common area maintenance charges in addition to base
rent. The current aggregate annual base rent of $172,500 is fixed through the initial lease term,
which expires January 31, 2017. Bed Bath & Beyond has five options to renew the lease, each for an
additional five-year term beginning on February 1, 2017, with rental escalations descending in a
range from approximately 7.0% to approximately 5.0% at the beginning of each five-year renewal
term.
Petsmart occupies approximately 20,000 rentable square feet of the VC Victoria Property
subject to a net lease (the Petsmart Lease). Pursuant to the Petsmart Lease, Petsmart is required
to pay substantially all operating expenses, capital expenditures and a proportionate amount of
common area maintenance charges in addition to base rent. The current aggregate annual base rent of
$270,959 is fixed through the initial lease term, which expires May 31, 2016. Petsmart has six
options to renew the lease, each for an additional five-year term beginning on June 1, 2016, with
rental escalations descending in a range from approximately 4.0% to approximately 3.0% at the
beginning of each five-year renewal term.
We expect to purchase the VC Victoria Property with proceeds from our ongoing public offering
and an approximately $10.2 million loan to be secured by the VC Victoria Property (the VC Victoria
Property Loan). We expect the loan to be a ten-year fixed rate, interest only loan.
Prior Potential Property Investments
A prior supplement to this prospectus described a potential acquisition of an approximately
79,000 square foot single-tenant retail building on an approximately 7.1 acre site located in
Cincinnati, Ohio. The purchase agreement between Series B and the seller for the acquisition of the
property was terminated prior to assignment to the Company, and this property is no longer under
consideration for purchase.
9
COLE CREDIT PROPERTY TRUST II, INC.
SUPPLEMENT NO. 15 DATED JANUARY 24, 2007
TO THE PROSPECTUS DATED JUNE 27, 2005
This document supplements, and should be read in conjunction with, the prospectus of Cole
Credit Property Trust II, Inc. dated June 27, 2005, Supplement No. 13 dated December 20, 2006 and
Supplement No. 14 dated January 11, 2007. Supplement 13 supersedes and replaces all prior
supplements to the prospectus. Unless otherwise defined in this supplement, capitalized terms used
in this supplement shall have the same meanings as set forth in the prospectus.
The purpose of this supplement is to describe the following:
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the status of the offering of shares in Cole Credit Property Trust II, Inc.; |
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the acquisition of a multi-tenant, net leased commercial retail property,
containing approximately 87,000 rentable square feet in Victoria, Texas; |
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the acquisition of a single-tenant, net leased commercial retail property,
containing approximately 7,000 rentable square feet in Maryland Heights,
Missouri; |
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the acquisition of a single-tenant, net leased corporate headquarters and
distribution facility, containing approximately 1.5 million rentable square
feet in Katy, Texas; and |
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the acquisition of a single-tenant, net leased commercial retail property,
containing approximately 61,000 rentable square feet in Peoria, Illinois. |
Status of the Offering
We commenced our initial public offering of shares of our common stock on June 27, 2005. We
have accepted investors subscriptions received through January 23, 2007 and have issued an
aggregate of approximately 34.1 million shares of our common stock to stockholders, with gross
proceeds of approximately $340.5 million distributed to us. For additional information, see the
Plan of Distribution Subscription Process section of the prospectus beginning on page 133.
Real Property Investments
The section captioned Investment Objectives and Policies Real Property Investments
beginning on page 82 of the prospectus is supplemented with the following information:
Victoria Crossing Victoria, Texas
On January 12, 2007, Cole VC Victoria TX, LLC, a Delaware limited liability company (VC
Victoria), a wholly-owned subsidiary of Cole Operating Partnership II, LP (Cole OP II) acquired
a 100% fee simple interest in an approximately 87,000 square foot multi-tenant retail building (the
VC Victoria Property) from SGI-Victoria, Ltd., which is not affiliated with us, our subsidiaries
or affiliates. The VC Victoria Property was constructed in 2006 on an approximately 9.2 acre site
in Victoria, Texas. The area surrounding the VC Victoria Property is shared by commercial, retail
and residential developments.
The purchase price of the VC Victoria Property was approximately $12.6 million, exclusive of
closing costs. The acquisition was funded by net proceeds from our ongoing public offering and an
approximately $10.2 million loan (the VC Victoria Loan) from Wachovia Bank, N.A. (Wachovia),
which is secured by the VC Victoria Property. In connection with the acquisition, we paid an
affiliate of our advisor an acquisition fee of $255,000 and our advisor a finance coordination fee
of approximately $83,000.
The VC Victoria Property is approximately 92% leased to four tenants. Three tenants occupy
greater than 10.0% of the rentable square footage of the VC Victoria Property including Ross Dress
for Less, Inc. (Ross), Bed Bath & Beyond, Inc. (Bed Bath & Beyond), and Petsmart, Inc.
(Petsmart).
Ross occupies approximately 30,000 rentable square feet of the VC Victoria Property subject to
a net lease (the Ross Lease). Pursuant to the Ross Lease, Ross is required to pay substantially
all operating expenses, capital expenditures and a proportionate amount of common area maintenance
charges in addition to base rent. The current aggregate annual base rent of $279,230 is fixed
through the first five years of the initial lease term and increases to $286,777 for the remainder
of the initial lease term, which expires January 31, 2017. Ross has five options to renew the
lease, each for an additional five-year term, beginning on February 1, 2017, with rental
escalations of approximately 5.0% at the beginning of each five-year renewal term.
Ross operates off-price retail stores in 26 states and Guam that feature branded apparel,
accessories, footwear and home fashions for men and women. Ross has a Standard & Poors credit
rating of BBB and its stock is publicly traded on the Nasdaq National Market under the symbol
ROST.
Bed Bath & Beyond occupies approximately 23,000 rentable square feet of the VC Victoria
Property subject to a net lease (the Bed Bath & Beyond Lease). Pursuant to the Bed Bath & Beyond
Lease, Bed Bath & Beyond is required to pay substantially all operating expenses, capital
expenditures and a proportionate amount of common area maintenance charges in addition to base
rent. The current aggregate annual base rent of $172,500 is fixed through the initial lease term,
which expires January 31, 2017. Bed Bath & Beyond has five options to renew the lease, each for an
additional five-year term beginning on February 1, 2017, with rental escalations descending in a
range from approximately 7.0% to approximately 5.0% at the beginning of each five-year renewal
term.
Bed Bath & Beyond operates retail stores selling domestics merchandise and home furnishings
throughout 46 states and Puerto Rico. Bed Bath & Beyond has a Standard & Poors credit rating of
BBB and its stock is publicly traded on the Nasdaq National Market under the symbol BBBY.
Petsmart occupies approximately 20,000 rentable square feet of the VC Victoria Property
subject to a net lease (the Petsmart Lease). Pursuant to the Petsmart Lease, Petsmart is required
to pay substantially all operating expenses, capital expenditures and a proportionate amount of
common area maintenance charges in addition to base rent. The current aggregate annual base rent of
$270,959 is fixed through the initial lease term, which expires May 31, 2016. Petsmart has six
options to renew the lease, each for an additional five-year term beginning on June 1, 2016, with
rental escalations descending in a range from approximately 4.0% to approximately 3.0% at the
beginning of each five-year renewal term.
Petsmart provides specialty pet products and services including grooming, pet training and
veterinary services through its retail stores. Petsmart operates approximately 826 retail stores
throughout North America. Petsmart has a Standard & Poors credit rating of BB- and its stock is
publicly traded on the Nasdaq National Market under the symbol PETM.
Cole Realty has the sole and exclusive right to manage, operate, lease and supervise the
overall maintenance of the VC Victoria Property and will receive a property management fee of 2.0%
of the monthly gross revenue from the VC Victoria Property. We currently have no plans for any
renovations, improvements or development of the VC Victoria Property. We believe the VC Victoria
Property is adequately insured.
The VC Victoria Loan consists of an approximately $8.3 million fixed interest rate tranche
(the VC Victoria Fixed Rate Tranche) and an approximately $1.9 million variable interest rate
tranche (the VC Victoria Variable Rate Tranche). The VC Victoria Fixed Rate Tranche has a fixed
interest rate of 5.71% per annum with monthly interest-only payments. The outstanding principal and
any accrued and unpaid interest is due on February 11, 2017 (the VC Victoria Maturity Date). The
VC Victoria Variable Rate Tranche has a variable interest rate based on the one-month LIBOR rate
plus 200 basis points with monthly interest-only payments, and the outstanding principal and any
accrued and unpaid interest is due on April 12, 2007. The VC Victoria Loan is generally
non-recourse to VC Victoria and Cole OP II, but both are liable for customary non-recourse
carveouts.
The VC Victoria Loan may not be prepaid, in whole or in part, except under the following
circumstances: (i) full prepayment may be made on any of the three (3) monthly payment dates
occurring immediately prior to the VC Victoria Maturity Date and (ii) partial prepayments resulting
from Wachovias election to apply insurance or condemnation proceeds may be made to reduce the
outstanding principal balance of the VC Victoria Loan. Notwithstanding the prepayment limitations,
VC Victoria may sell the VC Victoria Property to a buyer that assumes the VC Victoria Loan. The
transfer shall be subject to Wachovias approval of the proposed buyer and the payment of
Wachovias costs and expenses associated with the sale of the VC Victoria Property.
In the event the VC Victoria Loan is not paid off on the VC Victoria Maturity Date, the VC
Victoria Loan includes hyperamortization provisions. The VC Victoria Maturity Date, pursuant to the
hyperamortization provisions, will be extended by twenty (20) years. During such period, Wachovia
will apply 100% of the rents collected to (i) all payments due to Wachovia under the VC Victoria
Loan, including any payments to escrows or reserve accounts, (ii) any operating expenses of the VC
Victoria Property pursuant to an approved annual budget, (iii) any extraordinary expenses and (iv)
any accrued interest under the VC Victoria Loan. Any remaining amount will be applied to the
reduction of the principal balance of the VC Victoria Loan, until paid in full. The interest rate
during the hyperamortization period shall be the greater of (x) the fixed interest rate of 5.71%
plus two percent (2.0%) or (y) the Treasury Constant Maturity Yield Index plus two percent (2.0%).
Notwithstanding the forgoing, failure to make any required payments under the VC Victoria Loan in a
timely manner will cause an event of default, which will result in a 4.0% default interest rate in
excess of the applicable interest rate, late charges equal to 5.0% of the amount of such overdue
payment, and all interest and principal becoming immediately due and payable in full.
2
Advance Auto Maryland Heights, Missouri
On January 12, 2007, Cole MP-AA Midwest Portfolio, LLC, a Delaware limited liability company
(AA Midwest Portfolio), a wholly-owned subsidiary of Cole OP II, acquired a 100% fee simple
interest in an approximately 7,000 square foot single-tenant retail building (the AA Maryland
Heights Property) from Solid Muldoon Partners, LLC, which is not affiliated with us, our
subsidiaries or affiliates. The AA Maryland Heights Property was constructed in 2005 on an
approximately 1.3 acre site in Maryland Heights, Missouri. The area surrounding the AA Maryland
Heights Property is shared by commercial, retail and residential developments.
The purchase price of the AA Maryland Heights Property was approximately $1.9 million,
exclusive of closing costs. The acquisition was funded by net proceeds from our ongoing public
offering. In connection with the acquisition, we paid an affiliate of our advisor an acquisition
fee of approximately $38,000.
The AA Maryland Heights Property is 100% leased to Advance Stores Company, Incorporated
(Advance Auto). The AA Maryland Heights Property is subject to a net lease, which commenced on
February 23, 2006, pursuant to which Advance Auto is required to pay substantially all operating
expenses and capital expenditures in addition to base rent. The current aggregate annual base rent
of $142,940 is fixed through the first ten years of the initial lease term and increases to
$150,088 in the eleventh year through the remainder of the initial lease term, which expires
February 28, 2021. Advance Auto has three options to renew the lease, each for an additional
five-year term beginning on March 1, 2021, with rental escalations of 5.0% at the beginning of each
five-year renewal term.
Advance Auto operates over 2,800 auto parts stores in 40 states, Puerto Rico and the Virgin
Islands. Advance Auto has a Standard and Poors credit rating of BB+ and its stock is publicly
traded on the New York Stock Exchange under the symbol AAP.
Cole Realty has the sole and exclusive right to manage, operate, lease and supervise the
overall maintenance of the AA Maryland Heights Property and will receive a property management fee
of 2.0% of the monthly gross revenue from the AA Maryland Heights Property. We currently have no
plans for any renovations, improvements or development of the AA Maryland Heights Property. We
believe the AA Maryland Heights Property is adequately insured.
Academy Headquarters Katy, Texas
On January 18, 2007, Cole AS Katy TX, LP, a Delaware limited partnership (AS Katy), in which
Cole OP II is the sole limited partner and a wholly-owned subsidiary of Cole OP II is the sole
general partner, acquired a 100% fee simple interest in an approximately 1.5 million square foot
single-tenant corporate headquarters and distribution facility (the AS Katy Property) from 44.385
Acres, Ltd. and Mason MSG, Ltd. (collectively Mason), which is not affiliated with us, our
subsidiaries or affiliates. The AS Katy Property was constructed in four phases between 1976 and
2006 on an approximately 93.8 acre site in Katy, Texas. The area surrounding the AS Katy Property
is shared by industrial and residential developments.
The purchase price of the AS Katy Property was $102.0 million, exclusive of closing costs. The
acquisition was funded by net proceeds from our ongoing public offering and an approximately $68.3
million loan (the AS Katy Loan) from Bear Stearns Commercial Mortgage, Inc. (Bear Stearns),
which is secured by the AS Katy Property. In connection with the acquisition, we paid an affiliate
of our advisor an acquisition fee of approximately $2.0 million and our advisor a finance
coordination fee of approximately $683,000.
The AS Katy Property is 100% leased to Academy Ltd. (Academy). The AS Katy Property is
subject to a net lease, which commenced on January 18, 2007, pursuant to which Academy is required
to pay all operating expenses and capital expenditures in addition to base rent. The initial annual
base rent under the lease is $7,038,000 which increase each year, including during renewal terms,
by 1.5% of the then current annual base rent. The initial term of the lease expires January 31,
2027. Academy has eight options to renew the lease, each for an additional five-year term beginning
on February 1, 2027.
Academy is a sporting goods retailer, operating over 80 stores across the southeastern United
States. In determining the creditworthiness of Academy we considered a variety of factors,
including historical financial information and financial performance, and regional market position.
Cole Realty has the sole and exclusive right to manage, operate, lease and supervise the
overall maintenance of the AS Katy Property and will receive a property management fee of 2.0% of
the monthly gross revenue from the AS Katy Property. We currently have no plans for any
renovations, improvements or development of the AS Katy Property. We believe the AS Katy Property
is adequately insured.
The AS Katy Loan has a fixed interest rate of approximately 5.61% (the Initial Interest
Rate) with monthly interest-only payments. The outstanding principal and any accrued and unpaid
interest is due on February 1, 2017 (the AS Katy Maturity Date). The AS Katy Loan is generally
non-recourse to AS Katy and Cole OP II, but both are liable for customary non-recourse carveouts.
3
The AS Katy Loan may not be prepaid, in whole or in part, except under the following
circumstances: (i) full prepayment may be made on any of the three (3) monthly payment dates
occurring immediately prior to the AS Katy Maturity Date and (ii) partial prepayments resulting
from Bear Stearns election to apply insurance or condemnation proceeds may be made to reduce the
outstanding principal balance of the AS Katy Loan. Notwithstanding the prepayment limitations, AS
Katy may sell the AS Katy Property to a buyer that assumes the AS Katy Loan. The transfer shall be
subject to Bear Stearns approval of the proposed buyer and the payment of Bear Stearns costs and
expenses associated with the sale of the AS Katy Property.
In the event the AS Katy Loan is not paid off on the AS Katy Maturity Date, the AS Katy Loan
includes hyperamortization provisions. The AS Katy Maturity Date, pursuant to the hyperamortization
provisions, will be extended by twenty (20) years. During such period, the Lender will apply 100%
of the rents collected to the following items in the order indicated: (i) any payments to escrows
or reserve accounts, (ii) accrued interest at the Initial Interest Rate on the original outstanding
principal balance of the AS Katy Loan, (iii) any operating expenses of the AS Katy Property
pursuant to an approved annual budget, (iv) any extraordinary expenses (v) the outstanding
principal balance of the AS Katy Loan, and (vi) capitalized interest under the AS Katy Loan at an
interest rate equal to the greater of (x) the Initial Interest Rate of 5.61% plus two percent
(2.0%) per annum or (y) the then current Treasury Constant Maturity Yield Index plus two percent
(2.0%) per annum, not to exceed the Initial Interest Rate plus 5.0% per annum. Notwithstanding the
forgoing, failure to make any required payments under the AS Katy Loan in a timely manner will
cause an event of default, which will result in a 4.0% default interest rate in excess of the
applicable interest rate, late charges equal to 5.0% of the amount of such overdue payment, and all
interest and principal becoming immediately due and payable in full.
Gordmans Peoria, Illinois
On January 18, 2007, Cole GO Peoria IL, LLC, a Delaware limited liability company (GO
Peoria), a wholly-owned subsidiary of Cole OP II, acquired a 100% fee simple interest in an
approximately 61,000 square foot single-tenant retail building (the GO Peoria Property) from
Plaza at Grand Prairie, LLC, which is not affiliated with us, our subsidiaries or affiliates. The
GO Peoria Property was constructed in 2006 on an approximately 4.4 acre site in Peoria, Illinois.
The area surrounding the GO Peoria Property is shared by commercial and residential developments.
The purchase price of the GO Peoria Property was $9.0 million, exclusive of closing costs. The
acquisition was funded by net proceeds from our ongoing public offering and an approximately $5.0
million loan (the GO Peoria Loan) from JP Morgan Chase Bank, NA (JP Morgan), which is secured
by the GO Peoria Property. In connection with the acquisition, we paid an affiliate of our advisor
an acquisition fee of $180,000 and our advisor a finance coordination fee of approximately $50,000.
The GO Peoria Property is 100% leased to Gordmans, Inc. (Gordmans). The GO Peoria Property
is subject to a net lease, pursuant to which Gordmans is required to pay substantially all
operating expenses and capital expenditures in addition to base rent. The annual base rent of
$684,000 is fixed through the first five years of the initial lease term and increases to $716,127
in the sixth year through the remainder of the initial lease term, which expires March 31, 2016.
Gordmans has four options to renew the lease, each for an additional five-year term beginning on
April 1, 2016, with rental escalations of 4.0% at the beginning of each five-year renewal term.
Gordmans is a privately-held retail store chain with 62 locations in 15 states. Gordmans sells
brand name apparel, footwear, accessories, and home fashions at discounted prices. In determining
the credit worthiness of Gordmans we considered a variety of factors, including historical
financial information and financial performance and regional market position.
Cole Realty has the sole and exclusive right to manage, operate, lease and supervise the
overall maintenance of the GO Peoria Property and will receive a property management fee of 2.0% of
the monthly gross revenue from the GO Peoria Property. We currently have no plans for any
renovations, improvements or development of the GO Peoria Property. We believe the GO Peoria
Property is adequately insured.
The GO Peoria Loan has a fixed interest rate of 5.71% per annum with monthly interest-only
payments. The outstanding principal and any accrued and unpaid interest is due on February 1, 2017
(the GO Peoria Maturity Date). The GO Peoria Loan is generally non-recourse to GO Peoria and Cole
OP II, but both are liable for customary non-recourse carveouts.
The GO Peoria Loan may not be prepaid, in whole or in part, except under the following
circumstances: (i) full prepayment may be made on any of the three (3) monthly payment dates
occurring immediately prior to the GO Peoria Maturity Date and (ii) partial prepayments resulting
from JP Morgans election to apply insurance or condemnation proceeds may be made to reduce the
outstanding principal balance of the GO Peoria Loan. Notwithstanding the prepayment limitations, GO
Peoria may sell the GO Peoria Property to a buyer that assumes the GO Peoria Loan. The transfer
shall be subject to JP Morgans approval of the proposed buyer and the payment of JP Morgans costs
and expenses associated with the sale of the GO Peoria Property.
In the event the GO Peoria Loan is not paid off on the GO Peoria Maturity Date, the GO Peoria
Loan includes default provisions.
4
Upon the occurrence of an event of default, interest on the GO Peoria Loan will accrue at an
annual default interest rate equal to the lesser of (a) the maximum rate permitted by applicable
law, or (b) 9.71%. In addition, GO Peoria will be required to pay a prepayment consideration in an
amount equal to the greater of 1.0% of the outstanding principal balance of the GO Peoria Loan, or
the present value of the remaining scheduled payments of principal and interest from the date such
payment is received through the GO Peoria Maturity Date at the time any payment is received by JP
Morgan.
5
COLE CREDIT PROPERTY TRUST II, INC.
SUPPLEMENT NO. 16 DATED MARCH 20, 2007
TO THE PROSPECTUS DATED JUNE 27, 2005
This document supplements, and should be read in conjunction with, the prospectus of Cole
Credit Property Trust II, Inc. dated June 27, 2005, Supplement No. 13 dated December 20, 2006,
Supplement No. 14 dated January 11, 2007 and Supplement No. 15 dated January 24, 2007. Supplement
13 supersedes and replaces all prior supplements to the prospectus. Unless otherwise defined in
this supplement, capitalized terms used in this supplement shall have the same meanings as set
forth in the prospectus.
The purpose of this supplement is to describe the following:
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(1) |
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the status of the offering of shares in Cole Credit Property Trust II, Inc.; |
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(2) |
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the acquisition of a property, containing two single-tenant, net leased commercial retail
properties, totaling approximately 65,000 rentable square feet in Dallas, Texas; |
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(3) |
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the acquisition of a multi-tenant, net leased commercial retail shopping center,
containing approximately 92,000 rentable square feet in Omaha, Nebraska; |
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(4) |
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the acquisition of a single-tenant, net leased commercial retail property, containing
approximately 19,000 rentable square feet in Ankeny, Iowa; |
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(5) |
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the acquisition of a single-tenant, net leased commercial property, containing
approximately 33,000 rentable square feet in Coventry, Rhode Island; |
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(6) |
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the acquisition of a single-tenant, net leased commercial retail property, containing
approximately 20,000 rentable square feet in Enterprise, Alabama; |
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(7) |
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the acquisition of a single-tenant, net leased commercial retail property, containing
approximately 24,000 rentable square feet in Orangeburg, South Carolina; |
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(8) |
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the acquisition of a single-tenant, net leased commercial retail property, containing
approximately 25,000 rentable square feet in Blaine, Minnesota; |
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(9) |
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the acquisition of a single-tenant, net leased commercial retail property, containing
approximately 15,000 rentable square feet in Cincinnati, Ohio; |
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(10) |
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the acquisition of a single-tenant, net leased commercial retail property, containing
approximately 14,000 rentable square feet in Sharonville, Ohio; |
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(11) |
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the acquisition of a single-tenant, net leased commercial retail property, containing approximately
14,000 rentable square feet in Madeira, Ohio; |
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(12) |
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the acquisition of a single-tenant, net leased commercial property, containing approximately
142,000 rentable square feet in Beaumont, Texas; |
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(13) |
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the potential acquisition of a single-tenant, net leased commercial retail property, containing
approximately 75,000 rentable square feet in Sherwood, Arkansas; |
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(14) |
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the potential acquisition of a single-tenant, net leased commercial retail property, containing
approximately 14,000 rentable square feet in Shreveport, Louisiana; |
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(15) |
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the potential acquisition of a single-tenant, net leased commercial retail property, containing
approximately 15,000 rentable square feet in Fredericksburg, Virginia; |
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(16) |
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the potential acquisition of a multi-tenant, net leased commercial retail property, containing
approximately 85,000 rentable square feet in Jenison, Michigan; |
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(17) |
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the potential acquisition of a single-tenant, net leased commercial retail property, containing
approximately 38,000 rentable square feet in St. Croix, US Virgin Islands; |
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(18) |
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the potential acquisition of a single-tenant, net leased commercial office and warehouse property,
containing approximately 52,000 rentable square feet in St. John, Missouri; |
1
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(19) |
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The potential acquisition of a multi-tenant, net leased commercial retail property, containing
approximately 143,000 rentable square feet in Collierville, Tennessee; |
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(20) |
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the potential acquisition of a single-tenant, net leased commercial retail property, containing
approximately 23,000 rentable square feet in Greenfield, Minnesota; |
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(21) |
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the potential acquisition of a single-tenant, net leased commercial retail property, containing
approximately 135,000 rentable square feet in Anderson, South Carolina; |
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(22) |
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the potential acquisition of a single-tenant, net leased commercial retail property, containing
approximately 19,000 rentable square feet in Marinette, Wisconsin; |
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(23) |
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the potential acquisition of a single-tenant, net leased commercial retail property, containing
approximately 14,000 rentable square feet in Gainesville, Florida; |
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(24) |
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the potential acquisition of a single-tenant, net leased commercial retail property, containing
approximately 23,000 rentable square feet in Paw Paw, Michigan; |
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(25) |
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a Mangements Discussion and Analysis of Financial Condition and Results of Operations section
similar to that which was filed in the Annual Report on Form 10-K, dated March 20, 2007; |
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(26) |
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corrected disclosure regarding the increase in the number of shares authorized under our charter;
and |
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(27) |
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updated financial information regarding Cole Credit Property Trust II, Inc. and the acquired
properties. |
Status of the Offering
We commenced our initial public offering of shares of our common stock on June 27, 2005. We
have accepted investors subscriptions received through March 13, 2007 and have issued an aggregate
of approximately 40.6 million shares of our common stock to stockholders, with gross proceeds of
approximately $405.9 million distributed to us. For additional information, see the Plan of
Distribution Subscription Process section of the prospectus beginning on page 133.
Real Property Investments
The section captioned Investment Objectives and Policies Real Property Investments
beginning on page 82 of the prospectus is supplemented with the following information:
Sack n Save and OReilly Auto Dallas, Texas
On February 6, 2007, Cole MT Dallas TX, LLC, a Delaware limited liability company (MT
Dallas), a wholly-owned subsidiary of Cole Operating Partnership II, LP (Cole OP II), acquired a
100% fee simple interest in two single-tenant retail buildings, totaling
approximately 65,000 square feet (the MT Dallas Property) from Eqyinvest Owner I, Ltd.,
LLP., which is not affiliated with us, our subsidiaries or affiliates. The first single-tenant
retail building of the MT Dallas Property was constructed in 1970 and the second in 2002 on an
approximately 6.4 acre site in Dallas, Texas. The area surrounding the MT Dallas Property is shared
by commercial, retail and residential developments.
The purchase price of the MT Dallas Property was approximately $5.1 million, exclusive of
closing costs. The acquisition was funded by net proceeds from our ongoing public offering and an
approximately $3.3 million loan (the MT Dallas Loan) from Bear Stearns Commercial Mortgage, Inc.
(Bear Stearns) which is secured by the MT Dallas Property. In connection with the acquisition, we
paid an affiliate of our advisor an acquisition fee of approximately $101,000 and our advisor a
finance coordination fee of approximately $33,000.
One building on the MT Dallas Property is 100% leased to Minyard Food Stores, Inc., d/b/a Sack
n Save (Minyard) and the other building is 100% leased to Hi-Lo Auto Supply, LP d/b/a OReilly
Auto (OReilly).
The lease with Minyard (the Minyard Lease) is a net lease, which commenced on June 1, 1999,
pursuant to which Minyard is required to pay substantially all operating expenses and capital
expenditures in addition to base rent. The current aggregate annual base rent of $375,648 increases
to $396,191 on May 1, 2010 through the initial lease term, which expires April 30, 2020. Minyard
has four options to renew the lease, each for an additional five-year term beginning on May 1,
2020, with rental escalations of approximately 7.0% at the beginning of each five-year renewal
term.
2
Minyard is a privately owned company that operates retail supermarket stores, pharmacies and
fuel stations under the trade names of Minyard, Sack n Save and Carnival Food Stores in the
Dallas/Fort Worth metropolitan area. In determining the creditworthiness of Minyard we considered a
variety of factors, including historical financial information and financial performance, and
regional market position.
The lease with OReilly (the OReilly Lease) is a ground lease, which commenced on July 1,
2001, pursuant to which OReilly is required to pay substantially all operating expenses and
capital expenditures in addition to base rent. The current aggregate annual base rent of $25,920
has a rental escalation of approximately 8.0% beginning on July 1, 2011 and July 1, 2016,
respectively. The initial lease term expires on June 30, 2021. OReilly has three options to renew
the lease, each for an additional five-year term beginning on July 1, 2021, with rental escalations
of approximately 8.0% at the beginning of each five-year renewal term.
Cole Realty Advisors, Inc. (Cole Realty) has the sole and exclusive right to manage,
operate, lease and supervise the overall maintenance of the MT Dallas Property and will receive a
property management fee of 2.0% of the monthly gross revenue from the MT Dallas Property. We
currently have no plans for any renovations, improvements or development of the MT Dallas Property.
We believe the MT Dallas Property is adequately insured.
The MT Dallas Loan has a fixed interest rate of approximately 5.54% (the MT Dallas Initial
Interest Rate) with monthly interest-only payments. The outstanding principal and any accrued and
unpaid interest is due on March 1, 2017 (the MT Dallas Maturity Date). The MT Dallas Loan is
generally non-recourse to MT Dallas and Cole OP II, but both are liable for customary non-recourse
carveouts.
The MT Dallas Loan may not be prepaid, in whole or in part, except under the following
circumstances: (i) full prepayment may be made on any of the three (3) monthly payment dates
occurring immediately prior to the MT Dallas Maturity Date and (ii) partial prepayments resulting
from Bear Stearns election to apply insurance or condemnation proceeds made to reduce the
outstanding principal balance of the MT Dallas Loan. Notwithstanding the prepayment limitations, MT
Dallas may sell the MT Dallas Property to a buyer that assumes the MT Dallas Loan. The transfer
shall be subject to Bear Stearns approval of the proposed buyer and the payment of Bear Stearns
costs and expenses associated with the sale of the MT Dallas Property.
In the event the MT Dallas Loan is not paid off on the MT Dallas Maturity Date, the MT Dallas
Loan includes hyperamortization provisions. The MT Dallas Maturity Date, pursuant to the
hyperamortization provisions, will be extended by twenty (20) years. During such period, Bear
Stearns will apply 100% of the rents collected to the following items in the order indicated: (i)
any payments to escrows or reserve accounts, (ii) accrued interest at the MT Dallas Initial
Interest Rate on the original outstanding principal balance of the MT Dallas Loan, (iii) any
operating expenses of the MT Dallas Property pursuant to an approved annual budget, (iv) any
extraordinary expenses (v) the outstanding principal balance of the MT Dallas Loan, and (vi)
capitalized interest under the MT Dallas Loan at an interest rate equal to the greater of (x) the
MT Dallas Initial Interest Rate of 5.54% plus two percent (2.0%) per annum or (y) the then current
Treasury Constant Maturity Yield Index plus two percent (2.0%) per annum, not to exceed the MT
Dallas Initial Interest Rate plus 5.0% per annum. Notwithstanding the forgoing, failure to make any
required payments under the MT Dallas Loan in a timely manner will cause an event of default, which
will result in a 4.0% default interest rate in excess of the applicable interest rate, late charges
equal to 5.0% of the amount of such overdue payment, and all interest and principal becoming
immediately due and payable in full.
One Pacific Place Omaha, Nebraska
On February 6, 2007, Cole MT Omaha NE, LLC, a Delaware limited liability company (MT Omaha),
a wholly-owned subsidiary of Cole OP II acquired a 100% fee simple interest in an approximately
92,000 square foot multi-tenant retail shopping center (the MT Omaha Property) from L&B One
Pacific Place, Inc., which is not affiliated with us, our subsidiaries or affiliates. The MT Omaha
Property was constructed in 1988 and most recently renovated in 2005 on an approximately 10.5 acre
site in Omaha, Nebraska. The area surrounding the MT Omaha Property is shared by commercial and
residential developments.
The purchase price of the MT Omaha Property was $36.0 million, exclusive of closing costs. The
acquisition was funded by net proceeds from our ongoing public
offering and an approximately $23.4
million loan (the MT Omaha Loan) from Bear Stearns, which is secured by the MT Omaha Property. In
connection with the acquisition, we paid an affiliate of our advisor an acquisition fee of $720,000
and our advisor a finance coordination fee of $234,000.
The MT Omaha Property is approximately 95% leased to 24 tenants. Major tenants include,
Abercrombie & Fitch, Inc. d/b/a Abercrombie & Fitch, Banana Republic, Inc. d/b/a Banana Republic,
R.A Popp Enterprises, Inc. d/b/a Wheatfields and Sur La Table, Inc. d/b/a Sur La Table, however, no
single tenant accounts for more than 10.0% of the rentable square feet of the MT Omaha Property.
The MT Omaha Property is subject to 24 net leases (the MT Omaha Leases), pursuant to which each
tenant is required to pay substantially all operating expenses, and a proportionate amount of
common area maintenance charges in addition to base rent. The MT Omaha Leases have total annual
aggregate base rent of approximately $2.6 million and rental increases and renewal options
specific
to each tenant with lease terms ranging in length from approximately one year to approximately 25.0
years.
3
Cole Realty has the sole and exclusive right to manage, operate, lease and supervise the
overall maintenance of the MT Omaha Property and will receive a property management fee of 2.0% of
the monthly gross revenue from the MT Omaha Property. We currently have no plans for any
renovations, improvements or development of the MT Omaha Property. We believe the MT Omaha Property
is adequately insured.
The MT Omaha Loan has a fixed interest rate of approximately 5.53% (the MT Omaha Initial
Interest Rate) with monthly interest-only payments. The outstanding principal and any accrued and
unpaid interest is due on March 1, 2017 (the MT Omaha Maturity Date). The MT Omaha Loan is
generally non-recourse to MT Omaha and Cole OP II, but both are liable for customary non-recourse
carveouts.
The MT Omaha Loan may not be prepaid, in whole or in part, except under the following
circumstances: (i) full prepayment may be made on any of the three (3) monthly payment dates
occurring immediately prior to the MT Omaha Maturity Date and (ii) partial prepayments resulting
from Bear Stearns election to apply insurance or condemnation proceeds to reduce the outstanding
principal balance of the MT Omaha Loan. Notwithstanding the prepayment limitations, MT Omaha may
sell the MT Omaha Property to a buyer that assumes the MT Omaha Loan. The transfer shall be subject
to Bear Stearns approval of the proposed buyer and the payment of Bear Stearns costs and expenses
associated with the sale of the MT Omaha Property.
In the event the MT Omaha Loan is not paid off on the MT Omaha Maturity Date, the MT Omaha
Loan includes hyperamortization provisions. The MT Omaha Maturity Date, pursuant to the
hyperamortization provisions, will be extended by twenty (20) years. During such period, Bear
Stearns will apply 100% of the rents collected to the following items in the order indicated: (i)
any payments to escrows or reserve accounts, (ii) accrued interest at the MT Omaha Initial Interest
Rate on the original outstanding principal balance of the MT Omaha Loan, (iii) any operating
expenses of the MT Omaha Property pursuant to an approved annual budget, (iv) any extraordinary
expenses (v) the outstanding principal balance of the MT Omaha Loan, and (vi) capitalized interest
under the MT Omaha Loan at an interest rate equal to the greater of (x) the MT Omaha Initial
Interest Rate of 5.53% plus two percent (2.0%) per annum or (y) the then current Treasury Constant
Maturity Yield Index plus two percent (2.0%) per annum, not to exceed the MT Omaha Initial Interest
Rate plus 5.0% per annum. Notwithstanding the forgoing, failure to make any required payments under
the MT Omaha Loan in a timely manner will cause an event of default, which will result in a 4.0%
default interest rate in excess of the applicable interest rate, late charges equal to 5.0% of the
amount of such overdue payment, and all interest and principal becoming immediately due and payable
in full.
Tractor Supply Ankeny, Iowa
On February 9, 2007, Cole MP-TS Midwest Portfolio, LLC, a Delaware limited liability company
(MP Midwest), a wholly-owned subsidiary of Cole OP II, acquired a 100% fee simple interest in an
approximately 19,000 square foot single-tenant retail building (the TS Ankeny Property) from AMT
Iowa, LLC, which is not affiliated with us, our subsidiaries or affiliates. The TS Ankeny Property
was constructed in 2006 on an approximately 2.7 acre site in Ankeny, Iowa. The area surrounding the
TS Ankeny Property is shared by commercial, retail and residential developments.
The purchase price of the TS Ankeny Property was $3.0 million, exclusive of closing costs. The
acquisition was funded by net proceeds from our ongoing public offering. In connection with the
acquisition, we paid an affiliate of our advisor an acquisition fee of
approximately $60,000.
The TS Ankeny Property is 100% leased to Tractor Supply Company (Tractor Supply). The TS
Ankeny Property is subject to a net lease, which commenced on August 24, 2006, pursuant to which
Tractor Supply is required to pay substantially all operating expenses and capital expenditures in
addition to base rent. The current aggregate annual base rent of $213,252 is fixed through the
first five years of the initial lease term with rental escalations of approximately 10.0% every
five years thereafter through the remainder of the initial lease term, which expires August 23,
2021. Tractor Supply has four options to renew the lease, each for an additional five-year term
beginning on August 24, 2021, with rental escalations of approximately 10.0% at the beginning of
each five-year renewal term.
Tractor Supply currently operates more than 550 retail stores in 34 states, has more than
7,800 employees and is headquartered in Brentwood, Tennessee. Tractor Supplys common stock is
traded on The Nasdaq Global Select Market under the symbol TSCO.
Cole Realty has the sole and exclusive right to manage, operate, lease and supervise the
overall maintenance of the TS Ankeny Property and will receive a property management fee of 2.0% of
the monthly gross revenue from the TS Ankeny Property. We currently have no plans for any
renovations, improvements or development of the TS Ankeny Property. We believe the TS Ankeny
Property is adequately insured.
4
ABX Air Coventry, Rhode Island
On February 16, 2007, Cole AB Coventry RI, LLC, a Delaware limited liability company (AB
Coventry), a wholly-owned subsidiary of Cole OP II, acquired a 100% fee simple interest in an
approximately 33,000 square foot single-tenant distribution facility (the AB Coventry Property)
from Merstone IV Limited Partnership, which is not affiliated with us, our subsidiaries or
affiliates. The AB Coventry Property was constructed in 1998 on an approximately 7.4 acre site in
Coventry, Rhode Island. The area surrounding the AB Coventry Property is shared by retail and
residential developments.
The purchase price of the AB Coventry Property was approximately $4.1 million, exclusive of
closing costs. The acquisition was funded by net proceeds from our ongoing public offering and an
approximately $2.5 million loan (the AB Coventry Loan) from Bear Stearns, which is secured by the
AB Coventry Property and the WG Madeira Property, as defined in this
supplement. In connection with the acquisition, we paid an
affiliate of our advisor an acquisition fee of approximately $82,000 and our advisor a finance
coordination fee of approximately $25,000.
The AB Coventry Property is 100% leased to ABX Air, Inc. (ABX), while Airborne Freight
Corporation (Airborne) guarantees the lease. The AB Coventry Property is subject to a net lease,
pursuant to which ABX is required to pay substantially all operating expenses and capital
expenditures in addition to base rent. The current aggregate annual base rent of $316,990 is fixed
through the first year of the initial lease term and increases 3% each year through the remainder
of the lease term, which expires January 31, 2014.
ABX is an independent airline that provides air cargo transportation primarily for DHL Express
USA, Inc. ABX was an affiliate of Airborne, prior to a merger agreement between Airborne and DHL
Holdings, Inc., (DHL) a wholly-owned subsidiary of DHL Worldwide Express. In connection with the
merger agreement ABX became an independent publicly traded company and Airborne was merged into
DHL. Airborne remains the guarantor under the lease agreement for the AB Coventry Property.
Airborne has an A credit rating from Standard & Poors.
Cole Realty has the sole and exclusive right to manage, operate, lease and supervise the
overall maintenance of the AB Coventry Property and will receive a property management fee of 2.0%
of the monthly gross revenue from the AB Coventry Property. We currently have no plans for any
renovations, improvements or development of the AB Coventry Property. We believe the AB Coventry
Property is adequately insured.
The AB Coventry Loan has a fixed interest rate of approximately 5.70% (the AB Coventry
Initial Interest Rate) with monthly interest-only payments. The outstanding principal and any
accrued and unpaid interest is due on May 1, 2012 (the AB Coventry Maturity Date). The AB
Coventry Loan is generally non-recourse to AB Coventry and Cole OP II, but both are liable for
customary non-recourse carveouts.
The AB Coventry Loan may not be prepaid, in whole or in part, except under the following
circumstances: (i) full prepayment may be made on any of the three (3) monthly payment dates
occurring immediately prior to the AB Coventry Maturity Date and (ii) partial prepayments resulting
from Bear Stearns election to apply insurance or condemnation proceeds may be made to reduce the
outstanding principal balance of the AB Coventry Loan.
In the event the AB Coventry Loan is not paid off on the AB Coventry Maturity Date, the AB
Coventry Loan includes hyperamortization provisions. The AB Coventry Maturity Date, pursuant to the
hyperamortization provisions, will be extended by twenty
(20) years. During such period, Bear Stearns will apply 100% of the rents collected to the following items in the order indicated: (i) any
payments to escrows or reserve accounts, (ii) accrued interest at the AB Coventry Initial Interest
Rate on the original outstanding principal balance of the AB Coventry Loan, (iii) any operating
expenses of the AB Coventry Property pursuant to an approved annual budget, (iv) any extraordinary
expenses (v) the outstanding principal balance of the AB Coventry Loan, and (vi) capitalized
interest under the AB Coventry Loan at an interest rate equal to the greater of (x) the AB Coventry
Initial Interest Rate of 5.70% plus two percent (2.0%) per annum or (y) the then current Treasury
Constant Maturity Yield Index plus two percent (2.0%) per annum, not to exceed the AB Coventry
Initial Interest Rate plus 5.0% per annum. Notwithstanding the forgoing, failure to make any
required payments under the AB Coventry Loan in a timely manner will cause an event of default,
which will result in a 4.0% default interest rate in excess of the applicable interest rate, late
charges equal to 5.0% of the amount of such overdue payment, and all interest and principal
becoming immediately due and payable in full.
Office Depot Enterprise, Alabama
On February 27, 2007, Cole OD Enterprise AL, LLC, a Delaware limited liability company (OD
Enterprise), a wholly-owned subsidiary of Cole OP II, acquired a 100% fee simple interest in an
approximately 20,000 square foot single-tenant retail building (the OD Enterprise Property) from
NOM Enterprise, LLC, which is not affiliated with us, our subsidiaries or affiliates. The OD
Enterprise Property was constructed in 2006 on an approximately 4.2 acre site in Enterprise,
Alabama. The area surrounding the OD
Enterprise Property is shared by commercial and residential
developments.
5
The purchase price of the OD Enterprise Property was approximately $2.8 million, exclusive of
closing costs. The acquisition was funded by net proceeds from our ongoing public offering and an
approximately $1.9 million loan (the OD Enterprise Loan) from Bear Stearns, which is secured by
the OD Enterprise Property. In connection with the acquisition, we paid an affiliate of our advisor
an acquisition fee of approximately $56,000 and our advisor a finance coordination fee of
approximately $19,000.
The OD Enterprise Property is 100% leased to Office Depot, Inc. (Office Depot). The OD
Enterprise Property is subject to a net lease, which commenced on October 29, 2006, pursuant to
which Office Depot is required to pay substantially all operating expenses and capital expenditures
in addition to base rent. The current aggregate annual base rent of $215,129 is fixed through the
first ten years of the initial lease term and increases to $225,135 on November 1, 2016, through
the remainder of the initial lease term, which expires October 31, 2021. Office Depot has three
options to renew the lease, each for an additional five-year term beginning on November 1, 2021,
with rental escalations of approximately 10.0% at the beginning of each five-year renewal term.
Office Depot is a global supplier of office products and services. Office Depot has a Standard
& Poors credit rating of BBB- and its stock is publicly traded on the New York Stock Exchange
under the symbol ODP.
Cole Realty has the sole and exclusive right to manage, operate, lease and supervise the
overall maintenance of the OD Enterprise Property and will receive a property management fee of
2.0% of the monthly gross revenue from the OD Enterprise Property. We currently have no plans for
any renovations, improvements or development of the OD Enterprise Property. We believe the OD
Enterprise Property is adequately insured.
The OD Enterprise Loan has a fixed interest rate of approximately 6.29% (the OD Enterprise
Initial Interest Rate) with monthly interest-only payments. The outstanding principal and any
accrued and unpaid interest is due on March 1, 2017 (the OD Enterprise Maturity Date). The OD
Enterprise Loan is generally non-recourse to OD Enterprise and Cole OP II, but both are liable for
customary non-recourse carveouts.
The OD Enterprise Loan may not be prepaid, in whole or in part, except under the following
circumstances: (i) full prepayment may be made on any of the three (3) monthly payment dates
occurring immediately prior to the OD Enterprise Maturity Date and (ii) partial prepayments
resulting from Bear Stearns election to apply insurance or condemnation proceeds to reduce the
outstanding principal balance of the OD Enterprise Loan. Notwithstanding the prepayment
limitations, OD Enterprise may sell the OD Enterprise Property to a buyer that assumes the OD
Enterprise Loan. The transfer shall be subject to Bear Stearns approval of the proposed buyer and
the payment of Bear Stearns costs and expenses associated with the sale of the OD Enterprise
Property.
In the event the OD Enterprise Loan is not paid off on the OD Enterprise Maturity Date, the OD
Enterprise Loan includes hyperamortization provisions. The OD Enterprise Maturity Date, pursuant to
the hyperamortization provisions, will be extended by twenty (20) years. During such period, Bear
Stearns will apply 100% of the rents collected to the following items in the order indicated: (i)
any payments to escrows or reserve accounts, (ii) accrued interest at the OD Enterprise Initial
Interest Rate on the original outstanding principal balance of the OD Enterprise Loan, (iii) any
operating expenses of the OD Enterprise Property pursuant to an approved annual budget, (iv) any
extraordinary expenses (v) the outstanding principal balance of the OD Enterprise Loan, and (vi)
capitalized interest under the OD Enterprise Loan at an interest rate equal to the greater of (x)
the OD Enterprise Initial Interest Rate of 6.29% plus two percent (2.0%) per annum or (y) the then
current Treasury Constant Maturity Yield Index plus two percent
(2.0%) per annum, not to exceed the OD Enterprise Initial Interest Rate plus 5.0% per annum.
Notwithstanding the forgoing, failure to make any required payments under the OD Enterprise Loan in
a timely manner will cause an event of default, which will result in a 4.0% default interest rate
in excess of the applicable interest rate, late charges equal to 5.0% of the amount of such overdue
payment, and all interest and principal becoming immediately due and payable in full.
Office Max Orangeburg, South Carolina
On February 28, 2007, Cole OM Orangeburg SC, LLC, a Delaware limited liability company (OM
Orangeburg), a wholly-owned subsidiary of Cole OP II, acquired a 100% fee simple interest in an
approximately 24,000 square foot single-tenant retail building (the OM Orangeburg Property) from
Vivian A. Wong and Thomas K. Wong, individuals, who are not affiliated with us, our subsidiaries or
affiliates. The OM Orangeburg Property was constructed in 1999 on an approximately 2.2 acre site in
Orangeburg, South Carolina. The area surrounding the OM Orangeburg Property is shared by commercial
and residential developments.
The purchase price of the OM Orangeburg Property was approximately $3.1 million, exclusive of
closing costs. The acquisition was funded by net proceeds from our ongoing public offering and an
approximately $1.9 million loan (the OM Orangeburg Loan) from Bear Stearns, which is secured by
the OM Orangeburg Property and the WG Sharonville Property, as
defined in this supplement. In connection with the acquisition, we paid an affiliate of our advisor
an acquisition fee of approximately $63,000 and our advisor a finance coordination fee of
approximately $19,000.
6
The OM Orangeburg Property is 100% leased to OfficeMax, Inc. (OfficeMax). The OM Orangeburg
Property is subject to a net
lease, which commenced on June 3, 1999, pursuant to which OfficeMax is
required to pay substantially all operating expenses and capital expenditures in addition to base
rent. The current aggregate annual base rent of $252,625 is fixed through the initial lease term,
which expires June 30, 2014. OfficeMax has four options to renew the lease, each for an additional
five-year term beginning on July 1, 2014, with rental escalations of approximately 4% at the
beginning of each five-year renewal term.
OfficeMax currently operates more than 1,000 retail stores located in the United States,
Canada, and Mexico, employs more than 40,000 people and is headquartered in Naperville, Illinois.
OfficeMax has an S&P credit rating of B+ and its common stock is traded on The New York Stock
Exchange under the symbol OMX.
Cole Realty has the sole and exclusive right to manage, operate, lease and supervise the
overall maintenance of the OM Orangeburg Property and will receive a property management fee of
2.0% of the monthly gross revenue from the OM Orangeburg Property. We currently have no plans for
any renovations, improvements or development of the OM Orangeburg Property. We believe the OM
Orangeburg Property is adequately insured.
The OM Orangeburg Loan has a fixed interest rate of approximately 5.61% (the OM Orangeburg
Initial Interest Rate) with monthly interest-only payments. The outstanding principal and any
accrued and unpaid interest is due on April 1, 2012 (the OM Orangeburg Maturity Date). The OM
Orangeburg Loan is generally non-recourse to OM Orangeburg and Cole OP II, but both are liable for
customary non-recourse carveouts.
The OM Orangeburg Loan may not be prepaid, in whole or in part, except under the following
circumstances: (i) full prepayment may be made on any of the three (3) monthly payment dates
occurring immediately prior to the OM Orangeburg Maturity Date and (ii) partial prepayments
resulting from Bear Stearns election to apply insurance or condemnation proceeds to reduce the
outstanding principal balance of the OM Orangeburg Loan.
In the event the OM Orangeburg Loan is not paid off on the OM Orangeburg Maturity Date, the OM
Orangeburg Loan includes hyperamortization provisions. The OM Orangeburg Maturity Date, pursuant to
the hyperamortization provisions, will be extended by twenty (20) years. During such period, Bear
Stearns will apply 100% of the rents collected to the following items in the order indicated: (i)
any payments to escrows or reserve accounts, (ii) accrued interest at the OM Orangeburg Initial
Interest Rate on the original outstanding principal balance of the OM Orangeburg, (iii) any
operating expenses of the OM Orangeburg Property pursuant to an approved annual budget, (iv) any
extraordinary expenses (v) the outstanding principal balance of the OM Orangeburg Loan, and (vi)
capitalized interest under the OM Orangeburg Loan at an interest rate equal to the greater of (x)
the OM Orangeburg Initial Interest Rate of 5.61% plus two percent (2.0%) per annum or (y) the then
current Treasury Constant Maturity Yield Index plus two percent (2.0%) per annum, not to exceed the
OM Orangeburg Initial Interest Rate plus 5.0% per annum. Notwithstanding the forgoing, failure to
make any required payments under the OM Orangeburg Loan in a timely manner will cause an event of
default, which will result in a 4.0% default interest rate in excess of the applicable interest
rate, late charges equal to 5.0% of the amount of such overdue payment, and all interest and
principal becoming immediately due and payable in full.
Northern Tool and Equipment Blaine, Minnesota
On February 28, 2007, Cole NT Blaine MN, LLC, a Delaware limited liability company (NT
Blaine), a wholly-owned
subsidiary of Cole OP II, acquired a 100% fee simple interest in an approximately 25,000
square foot single-tenant retail building (the NT Blaine Property) from KTJ Limited Partnership
One Hundred Thirty-Five, which is not affiliated with us, our subsidiaries or affiliates. The NT
Blaine Property was constructed in 2006 on an approximately 3.9 acre site in Blaine, Minnesota. The
area surrounding the NT Blaine Property is shared by commercial, industrial, recreational and
residential developments.
The purchase price of the NT Blaine Property was approximately $4.9 million, exclusive of
closing costs. The acquisition was funded by net proceeds from our ongoing public offering and an
approximately $3.2 million loan (the NT Blaine Loan) from Bear Stearns, which is secured by the
NT Blaine Property and the WG Cincinnati Property, as defined in this supplement. In connection
with the acquisition, we paid an affiliate of our advisor an acquisition fee of $98,000 and our
advisor a finance coordination fee of approximately $32,000.
The NT Blaine Property is 100% leased to Northern Tool and Equipment, Inc. (Northern Tool).
The NT Blaine Property is subject to a net lease, pursuant to which Northern Tool is required to
pay substantially all operating expenses and capital expenditures in addition to base rent. The
annual base rent of $344,598 is fixed through the first ten years of the initial lease term and
increases to $380,536 for the remainder of the initial lease term, which expires November 30, 2021.
The tenant has three options to renew the lease, with each option for an additional five-year
term, beginning on December 1, 2021.
Northern Tool currently operates 61 retail stores in 11 states, employs more than 2,000 people
and is headquartered in Burnsville, Minnesota. In determining the creditworthiness of Northern
Tool we considered a variety of factors, including historical financial
information and financial
performance, and regional market position.
7
Cole Realty has the sole and exclusive right to manage, operate, lease and supervise the
overall maintenance of the NT Blaine Property and will receive a property management fee of 2.0% of
the monthly gross revenue from the NT Blaine Property. We currently have no plans for any
renovations, improvements or development of the NT Blaine Property. We believe the NT Blaine
Property is adequately insured.
The NT Blaine Loan has a fixed interest rate of approximately 6.00% (the NT Blaine Initial
Interest Rate) with monthly interest-only payments. The outstanding principal and any accrued and
unpaid interest is due on September 1, 2016 (the NT Blaine Maturity Date). The NT Blaine Loan is
generally non-recourse to NT Blaine and Cole OP II, but both are liable for customary non-recourse
carveouts.
The NT Blaine Loan may not be prepaid, in whole or in part, except under the following
circumstances: (i) full prepayment may be made on any of the three (3) monthly payment dates
occurring immediately prior to the NT Blaine Maturity Date and (ii) partial prepayments resulting
from Bear Stearns election to apply insurance or condemnation proceeds to reduce the outstanding
principal balance of the NT Blaine Loan.
In the event the NT Blaine Loan is not paid off on the NT Blaine Maturity Date, the NT Blaine
Loan includes hyperamortization provisions. The NT Blaine Maturity Date, pursuant to the
hyperamortization provisions, will be extended by twenty (20) years. During such period, Bear
Stearns will apply 100% of the rents collected to the following items in the order indicated: (i)
any payments to escrows or reserve accounts, (ii) accrued interest at the NT Blaine Initial
Interest Rate on the original outstanding principal balance of the NT Blaine Loan, (iii) any
operating expenses of the NT Blaine Property pursuant to an approved annual budget, (iv) any
extraordinary expenses (v) the outstanding principal balance of the NT Blaine Loan, and (vi)
capitalized interest under the NT Blaine Loan at an interest rate equal to the greater of (x) the
NT Blaine Initial Interest Rate of 6.00% plus two percent (2.0%) per annum or (y) the then current
Treasury Constant Maturity Yield Index plus two percent (2.0%) per annum, not to exceed the NT
Blaine Initial Interest Rate plus 5.0% per annum. Notwithstanding the forgoing, failure to make any
required payments under the NT Blaine Loan in a timely manner will cause an event of default, which
will result in a 4.0% default interest rate in excess of the applicable interest rate, late charges
equal to 5.0% of the amount of such overdue payment, and all interest and principal becoming
immediately due and payable in full.
Walgreens Cincinnati, Ohio
On March 6, 2007, Cole WG Cincinnati OH, LLC, a Delaware limited liability company (WG
Cincinnati), a wholly-owned subsidiary of Cole OP II, acquired a 100% fee simple interest in an
approximately 15,000 square foot single-tenant retail building on an approximately 2.17 acre site
located in Cincinnati, Ohio (the WG Cincinnati Property), from Anchor Developments IV, Ltd.,
which is not affiliated with us, our subsidiaries or affiliates. The WG Cincinnati Property was
constructed in 2000. The area surrounding the WG Cincinnati Property is shared by single-family
housing and small retail and large industrial developments.
The purchase price of the WG Cincinnati Property was approximately $5.1 million, exclusive of
closing costs. The acquisition was funded by net proceeds from our ongoing public offering and an
approximately $3.3 million loan (the WG Cincinnati Loan) from Bear Stearns, which is
secured by the WG Cincinnati Property and the NT Blaine Property.
In connection with the acquisition, we paid an affiliate of our advisor an acquisition fee of
approximately $103,000 and our advisor a finance coordination fee of approximately $33,000.
The WG Cincinnati Property is 100% leased to Walgreen Co. (Walgreens) subject to a net lease
pursuant to which the tenant is required to pay substantially all operating expenses and capital
expenditures in addition to base rent. The annual base rent for the WG Cincinnati Property is
$365,000. The annual base rent for the WG Cincinnati Property is fixed through the initial lease
term, which expires March 31, 2020, and all renewal options. The tenant has eight options to renew
the lease, with each option for an additional five-year term, beginning on April 1, 2020.
Cole Realty has the sole and exclusive right to manage, operate, lease and supervise the
overall maintenance of the WG Cincinnati Property and will receive a property management fee of
2.0% of the monthly gross revenue from the WG Cincinnati Property. We currently have no plans for
any renovations, improvements or development of the WG Cincinnati Property. We believe the WG
Cincinnati Property is adequately insured.
The WG Cincinnati Loan has a fixed interest rate of approximately 6.00% (the WG Cincinnati
Initial Interest Rate) with monthly interest-only payments. The outstanding principal and any
accrued and unpaid interest is due on September 1, 2016 (the WG Cincinnati Maturity Date). The WG
Cincinnati Loan is generally non-recourse to WG Cincinnati and Cole OP II, but both are liable for
customary non-recourse carveouts.
8
The WG Cincinnati Loan may not be prepaid, in whole or in part, except under the following
circumstances: (i) full prepayment may be made on any of the three (3) monthly payment dates
occurring immediately prior to the WG Cincinnati Maturity Date and (ii) partial prepayments
resulting from Bear Stearns election to apply insurance or condemnation proceeds may be made to
reduce the outstanding principal balance of the WG Cincinnati Loan. In the event the WG Cincinnati Loan is not paid off on the WG Cincinnati Maturity Date, the WG
Cincinnati Loan includes hyperamortization provisions. The WG Cincinnati Maturity Date, pursuant to
the hyperamortization provisions, will be extended by twenty (20) years. During such period, Bear
Stearns will apply 100% of the rents collected to the following items in the order indicated: (i)
any payments to escrows or reserve accounts, (ii) accrued interest at the WG Cincinnati Initial
Interest Rate on the original outstanding principal balance of the WG Cincinnati Loan, (iii) any
operating expenses of the WG Cincinnati Property pursuant to an approved annual budget, (iv) any
extraordinary expenses (v) the outstanding principal balance of the WG Cincinnati Loan, and (vi)
capitalized interest under the WG Cincinnati Loan at an interest rate equal to the greater of (x)
the WG Cincinnati Initial Interest Rate of 6.00% plus two percent (2.0%) per annum or (y) the then
current Treasury Constant Maturity Yield Index plus two percent (2.0%) per annum, not to exceed the
WG Cincinnati Initial Interest Rate plus 5.0% per annum. Notwithstanding the forgoing, failure to
make any required payments under the WG Cincinnati Loan in a timely manner will cause an event of
default, which will result in a 4.0% default interest rate in excess of the applicable interest
rate, late charges equal to 5.0% of the amount of such overdue payment, and all interest and
principal becoming immediately due and payable in full.
Walgreens Sharonville, Ohio
On March 6, 2007, Cole WG Sharonville OH, LLC, a Delaware limited liability company (WG
Sharonville), a wholly-owned subsidiary of Cole OP II, acquired a 100% fee simple interest in an
approximately 14,000 square foot single-tenant retail building on an approximately 2.0 acre site
located in Sharonville, Ohio (the WG Sharonville Property), from Anchor Developments III, Ltd.,
which is not affiliated with us, our subsidiaries or affiliates. The WG Sharonville Property was
constructed in 1998. The area surrounding the WG Sharonville Property is shared by residential and
commercial development.
The purchase price of the WG Sharonville Property was approximately $4.1 million, exclusive of
closing costs. The acquisition was funded by net proceeds from our ongoing public offering and an
approximately $2.7 million loan (the WG Sharonville
Loan) from Bear Stearns, which is secured by the WG Sharonville Property and the OM Orangeburg Property. In connection with the acquisition, we paid an affiliate of our
advisor an acquisition fee of approximately $82,000 and our advisor a finance coordination fee of
approximately $27,000.
The WG Sharonville Property is 100% leased to Walgreens subject to a net lease pursuant to
which the tenant is required to pay substantially all operating expenses and capital expenditures
in addition to base rent. The annual base rent for the WG Sharonville Property is $290,000. The
annual base rent for the WG Sharonville Property is fixed through the initial lease term, which
expires October 31, 2018, and all renewal options. The tenant has eight options to renew the lease,
with each option for an additional five-year term, beginning on November 1, 2018.
Cole Realty has the sole and exclusive right to manage, operate, lease and supervise the
overall maintenance of the WG
Sharonville Property and will receive a property management fee of 2.0% of the monthly gross
revenue from the WG Sharonville Property. We currently have no plans for any renovations,
improvements or development of the WG Sharonville Property. We believe the WG Sharonville Property
is adequately insured.
The WG Sharonville Loan has a fixed interest rate of approximately 5.62% (the WG Sharonville
Initial Interest Rate) with monthly interest-only payments. The outstanding principal and any
accrued and unpaid interest is due on April 1, 2012 (the WG Sharonville Maturity Date). The WG
Sharonville Loan is generally non-recourse to WG Sharonville and Cole OP II, but both are liable
for customary non-recourse carveouts.
The WG Sharonville Loan may not be prepaid, in whole or in part, except under the following
circumstances: (i) full prepayment may be made on any of the three (3) monthly payment dates
occurring immediately prior to the WG Sharonville Maturity Date and (ii) partial prepayments
resulting from Bear Stearns election to apply insurance or condemnation proceeds may be made to
reduce the outstanding principal balance of the WG Sharonville Loan.
In the event the WG Sharonville Loan is not paid off on the WG Sharonville Maturity Date, the
WG Sharonville Loan includes hyperamortization provisions. The WG Sharonville Maturity Date,
pursuant to the hyperamortization provisions, will be extended by twenty (20) years. During such
period, Bear Stearns will apply 100% of the rents collected to the following items in the order
9
indicated: (i) any payments to escrows or reserve accounts, (ii) accrued interest at the WG
Sharonville Initial Interest Rate on the original outstanding principal balance of the WG
Sharonville Loan, (iii) any operating expenses of the WG Sharonville Property pursuant to an
approved annual budget, (iv) any extraordinary expenses (v) the outstanding principal balance of
the WG Sharonville Loan, and (vi) capitalized interest under the WG Sharonville Loan at an interest
rate equal to the greater of (x) the WG Sharonville Initial Interest Rate of 5.62% plus two percent
(2.0%) per annum or (y) the then current Treasury Constant Maturity Yield Index plus two percent
(2.0%) per annum, not to exceed the WG Sharonville Initial Interest Rate plus 5.0% per annum.
Notwithstanding the forgoing, failure to make any required payments under the WG Sharonville Loan
in a timely manner will cause an event of default, which will result in a 4.0% default interest
rate in excess of the applicable interest rate, late charges equal to 5.0% of the amount of such
overdue payment, and all interest and principal becoming immediately due and payable in full.
Walgreens Madeira, Ohio
On March 6, 2007, Cole WG Madeira OH, LLC, a Delaware limited liability company (WG Madeira)
a wholly-owned subsidiary of Cole OP II, acquired a 100% fee simple interest in an approximately
14,000 square foot single-tenant retail building on an approximately 1.55 acre site located in
Madeira, Ohio (the WG Madeira Property), from Anchor Highland Heights, LLC, which is not
affiliated with us, our subsidiaries or affiliates. The WG Madeira Property was constructed in
1998. The area surrounding the WG Madeira Property within a three-mile radius is shared by retail,
industrial, and residential developments.
The purchase price of the WG Madeira Property was approximately $4.4 million, exclusive of
closing costs. The acquisition was funded by net proceeds from our ongoing public offering and an
approximately $2.9 million loan (the
WG Madeira Loan) from Bear Stearns, which is secured by the WG Madeira Property and the AB Coventry Property. In connection with the acquisition, we paid an affiliate of our advisor an
acquisition fee of approximately $89,000 and our advisor a finance coordination fee of
approximately $29,000.
The WG Madeira Property is 100% leased to Walgreens subject to a net lease pursuant to which
the tenant is required to pay substantially all operating expenses and capital expenditures in
addition to base rent. The annual base rent for the WG Madeira Property is $314,000. The annual
base rent for the WG Madeira Property is fixed through the initial lease term, which expires August
31, 2018, and all renewal options. The tenant has eight options to renew the lease, with each
option for an additional five-year term, beginning on September 1, 2018.
Cole Realty has the sole and exclusive right to manage, operate, lease and supervise the
overall maintenance of the WG Madeira Property and will receive a property management fee of 2.0%
of the monthly gross revenue from the WG Madeira Property. We currently have no plans for any
renovations, improvements or development of the WG Madeira Property. We believe the WG Madeira
Property is adequately insured.
The WG Madeira Loan has a fixed interest rate of approximately 5.70% (the WG Madeira Initial
Interest Rate) with monthly interest-only payments. The outstanding principal and any accrued and
unpaid interest is due on April 1, 2012 (the WG Madeira Maturity Date). WG Madeira Loan is
generally non-recourse to WG Madeira and Cole OP II, but both are liable for customary non-recourse
carveouts.
The WG Madeira Loan may not be prepaid, in whole or in part, except under the following
circumstances: (i) full prepayment may be made on any of the three (3) monthly payment dates
occurring immediately prior to the WG Madeira Maturity Date and (ii) partial prepayments resulting
from Bear Stearns election to apply insurance or condemnation proceeds to reduce the outstanding
principal balance of the WG Madeira Loan.
In the event the WG Madeira Loan is not paid off on the WG Madeira Maturity Date, the WG
Madeira Loan includes hyperamortization provisions. The WG Madeira Maturity Date, pursuant to the
hyperamortization provisions, will be extended by twenty (20) years. During such period, Bear
Stearns will apply 100% of the rents collected to the following items in the order indicated: (i)
any payments to escrows or reserve accounts, (ii) accrued interest at the WG Madeira Initial
Interest Rate on the original outstanding principal balance of the WG Madeira Loan, (iii) any
operating expenses of the WG Madeira Property pursuant to an approved annual budget, (iv) any
extraordinary expenses (v) the outstanding principal balance of the WG Madeira Loan, and (vi)
capitalized interest under the WG Madeira Loan at an interest rate equal to the greater of (x) the
WG Madeira Initial Interest Rate of 5.70% plus two percent (2.0%) per annum or (y) the then current
Treasury Constant Maturity Yield Index plus two percent (2.0%) per annum, not to exceed the WG
Madeira Initial Interest Rate plus 5.0% per annum. Notwithstanding the forgoing, failure to make
any required payments under the WG Madeira Loan in a timely manner will cause an event of default,
which will result in a 4.0% default interest rate in excess of the applicable interest rate, late
charges equal to 5.0% of the amount of such overdue payment, and all interest and principal
becoming immediately due and payable in full.
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AT&T Beaumont, TX
On March 19, 2007, Cole AT Beaumont TX, LLC, a Delaware limited liability company (AT
Beaumont), a wholly-owned subsidiary of Cole OP II, acquired a 100% fee simple interest in an
approximately 142,000 square foot single-tenant office building (the AT Beaumont Property) from
USA Properties, Inc., which is not affiliated with us, our subsidiaries or affiliates. The AT
Beaumont Property was constructed in 1971 on an approximately 3.4 acre site in Beaumont, Texas. The
area surrounding the AT Beaumont Property is shared by commercial and residential developments.
The purchase price of the AT Beaumont Property was approximately $12.3 million, exclusive of
closing costs. The acquisition was funded by net proceeds from our ongoing public offering and an
approximately $8.6 million loan (the AT Beaumont Loan) from JP Morgan Chase Bank, NA (JP
Morgan), which is secured by the AT Beaumont Property. In connection with the acquisition, we paid
an affiliate of our advisor an acquisition fee of approximately $246,000 and our advisor a finance
coordination fee of approximately $86,000.
The AT Beaumont Property is 100% leased to AT&T Services, Inc. (AT&T Services), which is a
wholly-owned subsidiary of AT&T, Inc. (AT&T). The AT Beaumont Property is subject to a net lease,
which commenced on March 19, 2007, pursuant to which AT&T is required to pay substantially all
operating expenses and capital expenditures in addition to base rent. The current aggregate annual
base rent of $900,473 is fixed through the first year of the initial lease, and increases 1.5% each
year through the initial lease term, which expires March 31, 2017. AT&T Services has two options to
renew the lease, each for an additional five-year term beginning on April 1, 2017, with rental
escalations of approximately 1.5% at the beginning of each year.
AT&T Services is a wholly-owned subsidiary of AT&T. AT&T is a holding company whose
subsidiaries and affiliates operate in the communications services industry both domestically and
internationally providing wireline and wireless telecommunications services and equipment, as well
as directory advertising and publishing services. AT&T has a Standard & Poors credit rating of
A and its stock is publicly traded on the New York Stock Exchange under the symbol T.
Cole Realty has the sole and exclusive right to manage, operate, lease and supervise the
overall maintenance of the AT Beaumont Property and will receive a property management fee of 2.0%
of the monthly gross revenue from the AT Beaumont Property. We currently have no plans for any
renovations, improvements or development of the AT Beaumont Property. We believe the AT Beaumont
Property is adequately insured.
The AT Beaumont Loan has a fixed interest rate of approximately 5.87% with monthly
interest-only payments. The outstanding principal and any accrued and unpaid interest is due on
April 1, 2017 (the AT Beaumont Maturity Date). The AT Beaumont Loan is generally non-recourse
to AT Beaumont and Cole OP II, but both are liable for customary non-recourse carveouts.
The AT Beaumont Loan may not be prepaid, in whole or in part, except under the following
circumstances: (i) full prepayment may be made on any of the three (3) monthly payment dates
occurring immediately prior to the AT Beaumont Maturity Date and (ii) partial prepayments resulting
from JP Morgans election to apply insurance or condemnation proceeds to reduce the outstanding
principal balance of the AT Beaumont Loan. Notwithstanding the prepayment limitations, AT Beaumont
may sell the AT Beaumont Property to a buyer that assumes the AT Beaumont Loan. The transfer shall
be subject to JP Morgans approval of the proposed buyer and the payment of JP Morgans costs and
expenses associated with the sale of the AT Beaumont Property.
In the event the AT Beaumont Loan is not paid off on the AT Beaumont Maturity Date, the AT
Beaumont Loan includes default provisions. Upon the occurrence of an event of default, interest on
the AT Beaumont Loan will accrue at an annual default interest rate
equal to the lesser of (a) the maximum rate permitted by applicable law, or (b) 10.87%. In
addition, AT Beaumont will be required to pay a prepayment consideration in an amount equal to the
greater of 1.0% of the outstanding principal balance of the AT Beaumont Loan, or the present value
of the remaining scheduled payments of principal and interest from the date such payment is
received through the AT Beaumont Maturity Date at the time any payment is received by JP Morgan.
Potential Property Investments
Our advisor has identified the following properties as potential suitable investments for us.
The acquisition of each such property is subject to a number of conditions. A significant condition
to acquiring any one of these potential acquisitions is our ability to raise sufficient proceeds in
this offering to pay a portion of the purchase price. An additional condition to acquiring these
properties will be our securing debt financing to pay the balance of the purchase price. Such
financing may not be available on acceptable terms or at all.
Our evaluation of a property as a potential acquisition, including the appropriate purchase
price, will include our consideration of a property condition report; unit-level store performance;
property location, visibility and access; age of the property, physical condition and curb appeal;
neighboring property uses; local market conditions, including vacancy rates; area demographics,
including trade area population and average household income; neighborhood growth patterns and
economic conditions; and the presence of demand generators.
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We will decide whether to acquire these properties generally based upon:
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satisfaction of the conditions to the acquisitions contained in the respective contracts; |
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no material adverse change occurring relating to the properties, the tenants or in the local economic conditions; |
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our receipt of sufficient net proceeds from the offering of our common stock to the
public and financing proceeds to make these acquisitions; and |
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our receipt of satisfactory due diligence information including appraisals,
environmental reports and tenant and lease information. |
Other properties may be identified in the future that we may acquire before or instead of
these properties. Due to the considerable conditions to the consummation of the acquisition of
these properties, we cannot make any assurances that the closing of these acquisitions is probable.
Academy Sports Sherwood, Arkansas
Cole Acquisitions I, LLC f/k/a Cole Takedown, LLC (Cole Acquisitions), an affiliate of our
advisor, has entered into an agreement to purchase an approximately 75,000 square foot
single-tenant retail building on an approximately 6.0 acre site located in Sherwood, Arkansas (the
AS Sherwood Property), for a purchase price of approximately $6.8 million, exclusive of closing
costs (the AS Sherwood Agreement). Subject to the satisfactory completion of certain conditions
to closing, we expect that Cole Acquisitions will assign all of its rights and obligations under
the AS Sherwood Agreement to a wholly-owned subsidiary of Cole OP II prior to the closing of the
transaction.
The AS Sherwood Property was constructed in 2006 and is 100% leased to Academy, Ltd
(Academy). The AS Sherwood Property is subject to a net lease, pursuant to which Academy is
required to pay substantially all operating expenses and capital expenditures in addition to base
rent. The current aggregate annual base rent of $494,716 is fixed through the first ten years of
the initial lease term and increases to $520,951 in the eleventh year through initial lease term,
which expires January 31, 2021. Academy has three options to renew the lease, each for an
additional five-year term beginning on February 1, 2021, with rental escalations of approximately
5.0% at the beginning of each five-year renewal term.
We expect to purchase the AS Sherwood Property with proceeds from our ongoing public offering
and an approximately $4.4 million loan to be secured by the AS Sherwood Property (the AS Sherwood
Property Loan). We expect the AS Sherwood Property Loan to be a ten-year fixed rate, interest only
loan.
Walgreens Shreveport, Louisiana
Series B, LLC (Series B), an affiliate of our advisor, has entered into an agreement to
purchase an approximately 14,000 square foot single-tenant retail building on an approximately 1.7
acre site located in Shreveport, Louisiana (the WG Shreveport Property), for a purchase price of
approximately $4.1 million, exclusive of closing costs (the WG Shreveport Agreement). Subject to
the satisfactory completion of certain conditions to closing, we expect that Series B will assign
all of its rights and obligations under the WG Shreveport Agreement to a wholly-owned subsidiary of
Cole OP II prior to the closing of the transaction.
The WG Shreveport Property was constructed in 1998 and is 100% leased to Walgreen
Louisiana Co., Inc., a wholly-owned subsidiary of Walgreens, which guarantees the lease. The WG Shreveport Property is subject to a net lease, pursuant to which Walgreens is
required to pay substantially all operating expenses and capital expenditures in addition to base
rent. The annual base rent for the WG Shreveport Property is $327,000. The annual base rent for the
WG Shreveport Property is fixed through the initial lease term, which expires August 31, 2019, and
all renewal options. The tenant has eight options to renew the lease, with each option for an
additional five-year term, beginning on September 1, 2019.
We expect to purchase the WG Shreveport Property with proceeds from our ongoing public
offering and an approximately $2.7 million loan to be secured by the WG Shreveport Property (the
WG Shreveport Property Loan). We expect the WG Shreveport Property Loan to be a ten-year fixed
rate, interest only loan.
Rite Aid Fredericksburg, Virginia
Series B has entered into an agreement to purchase an approximately 15,000 square foot
single-tenant retail building on an approximately 1.9 acre site located in Fredericksburg, Virginia
(the RA Fredericksburg Property), for a purchase price of approximately $5.4 million, exclusive
of closing costs (the RA Fredericksburg Agreement). Subject to the satisfactory completion of
certain conditions to closing, we expect that Series B will assign all of its rights and
obligations under the RA Fredericksburg Agreement to a wholly-owned subsidiary of Cole OP II prior
to the closing of the transaction.
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The RA Fredericksburg Property was constructed in 2007 and is 100% leased to Rite Aid of
Virginia, Inc., which is a wholly-owned subsidiary of Rite Aid Corporation (Rite Aid), which
guarantees the lease. The RA Fredericksburg Property is subject to a net lease, pursuant to which
Rite Aid is required to pay substantially all operating expenses and capital expenditures in
addition to base rent. The annual base rent of $392,063 is fixed through the initial lease term,
which expires February 28, 2027. Rite Aid has four options to renew the lease, each for an
additional five-year term beginning on March 1, 2027, with rental escalations of approximately 3.0%
at the beginning of each five-year renewal term.
We expect to purchase the RA Fredericksburg Property with proceeds from our ongoing public
offering and an approximately $3.5 million loan to be secured by the RA Fredericksburg Property
(the RA Fredericksburg Property Loan). We expect the RA Fredericksburg Property Loan to be a
ten-year fixed rate, interest only loan.
Center at 7500 Cottonwood Jenison, Michigan
Series D, LLC (Series D), an affiliate of our advisor, has entered into an agreement to
purchase an approximately 85,000 square foot multi-tenant retail center on an approximately 8.6
acre site located in Jenison, Michigan (the MT Jenison Property), for a purchase price of
approximately $5.4 million, exclusive of closing costs (the MT Jenison Agreement). Subject to the
satisfactory completion of certain conditions to closing, we expect that Series D will assign all
of its rights and obligations under the MT Jenison Agreement to a wholly-owned subsidiary of Cole
OP II prior to the closing of the transaction.
The MT Jenison Property was constructed in 1993 and is 100% leased to four tenants. Two
tenants occupy greater than 10.0% of the rentable square footage of the MT Jenison Property,
including Hob-Lob, Limited Partnership (Hobby Lobby) and D&W Food Centers, Inc. d/b/a Save-A-Lot
(D&W Food).
Hobby Lobby occupies approximately 55,000 rentable square feet of the MT Jenison Property
subject to a net lease (the Hobby Lobby Lease). Pursuant to the Hobby Lobby Lease, Hobby Lobby is
required to pay substantially all operating expenses, capital expenditures and a proportionate
amount of common area maintenance charges in addition to base rent. The current aggregate annual
base rent of $259,032 is fixed through the remainder of the initial lease term, which expires
October 31, 2009. Hobby Lobby has two options to renew the lease, each for an additional five-year
term beginning on November 1, 2009, with rental escalations of approximately 5.0% at the beginning
of each five-year renewal term.
D&W Food occupies approximately 16,000 rentable square feet of the MT Jenison Property subject
to a net lease (the D&W Food Lease). Pursuant to the D&W Food Lease, D&W Food is required to pay
substantially all operating expenses, capital expenditures and a proportionate amount of common
area maintenance charges in addition to base rent. The current aggregate annual base rent of
$97,104 has a rent escalation of approximately 2.0%, beginning on August 1, 2007 and every year
thereafter through the initial lease term, which expires July 31, 2011. D&W Food has three options
to renew the lease, each for an additional five-year term beginning on August 1, 2011, with rental
escalations of approximately 2.0% each year during the renewal terms.
We expect to purchase the MT Jenison Property with proceeds from our ongoing public offering.
Cost-U-Less St. Croix, US Virgin Islands
Series B has entered into an agreement to purchase an approximately 38,000 square foot
single-tenant retail building on an approximately 4.0 acre site located in St. Croix, USVI (the CL
St. Croix Property), for a purchase price of approximately $6.2
million, exclusive of closing costs (the CL St. Croix Agreement). Subject to the
satisfactory completion of certain conditions to closing, we expect that Series B will assign all
of its rights and obligations under the CL St. Croix Agreement to a wholly-owned subsidiary of Cole
OP II prior to the closing of the transaction.
The CL St. Croix Property was constructed in 2005 and is 100% leased to CULUSVI, Inc., a
wholly-owned subsidiary of Cost-U-Less, Inc., (Cost-U-Less), which guarantees the lease. The CL
St. Croix Property is subject to a net lease, pursuant to which Cost-U-Less is required to pay
substantially all operating expenses and capital expenditures in addition to base rent. The current
aggregate annual base rent of $512,000 has a rental escalation of 10.0% beginning in the sixth year
and eleventh year of the initial lease term, which expires December 31, 2021. Cost-U-Less has two
options to renew the lease, each for an additional five-year term beginning on January 1, 2022,
with rental escalations of 10.0% at the beginning of each five-year renewal term.
We expect to purchase the CL St. Croix Property with proceeds from our ongoing public offering
and an approximately $4.0 million loan to be secured by the CL St. Croix Property (the CL St.
Croix Property Loan). We expect the CL St. Croix Property Loan to be a ten-year fixed rate,
interest only loan.
Apria Healthcare St. John, MO
Series B has entered into an agreement to purchase an approximately 52,000 square foot
single-tenant office and warehouse facility on an approximately 6.9 acre site located in St. John,
Missouri (the AH St. John Property), for a purchase price of
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approximately $6.5 million,
exclusive of closing costs (the AH St. John Agreement). Subject to the satisfactory completion of
certain conditions to closing, we expect that Series B will assign all of its rights and
obligations under the AH St. John Agreement to a wholly-owned subsidiary of Cole OP II prior to the
closing of the transaction.
The AH St. John Property was constructed in 1996 and renovated in 2007 and is 100% leased to
Apria Healthcare, Inc. (Apria). The AH St. John Property is subject to a net lease, pursuant to
which Apria is required to pay substantially all operating expenses and capital expenditures in
addition to base rent. The current aggregate annual base rent of $514,464 is fixed through the
initial lease term, which expires March 31, 2014. Apria has one option to renew the lease, for an
additional five-year term beginning on April 1, 2014, with a rental escalation of approximately
10.0%.
We expect to purchase the AH St. John Property with proceeds from our ongoing public offering
and an approximately $4.2 million loan to be secured by the AH St. John Property (the AH St. John
Property Loan). We expect the AH St. John Property Loan to be a five-year fixed rate, interest
only loan.
Gallina Centro Collierville, TN
Series D has entered into an agreement to purchase an approximately 143,000 square foot
multi-tenant retail building on an approximately 16.8 acre site located in Collierville, Tennessee
(the MT Collierville Property), for a purchase price of approximately $17.8 million, exclusive of
closing costs (the MT Collierville Agreement). Subject to the satisfactory completion of certain
conditions to closing, we expect that Series D will assign all of its rights and obligations under
the MT Collierville Agreement to a wholly-owned subsidiary of Cole OP II prior to the closing of
the transaction.
The MT Collierville Property was constructed in 2000 and is 100% leased to 11 tenants. Three
tenants occupy greater than 10.0% of the rentable square feet of the MT Collierville Property,
including, Kroger Limited Partnership I, LP, d/b/a Kroger (Kroger LP), Stein Mart, Inc., d/b/a
Stein Mart (Stein Mart) and Walgreens.
The lease to Kroger LP is a ground lease (the Kroger LP Lease), pursuant to which Kroger LP
is required to pay substantially all operating expenses and a proportionate amount of common area
maintenance charges in addition to base rent. Kroger LP is a wholly-owned subsidiary of The Kroger
Co. which guarantees the Kroger LP Lease. The annual base rent of $172,000 has a rental escalation
of approximately 10.0% beginning on the eleventh year through the initial lease term, which expires
March 31, 2021. Kroger LP has 11 options to renew the lease, each for an additional five-year term
beginning on April 1, 2021, with rental escalations of 5.0% at the beginning of each five-year
renewal term.
The lease to Stein Mart, Inc. is a net lease, pursuant to which Stein Mart is required to pay
substantially all operating expenses and a proportionate amount of common area maintenance charges
in addition to base rent. The annual base rent of $234,000 has a rental escalation of
approximately 8.0% beginning on the eleventh year through the initial lease term, which expires
March 31, 2016. Stein Mart has three options to renew the lease, each for an additional five-year
term beginning on April 1, 2016, with rental escalations of approximately 7.0% at the beginning of
each five-year renewal term.
The lease to Walgreens is a net lease, pursuant to which Walgreens is required to pay
substantially all operating expenses and a proportionate amount of common area maintenance charges
in addition to base rent. The annual base rent of $350,000 is fixed through the initial lease
term, which expires October 31, 2021, and all renewal options. Walgreens has eight options to renew
the lease, each for an additional five-year term beginning on November 1, 2021.
We expect to purchase the MT Collierville Property with proceeds from our ongoing public
offering and an approximately $14.2 million loan to be secured by the MT Collierville Property (the
MT Collierville Property Loan). We expect the MT Collierville Property Loan to be a ten-year
fixed rate, interest only loan.
Tractor Supply Greenfield, MN
Series B has entered into an agreement to purchase an approximately 23,000 square foot
single-tenant retail facility on an approximately 4.2 acre site located in Greenfield, Minnesota
(the TS Greenfield Property), for a purchase price of approximately $4.1 million, exclusive of
closing costs (the TS Greenfield Agreement). Subject to the satisfactory completion of certain
conditions to closing, we expect that Series B will assign all of its rights and obligations under
the TS Greenfield Agreement to a wholly-owned subsidiary of Cole OP II prior to the closing of the
transaction.
The TS Greenfield Property was constructed in 2006 and is 100% leased to Tractor Supply. The
TS Greenfield Property is subject to a net lease, pursuant to which Tractor Supply is required to
pay substantially all operating expenses and capital expenditures in addition to base rent. The
current aggregate annual base rent of $289,228 is fixed through the first five year period of the
initial lease term, and increases 10% every five years of the remaining initial lease term which
expires December 31, 2021. Tractor Supply has four options to renew the lease, each for an
additional five-year term beginning on January 1, 2022, with a rental escalation of approximately
10.0% at the beginning of each five-year term.
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We expect to purchase the TS Greenfield Property with proceeds from our ongoing public
offering and an approximately $2.6 million loan to be secured by the TS Greenfield Property (the
TS Greenfield Property Loan). We expect the TS Greenfield Property Loan to be a ten-year fixed
rate, interest only loan.
Sams Club Anderson, South Carolina
Series B has entered into an agreement to purchase an approximately 135,000 square foot
single-tenant retail facility on an approximately 27.9 acre site located in Anderson, South
Carolina (the SC Anderson Property), for a purchase price of $12.0 million, exclusive of closing
costs (the SC Anderson Agreement). Subject to the satisfactory completion of certain conditions
to closing, we expect that Series B will assign all of its rights and obligations under the SC
Anderson Agreement to a wholly-owned subsidiary of Cole OP II prior to the closing of the
transaction.
The SC Anderson Property was constructed in 1993 and is 100% leased to Wal-Mart Stores, Inc.
(Wal-Mart). The SC Anderson Property is subject to a net lease, pursuant to which Wal-Mart is
required to pay substantially all operating expenses and capital expenditures in addition to base
rent. The current aggregate annual base rent of $812,098 is fixed through the initial lease term,
which expires November 14, 2013.
We expect to purchase the SC Anderson Property with proceeds from our ongoing public offering
and an approximately $7.8 million loan to be secured by the SC Anderson Property (the SC Anderson
Property Loan). We expect the SC Anderson Property Loan to be a ten-year fixed rate, interest only
loan.
Tractor Supply Marinette, WI
Series B has entered into an agreement to purchase an approximately 19,000 square foot
single-tenant retail building on an approximately 4.1 acre site located in Marinette, Wisconsin
(the TS Marinette Property), for a purchase price of approximately $3.0 million, exclusive of
closing costs (the TS Marinette Agreement). Subject to the satisfactory completion of certain
conditions to closing, we expect that Series B will assign all of its rights and obligations under
the TS Marinette Agreement to a wholly-owned subsidiary of Cole OP II prior to the closing of the
transaction.
The TS Marinette Property was constructed in 2006 and is 100% leased to Tractor Supply. The TS
Marinette Property is subject to a net lease, pursuant to which Tractor Supply is required to pay
substantially all operating expenses and capital expenditures in addition to base rent. The current
aggregate annual base rent of $213,933 is fixed through the first five years of the initial lease
term, and increases 10% every five years of the remaining lease term which expires December 15,
2021. Tractor Supply has four options to renew the lease, each for an additional five-year term
beginning on December 16, 2021, with rental escalations of approximately 10.0% at the beginning of
each five-year renewal term.
We expect to purchase the TS Marinette Property with proceeds from our ongoing public offering
and an approximately $1.9 million loan to be secured by the TS Marinette Property (the TS
Marinette Property Loan). We expect the TS Marinette Property Loan to be a ten-year fixed rate,
interest only loan.
Walgreens Gainesville, FL
Series B has entered into an agreement to purchase an approximately 14,000 square foot
single-tenant retail property on an approximately 1.7 acre site located in Gainesville, Florida
(the WG Gainesville Property), for a purchase price of approximately $3.6 million, exclusive of
closing costs (the WG Gainesville Agreement). Subject to the satisfactory completion of certain
conditions to closing, we expect that Series B will assign all of its rights and obligations under
the WG Gainesville Agreement to a wholly-owned subsidiary of Cole OP II prior to the closing of the
transaction.
The WG Gainesville Property was constructed in 1997 and is 100% leased to Walgreens. The WG
Gainesville Property is subject to a net lease, pursuant to which Walgreens is required to pay
substantially all operating expenses and capital expenditures in addition to base rent. The current
aggregate annual base rent of $262,800 is fixed through the initial lease term, which expires July
31, 2017, and all renewal terms. The tenant has eight options to renew the lease, with each option
for an additional five-year term, beginning on August 1, 2017.
We expect to purchase the WG Gainesville Property with proceeds from our ongoing public
offering and an approximately $2.4 million loan to be secured by the WG Gainesville Property (the
WG Gainesville Property Loan). We expect the WG Gainesville Property Loan to be a ten-year fixed
rate, interest only loan.
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Tractor Supply Paw Paw, MI
Series B has entered into an agreement to purchase an approximately 23,000 square foot
single-tenant retail building on an approximately 5.0 acre site located in Paw Paw, Michigan (the
TS Paw Paw Property), for a purchase price of approximately $3.0 million, exclusive of closing
costs (the TS Paw Paw Agreement). Subject to the satisfactory completion of certain conditions to
closing, we expect that Series B will assign all of its rights and obligations under the TS Paw Paw
Agreement to a wholly-owned subsidiary of Cole OP II prior to the closing of the transaction.
The TS Paw Paw Property was constructed in 2006 and is 100% leased to Tractor Supply. The TS
Paw Paw Property is subject to a net lease, pursuant to which Tractor Supply is required to pay
substantially all operating expenses and capital expenditures in addition to base rent. The current
aggregate annual base rent of $231,840 is fixed through the first five years of the initial lease
term with rental escalations of approximately 10.0% every five years thereafter through the
remainder of the initial lease term, which expires December 10, 2021. Tractor Supply has four
options to renew the lease, each for an additional five-year term beginning on December 11, 2021,
with rental escalations of approximately 10.0% at the beginning of each five-year renewal term.
We expect to purchase the TS Paw Paw Property with proceeds from our ongoing public offering
and an approximately $2.0 million loan to be secured by the TS Marinette Property (the TS Paw Paw
Property Loan). We expect the TS Paw Paw Property Loan to be a ten-year fixed rate, interest only
loan.
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The prospectus is hereby supplemented with the following Managements Discussion and Analysis
of Financial Condition and Results of Operations:
Managements Discussion and Analysis of Financial Condition and Results of Operations
17
The following discussion and analysis supplements prior
discussions in the Managements Discussion and Analysis of
Financial Condition and Results of Operations in our prospectus and should be read in
conjunction with our
accompanying consolidated financial statements and notes
thereto.
Forward-Looking Statements
This section contains forward-looking statements, including
discussion and analysis of the financial condition of us and our
subsidiary, our anticipated capital expenditures, amounts of
anticipated cash distributions to our stockholders in the future and
other matters. These forward-looking statements are not historical
facts but are the intent, belief or current expectations of our
management based on their knowledge and understanding of our business
and industry. Words such as may, will,
anticipates, expects, intends,
plans, believes, seeks,
estimates, would, could,
should and variations of these words and similar
expressions are intended to identify forward-looking statements.
These statements are not guarantees of future performance and are
subject to risks, uncertainties and other factors, some of which are
beyond our control, are difficult to predict and could cause actual
results to differ materially from those expressed or forecasted in
the forward-looking statements.
Forward-looking statements that were true at the time made may
ultimately prove to be incorrect or false. Investors are cautioned
not to place undue reliance on forward-looking statements, which
reflect our managements view only as of the date of our Annual
Report on Form 10-K for the year ended December 31, 2006.
We undertake no obligation to update or revise forward-looking
statements to reflect changed assumptions, the occurrence of
unanticipated events or changes to future operating results. Factors
that could cause actual results to differ materially from any
forward-looking statements made in this prospectus include changes in
general economic conditions, changes in real estate conditions,
construction costs that may exceed estimates, construction delays,
increases in interest rates, lease-up risks, inability to obtain new
tenants upon the expiration of existing leases, and the potential
need to fund tenant improvements or other capital expenditures out of
operating cash flows. The forward-looking statements should be read
in light of the risk factors identified in the Risk
Factors section of our Annual Report on Form 10-K for the
year ended December 31, 2006 and the Risk Factors
section of this prospectus, relating to this offering, each as filed
with the SEC.
Managements discussion and analysis of financial condition and
results of operations are based upon our consolidated financial
statements, which have been prepared in accordance with
U.S. GAAP. The preparation of these financial statements
requires our management to make estimates and assumptions that affect
the reported amounts of assets, liabilities, revenues and expenses,
and related disclosure of contingent assets and liabilities. On a
regular basis, we evaluate these estimates. These estimates are based
on managements historical industry experience and on various
other assumptions that are believed to be reasonable under the
circumstances. Actual results may differ from these estimates.
Overview
We were formed on September 29, 2004 to acquire and operate
commercial real estate primarily consisting of high quality,
freestanding, single-tenant properties net leased to investment
grade and other creditworthy tenants located throughout the
United States. We commenced our principal operations on
September 23, 2005, when we issued the initial
486,000 shares of our common stock in this offering. Prior
to such date, we were considered a development stage company. We
acquired our first real estate property on September 26,
2005. We have no paid employees and are externally advised and
managed by Cole Advisors II, an affiliate of ours. We
intend to qualify, and currently qualify, as a real estate
investment trust for federal income tax purposes.
We derive a substantial portion of our revenue from our rental
income. As a result, our operating results and cash flows are
primarily influenced by rental income from our commercial
properties and interest expense on our property acquisition
indebtedness. Rental income accounted for approximately 94% and
100% of total revenue during the years ended December 31,
2006 and 2005, respectively. As 100% of our properties were under
lease, with an average remaining lease term of approximately
13.2 years, we believe our exposure to changes in
commercial rental rates on our portfolio is substantially
mitigated. Our advisor regularly monitors the creditworthiness
of our tenants by reviewing the tenants financial results,
credit rating agency reports (if any) on the tenant or
guarantor, the operating history of the property with such
tenant, the tenants market share and track record within
its industry segment, the general health and outlook of the
tenants industry segment, and other information for
changes and possible trends. If our advisor identifies
significant changes or trends that may adversely affect the
creditworthiness of a tenant, it will gather a more in-depth
knowledge of the tenants financial condition and, if
necessary, attempt to mitigate the tenant credit risk by
evaluating the possible sale of the property, or identifying a
possible replacement tenant should the current tenant fail to
perform on the lease. As of December 31, 2006, the debt
leverage ratio of our portfolio, which is the ratio of total
real estate assets to mortgage notes payable, was approximately
49%, with approximately 1% of the debt, or approximately
$2.7 million subject to variable interest rates. As of
March 16, 2007, we had repaid all of the approximately
$2.7 million variable interest rate mortgage notes payable.
The repayments of the variable interest rate mortgage notes
payable loans was made with proceeds from this offering.
As we continue to raise capital in this offering and our
proposed secondary offering and invest the proceeds in
commercial real estate, we will be subject to changes in real
estate prices and changes in interest rates on new indebtedness
used to acquire the properties. We may manage our risk of
changes in real estate prices on future property acquisitions by
entering into purchase agreements and loan commitments
simultaneously such that our operating yield is determinable, by
contracting with developers for future delivery of properties,
or by entering into sale-
18
leaseback transactions. We expect to
manage our interest rate risk by monitoring the interest rate
environment in connection with our planned property acquisitions
to determine the appropriate acquisition financing, which may
include fixed rate loans, variable rate loans or interest rate
hedges. If we are unable to acquire suitable properties or
obtain suitable financing for future acquisitions, our results
of operations may be adversely affected.
As of December 31, 2006, we owned 83 single-tenant,
freestanding retail properties, four single-tenant freestanding
commercial properties, and four multi-tenant retail properties,
all of which were 100% leased. During the years ended
December 31, 2006 and 2005, we acquired 77 and 14
properties, respectively. Our results of operations are not
indicative of those expected in future periods as we expect that
rental income, operating expenses, asset management fees,
depreciation expense, interest expense, and net income will each
increase in the future as we acquire additional properties and
as our current properties are owned for an entire period.
19
Our management is not aware of any material trends or
uncertainties, other than national economic conditions affecting
real estate generally (such as lower capitalization rates and
increasing interest rates, which lead to higher interest
expense) that may reasonably be expected to have a material
impact, favorable or unfavorable, on revenues or income from the
acquisition and operations of real properties and mortgage
loans, other than those referred to in our annual report on
Form 10-K for the year
ended December 31, 2006.
With our objectives of providing current income to our
stockholders and preserving their capital, we view our most
significant challenges as:
|
|
|
|
|
continuing to raise sufficient amounts of equity capital in
order to acquire a large, diversified portfolio while
maintaining a moderate leverage ratio; and
|
|
|
|
investing net offering proceeds in properties that are accretive
to our stockholders distributions at a time when the demand for
high-quality, income-producing properties is high and the market
competitive.
|
Application
of Critical Accounting Policies
Our accounting policies have been established to conform with
GAAP. The preparation of financial statements in conformity with
GAAP requires management to use judgment in the application of
accounting policies, including making estimates and assumptions.
These judgments affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities
at the dates of the financial statements and the reported
amounts of revenue and expenses during the reporting periods. If
managements judgment or interpretation of the facts and
circumstances relating to various transactions had been
different, it is possible that different accounting policies
would have been applied, thus, resulting in a different
presentation of the financial statements. Additionally, other
companies may utilize different estimates that may impact
comparability of our results of operations to those of companies
in similar businesses.
The critical accounting policies outlined below have been
discussed with members of the audit committee of the board of
directors.
Investment
in Real Estate Assets
We are required to make subjective assessments as to the useful
lives of our depreciable assets. We consider the period of
future benefit of the asset to determine the appropriate useful
lives. These assessments, which are based on estimates, have a
direct impact on net income. The estimated useful lives of our
assets by class are generally as follows:
|
|
|
Building
|
|
40 years
|
Tenant improvements
|
|
Lesser of useful life or lease term
|
Intangible lease assets
|
|
Lesser of useful life or lease
term
|
Allocation
of Purchase Price of Acquired Assets
Upon the acquisition of real properties, it is our policy to
allocate the purchase price of properties to acquired tangible
assets, consisting of land and building, and identified
intangible assets and liabilities, consisting of the value of
above-market and below-market leases, other value of in-place
leases and value of tenant relationships, based in each case on
their fair values. We utilize independent appraisals to
determine the fair values of the tangible assets of an acquired
property (which includes land and building).
The fair values of above-market and below-market in-place lease
values are recorded based on the present value (using an
interest rate which reflects the risks associated with the
leases acquired) of the difference
20
between (i) the contractual amounts to be paid pursuant to
the in-place leases and (ii) an estimate of fair market
lease rates for the corresponding in-place leases, which is
generally obtained from independent appraisals, measured over a
period equal to the remaining non-cancelable term of the lease.
The above-market and below-market lease values are capitalized
as intangible lease assets or liabilities and amortized as an
adjustment of rental income over the remaining terms of the
respective leases.
The fair values of in-place leases include direct costs
associated with obtaining a new tenant, opportunity costs
associated with lost rentals which are avoided by acquiring an
in-place lease, and tenant relationships. Direct costs
associated with obtaining a new tenant include commissions,
tenant improvements, and other direct costs and are estimated
based on independent appraisals and managements
consideration of current market costs to execute a similar
lease. These direct costs are included in intangible lease
assets in the accompanying consolidated balance sheet and are
amortized to expense over the remaining terms of the respective
leases. The value of opportunity costs is calculated using the
contractual amounts to be paid pursuant to the in-place leases
over a market absorption period for a similar lease. Customer
relationships are valued based on expected renewal of a lease or
the likelihood of obtaining a particular tenant for other
locations. These intangibles are included in intangible lease
assets in the accompanying consolidated balance sheet and are
amortized to expense over the remaining term of the respective
leases.
The determination of the fair values of the assets and
liabilities acquired requires the use of significant assumptions
with regard to the current market rental rates, rental growth
rates, discount rates and other variables. The use of
inappropriate estimates would result in an incorrect assessment
of our purchase price allocations, which could impact the amount
of our reported net income.
Valuation
of Real Estate Assets
We continually monitor events and changes in circumstances that
could indicate that the carrying amounts of our real estate and
related intangible assets may not be recoverable. When
indicators of potential impairment are present that indicate
that the carrying amounts of real estate and related intangible
assets may not be recoverable, we assess the recoverability of
the assets by determining whether the carrying value of the
assets will be recovered through the undiscounted future
operating cash flows expected from the use of the assets and
their eventual disposition. In the event that such expected
undiscounted future cash flows do not exceed the carrying value,
we will adjust the real estate and related intangible assets to
the fair value and recognize an impairment loss. As of
December 31, 2006, the undiscounted future operating cash flows
of any property with potential impairment indicators exceeded its
carrying value and no impairment losses had been recorded. As of
December 31, 2005, no potential impairment indicators existed
and no losses had been recorded.
Projections of expected future cash flows require us to estimate
future market rental income amounts subsequent to the expiration
of current lease agreements, property operating expenses,
discount rates, the number of months it takes to re-lease the
property and the number of years the property is held for
investment. The use of inappropriate assumptions in the future
cash flow analysis would result in an incorrect assessment of
the propertys future cash flow and fair value and could
result in the overstatement of the carrying value of our real
estate and related intangible assets and net income.
Revenue
Recognition
Upon the acquisition of real estate, certain properties have
leases where minimum rent payments increase during the term of
the lease. We record rental revenue for the full term of each
lease on a straight-line basis. Accordingly, we record a
receivable from tenants that we expect to collect over the
remaining lease term rather than currently, which we record as
rents receivable. When we acquire a property, the term of
existing leases is considered to commence as of the acquisition
date for the purposes of this calculation. In accordance with
Staff Accounting Bulletin 101, Revenue Recognition in
Financial Statements, we defer the recognition of contingent
rental income, such as percentage rents, until the specific
target that triggers the contingent rental income is achieved.
Cost recoveries from tenants are included in tenant
reimbursement income in the period the related costs are
incurred.
21
Income
Taxes
We have made an election to be taxed as a REIT under
Sections 856 through 860 of the Internal Revenue Code
commencing with our taxable year ended December 31, 2005.
If we qualify for taxation as a REIT, we generally will not be
subject to federal corporate income tax to the extent we
distribute our REIT taxable income to our stockholders, and so
long as we distribute at least 90% of our REIT taxable income.
REITs are subject to a number of other organizational and
operational requirements. Even if we qualify for taxation as a
REIT, we may be subject to certain state and local taxes on our
income and property, and federal income and excise taxes on our
undistributed income. We believe we are organized and operating
in such a manner as to qualify to be taxed as a REIT for the
taxable year ended December 31, 2006.
Results
of Operations
We commenced our principal operations on September 23,
2005, when we issued the initial 486,000 shares of our
common stock in this offering. Prior to such date, we were
considered a development stage company. We acquired our first
real estate property on September 26, 2005.
Year
Ended December 31, 2006 Compared to the Year Ended
December 31, 2005
As of December 31, 2006, we owned 91 commercial properties
compared to 14 commercial properties at December 31, 2005,
all of which were 100% leased. Accordingly, our results of
operations for the year ended December 31, 2006 as compared
to the year ended December 31, 2005 reflect significant
increases in all categories.
Revenue. Rental income increased
approximately $17.6 million to approximately
$18.4 million for the year ended December 31, 2006
compared to approximately $742,000 for the year ended
December 31, 2005. The increase was primarily due to the
acquisition of 77 new properties during 2006 and the recording
of rental income for the 14 properties acquired during 2005 for
12 months during 2006 compared to three months, or less,
during 2005. Our revenue primarily consists of rental income
from net leased commercial properties, which accounted for
approximately 94% and 100% of total revenues during the year
ended December 31, 2006 and December 31, 2005,
respectively. During 2006, we acquired certain properties for
which we pay certain operating expenses subject to reimbursement
by the tenant, which resulted in approximately $1.2 million
of tenant reimbursement income in 2006 compared to no amounts in
2005.
General and Administrative Expenses. General
and administrative expenses increased approximately $797,000 to
approximately $953,000 for the year ended December 31, 2006
compared to approximately $156,000 for the year ended
December 31, 2005. The increase was primarily due to
increases in legal and accounting fees, primarily due to our
increase in assets and operations and a full year of SEC
reporting obligations in 2006, compared to six months in 2005,
and increases in state franchise and income taxes due to the
increase in the number of properties owned from 14 properties in
2005 to 91 properties in 2006. The primary general and
administrative expense items are legal and accounting fees,
organizational costs, state franchise and income taxes, other
licenses and fees, and insurance.
Property Operating Expenses. Property
operating expenses increased to approximately $1.4 million
during the year ended December 31, 2006 compared to
$0 for the year ended December 31, 2005. The
increase was primarily due to the acquisition of certain
properties subsequent to December 31, 2005, for which we
initially paid certain operating expenses and are reimbursed by
the tenant in accordance with the respective lease agreements.
At December 31, 2005, our portfolio consisted of properties
in which each tenant paid substantially all expenses directly.
The primary property operating expense items are repairs and
maintenance, property taxes, and insurance.
Property and Asset Management Fees. Pursuant
to the advisory agreement with our advisor, we are required to
pay to our advisor a monthly asset management fee equal to 1/12
of 0.25% of the aggregate asset value of our properties
determined in accordance with the advisory agreement as of the
last day of the preceding month. Pursuant to the property
management agreement with our advisor, we are required to pay to
22
our advisor a property management and leasing fee in an amount
equal to 2.0% of gross revenues determined pursuant to the
agreement, less all payments to third-party management
subcontractors.
Property and asset management fees increased approximately
$898,000 to approximately $937,000 for the year ended
December 31, 2006 compared to approximately $39,000 for the
year ended December 31, 2005. Property management fees
increased approximately $336,000 to approximately $350,000 in
2006 from approximately $14,000 in 2005. The increase in
property management fees was primarily due to an increase in
rental income to approximately $18.4 million in 2006 from
approximately $742,000 in 2005. Asset management fees increased
approximately $562,000 to approximately $587,000 in 2006 from
approximately $25,000 in 2005. The increase in asset management
fees was primarily due to an increase in the aggregate book
value of properties owned to approximately $444.0 million
at December 31, 2006 from approximately $91.6 million
at December 31, 2005.
Depreciation & Amortization
Expenses. Depreciation and amortization expenses
increased approximately $6.3 million to approximately
$6.5 million for the year ended December 31, 2006
compared to approximately $221,000 for the year ended
December 31, 2005. The increase was primarily due to an
increase in the average aggregate book value of properties owned
to approximately $443.9 million at December 31, 2006
from approximately $91.6 million at December 31, 2005
and the recording of depreciation and amortization for
12 months during 2006 compared to three months during 2005.
The increase in aggregate book value is due to the acquisition
of 77 new properties during 2006 and the ownership of the 14
properties acquired during 2005 for a full year in 2006.
Interest Income. Interest income increased
approximately $475,000 to approximately $503,000 during the year
ended December 31, 2006 compared to approximately $28,000
for the year ended December 31, 2005. The increase was
primarily due to having higher uninvested cash throughout the
year due to proceeds from this offering. Cash and cash
equivalents was approximately $37.6 million at
December 31, 2006 compared to approximately
$4.6 million at December 31, 2005.
Interest Expense. Interest expense increased
approximately $8.4 million to approximately
$8.9 million for the year ended December 31, 2006
compared to approximately $467,000 during the year ended
December 31, 2005. The increase was primarily due to an
increase in the average mortgage notes payable outstanding
during 2006 to approximately $142.5 million from
approximately $33.4 million during 2005 and the recording
of interest expense for 12 months during 2006 compared to
four months during 2005. The increase in average mortgage notes
payable was primarily due to the acquisition of 77 new
properties during 2006 and the ownership of the 14 properties
acquired during 2005 for a full year in 2006.
Net Income. Net income increased approximately
$1.5 million to approximately $1.3 million for the
year ended December 31, 2006 compared to a net loss of
approximately $115,000 for the year ended December 31,
2005. The increase was primarily due to the acquisition and
ownership of 77 new properties during 2006 and the ownership of
the 14 properties acquired during 2005 for a full year in 2006.
Our property acquisitions during the year ended
December 31, 2006 were financed in part with short-term and
long-term notes payable as discussed in Note 5 to our
consolidated financial statements. Our interest expense in
future periods will vary based on our level of future
borrowings, which will depend on the level of proceeds raised in
this offering, the cost of borrowings, and the opportunity to
acquire real estate assets which meet our investment objectives.
Year
Ended December 31, 2005 Compared to the Period from
September 29, 2004 (Date of Inception) to December 31,
2004
As previously disclosed, we commenced our principal operations
on September 23, 2005 and we made our initial real estate
acquisition on September 26, 2005. As a result, our
consolidated financial results for the year ended
December 31, 2005 are not comparable to the results for the
period from September 29, 2004 (date of inception) to
December 31, 2004.
23
Results of operations for the year ended December 31, 2005
primarily consisted of the following:
Real Estate Operations. Rental income was
approximately $742,000, depreciation and amortization expense
was approximately $221,000, property and asset management fees
were approximately $39,000, and interest expense was
approximately $467,000 for the year ended December 31,
2005. All of such costs were directly related to the timing of
our real estate acquisitions during 2005. We acquired our
initial property on September 26, 2005, and 13 additional
properties during the fourth quarter of 2005.
General and Administrative Expenses. General
and administrative expenses for the year ended December 31,
2005 totaled approximately $156,000, constituting 21.0% of total
revenues. The primary components of general and administrative
expenses were board of directors fees, legal fees, accounting
fees, and organizational costs. Such expenses
represented approximately six months of expense as we incurred
no general and administrative expenses prior to the
June 27, 2005, the effective date of this offering.
We sustained a net loss for the year ended December 31,
2005 of approximately $115,000, primarily as a result of
incurring overhead-related general and administrative expenses,
depreciation and amortization expenses and interest expense
without sufficient rental income from properties to cover the
costs.
Portfolio
Information
As of December 31, 2006, we owned 91 properties located in
26 states, all of which were 100% leased with an average
lease term remaining of approximately 13.2 years.
As of December 31, 2006, our five highest geographic
concentrations were as follows:
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage of 2006
|
|
|
|
Total Number
|
|
|
Rentable
|
|
|
2006 Annualized
|
|
|
Annualized Gross
|
|
Location
|
|
of Properties
|
|
|
Square Feet
|
|
|
Gross Base Rents
|
|
|
Base Rent
|
|
|
Texas
|
|
|
9
|
|
|
|
468,515
|
|
|
$
|
3,917,448
|
|
|
|
11
|
%
|
Kansas
|
|
|
5
|
|
|
|
314,785
|
|
|
|
3,241,765
|
|
|
|
9
|
%
|
Missouri
|
|
|
7
|
|
|
|
144,363
|
|
|
|
3,113,324
|
|
|
|
9
|
%
|
Michigan
|
|
|
5
|
|
|
|
144,561
|
|
|
|
2,757,480
|
|
|
|
8
|
%
|
Illinois
|
|
|
5
|
|
|
|
354,551
|
|
|
|
2,606,670
|
|
|
|
8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31
|
|
|
|
1,426,775
|
|
|
$
|
15,636,687
|
|
|
|
45
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of December 31, 2006, our five highest tenant industry
concentrations were as follows:
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage of 2006
|
|
|
|
Total Number
|
|
|
Rentable
|
|
|
2006 Annualized
|
|
|
Annualized Gross
|
|
Industry
|
|
of Leases
|
|
|
Square Feet
|
|
|
Gross Base Rent
|
|
|
Base Rent
|
|
|
Drugstore
|
|
|
29
|
|
|
|
375,975
|
|
|
$
|
8,648,280
|
|
|
|
25
|
%
|
Specialty retail
|
|
|
15
|
|
|
|
422,990
|
|
|
|
4,103,342
|
|
|
|
12
|
%
|
Automotive parts
|
|
|
18
|
|
|
|
232,017
|
|
|
|
4,020,941
|
|
|
|
12
|
%
|
Home improvement
|
|
|
3
|
|
|
|
366,703
|
|
|
|
2,191,240
|
|
|
|
6
|
%
|
Distribution
|
|
|
3
|
|
|
|
247,400
|
|
|
|
2,183,809
|
|
|
|
6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
68
|
|
|
|
1,645,085
|
|
|
$
|
21,147,612
|
|
|
|
61
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24
As of December 31, 2006, our five highest tenant
concentrations were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage of 2006
|
|
|
|
Total Number
|
|
|
2006 Annualized
|
|
|
Annualized Gross
|
|
Tenant
|
|
of Leases
|
|
|
Gross Base Rent
|
|
|
Base Rent
|
|
|
Walgreens drugstore
|
|
|
8
|
|
|
$
|
2,998,885
|
|
|
|
9
|
%
|
CVS drugstore
|
|
|
11
|
|
|
|
2,929,894
|
|
|
|
9
|
%
|
Rite Aid drugstore
|
|
|
10
|
|
|
|
2,719,501
|
|
|
|
8
|
%
|
Lowes home improvement
store
|
|
|
3
|
|
|
|
2,191,240
|
|
|
|
6
|
%
|
FedEx distribution facility
|
|
|
3
|
|
|
|
2,183,809
|
|
|
|
6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
35
|
|
|
$
|
13,023,329
|
|
|
|
38
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For more information on our portfolio diversification and
statistics, see Item 2 Properties
above.
Funds
From Operations
We believe that funds from operations (FFO) is a
beneficial indicator of the performance of a REIT. Because FFO
calculations exclude such factors as depreciation and
amortization of real estate assets and gains or losses from
sales of operating real estate assets (which can vary among
owners of identical assets in similar conditions based on
historical cost accounting and useful-life estimates), they
facilitate comparisons of operating performance between periods
and between other REITs. Our management believes that accounting
for real estate assets in accordance with GAAP implicitly
assumes that the value of real estate assets diminishes
predictability over time. Since real estate values have
historically risen or fallen with market conditions, many
industry investors and analysts have considered the presentation
of operating results for real estate companies that use
historical cost accounting to be insufficient by themselves. As
a result, we believe that the use of FFO, together with the
required GAAP presentations, provide a more complete
understanding of our performance relative to our competitors and
a more informed and appropriate basis on which to make decisions
involving operating, financing, and investing activities. Other
REITs may not define FFO in accordance with the current National
Association of Real Estate Investment Trusts
(NAREIT) definition (as we do) or may interpret the
current NAREIT definition differently than we do.
FFO is a non-GAAP financial measure and does not represent net
income as defined by GAAP. Net income as defined by GAAP is the
most relevant measure in determining our operating performance
because FFO includes adjustments that investors may deem
subjective, such as adding back expenses such as depreciation
and amortization. Accordingly, FFO should not be considered as
an alternative to net income as an indicator of our operating
performance.
Our calculation of FFO is presented in the following table for
the period ended as indicated:
|
|
|
|
|
|
|
|
|
|
|
Year Ended
|
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
2006
|
|
|
2005
|
|
|
Net income (loss)
|
|
$
|
1,345,996
|
|
|
$
|
(114,591
|
)
|
Add:
|
|
|
|
|
|
|
|
|
Depreciation of real estate assets
|
|
|
4,396,460
|
|
|
|
151,472
|
|
Amortization of lease related costs
|
|
|
2,072,906
|
|
|
|
69,939
|
|
|
|
|
|
|
|
|
|
|
FFO
|
|
$
|
7,815,362
|
|
|
$
|
106,820
|
|
|
|
|
|
|
|
|
|
|
Set forth below is additional information (often considered in
conjunction with FFO) that may be helpful in assessing our
operating results:
|
|
|
|
|
In order to recognize revenues on a straight-line basis over the
terms of the respective leases, we recognized additional revenue
by straight-lining rental revenue of approximately $813,000 and
approximately $34,000 during the years ended December 31,
2006 and 2005, respectively.
|
25
|
|
|
|
|
Amortization of deferred financing costs totaled approximately
$548,000 and approximately $18,000 during the years ended
December 31, 2006 and 2005, respectively.
|
Liquidity
and Capital Resources
We expect to continue to raise capital through this ongoing
Offering of common stock and to utilize the net proceeds of this
offering and proceeds from secured or unsecured financings to
complete future property acquisitions. As of December 31,
2006, we had received and accepted subscriptions for
30,691,204 shares of common stock in this offering for gross
proceeds of approximately $306.5 million.
Short-term
Liquidity and Capital Resources
We expect to meet our short-term liquidity requirements through
net cash provided by property operations and proceeds from this
offering. We expect our operating cash flows to increase as
additional properties are added to our portfolio. We expect that
approximately 88.6% of the gross proceeds from this offering will
be invested in real estate, approximately 9.2% will be used to
pay sales commissions, dealer manager fees and offering and
organizational costs, with the remaining 2.2% used to pay
acquisition and advisory fees and acquisition expenses. The
offering and organizational costs associated with this offering
are initially paid by our advisor, which we reimburse for such
costs up to 1.5% of the capital raised by us in this offering. As
of December 31, 2006, Cole Advisors II had paid
approximately $3.8 million of offering and organization
costs since the inception of this offering and we had reimbursed
our advisor for approximately $3.8 million of such costs,
of which approximately $59,000 was expensed as organizational
costs.
During the period from January 1, 2007 to March 19,
2007, we completed the acquisition of 14 single-tenant
properties and three multi-tenant properties in separate
transactions for an aggregate purchase price of approximately
$229.4 million, exclusive of closing costs. The
acquisitions were funded with proceeds from this offering and
approximately $145.9 million in aggregate proceeds from
15 loans. Additionally, we issued an approximately
$6.3 million mortgage note payable on a property owned as
of December 31, 2006.
On December 15, 2006, our board of directors declared a
daily distribution of $0.0017808 per share for stockholders
of record as of the close of business on each day of the period
commencing on January 1, 2007 and ending on March 31,
2007. The distributions for the period commencing on
January 1, 2007 and ending on January 31, 2007 were
paid in February 2007 and totaled approximately
$1.8 million, of which approximately $950,000 was
reinvested in shares through our distribution reinvestment
program. The distributions for the period commencing on
February 1, 2007 and ending on February 28, 2007 were
paid in March 2007 and totaled approximately $1.8 million,
of which approximately $970,000 was reinvested in shares through
our distribution reinvestment program.
Long-term
Liquidity and Capital Resources
We expect to meet our long-term liquidity requirements through
proceeds from the sale of our common stock, including through
this offering, proceeds from secured or unsecured financings from
banks and other lenders, the selective and strategic sale of
properties and net cash flows from operations. We expect that
our primary uses of capital will be for property acquisitions,
for the payment of tenant improvements, for the payment of
offering-related costs, for the payment of operating expenses,
including interest expense on any outstanding indebtedness, and
for the payment of distributions to our stockholders.
We expect that substantially all net cash generated from
operations will be used to pay distributions to our stockholders
after certain capital expenditures, including tenant
improvements and leasing commissions, are paid at the
properties; however, we may use other sources to fund
distributions as necessary. To the extent that cash flows from
operations are lower due to fewer properties being acquired or
lower returns on the properties, distributions paid to our
stockholders may be lower. We expect that substantially all net
cash resulting from equity or debt financing will be used to
fund acquisitions, certain capital expenditures identified at
acquisition, repayments of outstanding debt, or distributions to
our stockholders. Over the long term, we intend to reduce our
aggregate borrowings as a percentage of our real estate assets.
26
As of December 31, 2006, we had cash and cash equivalents
of approximately $37.6 million, which we expect to be used
primarily to invest in additional real estate, pay operating
expenses and pay stockholder distributions.
As of December 31, 2006, we had approximately
$218.3 million of debt outstanding consisting of
approximately $215.6 million in fixed rate, term mortgage
loans and approximately $2.7 million in variable rate term
mortgage loans. The weighted average interest rate at
December 31, 2006 under the fixed rate term mortgage loans
was 5.72% and the variable rate term mortgage interest rate is
stated at LIBOR plus 2.0%. Additionally the ratio of debt to
total assets was approximately 44% and the weighted average
years to maturity was 7.70 years.
Our contractual obligations as of December 31, 2006 are as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payments Due by Period(2)
|
|
|
|
|
|
|
Less Than
|
|
|
1-3
|
|
|
4-5
|
|
|
More Than
|
|
Contractual Obligations
|
|
Total
|
|
|
1 Year
|
|
|
Years
|
|
|
Years
|
|
|
5 Years
|
|
|
Principal payments
fixed rate debt
|
|
$
|
215,555,559
|
|
|
$
|
355,849
|
|
|
$
|
819,031
|
|
|
$
|
39,518,216
|
|
|
$
|
148,862,462
|
|
Interest payments
fixed rate debt
|
|
|
100,009,247
|
|
|
|
12,413,771
|
|
|
|
36,546,514
|
|
|
|
18,537,916
|
|
|
|
32,511,046
|
|
Principal payments
variable rate debt
|
|
|
2,710,357
|
|
|
|
2,710,357
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest payments
variable rate debt
|
|
|
198,300
|
|
|
|
198,300
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
318,473,463
|
|
|
$
|
15,678,277
|
|
|
$
|
63,365,545
|
|
|
$
|
58,056,132
|
|
|
$
|
181,373,508
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
A rate of 7.32% was used to calculate the variable debt payment
obligations in future periods. This is the rate effective as of
December 31, 2006. |
|
(2) |
|
Principle paydown amounts are included in payments due by period
amounts. |
Our charter prohibits us from incurring debt that would cause
our borrowings to exceed the greater of 60% of our assets,
valued at the greater of the aggregate cost (before depreciation
and other non-cash reserves) or fair market value of all assets
owned by us, unless approved by a majority of our independent
directors and disclosed to our stockholders in our next
quarterly report. During the fourth quarter of 2005 and the
quarter ended March 31, 2006, the independent directors
approved borrowings that caused our leverage ratio at certain
times to exceed the 60% limitation. The independent directors
believed such borrowing levels were justified for the following
reasons:
|
|
|
|
|
the borrowings enabled us to purchase the properties and earn
rental income more quickly;
|
|
|
|
|
the property acquisitions were likely to increase the net
offering proceeds from this offering by allowing
us to show potential investors actual acquisitions, thereby
improving our ability to meet our goal of acquiring a
diversified portfolio of properties to generate current income
for investors and preserve investor capital; and
|
|
|
|
|
based on expected equity sales at the time and scheduled
maturities of our short-term variable rate debt, leverage was
likely to exceed the charters guidelines only for a
limited period of time.
|
27
Cash Flow
Analysis
Year
Ended December 31, 2006 Compared to the Year Ended
December 31, 2005
Operating
Activities
Net cash provided by operating activities increased
approximately $7.5 million to approximately
$7.9 million for the year ended December 31, 2006,
compared to net cash provided by operating activities of
approximately $398,000 for the year ended December 31,
2005. The increase was primarily due to net income for the
period of approximately $1.3 million and depreciation and
amortization expenses totaling approximately $7.0 million
offset by increases in rents and tenant receivables of
approximately $2.4 million. See Results of
Operations for a more complete discussion of the factors
impacting our operating performance.
Investing
Activities
Net cash used in investing activities increased approximately
$226.6 million to approximately $320.2 million for the
year ended December 31, 2006, compared to net cash used in
investing activities of approximately $93.6 million for the
year ended December 31, 2005. The increase was primarily
due to the acquisition of 77 real estate properties during 2006
compared to the acquisition of 14 properties during 2005 and an
approximately $2.2 million increase in restricted cash, due
to an increase cash held in escrow pending the issuance of
shares to investors.
Financing
Activities
Net cash provided by financing activities increased
approximately $247.7 million to approximately
$345.3 million for the year ended December 31, 2006,
compared to net cash provided by financing activities of
approximately $97.6 million for the year ended
December 31, 2005. The increase was primarily due to an
increase in net proceeds from the issuance of common stock in
this offering of approximately $222.8 million and an
increase in proceeds from the issuance of mortgage and affiliate
notes of approximately $93.9 million, offset by an increase
in repayments of mortgage and affiliate notes payable of
approximately $63.5 million. The increase in proceeds from
issuance of mortgage and affiliate notes payable was due to the
issuance of 59 new mortgages in 2006 compared to nine new
mortgages in 2005. The increase in repayments of mortgage and
affiliate notes payable was due to the repayment of short-term
variable rate debt at its maturity during 2006 and the repayment
of approximately $4.5 million of affiliate notes payable
during 2006.
Year
Ended December 31, 2005 Compared to the Period from
September 29, 2004 (Date of Inception) to December 31,
2004
As previously disclosed, we commenced our principal operations
on September 23, 2005 and we made our initial real estate
acquisition on September 26, 2005. As a result, our
consolidated cash flows for the year ended December 31,
2005 are not comparable to the cash flows for the period from
September 29, 2004 (date of inception) to December 31,
2004.
Operating
Activities
Net cash provided by operating activities was approximately
$398,000 for the year ended December 31, 2005, primarily
due to a net loss for the period of approximately $115,000
offset by depreciation and amortization expenses totaling
approximately $241,000 and an increase in accounts payable and
accrued expenses of approximately $283,000. Our initial property
acquisition was made on September 26, 2005. See
Results of Operations for a more complete discussion
of the factors impacting our operating performance.
Investing
Activities
Net cash used in investing activities was approximately
$93.6 million for the year ended December 31, 2005,
primarily due to approximately $91.8 million used on the
acquisition of 14 real estate properties and their associated
intangible lease assets and acquisition costs and approximately
$1.8 million in restricted cash, which is held in escrow
pending the issuance of shares to investors.
28
Financing
Activities
Net cash provided by financing activities was approximately
$97.6 million for the year ended December 31, 2005,
primarily due to net proceeds from the issuance of common stock
in this offering of approximately $25.3 million, net
proceeds of $70.5 million from the issuance of notes in
connection with the acquisition of 14 properties and an
approximately $1.8 million liability related to investor
proceeds, which are held in escrow pending our acceptance of
subscriptions and the issuance of shares to the investors.
Election
as a REIT
We are taxed as a REIT under the Internal Revenue Code of 1986,
as amended. To qualify as a REIT, we must meet certain
organizational and operational requirements, including a
requirement to distribute at least 90% of our ordinary taxable
income to stockholders. As a REIT, we generally will not be
subject to federal income tax on taxable income that we
distribute to our stockholders. If we fail to qualify as a REIT
in any taxable year, we will then be subject to federal income
taxes on our taxable income for four years following the year
during which qualification is lost, unless the Internal Revenue
Service grants us relief under certain statutory provisions.
Such an event could materially adversely affect our net income
and net cash available for distribution to stockholders.
However, we believe that we are organized and operate in such a
manner as to qualify for treatment as a REIT for federal income
tax purposes. No provision for federal income taxes has been
made in our accompanying consolidated financial statements. We
are subject to certain state and local taxes related to the
operations of properties in certain locations, which have been
provided for in our accompanying financial statements.
Inflation
We are exposed to inflation risk as income from long-term leases
is the primary source of our cash flows from operations. There
are provisions in certain of our tenant leases that would
protect us from the impact of inflation such as step rental
increases and percentage rent provisions. However, due to the
long-term nature of the leases, the leases may not re-set
frequently enough to cover inflation.
Related-Party
Transactions and Agreements
We have entered into agreements with Cole Advisors II and
its affiliates, whereby we pay certain fees to, or reimburse
certain expenses of, Cole Advisors II or its affiliates for
acquisition and advisory fees and expenses, organization and
offering costs, sales commissions, dealer manager fees, asset
and property management fees and reimbursement of operating
costs. See Note 9 to our consolidated financial statements
included in this annual report on
Form 10-K
for a discussion of the various related-party transactions,
agreements and fees.
Conflicts
of Interest
Affiliates of Cole Advisors II act as sponsor, general
partner or advisor to various private real estate limited
partnerships and a REIT that offered its shares pursuant to an
exemption from registration. As such, there are conflicts of
interest where Cole Advisors II or its affiliates, while
serving in the capacity as sponsor, general partner or advisor
for another Cole sponsored program, may be in competition with
us in connection with property acquisitions, property
dispositions, and property management. The compensation
arrangements between affiliates of Cole Advisors II and
these other Cole sponsored programs could influence its advice
to us. See Risk Factors Conflicts of
Interest beginning on page 21 of the prospectus and
Conflicts of Interest beginning on page 65 of the
prospectus.
Subsequent
Events
Certain events subsequent to December 31, 2006 through
March 16, 2007, including the sale of shares of common
stock, the acquisition of 17 properties, the attainment of
additional mortgage financing, and the addition of various
extended rate lock agreements are discussed in Note 16 to
the consolidated financial statements included in our annual
report on
Form 10-K for the
year ended December 31, 2006.
29
Impact of
Recent Accounting Pronouncements
Reference is made to Note 1 to the consolidated financial
statements included in this annual report on Form 10-K regarding
the impact of recent accounting pronouncements.
Reference is made to Note 10 to the consolidated financial
statements included in our annual report on
Form 10-K
for the year ended December 31, 2006 regarding our adoption of SFAS No. 123R,
Share-based Payment.
Off
Balance Sheet Arrangements
As of December 31, 2006 and 2005, we had no off balance
sheet arrangements.
Increase in the Number of Shares Authorized Under our Charter
The following information replaces the risk factor under the risk captioned Our charter
permits our board of directors to issue stock with terms that may subordinate the rights of common
stockholders or discourage a third party from acquiring us in a manner that might result in a
premium price to our stockholders on page 24 of the prospectus:
Our charter permits our board of directors to issue up to 250,000,000 shares of stock. In
addition, our board of directors, without any action by our stockholders, may amend our charter
from time to time to increase or decrease the aggregate number of shares or the number of shares of
any class or series of stock that we have authority to issue. Our board of directors may classify
or reclassify any unissued common stock or preferred stock and establish the preferences,
conversion or other rights, voting powers, restrictions, limitations as to distributions,
qualifications and terms or conditions of redemption of any such stock. Thus, our board of
directors could authorize the issuance of preferred stock with terms and conditions that could have
a priority as to distributions and amounts payable upon liquidation over the rights of the holders
of our common stock. Preferred stock could also have the effect of delaying, deferring or
preventing a change in control of us, including an extraordinary transaction (such as a merger,
tender offer or sale of all or substantially all of our assets) that might provide a premium price
for holders of our common stock. See the Description of Shares Preferred Stock section of this
prospectus.
The following information replaces the risk factor under the risk captioned Your interest in
Cole REIT II will be diluted if we issue additional shares on page 27 of the prospectus:
Existing stockholders and potential investors in this offering do not have preemptive rights
to any shares issued by us in the future. Our charter currently has authorized 250,000,000 shares
of stock, of which 240,000,000 shares are designated as common stock and 10,000,000 are designated
as preferred stock. Subject to any limitations set forth under Maryland law, our board of directors
may increase the number of authorized shares of stock, increase or decrease the number of shares of
any class or series of stock designated, or reclassify any unissued shares without the necessity of
obtaining stockholder approval. All of such shares may be issued in the discretion of our board of
directors. Therefore, in the event that we (1) sell shares in this offering or sell additional
shares in the future, including those issued pursuant to our distribution reinvestment plan, (2)
sell securities that are convertible into shares of our common stock, (3) issue shares of our
common stock in a private offering of securities to institutional investors, (4) issue shares of
our common stock upon the exercise of the options granted to our independent directors, (5) issue
shares to our advisor, its successors or assigns, in payment of an outstanding fee obligation as
set forth under our advisory agreement, or (6) issue shares of our common stock to sellers of
properties acquired by us in connection with an exchange of limited partnership interests of Cole
OP II, existing stockholders and investors purchasing shares in this offering will likely
experience dilution of their equity investment in us. In addition, the partnership agreement for
Cole OP II contains provisions that would allow, under certain circumstances, other entities,
including other Cole-sponsored programs, to merge into or cause the exchange or conversion of their
interest for interests of Cole OP II. Because the limited partnership interests of Cole OP II may,
in the discretion of our board of directors, be exchanged for shares of our common stock, any
merger, exchange or conversion between Cole OP II and another entity ultimately could result in the
issuance of a substantial number of shares of our common stock, thereby diluting the percentage
ownership interest of other stockholders. Because of these and other reasons described in this
Risk Factors section, you should not expect to be able to own a significant percentage of our
shares.
The following replaces the information in the first sentence of the second paragraph under the
caption Description of Shares on page 112 of the prospectus:
Our charter authorizes us to issue up to 250,000,000 shares of stock, of which 240,000,000
shares are designated as common stock at $0.01 par value per share and 10,000,000 shares are
designated as preferred stock at $0.01 par value per share. Our board of directors may amend our
charter to increase or decrease the aggregate number of our authorized shares or the number of
shares of any class or series that we have authority to issue without any action by our
stockholders.
30
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
|
|
|
|
|
Page |
|
Audited Financial Statements of Cole Credit Property Trust II, Inc. |
|
|
|
|
|
|
|
|
|
Report of Independent Registered Accounting Firm |
|
|
F-4 |
|
Consolidated Balance Sheets as of December 31, 2006 and 2005 |
|
|
F-5 |
|
Consolidated Statements of Operations for the Years Ended December 31, 2006, 2005 and the
Period from Inception (September 29, 2004) to December 31, 2004 |
|
|
F-6 |
|
Consolidated Statements of Stockholders Equity for the Years Ended December 31, 2006, 2005
and the Period from Inception (September 29, 2004) to December 31, 2004 |
|
|
F-7 |
|
Consolidated
Statements of Cash Flows for the Years Ended December 31, 2006
and 2005
and the Period from Inception (September 29, 2004) to December 31, 2004 |
|
|
F-8 |
|
Notes to Consolidated Financial Statements |
|
|
F-9 |
|
|
|
|
|
|
Summary Financial Information of Businesses Acquired |
|
|
|
|
|
|
|
|
|
Tractor Supply Ankeny, Iowa (TS Ankeny Property) |
|
|
|
|
Overview |
|
|
F-29 |
|
Summary Financial Data Regarding Tractor Supply |
|
|
F-29 |
|
|
|
|
|
|
Office Max Orangeburg, South Carolina (OM Orangeburg Property) |
|
|
|
|
Overview |
|
|
F-30 |
|
Summary Financial Data Regarding Office Max |
|
|
F-30 |
|
|
|
|
|
|
Walgreens Cincinnati, Ohio (WG Cincinnati Property) |
|
|
|
|
Overview |
|
|
F-31 |
|
|
|
|
|
|
Walgreens
Sharonville, Ohio (WG Sharonville Property) |
|
|
|
|
Overview |
|
|
F-31 |
|
|
|
|
|
|
Walgreens
Madeira, Ohio (WG Madeira Property) |
|
|
|
|
Overview |
|
|
F-32 |
|
Summary Financial Data Regarding Walgreens |
|
|
F-32 |
|
|
|
|
|
|
Academy Sports Headquarters and Distribution Facility Katy, Texas (AS Katy Property) |
|
|
|
|
Overview |
|
|
F-33 |
|
Independent Auditors Report |
|
|
F-34 |
|
Audited Financial Statements of Property Acquired |
|
|
F-35 |
|
Statement of Revenues and Certain Operating Expenses for the year Ended December 31, 2006 |
|
|
F-35 |
|
Notes to the Statement of Revenues and Certain Operating Expenses |
|
|
F-36 |
|
|
|
|
|
|
One Pacific Place Omaha, Nebraska (MT Omaha Property) |
|
|
|
|
Overview |
|
|
F-38 |
|
Independent Auditors Report |
|
|
F-39 |
|
Audited Financial Statements of Property Acquired |
|
|
F-40 |
|
Statement of Revenues and Certain Operating Expenses for the year Ended June 30, 2006 and The
Six Months Ended December 31, 2006 |
|
|
F-40 |
|
Notes to the Statement of Revenues and Certain Operating Expenses |
|
|
F-41 |
|
|
|
|
|
|
Dicks Sporting Goods Amherst, New York (DK Amherst Property) |
|
|
|
|
Overview |
|
|
F-43 |
|
|
|
|
|
|
Chilis Paris, Texas (CH Paris Property) |
|
|
|
|
Overview |
|
|
F-43 |
|
|
|
|
|
|
Staples Clarksville, Indiana (ST Clarksville Property) |
|
|
|
|
Overview |
|
|
F-43 |
|
|
|
|
|
|
HOM Furniture Fargo, North Dakota (HM Fargo Property) |
|
|
|
|
Overview |
|
|
F-44 |
|
|
|
|
|
|
La-Z-Boy Newington, CT (LZ Newington Property) |
|
|
|
|
Overview |
|
|
F-44 |
|
|
|
|
|
|
Advance Auto Maryland Heights, MO (AA Maryland Heights Property) |
|
|
|
|
Overview |
|
|
F-44 |
|
|
|
|
|
|
Victoria Crossing Victoria, Texas (VC Victoria Property) |
|
|
|
|
Overview |
|
|
F-45 |
|
F-1
|
|
|
|
|
|
|
Page |
|
Gordmans Peoria, Illinois (GO Peoria Property) |
|
|
|
|
Overview |
|
|
F-45 |
|
|
|
|
|
|
Northern Tool and Equipment Blaine, Minnesota (NT Blaine Property) |
|
|
|
|
Overview |
|
|
F-46 |
|
|
|
|
|
|
Office Depot Enterprise, Alabama (OD Enterprise Property) |
|
|
|
|
Overview |
|
|
F-46 |
|
|
|
|
|
|
Sack n Save/OReilly Auto Parts Dallas, Texas (MT Dallas Property) |
|
|
|
|
Overview |
|
|
F-46 |
|
|
|
|
|
|
ABX Air Coventry, Rhode Island (AB Coventry Property) |
|
|
|
|
Overview |
|
|
F-47 |
|
|
|
|
|
|
AT&T Beaumont, Texas (AT Beaumont Property) |
|
|
|
|
Overview |
|
|
F-47 |
|
|
|
|
|
|
Summary Financial Information of Probable Business Acquisitions |
|
|
|
|
|
|
|
|
|
Walgreens Shreveport, Louisiana (WG Shreveport Property) |
|
|
|
|
Overview |
|
|
F-48 |
|
|
|
|
|
|
Walgreens Gainesville, Florida (WG Gainesville Property) |
|
|
|
|
Overview |
|
|
F-48 |
|
Summary Financial Data Regarding Walgreens |
|
|
F-48 |
|
|
|
|
|
|
Tractor Supply Greenfield, Michigan (TS Greenfield Property) |
|
|
|
|
Overview |
|
|
F-49 |
|
|
|
|
|
|
Tractor Supply Marinette, Wisconsin (TS Marinette Property) |
|
|
|
|
Overview |
|
|
F-49 |
|
|
|
|
|
|
Tractor Supply Paw Paw, Michigan (TS Paw Paw Property) |
|
|
|
|
Overview |
|
|
F-49 |
|
Summary Financial Data Regarding Tractor Supply |
|
|
F-50 |
|
|
|
|
|
|
Sams Club Anderson, South Carolina (SC Anderson Property) |
|
|
|
|
Overview |
|
|
F-50 |
|
Summary Financial Data Regarding Wal-Mart |
|
|
F-50 |
|
|
|
|
|
|
Apria Healthcare St. John, Missouri (AH St. John Property) |
|
|
|
|
Overview |
|
|
F-51 |
|
Summary Financial Data Regarding Apria Healthcare |
|
|
F-51 |
|
|
|
|
|
|
Rite Aid Fredericksburg, Virginia (RA Fredericksburg Property) |
|
|
|
|
Overview |
|
|
F-52 |
|
Summary Financial Data Regarding Rite Aid |
|
|
F-52 |
|
|
|
|
|
|
Academy Sports Sherwood, Arkansas (AS Sherwood Property) |
|
|
|
|
Overview |
|
|
F-53 |
|
|
|
|
|
|
Center at 7500 Jenison, Michigan (MT Jenison Property) |
|
|
|
|
Overview |
|
|
F-53 |
|
|
|
|
|
|
Cost-U-Less, St. Croix, US Virgin Island (CU St. Croix Property) |
|
|
|
|
Overview |
|
|
F-53 |
|
|
|
|
|
|
Gallina Centro Collierville, Tennessee (MT Collierville Property) |
|
|
|
|
Overview |
|
|
F-54 |
|
F-2
|
|
|
|
|
|
|
Page |
|
Unaudited Pro Forma Financial Statements Cole Credit Property Trust II, Inc. |
|
|
|
|
|
|
|
|
|
Aggregated Pro Forma Financial Statements (Unaudited) |
|
|
F-55 |
|
Pro Forma Consolidated Balance Sheet as of December 31, 2006 (Unaudited) |
|
|
F-55 |
|
Pro Forma Consolidated Statement of Operations for the Year Ended December 31, 2006 (Unaudited) |
|
|
F-56 |
|
Notes to Pro Forma Consolidated Financial Statements (Unaudited) |
|
|
F-57 |
|
F-3
REPORT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of
Cole Credit Property Trust II, Inc.
Phoenix, Arizona
We have audited the accompanying consolidated balance sheets of
Cole Credit Property Trust II, Inc. and subsidiaries
(the Company) as of December 31, 2006 and 2005
and the related consolidated statements of operations,
stockholders equity, and cash flows for the years ended
December 31, 2006, 2005 and for the period from
September 29, 2004 (date of inception) to December 31,
2004. Our audits also included the financial statement schedule
listed in the index at Item 15. These financial statements
and financial statement schedule are the responsibility of the
Companys management. Our responsibility is to express an
opinion on these financial statements and financial statement
schedule based on our audits.
We conducted our audits in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are
free of material misstatement. The Company is not required to
have, nor were we engaged to perform, an audit of its internal
control over financial reporting. Our audits included
consideration of internal control over financial reporting as a
basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion
on the effectiveness of the Companys internal control over
financial reporting. Accordingly, we express no such opinion. An
audit also includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements presents
fairly, in all material respects, the financial position of the
Company as of December 31, 2006 and 2005 and the results of
its operations and its cash flows for the years ended
December 31, 2006, 2005 and for the period from
September 29, 2004 (date of inception) to December 31,
2004, in conformity with accounting principles generally
accepted in the United States of America. Also, in our opinion,
such financial statement schedule, when considered in relation
to the basic consolidated financial statements taken as a whole,
present fairly, in all material respects, the information set
forth therein.
The Company was in the development stage at December 31,
2004; during the year ended December 31, 2005, the Company
completed its development activities and commenced its planned
principal operations.
As discussed in Note 11 to the consolidated financial
statements, effective January 1, 2006, the Company adopted
Statement of Financial Accounting Standard No. 123(R),
Share-Based Payment, using the modified prospective
method.
/s/ DELOITTE &
TOUCHE, LLP
Phoenix, Arizona
March 20, 2007
F-4
COLE
CREDIT PROPERTY TRUST II, INC.
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
|
2006
|
|
|
2005
|
|
|
ASSETS:
|
Real estate assets, at cost:
|
|
|
|
|
|
|
|
|
Land
|
|
$
|
109,506,269
|
|
|
$
|
23,854,308
|
|
Buildings and improvements, less
accumulated depreciation of $4,547,932 and $151,472 at
December 31, 2006 and 2005, respectively
|
|
|
282,468,749
|
|
|
|
57,338,359
|
|
Acquired intangible lease assets,
less accumulated amortization of $2,251,172 and $71,881 at
December 31, 2006 and 2005, respectively
|
|
|
54,569,023
|
|
|
|
10,425,618
|
|
|
|
|
|
|
|
|
|
|
Total real estate assets
|
|
|
446,544,041
|
|
|
|
91,618,285
|
|
Cash and cash equivalents
|
|
|
37,566,490
|
|
|
|
4,575,144
|
|
Restricted cash
|
|
|
5,839,733
|
|
|
|
1,813,804
|
|
Rents and tenant receivables, net
|
|
|
2,432,536
|
|
|
|
36,001
|
|
Prepaid expenses, mortgage loan
deposits and other assets
|
|
|
4,248,973
|
|
|
|
11,928
|
|
Deferred financing costs, less
accumulated amortization of $565,946 and $17,964 at
December 31, 2006 and 2005, respectively
|
|
|
3,789,019
|
|
|
|
754,676
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
500,420,792
|
|
|
$
|
98,809,838
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS EQUITY:
|
Mortgage notes payable
|
|
$
|
218,265,916
|
|
|
$
|
66,804,041
|
|
Notes payable to affiliates
|
|
|
|
|
|
|
4,453,000
|
|
Accounts payable and accrued
expenses
|
|
|
2,016,343
|
|
|
|
282,797
|
|
Escrowed investor proceeds
|
|
|
5,710,730
|
|
|
|
1,813,804
|
|
Due to affiliates
|
|
|
67,608
|
|
|
|
41,384
|
|
Acquired below market lease
intangibles, less accumulated amortization of $96,484 and $52 at
December 31, 2006 and 2005, respectively
|
|
|
2,649,374
|
|
|
|
14,637
|
|
Distributions payable
|
|
|
1,612,094
|
|
|
|
195,209
|
|
Deferred rent and other liabilities
|
|
|
340,974
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
230,663,039
|
|
|
|
73,604,872
|
|
|
|
|
|
|
|
|
|
|
Redeemable Common Stock
|
|
|
3,521,256
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS
EQUITY:
|
Preferred stock, $0.01 par
value; 10,000,000 shares authorized, none issued and
outstanding
|
|
|
|
|
|
|
|
|
Common stock, $.01 par value;
240,000,000 and 90,000,000 shares authorized, 30,691,204
and 2,832,387 shares issued and outstanding at
December 31, 2006 and 2005, respectively
|
|
|
306,912
|
|
|
|
28,324
|
|
Capital in excess of par value
|
|
|
273,385,603
|
|
|
|
25,486,442
|
|
Accumulated distributions in
excess of earnings
|
|
|
(7,456,018
|
)
|
|
|
(309,800
|
)
|
|
|
|
|
|
|
|
|
|
Total stockholders equity
|
|
|
266,236,497
|
|
|
|
25,204,966
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and
stockholders equity
|
|
$
|
500,420,792
|
|
|
$
|
98,809,838
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these
consolidated financial statements.
F-5
COLE
CREDIT PROPERTY TRUST II, INC.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended
|
|
|
Year Ended
|
|
|
Period from Inception
|
|
|
|
December 31,
|
|
|
December 31,
|
|
|
(September 29, 2004) to
|
|
|
|
2006
|
|
|
2005
|
|
|
December 31, 2004
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
Rental income
|
|
$
|
18,357,174
|
|
|
$
|
741,669
|
|
|
$
|
|
|
Tenant reimbursement income
|
|
|
1,162,333
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenue
|
|
|
19,519,507
|
|
|
|
741,669
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative
|
|
|
952,789
|
|
|
|
156,252
|
|
|
|
|
|
Property operating expenses
|
|
|
1,416,745
|
|
|
|
|
|
|
|
|
|
Property and asset management fees
|
|
|
936,977
|
|
|
|
38,768
|
|
|
|
|
|
Depreciation
|
|
|
4,396,460
|
|
|
|
151,472
|
|
|
|
|
|
Amortization
|
|
|
2,072,906
|
|
|
|
69,939
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
|
9,775,877
|
|
|
|
416,431
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate operating
income
|
|
|
9,743,630
|
|
|
|
325,238
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income
(expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income
|
|
|
503,479
|
|
|
|
27,557
|
|
|
|
|
|
Interest expense
|
|
|
(8,901,113
|
)
|
|
|
(467,386
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total other income
|
|
|
(8,397,634
|
)
|
|
|
(439,829
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
1,345,996
|
|
|
$
|
(114,591
|
)
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of
common shares outstanding
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted
|
|
|
13,275,635
|
|
|
|
411,909
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per common
share
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted
|
|
$
|
0.10
|
|
|
$
|
(0.28
|
)
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these
consolidated financial statements.
F-6
COLE
CREDIT PROPERTY TRUST II, INC.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
|
|
|
|
Common Stock
|
|
|
Capital in
|
|
|
Distributions
|
|
|
Total
|
|
|
|
Number of
|
|
|
Par
|
|
|
Excess of Par
|
|
|
in Excess of
|
|
|
Stockholders
|
|
|
|
Shares
|
|
|
Value
|
|
|
Value
|
|
|
Earnings
|
|
|
Equity
|
|
|
Balance, September 29,
2004 (Date of Inception)
|
|
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
Issuance of Common Stock to Cole
Holdings Corporation
|
|
|
20,000
|
|
|
|
200
|
|
|
|
199,800
|
|
|
|
|
|
|
|
200,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31,
2004
|
|
|
20,000
|
|
|
|
200
|
|
|
|
199,800
|
|
|
|
|
|
|
|
200,000
|
|
Issuance of common stock
|
|
|
2,812,387
|
|
|
|
28,124
|
|
|
|
28,080,997
|
|
|
|
|
|
|
|
28,109,121
|
|
Distributions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(195,209
|
)
|
|
|
(195,209
|
)
|
Commissions on stock sales and
related dealer manager fees
|
|
|
|
|
|
|
|
|
|
|
(2,375,780
|
)
|
|
|
|
|
|
|
(2,375,780
|
)
|
Other offering costs
|
|
|
|
|
|
|
|
|
|
|
(418,575
|
)
|
|
|
|
|
|
|
(418,575
|
)
|
Net loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(114,591
|
)
|
|
|
(114,591
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31,
2005
|
|
|
2,832,387
|
|
|
|
28,324
|
|
|
|
25,486,442
|
|
|
|
(309,800
|
)
|
|
|
25,204,966
|
|
Issuance of common stock
|
|
|
27,858,817
|
|
|
|
278,588
|
|
|
|
277,953,219
|
|
|
|
|
|
|
|
278,231,807
|
|
Distributions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(8,492,214
|
)
|
|
|
(8,492,214
|
)
|
Commissions on stock sales and
related dealer manager fees
|
|
|
|
|
|
|
|
|
|
|
(23,254,138
|
)
|
|
|
|
|
|
|
(23,254,138
|
)
|
Other offering costs
|
|
|
|
|
|
|
|
|
|
|
(3,332,577
|
)
|
|
|
|
|
|
|
(3,332,577
|
)
|
Stock option compensation expense
|
|
|
|
|
|
|
|
|
|
|
53,913
|
|
|
|
|
|
|
|
53,913
|
|
Redeemable common stock
|
|
|
|
|
|
|
|
|
|
|
(3,521,256
|
)
|
|
|
|
|
|
|
(3,521,256
|
)
|
Net income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,345,996
|
|
|
|
1,345,996
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31,
2006
|
|
|
30,691,204
|
|
|
$
|
306,912
|
|
|
$
|
273,385,603
|
|
|
$
|
(7,456,018
|
)
|
|
$
|
266,236,497
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these
consolidated financial statements.
F-7
COLE
CREDIT PROPERTY TRUST II, INC.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended
|
|
|
Year Ended
|
|
|
Period from Inception
|
|
|
|
December 31,
|
|
|
December 31,
|
|
|
(September 29, 2004) to
|
|
|
|
2006
|
|
|
2005
|
|
|
December 31, 2004
|
|
|
Cash Flows from Operating
Activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
1,345,996
|
|
|
$
|
(114,591
|
)
|
|
$
|
|
|
Adjustments to reconcile net
income (loss) to net cash provided by operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
4,396,460
|
|
|
|
151,472
|
|
|
|
|
|
Amortization
|
|
|
2,630,841
|
|
|
|
89,793
|
|
|
|
|
|
Stock compensation expense
|
|
|
53,913
|
|
|
|
|
|
|
|
|
|
Changes in assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Rents and tenant receivables
|
|
|
(2,396,534
|
)
|
|
|
(36,001
|
)
|
|
|
|
|
Prepaid expenses and other assets
|
|
|
(269,945
|
)
|
|
|
(11,928
|
)
|
|
|
|
|
Accounts payable and accrued
expenses
|
|
|
1,733,546
|
|
|
|
282,797
|
|
|
|
|
|
Deferred rent and other liabilities
|
|
|
340,974
|
|
|
|
|
|
|
|
|
|
Due to affiliates
|
|
|
26,224
|
|
|
|
36,199
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating
activities
|
|
|
7,861,475
|
|
|
|
397,741
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows from Investing
Activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment in real estate and
related assets
|
|
|
(278,576,503
|
)
|
|
|
(81,344,139
|
)
|
|
|
|
|
Acquired intangible lease assets
|
|
|
(40,305,246
|
)
|
|
|
(10,497,499
|
)
|
|
|
|
|
Acquired below market lease
intangibles
|
|
|
2,731,169
|
|
|
|
14,689
|
|
|
|
|
|
Restricted cash
|
|
|
(4,025,929
|
)
|
|
|
(1,813,804
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in investing
activities
|
|
|
(320,176,509
|
)
|
|
|
(93,640,753
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows from Financing
Activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from issuance of common
stock
|
|
|
274,710,551
|
|
|
|
28,109,121
|
|
|
|
200,000
|
|
Proceeds from mortgage and
affiliate notes payable
|
|
|
168,764,469
|
|
|
|
72,084,404
|
|
|
|
|
|
Repayment of mortgage and
affiliate notes payable
|
|
|
(64,375,352
|
)
|
|
|
(827,363
|
)
|
|
|
|
|
Refund of mortgage rate lock
deposits
|
|
|
1,936,000
|
|
|
|
|
|
|
|
|
|
Payment of mortgage rate lock
deposits
|
|
|
(5,903,100
|
)
|
|
|
|
|
|
|
|
|
Escrowed investor proceeds
liability
|
|
|
3,896,925
|
|
|
|
1,813,804
|
|
|
|
|
|
Offering costs on issuance of
common stock
|
|
|
(26,586,715
|
)
|
|
|
(2,789,170
|
)
|
|
|
|
|
Distributions to investors
|
|
|
(3,554,073
|
)
|
|
|
|
|
|
|
|
|
Deferred financing costs paid
|
|
|
(3,582,325
|
)
|
|
|
(772,640
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by financing
activities
|
|
|
345,306,381
|
|
|
|
97,618,156
|
|
|
|
200,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase in cash and cash
equivalents
|
|
|
32,991,347
|
|
|
|
4,375,144
|
|
|
|
200,000
|
|
|
Cash and cash equivalents,
beginning of period
|
|
|
4,575,144
|
|
|
|
200,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents, end
of period
|
|
$
|
37,566,490
|
|
|
$
|
4,575,144
|
|
|
$
|
200,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental Disclosures of
Non-Cash Investing and Financing Activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends declared and unpaid
|
|
$
|
1,612,094
|
|
|
$
|
195,209
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage notes assumed in real
estate acquisitions
|
|
$
|
42,619,758
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issued through
distribution reinvestment plan
|
|
$
|
3,521,256
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commissions and dealer manager
fees due to affiliate
|
|
$
|
|
|
|
$
|
5,185
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental Cash Flow
Disclosures:
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest paid
|
|
$
|
7,981,952
|
|
|
$
|
223,183
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these
consolidated financial statements.
F-8
COLE
CREDIT PROPERTY TRUST II, INC.
NOTE 1
ORGANIZATION AND BUSINESS
Cole Credit Property Trust II, Inc. (the
Company) was formed on September 29, 2004 and
is a Maryland corporation that is organized and operating as a
real estate investment trust (REIT) for federal
income tax purposes. Substantially all of the Companys
business is conducted through Cole Operating
Partnership II, LP (Cole OP II), a
Delaware limited partnership. The Company is the sole general
partner of and owns a 99.99% partnership interest in Cole
OP II. Cole REIT Advisors II, LLC (Cole
Advisors II) the affiliate advisor to the Company, is
the sole limited partner and owner of 0.01% (minority interest)
of the partnership interests of Cole OP II.
At December 31, 2006, the Company owned 91 properties
comprising approximately 2.9 million square feet of single
and multi-tenant commercial space located in 26 states. At
December 31, 2006, these properties were 100% leased.
On June 27, 2005, the Company commenced a public offering
on a best efforts basis of up to
45,000,000 shares of common stock offered at a price of
$10.00 per share, subject to certain volume and other
discounts, pursuant to a Registration Statement on
Form S-11
filed with the Securities and Exchange Commission (the
SEC) under the Securities Act (the
Offering). The Registration Statement also covered
up to 5,000,000 shares available pursuant to a distribution
reinvestment plan (the DRIP) under which our
stockholders may elect to have their distributions reinvested in
additional shares of the Companys common stock at the
greater of $9.50 per share or 95% of the estimated value of
a share of common stock. On November 13, 2006, the Company
filed a registration statement with the SEC under
Rule 462(b) to add securities to the Offering. The
registration statement registers an additional
4,390,000 shares of common stock for sale in the primary
offering and an additional 952,000 shares of common stock
for sale pursuant to the Companys DRIP.
On November 6, 2006, the Company filed a registration
statement with the SEC with respect to a proposed secondary
public offering of up to 150,000,000 shares of common
stock. The offering would include up to 125,000,000 shares
to be offered for sale at $10.00 per share in the primary
offering and up to 25,000,000 shares to be offered for sale
pursuant to the Companys DRIP.
The Company commenced its principal operations on
September 23, 2005, when it issued the initial
486,000 shares of our common stock in the Offering. Prior
to such date, the Company was considered a development stage
company. As of December 31, 2006, the Company had accepted
subscriptions for 30,691,204 shares of its common stock,
including 20,000 shares owned by Cole Holdings Corporation
(Cole Holdings) for aggregate gross proceeds of
approximately $306.5 million before offering costs and
selling commissions of approximately $29.4 million. As of
December 31, 2006, the Company was authorized to issue
10,000,000 shares of preferred stock, but had none issued
and outstanding. As of March 16, 2007, the Company had
raised approximately $406.3 million in offering proceeds
through the issuance of 40,629,407 shares of its common
stock. As of March 16, 2007, approximately
$87.6 million in shares (8,760,693 shares) remained
available for sale to the public under the Offering, exclusive
of shares available under the DRIP.
The Companys stock is not currently listed on a national
securities exchange. The Company may seek to list its stock for
trading on a national securities exchange only if a majority of
its independent directors believe listing would be in the best
interest of its stockholders. The Company does not intend to
list its shares at this time. The Company does not anticipate
that there would be any market for its common stock until its
shares are listed or quoted. In the event it does not obtain
listing prior to the tenth anniversary of the completion or
termination of the Offering, its charter requires that it
either: (1) seek stockholder approval of an extension or
amendment of this listing deadline; or (2) seek stockholder
approval to adopt a plan of liquidation of the corporation.
F-9
COLE
CREDIT PROPERTY TRUST II, INC.
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
NOTE 2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The summary of significant accounting policies presented below
is designed to assist in understanding the Companys
consolidated financial statements. These accounting policies
conform to generally accepted accounting principles in the
United States (GAAP), in all material respects, and
have been consistently applied in preparing the accompanying
consolidated financial statements.
Principles
of Consolidation and Basis of Presentation
The consolidated financial statements include the accounts of
the Company and its wholly-owned subsidiaries. All significant
intercompany accounts and transactions have been eliminated in
consolidation.
Use of
Estimates
The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of
America necessarily requires management to make estimates and
assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities
at the date of the consolidated financial statements and the
reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
Investment
in Real Estate Assets
Real estate assets are stated at cost, less accumulated
depreciation. Amounts capitalized to real estate assets consist
of the cost of acquisition or construction and any tenant
improvements or major improvements and betterments that extend
the useful life of the related asset. All repairs and
maintenance are expensed as incurred.
All assets are depreciated on a straight line basis. The
estimate useful lives of our assets by class are generally as
follows:
|
|
|
Building
|
|
40 years
|
Tenant improvements
|
|
Lesser of useful life or lease term
|
Intangible lease assets
|
|
Lesser of useful life or lease
term
|
The Company continually monitors events and changes in
circumstances that could indicate that the carrying amounts of its
real estate and related intangible assets may not be recoverable.
When indicators of potential impairment are present that indicate
that the carrying amounts of real estate and related intangible
assets may not be recoverable, the Company assesses the
recoverability of the assets by determining whether the carrying
value of the assets will be recovered through the undiscounted future
operating cash flows expected from the use of the assets will be
recovered through the undiscounted future operating cash flows
expected from the use of the assets and their eventual disposition.
In the event that such expected undiscounted future cash flows do not
exceed the carrying value, the Company will adjust the real estate
and related intangible assets to the fair value and recognize an
impairment loss. As of December 31, 2006, the undiscounted
future operating cash flows of any property with potential impairment
indicators exceeded its carrying value and no impairment losses had
been recorded. As of December 31, 2005, no potential impairment
indicators existed and no losses had been recorded.
Allocation
of Purchase Price of Acquired Assets
Upon the acquisition of real properties, the Company allocates
the purchase price of such properties to acquired tangible
assets, consisting of land and building, and identified
intangible assets and liabilities, consisting of the value of
above-market and below-market leases and the value of in-place
leases and value of tenant relationships, based in each case on
their fair values. The Company utilizes independent appraisals
to determine the fair values of the tangible assets of an
acquired property (which includes land and building).
The fair values of above-market and below-market in-place lease
values are recorded based on the present value (using an
interest rate which reflects the risks associated with the
leases acquired) of the difference between (i) the
contractual amounts to be paid pursuant to the in-place leases
and (ii) an estimate of fair market lease rates for the
corresponding in-place leases, which is generally obtained from
independent appraisals, measured over a period equal to the
remaining non-cancelable term of the lease. The above-market
F-10
COLE
CREDIT PROPERTY TRUST II, INC.
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
and below- market lease values are capitalized as intangible
lease assets or liabilities and amortized as an adjustment of
rental income over the remaining terms of the respective leases.
The fair values of in-place leases include direct costs
associated with obtaining a new tenant, opportunity costs
associated with lost rentals which are avoided by acquiring an
in-place lease, and tenant relationships. Direct costs
associated with obtaining a new tenant include commissions,
tenant improvements, and other direct costs and are estimated
based on independent appraisals and managements
consideration of current market costs to execute a similar
lease. These direct costs are included in intangible lease
assets in the accompanying consolidated balance sheet and are
amortized to expense over the remaining terms of the respective
leases. The value of opportunity costs is calculated using the
contractual amounts to be paid pursuant to the in-place leases
over a market absorption period for a similar lease. Customer
relationships are valued based on expected renewal of a lease or
the likelihood of obtaining a particular tenant for other
locations. These intangibles are included in intangible lease
assets in the accompanying consolidated balance sheet and are
amortized to expense over the remaining term of the respective
leases.
The determination of the fair values of the assets and
liabilities acquired requires the use of significant assumptions
with regard to the current market rental rates, rental growth
rates, discount rates and other variables. The use of
inappropriate estimates would result in an incorrect assessment
of the Companys purchase price allocations, which could
impact the amount of its reported net income.
Cash
and Cash Equivalents
The Company considers all highly liquid instruments with
maturities when purchased of three months or less to be cash
equivalents.
Restricted
Cash and Escrowed Investor Proceeds
The Company is currently engaged in a public offering of its
common stock. Included in restricted cash and escrowed investor
proceeds is approximately $5.7 million and
$1.8 million of offering proceeds for which shares of
common stock had not been issued as of December 31, 2006
and 2005, respectively.
Rents
and Tenant Receivables
Rents and tenant receivables primarily includes amounts to be
collected in future periods related to the recognition of rental
income on a straight-line basis over the lease term and cost
recoveries from tenants. See Revenue
Recognition below. Allowance for doubtful accounts was
approximately $75,000 and $0 at December 31, 2006 and 2005,
respectively.
Prepaid
Expenses and Other Assets
Prepaid expenses and other assets includes expenses incurred as
of the balance sheet date that relate to future periods and will
be expensed or reclassified to another account during the period
to which the costs relate. Any amounts with no future economic
benefit are charged to earnings when identified.
Deferred
Financing Costs
Deferred financing costs are capitalized and amortized on a
straight-line basis, which approximates the effective interest
method, over the term of the related financing arrangement.
Amortization of deferred financing costs for the years ended
December 31, 2006 and 2005, and the period from inception
(September 29, 2004) to December 31, 2004, was
approximately $548,000, $18,000 and $0, respectively, and was
recorded in interest expense in the consolidated statements of
operations.
F-11
COLE
CREDIT PROPERTY TRUST II, INC.
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
Revenue
Recognition
Upon the acquisition of real estate, certain properties have
leases where minimum rent payments increase during the term of
the lease. The Company records rental revenue for the full term
of each lease on a straight-line basis. Accordingly, the Company
records a receivable from tenants that the Company expects to
collect over the remaining lease term rather than currently,
which is recorded as rents receivable. When the Company acquires
a property, the term of existing leases is considered to
commence as of the acquisition date for the purposes of this
calculation. In accordance with Staff Accounting
Bulletin 101, Revenue Recognition in Financial
Statements, the Company defers the recognition of contingent
rental income, such as percentage rents, until the specific
target that triggers the contingent rental income is achieved.
Cost recoveries from tenants are included in rental income in
the period the related costs are incurred. Tenant reimbursement
income includes payments from tenants as reimbursement for
property taxes, utilities, and other property operating expenses.
Income
Taxes
The Company generally will not be subject to federal corporate
income tax to the extent it distributes its REIT taxable income
to its stockholders, and so long as it distributes at least 90%
of its REIT taxable income. REITs are subject to a number of
other organizational and operational requirements. Even if the
Company qualifies for taxation as a REIT, it may be subject to
certain state and local taxes on its income and property, and
federal income and excise taxes on its undistributed income.
Concentration
of Credit Risk
At December 31, 2006 and 2005, the Company had cash on
deposit in one financial institution in excess of federally
insured levels; however, the Company has not experienced any
losses in such account. The Company limits investment of cash
investments to financial institutions with high credit standing;
therefore, the Company believes it is not exposed to any
significant credit risk on cash.
As of December 31, 2006, no single tenant accounts for more
than 10% of the Companys gross annualized base rental
revenues. Tenants in the drugstore, specialty retail and
automotive supply industries comprise approximately 25%, 12% and
11%, respectively, of the Companys gross annualized base
rental revenues for the year ended December 31, 2006. As of
December 31, 2005, one tenant in the drugstore industry and
one tenant in the automotive supply industry accounted for
approximately 34% and 31% of the Companys gross annualized
base rental revenues, respectively. Tenants in the drugstore,
and automotive supply industries comprise approximately 44% and
31%, respectively, of the Companys gross annualized base
rental revenues for the year ended December 31, 2005.
Offering
and Related Costs
Cole Advisors II funds all of the organization and offering
costs on the Companys behalf and may be reimbursed for
such costs up to 1.5% of the cumulative capital raised by the
Company in the Offering. As of December 31, 2006 and 2005,
Cole Advisors II had incurred organization and offering
costs of approximately $3.8 million and $1.4 million,
respectively, on behalf of the Company. Of these amounts, the
Company was responsible for approximately $3.8 million and
$421,000 at December 31, 2006 and 2005, respectively. The
offering costs, which include items such as legal and accounting
fees, marketing, and promotional printing costs, are recorded as
a reduction of capital in excess of par value along with sales
commissions and dealer manager fees of 7% and 1.5%,
respectively. Organization costs are expensed as incurred, of
which approximately $57,000, $2,000 and $0 was expensed during
the years ended December 31, 2006, and 2005 and the period
from inception (September 29, 2004) to
December 31, 2004, respectively.
F-12
COLE
CREDIT PROPERTY TRUST II, INC.
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
Due to
Affiliates
As of December 31, 2006, due to affiliates consists of
approximately $47,000 due to Cole Advisors II for
reimbursement of organization and offering costs and $20,000 to
an affiliate of Cole Advisors II for reimbursement of
certain loan costs. As of December 31, 2005, due to
affiliates consists of approximately $36,000 due to Cole
Advisors II for reimbursement of legal fees and
approximately $5,000 due to Cole Capital Corporation (Cole
Capital), the Companys affiliated dealer manager,
for commissions and dealer manager fees payable on stock
issuances.
Stockholders
Equity
At December 31, 2006, and 2005 the Company was
authorized to issue 240,000,000, and 90,000,000
respectively, shares of common stock and 10,000,000 shares
of preferred stock. All shares of such stock have a par value of
$.01 per share. The Companys board of directors may
authorize additional shares of capital stock and amend their
terms without obtaining stockholder approval.
The par value of investor proceeds raised from the Offering is
classified as common stock, with the remainder allocated to
capital in excess of par value. The Companys share
redemption program provides that all redemptions during any
calendar year, including those upon death or qualifying
disability, are limited to those that can be funded with
proceeds raised from the Companys distribution
reinvestment plan. In accordance with Accounting
Series Release No. 268, Presentation in
Financial Statements of Redeemable Preferred Stock,
the Company accounts for the proceeds received from its
distribution reinvestment plan outside of permanent equity for
future redemption of shares. During the years ended
December 31, 2006 and 2005, proceeds of approximately $3.5
million and $0 were received from the distribution reinvestment
plan, respectively, which have been recorded as redeemable
common stock in the respective consolidated balance sheets. As
of December 31, 2006 and 2005, no shares had been redeemed
under the Companys share redemption program.
Earnings
Per Share
Earnings per share are calculated based on the weighted average
number of common shares outstanding during each period. The
weighted average number of common shares outstanding is
identical for basic and fully diluted earnings per share. The
effect of all the outstanding stock options was anti-dilutive to
earnings per share for the year ended December 31, 2005.
See Note 11.
Stock
Options
As permitted by Statement of Financial Accounting Standards
(SFAS) No. 123, Accounting for Stock-Based
Compensation, and SFAS No. 148, Accounting for
Stock-Based Compensation Transition and Disclosure, the
Company elected to follow Accounting Principles Board Opinion
(APB) No. 25, Accounting for Stock Issued to
Employees, and related interpretations in accounting for its
stock options under the 2004 Independent Directors Stock Option
Plan (IDSOP) (see Note 11). Under APB
No. 25, compensation expense is recorded when the exercise
price of stock options is less than the fair value of the
underlying stock on the date of grant. On January 1, 2006,
the Company adopted SFAS 123R which requires the measurement and
recognition of compensation expense for all share-based payment
awards made to employees and directors, including stock options
related to the IDSOP, based on estimated fair values. The
Company adopted FAS 123R, using the modified prospective
application. Accordingly, prior period amounts have not been
restated. As of December 31, 2006, there were 20,000 stock
options outstanding under the IDSOP at an average exercise price
of $9.15 per share.
F-13
COLE
CREDIT PROPERTY TRUST II, INC.
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
Reportable
Segments
The Financial Accounting Standards Board (FASB)
issued SFAS No. 131, Disclosures about
Segments of an Enterprise and Related Information,
which establishes standards for reporting financial and
descriptive information about an enterprises reportable
segments. The Company has determined that it has one reportable
segment, with activities related to investing in real estate.
The Companys investments in real estate generate rental revenue and other
income through the leasing of properties, which comprised 100%
of our total consolidated revenues for the years ended
December 31, 2006 and 2005. Although the Companys investments in
real estate are geographically diversified throughout the United
States, its management evaluates operating performance on an
individual property level. The Companys properties have been aggregated
into one reportable segment.
Interest
Interest is charged to interest expense as it accrues. No
interest costs were capitalized during the years ended
December 31, 2006 and 2005.
Distributions
Payable and Distribution Policy
In order to maintain its status as a REIT, the Company is
required to make distributions each taxable year equal to at
least 90% of its REIT taxable income excluding capital gains. To
the extent funds are available, the Company intends to pay
regular monthly distributions to stockholders. Distributions are
paid to those stockholders who are stockholders of record as of
applicable record dates.
On December 15, 2006, the Companys board of directors
declared a distribution of $0.0017808 per share for
stockholders of record as of the close of business on each day
of the period commencing on January 1, 2007 and ending on
March 31, 2007. The monthly distributions were calculated
to be equivalent to an annualized distribution of six and one
half percent (6.50%) per share, assuming a purchase price of
$10.00 per share. As of December 31, 2006, the Company
had distributions payable of approximately $1.6 million.
The distributions were paid in January 2007, of which
approximately $844,000 was reinvested in shares through our
distribution reinvestment program.
Recent
Accounting Pronouncements
In December 2004, the FASB issued Statement of Financial
Accounting Standards (SFAS) No. 123 (revised
2004), Share-Based Payment,
(SFAS 123R), which requires the measurement and
recognition of compensation expense for all share-based payment
awards made to employees and directors based on estimated fair
values. SFAS No. 123R is effective for fiscal years
beginning after June 15, 2005.
SFAS No. 123 (revised 2004) requires a public
entity to measure the cost of employee services received in
exchange for an award of equity instruments based on the grant
date fair value of the award. That cost will be recognized over
the period during which an employee is required to provide
services in exchange for the award. The Company adopted the
provisions of SFAS 123 (revised 2004) using a modified
prospective application. The modified prospective method
requires companies to recognize compensation cost for unvested
awards that are outstanding on the effective date based on the
fair value that the Company had originally estimated for
purposes of preparing its SFAS 123 pro forma disclosures.
For all new awards that are granted or modified after the
effective date, a company would use SFAS 123Rs
measurement model. The Company adopted the new standard on
January 1, 2006. See Note 11.
In September 2006, the Securities and Exchange Commission
(SEC) issued Staff Accounting
Bulletin No. 108 (SAB No. 108).
Due to diversity in practice among registrants,
SAB No. 108 expresses SEC staff views regarding the
process by which misstatements in financial statements are
evaluated for purposes of determining whether financial
statement restatement is necessary. SAB No. 108 is
effective for fiscal years
F-14
COLE
CREDIT PROPERTY TRUST II, INC.
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
ending after November 15, 2006. The adoption of
SAB No. 108 did not have a material impact on the
Companys consolidated financial statements.
In September 2006, the FASB issued SFAS No. 157,
Fair Value Measurements
(SFAS No. 157). SFAS No. 157
defines fair value, establishes a framework for measuring fair
value in generally accepted accounting principles and expands
disclosures about fair value measurements.
SFAS No. 157 is effective for financial statements
issued for fiscal years beginning after November 15, 2007,
and interim periods within those fiscal years. The Company has
not determined what impact, if any, the adoption of
SFAS No. 157 will have on its consolidated financial
statements.
In June 2006, the FASB issued FASB Interpretation No. 48,
Accounting for Uncertainty in Income Taxes, an interpretation
of SFAS No. 109 (FIN 48).
FIN 48 clarifies the accounting for uncertainty in income
taxes recognized in an enterprises financial statements in
accordance with SFAS No. 109, Accounting for Income
Taxes. FIN 48 prescribes a recognition threshold and
measurement attribute for the financial statement recognition
and measurement of a tax position taken or expected to be taken
in a tax return. FIN 48 also provides guidance on
derecognition, classification, interest and penalties,
accounting in interim periods, disclosure and transition.
FIN 48 is effective for fiscal years beginning after
December 15, 2006. The Company has not determined what
impact, if any, the provisions of FIN 48 will have on its
consolidated financial statements.
In February 2007, the FASB issued SFAS No. 159, The
Fair Value Option for Financial Assets and Financial Liabilities
(SFAS No. 159). SFAS No. 159
allows entities to choose to measure eligible financial
instruments at fair value with changes in fair value recognized
in earnings of each subsequent reporting date. The fair value
election is available for most financial assets and liabilities
on an
instrument-by-instrument
basis and is to be elected on the date of the financial
instrument is initially recognized. SFAS 159 is effective
for all entities as of the beginning of a reporting
entitys first fiscal year that begins after
November 15, 2007 (with earlier application permitted under
certain circumstances). The Company has not determined what
impact, if any, the adoption of SFAS No. 159 will have
on its consolidated financial statements.
NOTE 3
REAL ESTATE ACQUISITIONS
During the year ended December 31, 2006, the Company
acquired a 100% interest in 77 commercial properties for an
aggregate purchase price of approximately $358.8 million,
including acquisition costs of approximately $7.9 million.
The Company financed the acquisitions through the issuance and
assumption of approximately $213.2 million of mortgage
loans generally secured by the individual properties. In
accordance with SFAS, No. 141, Business
Combinations, the Company allocated the purchase price
of these properties, including aggregate acquisition costs, to
the fair value of the assets acquired and liabilities assumed.
The Company allocated approximately $85.7 million to land,
approximately $229.5 million to building and improvements,
approximately $46.3 million to acquired in-place leases,
approximately ($2.7) million to acquired below-market
leases and approximately $42.6 million related to debt
assumed on properties acquired during the year ended
December 31, 2006.
During the year ended December 31, 2005, the Company
acquired a 100% interest in 14 commercial properties for an
aggregate purchase price of approximately $91.8 million,
including acquisition costs of approximately $2.0 million.
The Company financed the acquisitions through the issuance of
approximately $66.8 million of mortgage loans generally
secured by the individual properties. In accordance with SFAS,
No. 141, Business Combinations, the
Company allocated the purchase price of these properties,
including aggregate acquisition costs, to the fair value of the
assets acquired and liabilities assumed. The Company allocated
approximately $23.8 million to land, approximately
$57.5 million to building and improvements, approximately
$10.5 million to acquired in-place leases, and
approximately ($15,000) to acquired below-market leases.
F-15
COLE
CREDIT PROPERTY TRUST II, INC.
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
NOTE 4
INTANGIBLE LEASE ASSETS
Identified intangible assets relating to the real estate
acquisitions discussed in Note 3 consisted of the following:
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
|
2006
|
|
|
2005
|
|
|
Acquired in place leases and
tenant relationships, net of accumulated amortization of
$2,142,845 and $69,939 at December 31, 2006 and 2005,
respectively (with a weighted average life of 159 and
172 months for in-place leases and tenant relationships,
respectively)
|
|
$
|
51,939,520
|
|
|
$
|
9,970,272
|
|
Acquired above market leases, net
of accumulated amortization of $108,327 and $1,942 at
December 31, 2006 and 2005, respectively (with a weighted
average life of 162 and 118 months for acquired above
market leases, respectively)
|
|
$
|
2,629,503
|
|
|
$
|
455,346
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
54,569,023
|
|
|
$
|
10,425,618
|
|
|
|
|
|
|
|
|
|
|
Amortization expense recorded on the identified intangible
assets, for each of fiscal years ended December 31, 2006,
2005 and 2004 was approximately $2.2 million, $72,000 and $0,
respectively.
Estimated amortization expense of the respective intangible
lease assets as of December 31, 2006 for each of the five
succeeding fiscal years is as follows:
|
|
|
|
|
|
|
|
|
|
|
Amount
|
|
|
|
Lease
|
|
|
|
|
|
|
In-Place and Tenant
|
|
|
Above
|
|
Year
|
|
Relationships
|
|
|
Market Lease
|
|
|
2007
|
|
$
|
3,902,608
|
|
|
$
|
199,240
|
|
2008
|
|
$
|
3,882,619
|
|
|
$
|
199,240
|
|
2009
|
|
$
|
3,821,858
|
|
|
$
|
199,240
|
|
2010
|
|
$
|
3,821,858
|
|
|
$
|
199,240
|
|
2011
|
|
$
|
3,819,312
|
|
|
$
|
199,240
|
|
NOTE 5
MORTGAGE NOTES PAYABLE
As of December 31, 2006, the Company had 71 mortgage notes
payable totaling approximately $218.3 million, of which
approximately $215.6 million was fixed rate debt with
interest rates ranging from 5.15% to 6.31% with a weighted
average interest rate of approximately 5.72%. The Company also
had approximately $2.7 million of short-term variable rate
debt outstanding at December 31, 2006.
As of December 31, 2005, the Company had 13 mortgage notes
payable totaling approximately $71.3 million, of which
approximately $41.8 million was fixed rate debt with
interest rates ranging from 5.15% to 5.76% with a weighted
average interest rate of approximately 5.47%. The Company also
had approximately $29.5 million of short-term variable rate
debt outstanding at December 31, 2005.
The fixed rate debt mortgage notes require monthly interest-only
payments with the principal balance due on various dates from
July 2008 through October 2018. The variable rate debt mortgage
notes bear interest at the one-month LIBOR rate plus
200 basis points and require monthly interest-only payments
and generally mature within 90 days. Each of the mortgage
notes are secured by the respective property. Certain of the
mortgage notes have cross-default provisions and are
cross-collateralized. Under certain cross-default provisions, a
default under any mortgage note included in a cross-default
agreement may constitute a default under all such mortgage notes
in the agreement and may lead to acceleration of the
indebtedness due on each
F-16
COLE
CREDIT PROPERTY TRUST II, INC.
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
property within the cross-default agreement. Certain of the mortgage
notes have cross-default provisions and are cross-collateralized.
Under certain cross-default provisions, a default under any mortgage
note included in a cross-default agreement may constitute a default
under all such mortgage notes in the agreement and may lead to acceleration
of the indebtedness due on each property within the cross-default agreement. The mortgage notes
are generally non-recourse to the Company and Cole Op II,
but both are liable for customary non-recourse carveouts.
The fixed rate mortgage notes may not be prepaid, in whole or in
part, except under the following circumstances: (i) full
prepayment may be made on any of the three (3) monthly
payment dates occurring immediately prior to the maturity date,
and (ii) partial prepayments resulting from the application
of insurance or condemnation proceeds to reduce the outstanding
principal balance of the mortgage notes. Notwithstanding the
prepayment limitations, the Company may sell the properties to a
buyer that assumes the respective mortgage loan. The transfer
would be subject to the conditions set forth in the individual
propertys mortgage note document, including without
limitation, the lenders approval of the proposed buyer and
the payment of the lenders fees, costs and expenses
associated with the sale of the property and the assumption of
the loan.
In the event that a mortgage note is not paid off on the
respective maturity date, each mortgage note includes
hyperamortization provisions. The interest rate during the
hyperamortization period shall be the fixed interest rate as
stated on the respective mortgage note agreement plus two
percent (2.0%). The individual mortgage note maturity date,
under the hyperamortization provisions, will be extended by
twenty (20) years. During such period, the lender will
apply 100% of the rents collected to (i) all payments for
escrow or reserve accounts, (ii) payment of interest at the
original fixed interest rate, (iii) payments for the
replacement reserve account, (iv) any other amounts due in
accordance with the mortgage note agreement other than any
additional interest expense, (v) any operating expenses of
the property pursuant to an approved annual budget,
(vi) any extraordinary expenses, (vii) payments to be
applied to the reduction of the principal balance of the
mortgage note, and (viii) any additional interest expense,
which is not paid will be added to the principal balance of the
mortgage note.
We have entered into interest rate lock agreements. See Note 7.
Related
Party Notes
On December 15, 2005, Cole OP II borrowed
approximately $2.5 million and approximately $2.0 million
from Series C, LLC (Series C), which is an
affiliate of the Company and the Companys advisor, by
executing two promissory notes which was secured by the
membership interests held by Cole OP II in Cole WG
St. Louis MO, LLC and Cole RA Alliance OH, LLC,
respectively. Each of the loans had a variable interest rate
based on the one-month LIBOR rate plus 200 basis points
with monthly interest-only payments, and the outstanding
principal and accrued and unpaid interest payable in full on
June 30, 2006. Each of the loans was generally non recourse
to Cole OP II and could be prepaid at any time without
penalty or premium. The Companys board of directors,
including a majority of its independent directors, approved the
loans and determined that the terms of the loans were no less
favorable to the Company than loans between unaffiliated third
parties under the same circumstances. Cole OP II repaid the
notes in full in April 2006.
On February 6, 2006, Cole OP II borrowed approximately
$2.3 million from Series C by executing a promissory note
which was secured by the membership interest held by Cole
OP II in a wholly-owned subsidiary. The loan proceeds were
used to acquire a property with a purchase price of
approximately $18.5 million, exclusive of closing costs.
The loan had a variable interest rate based on the one-month
LIBOR rate plus 200 basis points with monthly interest-only
payments, and the outstanding principal and accrued and unpaid
interest was payable in full on December 31, 2006. The loan
was generally non recourse to Cole OP II and could be
prepaid at any time without penalty or premium. The
Companys board of directors, including all of the
independent directors, approved the loan and determined that its
terms were no less favorable to the Company than loans between
unaffiliated third parties under the same circumstances. Cole
OP II repaid the note in full in April 2006.
On February 10, 2006, Cole OP II borrowed
approximately $4.7 million from Series B, LLC
(Series B), an affiliate of the Company and the
Companys advisor, by executing a promissory note which was
secured by
F-17
COLE
CREDIT PROPERTY TRUST II, INC.
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
the membership interest held by Cole OP II in a
wholly-owned subsidiary. The loan proceeds were used to acquire
a property with a purchase price of approximately
$5.9 million, exclusive of closing costs. The loan had a
variable interest rate based on the one-month LIBOR rate plus
200 basis points with monthly interest-only payments, and
the outstanding principal and accrued and unpaid interest was
payable in full on December 31, 2006. The loan was
generally non-recourse to Cole OP II and could be prepaid
at any time without penalty or premium. The Companys board
of directors, including all of the independent directors,
approved the loan and determined that its terms were no less
favorable to the Company than loans between unaffiliated third
parties under the same circumstances. Cole OP II repaid the note
in full in May 2006.
During the years ended December 31, 2006 and 2005 and the
period from inception (September 29, 2004) to
December 31, 2004 Cole OP II incurred approximately
$210,000, $13,000 and $0 in interest expense to affiliates under
the aforementioned loans, respectively.
The following table summarizes the scheduled aggregate principal
repayments for the five years subsequent to December 31,
2006:
|
|
|
|
|
|
|
Principal
|
|
For the Year Ending December 31:
|
|
Repayments
|
|
|
2007
|
|
$
|
3,066,207
|
|
2008
|
|
|
9,729,334
|
|
2009
|
|
|
205,511
|
|
2010
|
|
|
16,854,186
|
|
2011
|
|
|
39,272,285
|
|
Thereafter
|
|
|
149,108,393
|
|
|
|
|
|
|
Total
|
|
$
|
218,265,916
|
|
|
|
|
|
|
The variable rate mortgages approximate fair market value. The
fair value of our fixed rate mortgage notes payable at
December 31, 2006 approximates $215.0 million.
NOTE 6
INTANGIBLE LEASE LIABILITY
Identified intangible liability relating to the real estate
acquisitions discussed in Note 3 consisted of the following:
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
|
2006
|
|
|
2005
|
|
|
Acquired below market
leases, net of accumulated amortization of $96,484 and $52 at
December 31, 2006 and 2005, respectively (with a weighted
average life of 144 and 141 months, respectively)
|
|
$
|
2,649,374
|
|
|
$
|
14,637
|
|
|
|
|
|
|
|
|
|
|
Amortization income recorded on the identified intangible
liability, for each of fiscal years ended December 31,
2006, 2005 and the period from inception (September 29,
2004) to December 31, 2004 was $96,000, $52 and $0,
respectively.
F-18
COLE
CREDIT PROPERTY TRUST II, INC.
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
Estimated amortization income of the respective intangible lease
liability as of December 31, 2006 for each of the five
succeeding fiscal years is as follows:
|
|
|
|
|
|
|
Amount
|
|
|
|
Below
|
|
Year
|
|
Market Lease
|
|
|
2007
|
|
$
|
231,097
|
|
2008
|
|
$
|
231,097
|
|
2009
|
|
$
|
231,097
|
|
2010
|
|
$
|
231,097
|
|
2011
|
|
$
|
230,059
|
|
NOTE 7
EXTENDED RATE LOCK AGREEMENTS
The Company entered into Extended Rate Lock Agreements with
Wachovia Bank, N.A. (Wachovia) and Bear Stearns
Commercial Mortgage, Inc. (Bear Stearns) (the
Rate Locks) to lock interest rates ranging from
5.52% to 6.56% for up to approximately $247 million in
total borrowings. Under the terms of the Rate Locks, the Company
made rate lock deposits totaling approximately $5.9 million
to Wachovia and Bear Stearns. As of December 31, 2006, the
Company had available borrowings of approximately
$197 million under the Rate Locks.
The Company has approximately $3.9 million in rate lock
deposits outstanding at December 31, 2006, which are
reflected as Mortgage Loan Deposits and recorded in Prepaid
Expenses, Mortgage Loan Deposits and Other Assets on the
Companys consolidated balance and statement of cashflows.
The deposits are refundable to the Company in amounts generally
equal to 2% of any loans funded under the agreements. The Rate
Locks expire 60 days from execution and may be extended by
30 days for a rate lock fee of 0.25% of the loan amount or,
at the borrowers election, by converting the fee into
interest rate spread.
NOTE 8
COMMITMENTS AND CONTINGENCIES
Litigation
In the ordinary course of business, the Company may become
subject to litigation or claims. There are no material pending
legal proceedings known to be contemplated against us.
Environmental
Matters
In connection with the ownership and operation of real estate,
the Company may be potentially liable for costs and damages
related to environmental matters. The Company has not been
notified by any governmental authority of any non-compliance,
liability or other claim, and the Company is not aware of any
other environmental condition that it believes will have a
material adverse effect on the consolidated results of
operations.
NOTE 9
RELATED PARTY TRANSACTIONS AND ARRANGEMENTS
Certain affiliates of the Company receive, and will continue to
receive fees and compensation in connection with the Offering,
and the acquisition, management and sale of the assets of the
Company. Cole Capital receives, and will continue to receive a
selling commission of up to 7% of gross offering proceeds before
reallowance of commissions earned by participating
broker-dealers. Cole Capital reallows, and intends to continue
to reallow 100% of commissions earned to participating
broker-dealers. In addition, Cole Capital will receive up to
1.5% of gross proceeds from the Offering, before reallowance to
participating broker-
F-19
COLE
CREDIT PROPERTY TRUST II, INC.
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
dealers, as a dealer-manager fee. Cole Capital, in its sole
discretion, may reallow all or a portion of its dealer-manager
fee to such participating broker-dealers as a marketing and due
diligence expense reimbursement, based on such factors as the
volume of shares sold by such participating broker-dealers and
marketing support incurred as compared to those of other
participating broker-dealers. No selling commissions or
dealer-manager fees are paid to Cole Capital in respect to
shares sold under the DRIP. During the years ended
December 31, 2006 and 2005, the Company paid approximately
$23.3 million and $2.4 million to Cole Capital for
commissions and dealer manager fees, of which approximately
$20.0 million and $2.0 million was reallowed to
participating broker-dealers.
All organization and offering expenses (excluding selling
commissions and the dealer-manager fee) are paid for by Cole
Advisors II or its affiliates and are reimbursed by the
Company up to 1.5% of gross offering proceeds. Cole
Advisors II or its affiliates also receive acquisition and
advisory fees of up to 2% of the contract purchase price of each
asset for the acquisition, development or construction of real
property and will be reimbursed for acquisition costs incurred
in the process of acquiring properties, but not to exceed 2.0%
of the contract purchase price. The Company expects the
acquisition expenses to be approximately 0.5% of the purchase
price of each property. During the years ended December 31,
2006 and 2005, the Company reimbursed the advisor approximately
$3.4 million and $421,000, respectively, for organizational
and offering expenses, of which approximately $57,000 and
$2,000, respectively, was expensed as organization costs. During
the years ended December 31, 2006 and 2005, the Company
paid Cole Realty Advisors approximately $5.8 million and
approximately $1.7 million for acquisition fees,
respectively.
If Cole Advisors II provides services, as determined by the
independent directors, in connection with the origination or
refinancing of any debt financing obtained by the Company that
is used to acquire properties or to make other permitted
investments, or that is assumed, directly or indirectly, in
connection with the acquisition of properties, the Company will
pay Cole Advisors II a financing coordination fee equal to
1% of the amount available under such financing; provided
however, that Cole Advisors II shall not be entitled to a
financing coordination fee in connection with the refinancing of
any loan secured by any particular property that was previously
subject to a refinancing in which Cole Advisors II received
such a fee. Financing coordination fees payable from loan
proceeds from permanent financing will be paid to Cole
Advisors II as the Company acquires such permanent
financing. However, no acquisition fees will be paid on loan
proceeds from any line of credit until such time as all net
offering proceeds have been invested by the Company. During the
years ended December 31, 2006 and 2005, the Company paid
Cole Advisors II approximately $1.8 million and
approximately $320,000 for finance coordination fees.
The Company pays, and expects to continue to pay, Cole Realty
Advisors, its affiliated property manager, fees for the
management and leasing of the Companys properties. Such
fees currently equal, and are expected to continue to equal 2%
of gross revenues, plus leasing commissions at prevailing market
rates; provided however, that the aggregate of all property
management and leasing fees paid to affiliates plus all payments
to third parties will not exceed the amount that other
nonaffiliated management and leasing companies generally charge
for similar services in the same geographic location. Cole
Realty Advisors may subcontract its duties for a fee that may be
less than the fee provided for in the property management
agreement. During the years ended December 31, 2006 and
2005, respectively, the Company paid Cole Realty Advisors
approximately $350,000 and approximately $14,000 for property
management fees, respectively.
The Company pays Cole Advisors II an annualized asset
management fee of 0.25% of the aggregate asset value of the
Companys assets (the Asset Management Fee).
The fee will be payable monthly in an amount equal to 0.02083%
of aggregate asset value as of the last day of the immediately
preceding month. During the years ended December 31, 2006
and 2005, respectively the Company paid asset management fees to
Cole Advisors II of approximately $587,000 and
approximately $25,000, respectively.
If Cole Advisors II or its affiliates provides a
substantial amount of services, as determined by the
Companys independent directors, in connection with the
sale of one or more properties, the Company will
F-20
COLE
CREDIT PROPERTY TRUST II, INC.
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
pay Cole Advisors II up to one-half of the brokerage
commission paid, but in no event to exceed an amount equal to 2%
of the sales price of each property sold. In no event will the
combined real estate commission paid to Cole Advisors II,
its affiliates and unaffiliated third parties exceed 6% of the
contract sales price. In addition, after investors have received
a return of their net capital contributions and an 8% annual
cumulative, non-compounded return, then Cole Advisors II is
entitled to receive 10% of the remaining net sale proceeds.
During the years ended December 31, 2006 and 2005,
respectively, the Company did not pay any fees or amounts to
Cole Advisors II relating to the sale of properties.
Upon listing of the Companys common stock on a national
securities exchange, a fee equal to 10% of the amount by which
the market value of the Companys outstanding stock plus
all distributions paid by the Company prior to listing, exceeds
the sum of the total amount of capital raised from investors and
the amount of cash flow necessary to generate an 8% annual
cumulative, non-compounded return to investors will be paid to
Cole Advisors II (the Subordinated Incentive Listing
Fee).
Upon termination of the advisory agreement with Cole
Advisors II, other than termination by the Company because
of a material breach of the advisory agreement by Cole
Advisors II, a performance fee of 10% of the amount, if
any, by which (i) the appraised asset value at the time of
such termination plus total distributions paid to stockholders
through the termination date exceeds (ii) the aggregate
capital contribution contributed by investors less distributions
from sale proceeds plus payment to investors of an 8% annual,
cumulative, non-compounded return on capital. No subordinated
performance fee will be paid if the Company has already paid or
become obligated to pay Cole Advisors II a Subordinated
Incentive Listing Fee.
The Company will reimburse Cole Advisors II for all
expenses it paid or incurred in connection with the services
provided to the Company, subject to the limitation that the
Company will not reimburse for any amount by which its
operating expenses (including the Asset Management Fee) at the
end of the four preceding fiscal quarters exceeds the greater of
(i) 2% of average invested assets, or (ii) 25% of net
income other than any additions to reserves for depreciation,
bad debts or other similar non-cash reserves and excluding any
gain from the sale of assets for that period. The Company will
not reimburse for personnel costs in connection with services
for which Cole Advisors II receives acquisition fees or
real estate commissions. During the years ended
December 31, 2006, 2005 and the period from inception
(September 29, 2004) to December 31, 2004, the
Company did not reimburse Cole Advisors II for any such
costs.
On December 15, 2005, Cole OP II borrowed
approximately $2.5 million and approximately
$2.0 million from Series C by executing two promissory
notes which are secured by the membership interests held by Cole
OP II in Cole WG St. Louis MO, LLC and Cole RA
Alliance OH, LLC, respectively. Each of the loans has a variable
interest rate based on the one-month LIBOR rate plus
200 basis points with monthly interest-only payments, and
the outstanding principal and accrued and unpaid interest
payable in full on June 30, 2006. Each of the loans is
generally non recourse to Cole OP II and may be prepaid at
any time without penalty or premium. The Companys board of
directors, including a majority of its independent directors,
approved the loans and determined that the terms of the loans
are no less favorable to the Company than loans between
unaffiliated third parties under the same circumstances. Cole
OP II repaid the notes in full in April 2006.
On February 6, 2006, Cole OP II borrowed approximately
$2.3 million from Series C, an affiliate of the
Company and the Companys advisor, by executing a
promissory note which was secured by the membership interest
held by Cole OP II in a wholly-owned subsidiary. The loan
proceeds were used to acquire a property with a purchase price
of approximately $18.5 million, exclusive of closing costs.
The loan had a variable interest rate based on the one-month
LIBOR rate plus 200 basis points with monthly interest-only
payments, and the outstanding principal and accrued and unpaid
interest was payable in full on December 31, 2006. The loan
was generally non recourse to Cole OP II and could be
prepaid at any time without penalty or premium. The
Companys board of directors, including all of the
independent directors, approved the loan and determined that its
terms were no less favorable to the Company than loans between
unaffiliated third parties under the same circumstances. Cole OP
II repaid the note in full in April 2006.
F-21
COLE
CREDIT PROPERTY TRUST II, INC.
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
On February 10, 2006, Cole OP II borrowed
approximately $4.7 million from Series B, an affiliate
of the Company and the Companys advisor, by executing a
promissory note which was secured by the membership interest
held by Cole OP II in a wholly-owned subsidiary. The loan
proceeds were used to acquire a property with a purchase price
of approximately $5.9 million, exclusive of closing costs.
The loan had a variable interest rate based on the one-month
LIBOR rate plus 200 basis points with monthly interest-only
payments, and the outstanding principal and accrued and unpaid
interest was payable in full on December 31, 2006. The loan
was generally non-recourse to Cole OP II and could be
prepaid at any time without penalty or premium. The
Companys board of directors, including all of the
independent directors, approved the loan and determined that its
terms were no less favorable to the Company than loans between
unaffiliated third parties under the same circumstances. Cole OP
II repaid the note in full in May 2006.
During the years ended December 31, 2006, 2005 and the
period from inception (September 29, 2004) to
December 31, 2004 Cole OP II incurred approximately
$210,000, $13,000 and $0 in interest expense to affiliates under
the aforementioned loans, respectively.
During the year ended, December 31, 2006, Cole OP II
acquired the following properties from various affiliates of the
Company and the Companys advisor. The acquisitions were
funded by net proceeds from the Companys Offering and the
assumption of loans secured by the respective properties.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition
|
|
|
|
|
|
|
|
|
|
|
Property Description
|
|
Date
|
|
Location
|
|
Seller
|
|
Purchase Price
|
|
|
Loan Assumed
|
|
|
Wawa-convenience store
|
|
March 29, 2006
|
|
Hockessin, DE
|
|
Series A, LLC
|
|
$
|
4,830,000
|
(1)
|
|
$
|
2,598,068
|
|
Wawa-convenience store
|
|
March 29, 2006
|
|
Manahawkin, NJ
|
|
Series A, LLC
|
|
|
4,414,000
|
(1)
|
|
|
2,374,301
|
|
Wawa-convenience store
|
|
March 29, 2006
|
|
Narberth, PA
|
|
Series A, LLC
|
|
|
4,206,000
|
(1)
|
|
|
2,262,417
|
|
Conns-appliance retailer
|
|
May 26, 2006
|
|
San Antonio, TX
|
|
Series D, LLC
|
|
|
4,624,619
|
(2)
|
|
|
3,580,000
|
|
Rite Aid-drugstore
|
|
May 26, 2006
|
|
Defiance, OH
|
|
Cole Acquisitions I, LLC
|
|
|
4,326,165
|
(2)
|
|
|
2,321,000
|
|
CVS-drugstore
|
|
May 26, 2006
|
|
Madison, MS
|
|
Cole Acquisitions I, LLC
|
|
|
4,463,088
|
(2)
|
|
|
2,809,000
|
|
CVS-drugstore
|
|
June 28, 2006
|
|
Portsmouth, OH
|
|
Cole Acquisitions I, LLC
|
|
|
2,101,708
|
(2)
|
|
|
1,753,000
|
|
CVS-drugstore
|
|
July 7, 2006
|
|
Okeechobee, FL
|
|
Cole Acquisitions I, LLC
|
|
|
6,459,262
|
(2)
|
|
|
4,076,000
|
|
Office Depot-office supply
|
|
July 7, 2006
|
|
Dayton, OH
|
|
Cole Acquisitions I, LLC
|
|
|
3,416,526
|
(2)
|
|
|
2,130,000
|
|
Advance Auto-specialty retailer
|
|
July 12, 2006
|
|
Holland, MI
|
|
Cole Acquisitions I, LLC
|
|
|
2,071,843
|
(2)
|
|
|
1,193,000
|
|
Advance Auto-specialty retailer
|
|
July 12, 2006
|
|
Holland Township, MI
|
|
Cole Acquisitions I, LLC
|
|
|
2,137,244
|
(2)
|
|
|
1,231,000
|
|
Advance Auto-specialty retailer
|
|
July 12, 2006
|
|
Zeeland, MI
|
|
Cole Acquisitions I, LLC
|
|
|
1,840,715
|
(2)
|
|
|
1,057,000
|
|
CVS-drugstore
|
|
July 12, 2006
|
|
Orlando, FL
|
|
Series D, LLC
|
|
|
4,956,763
|
(2)
|
|
|
3,016,000
|
|
Office Depot-office supply
|
|
July 12, 2006
|
|
Greenville, MS
|
|
Cole Acquisitions I, LLC
|
|
|
3,491,470
|
(2)
|
|
|
2,192,000
|
|
Office Depot-office supply
|
|
July 19, 2006
|
|
Warrensburg, MO
|
|
Series D, LLC
|
|
|
2,880,552
|
(2)
|
|
|
1,810,000
|
|
CVS-drugstore
|
|
August 10, 2006
|
|
Gulfport, MS
|
|
Cole Acquisitions I, LLC
|
|
|
4,414,117
|
(2)
|
|
|
2,611,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
60,634,072
|
|
|
$
|
37,013,786
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
The Companys board of directors, including all of
the independent directors, approved the transaction as being
fair and reasonable to the Company, at a price in excess of the
cost to Series A, LLC, which is an affiliate of our
advisor, but substantial justification exists for such excess,
such excess is reasonable and the costs of the interest did
exceed its current fair market value as determined by an
independent expert selected by the Companys independent
directors. |
|
(2) |
|
The Companys board of directors, including all of
the independent directors, approved the transactions above as
being fair and reasonable to the Company, at a price no greater
than the cost to the affiliated entity, and at a cost that did
not exceed its current fair market value as determined by an
independent expert. |
F-22
COLE
CREDIT PROPERTY TRUST II, INC.
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
NOTE 10
ECONOMIC DEPENDENCY
Under various agreements, the Company has engaged or will engage
Cole Advisors II and its affiliates to provide certain
services that are essential to the Company, including asset
management services, supervision of the management and leasing
of properties owned by the Company, asset acquisition and
disposition decisions, the sale of shares of the Companys
common stock available for issue, as well as other
administrative responsibilities for the Company including
accounting services and investor relations. As a result of these
relationships, the Company is dependent upon Cole
Advisors II and its affiliates. In the event that these
companies were unable to provide the Company with the respective
services, the Company would be required to find alternative
providers of these services.
NOTE 11
INDEPENDENT DIRECTORS STOCK OPTION PLAN
The Company has a stock option plan, the Independent
Directors Stock Option Plan (the IDSOP), which
authorizes the grant of non-qualified stock options to the
Companys independent directors, subject to the absolute
discretion of the board of directors and the applicable
limitations of the plan. The Company intends to grant options
under the IDSOP to each qualifying director annually. The
exercise price for the options granted under the IDSOP initially
will be $9.15 per share (or greater, if such higher price
is necessary so that such options shall not be considered a
nonqualified deferred compensation plan under
Section 409A of the Internal Revenue Code of 1986, as
amended). It is intended that the exercise price for future
options granted under the IDSOP will be at least 100% of the
fair market value of the Companys common stock as of the
date the option is granted. As of December 31, 2006 and
2005, the Company had granted options to purchase 20,000 and
10,000 shares at $9.15 per share, respectively, each
with a one year vesting period. A total of 1,000,000 shares
have been authorized and reserved for issuance under the IDSOP.
On January 1, 2006, we adopted SFAS 123R which
requires the measurement and recognition of compensation expense
for all share-based payment awards made to employees and
directors, including stock options related to the IDSOP, based
on estimated fair values. The Company adopted FAS 123R
using the modified prospective application. Accordingly, prior
period amounts have not been restated.
During the year ended December 31, 2006, the adoption of
SFAS 123R resulted in stock-based compensation charges of
approximately $54,000. Stock-based compensation expense
recognized in the year ended December 31, 2006 was based on
awards ultimately expected to vest, and has been reduced for
estimated forfeitures. SFAS 123R requires forfeitures to be
estimated at the time of grant and revised, if necessary, in
subsequent periods if actual forfeitures differ from those
estimates. The Companys calculations do not assume any
forfeitures.
Prior to SFAS 123R, we applied the intrinsic-value-based
method of accounting prescribed by Accounting Principles Board
(APB) Opinion No. 25, Accounting for
Stock Issued to Employees , and related
interpretations, including FASB Interpretation No. 44,
Accounting for Certain Transactions involving Stock
Compensation, an interpretation of APB Opinion No. 25
, issued in March 2000, to account for our fixed-plan
stock options. Under this method, compensation expense was
recorded on the date of grant only if the current market price
of the underlying stock exceeded the exercise price. No
stock-based employee compensation cost was reflected in net
income, as all options granted under the plan had an exercise
price equal to the market value of the underlying common stock
on the date of the grant. SFAS No. 123,
Accounting for Stock-Based Compensation, as
amended by SFAS No. 148, Accounting for
Stock-Based Compensation Transition and
Disclosure, established accounting and disclosure
requirements using a fair-value-based method of accounting for
stock-based employee compensation plans. As allowed by
SFAS No. 123, during prior periods we elected to apply
the intrinsic-value-based method of accounting described above,
and adopted only the disclosure requirements of
SFAS No. 123.
F-23
COLE
CREDIT PROPERTY TRUST II, INC.
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
No grants were made under the Independent Director Plan in 2004.
A summary of the Companys stock option activity under its
Independent Director Plan during the years ended
December 31, 2006 and 2005 is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercise
|
|
|
|
|
|
|
Number
|
|
|
Price
|
|
|
Exercisable
|
|
|
Outstanding at December 31,
2004
|
|
|
|
|
|
|
|
|
|
|
|
|
Granted in 2005
|
|
|
10,000
|
|
|
$
|
9.15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at December 31,
2005
|
|
|
10,000
|
|
|
$
|
9.15
|
|
|
|
|
|
Granted in 2006
|
|
|
10,000
|
|
|
$
|
9.15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at December 31,
2006
|
|
|
20,000
|
|
|
$
|
9.15
|
|
|
|
10,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of December 31, 2006 and 2005, options to purchase
10,000 shares were unvested with a weighted average
contractual remaining life of approximately 9.3 and
8.9 years, respectively.
The weighted average fair value of options granted were $6.04 in
2005 and $5.55 in 2006. As of December 31, 2006 the number
of options that were currently vested and expected to become
vested was 20,000 shares and have an intrinsic value of
$17,000. The 2005 pro forma impact on the results of operations
is a reduction in earnings per share of $.10. The total 2005
stock-based employee compensation Pro forma expense
determined under fair-value-based method for all awards, net of
tax was approximately, $40,000.
In accordance with Statement 123R, the fair value of each
stock option granted has been estimated as of the date of the
grant using the Black-Scholes method based on the following
assumptions; a weighted average risk-free interest rate from
4.19% to 5.07%, a projected future dividend yield from 6.0% to
6.25%, expected volatility of 0%, and an expected life of an
option of 10 years. Based on these assumptions, the fair
value of the options granted during the years ended
December 31, 2006 and 2005 was approximately $55,000 and
$60,000, respectively. As of December 31, 2006, there was
approximately $22,000 of total unrecognized compensation cost
related to unvested share-based compensation awards granted
under the IDSOP. That cost is expected to be recognized during
2007.
NOTE 12
STOCKHOLDERS EQUITY
Distribution
Reinvestment Plan
The Company maintains a distribution reinvestment plan that
allows common stockholders (the Stockholders) to
elect to have the distributions the Stockholders receive
reinvested in additional shares of the Companys common
stock. The purchase price per share under the distribution
reinvestment plan will be the higher of 95% of the fair market
value per share as determined by the Companys board of
directors and $9.50 per share. No sales commissions or
dealer manager fees will be paid on shares sold under the
distribution reinvestment plan. The Company may terminate the
distribution reinvestment plan at the Companys discretion
at any time upon ten days prior written notice to the
Stockholders. Additionally, the Company will be required to
discontinue sales of shares under the distribution reinvestment
plan on the earlier of June 27, 2007, which is two years
from the effective date of the Offering, unless the Offering is
extended, or the date the Company sells 5,952,000 shares
under the Offering, unless the Company files a new registration
statement with the Securities and Exchange Commission and
applicable states. During the years ended December 31, 2006
and 2005, approximately 371,000 and 0 shares were purchased
under the distribution reinvestment plan for $3.5 million
and $0, respectively, which have been recorded as redeemable
common stock on the consolidated balance sheets.
F-24
COLE
CREDIT PROPERTY TRUST II, INC.
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
Share
Redemption Program
The Companys share redemption program permits the
Stockholders to sell their shares back to the Company after they
have held them for at least one year, subject to the significant
conditions and limitations described below.
There are several restrictions on the Stockholders ability
to sell their shares to the Company under the program. The
Stockholders generally have to hold their shares for one year
before selling the shares to the Company under the plan;
however, the Company may waive the one-year holding period in
the event of the death or bankruptcy of a Stockholder. In
addition, the Company will limit the number of shares redeemed
pursuant to the Companys share redemption program as
follows: (1) during any calendar year, the Company will not
redeem in excess of 3.0% of the weighted average number of
shares outstanding during the prior calendar year; and
(2) funding for the redemption of shares will be limited to
the amount of net proceeds the Company receives from the sale of
shares under the Companys distribution reinvestment plan.
These limits may prevent the Company from accommodating all
requests made in any year. During the term of the Offering, and
subject to certain provisions the redemption price per share
will depend on the length of time the Stockholder has held such
shares as follows: after one year from the purchase
date 92.5% of the amount the Stockholder paid for
each share; after two years from the purchase date
95.0% of the amount the Stockholder paid for each share; after
three years from the purchase date 97.5% of the
amount the Stockholder paid for each share; and after four years
from the purchase date 100.0% of the amount the
Stockholder paid for each share.
Upon receipt of a request for redemption, the Company will
conduct a Uniform Commercial Code search to ensure that no liens
are held against the shares. The Company will charge an
administrative fee to the Stockholder for the search and other
costs, which will be deducted from the proceeds of the
redemption or, if a lien exists, will be charged to the
Stockholder. Repurchases will be made quarterly. If funds are
not available to redeem all requested redemptions at the end of
each quarter, the shares will be purchased on a pro rata basis
and the unfulfilled requests will be held until the next
quarter, unless withdrawn. The Companys board of directors
may amend, suspend or terminate the share redemption program at
any time upon 30 days prior written notice to the
Stockholders. No shares were redeemed under the share redemption
program during the years ended December 31, 2006 and 2005.
NOTE 13
INCOME TAXES
For income tax purposes, dividends to common stockholders are
characterized as ordinary income, capital gains, or as a return
of a stockholders invested capital. The following table
represents the character of distributions to stockholder for the
years ended December 31, 2006 and 2005.
|
|
|
|
|
|
|
|
|
|
|
2006
|
|
|
2005
|
|
|
Character of
Distributions:
|
|
|
|
|
|
|
|
|
Ordinary income
|
|
|
42
|
%
|
|
|
0
|
%
|
Return of capital
|
|
|
58
|
%
|
|
|
0
|
%
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
100
|
%
|
|
|
100
|
%
|
|
|
|
|
|
|
|
|
|
At December 31, 2006 and 2005, the tax basis carrying value
of the Companys total assets was approximately
$500.5 million and approximately $98.8 million,
respectively. During the years ended December 31, 2006 and 2005 and the period from inception (September 29,
2004) to December 31, 2004, the Company had state
income taxes of approximately $24,000, $3,000, and $0,
respectively, which has been recorded in general and
administrative expenses in the consolidated statements of
operations.
During 2006, the state of Texas enacted new tax legislation that
restructures the state business tax in Texas by replacing the
taxable capital and earned surplus components of the current
franchise tax with a new
F-25
COLE
CREDIT PROPERTY TRUST II, INC.
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
margin tax, which for financial reporting purposes
is considered an income tax. The Company believes the impact of
this legislation was not material to the Company for the year
ended December 31, 2006. Accordingly, it has not recorded a
provision for income taxes in its accompanying consolidated
condensed financial statements for the year ended
December 31, 2006.
NOTE 14
OPERATING LEASES
All of the Companys real estate assets are leased to
tenants under operating leases for which the terms and
expirations vary. The leases frequently have provisions to
extend the lease agreement and other terms and conditions as
negotiated. The Company retains substantially all of the risks
and benefits of ownership of the real estate assets leased to
tenants.
The future minimum rental income from the Companys
investment in real estate assets under non-cancelable operating
leases, at December 31, 2006 is as follows:
|
|
|
|
|
|
|
Amount
|
|
|
Year ending
December 31:
|
|
|
|
|
2007
|
|
$
|
34,430,846
|
|
2008
|
|
|
34,385,306
|
|
2009
|
|
|
34,244,642
|
|
2010
|
|
|
34,244,642
|
|
2011
|
|
|
34,230,502
|
|
Thereafter
|
|
|
302,476,178
|
|
|
|
|
|
|
Total
|
|
$
|
474,012,116
|
|
|
|
|
|
|
NOTE 15
QUARTERLY RESULTS (Unaudited)
Presented below is a summary of the unaudited quarterly
financial information for the year ended December 31, 2006.
The Company believes that all necessary adjustments, consisting
only of normal recurring adjustments, have been included in the
amounts stated below to present fairly, and in accordance with
GAAP, the selected quarterly information.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2006
|
|
|
|
First Quarter
|
|
|
Second Quarter
|
|
|
Third Quarter
|
|
|
Fourth Quarter
|
|
|
Revenues
|
|
$
|
2,571,786
|
|
|
$
|
3,715,493
|
|
|
$
|
5,392,741
|
|
|
$
|
7,839,487
|
|
Net income (loss)
|
|
|
(182,588
|
)
|
|
|
(181,847
|
)
|
|
|
548,942
|
|
|
|
1,161,489
|
|
Basic and diluted net income
(loss) per share
|
|
|
(0.04
|
)
|
|
|
(0.02
|
)
|
|
|
0.04
|
|
|
|
0.05
|
|
Dividends per share
|
|
$
|
0.15
|
|
|
$
|
0.15
|
|
|
$
|
0.16
|
|
|
$
|
0.16
|
|
|
|
|
|
|
|
|
|
|
|
|
2005(1)
|
|
|
|
Third Quarter
|
|
|
Fourth Quarter
|
|
|
Revenues
|
|
$
|
2,761
|
|
|
$
|
738,908
|
|
Net loss
|
|
|
(29,543
|
)
|
|
|
(85,048
|
)
|
Basic and diluted net loss per
share(2)
|
|
|
(0.46
|
)
|
|
|
(0.05
|
)
|
Dividends per share
|
|
|
|
|
|
$
|
0.15
|
|
|
|
|
(1) |
|
No quarterly financial information is presented for the first
two quarters of 2005 as the Company was a development stage
company during those quarters and had no operations. |
F-26
COLE
CREDIT PROPERTY TRUST II, INC.
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
|
|
|
(2) |
|
The total of the two quarterly amounts for the year ended
December 31, 2005, does not equal the total for the year
then ended. This difference results from the increase in shares
outstanding over the year. |
NOTE 16
SUBSEQUENT EVENTS
Sale
of Shares of Common Stock
As of March 16, 2007, the Company had raised approximately
$406.3 million in offering proceeds through the issuance of
approximately 40,600,000 shares of the Companys
common stock. As of March 16, 2007, approximately
$87.6 million in shares (8,760,593 million shares)
remained available for sale to the public under the Offering,
exclusive of shares available under the DRIP.
Property
Acquisition and Borrowings
During the period from January 1, 2007 through
March 19, 2007, the Company acquired 17 commercial real
estate properties in separate transactions for an aggregate
acquisition cost of approximately $229.4 million and issued
mortgage notes payable totaling approximately
$152.2 million to finance the transactions or finance
previous transactions (see detailed borrowings below). The
acquisitions are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
Property
|
|
Location
|
|
Acquisition Date
|
|
Square Feet
|
|
|
Purchase Price(1)
|
|
|
HOM-furniture store
|
|
Fargo, ND
|
|
January 4, 2007
|
|
|
122,108
|
|
|
$
|
12,000,000
|
|
La-Z-Boy-furniture
store
|
|
Newington, CT
|
|
January 5, 2007
|
|
|
20,701
|
|
|
|
6,900,000
|
|
Advance Auto-parts store
|
|
Maryland Heights, MO
|
|
January 12, 2007
|
|
|
7,000
|
|
|
|
1,893,000
|
|
Victoria Crossing-multi-tenant
retail center
|
|
Victoria, TX
|
|
January 12, 2007
|
|
|
87,473
|
|
|
|
12,750,000
|
|
Academy Sports-corporate
offices/distribution
|
|
Katy, TX
|
|
January 18, 2007
|
|
|
1,500,596
|
|
|
|
102,000,000
|
|
Gordmans-department store
|
|
Peoria, IL
|
|
January 18, 2007
|
|
|
60,947
|
|
|
|
9,000,000
|
|
One Pacific Place-multi-tenant
retail center
|
|
Omaha, NE
|
|
February 6, 2007
|
|
|
91,564
|
|
|
|
36,000,000
|
|
Sack n Save-convenience store OReilly
Auto-parts store
|
|
Garland, TX
|
|
February 6, 2007
|
|
|
65,295
|
|
|
|
5,060,000
|
|
Tractor Supply-specialty retail
store
|
|
Ankeny, IA
|
|
February 9, 2007
|
|
|
19,097
|
|
|
|
3,000,000
|
|
ABX Air-distribution center
|
|
Coventry, RI
|
|
February 14, 2007
|
|
|
33,000
|
|
|
|
4,090,000
|
|
Office Depot-office supply store
|
|
Enterprise, AL
|
|
February 27, 2007
|
|
|
20,000
|
|
|
|
2,776,357
|
|
Northern Tool-specialty retail store
|
|
Blaine, MN
|
|
February 28, 2007
|
|
|
25,685
|
|
|
|
4,900,000
|
|
Office Max-office supply store
|
|
Orangeburg, SC
|
|
February 28, 2007
|
|
|
23,600
|
|
|
|
3,125,000
|
|
Walgreens-drugstore
|
|
Cincinnati, OH
|
|
March 5, 2007
|
|
|
15,120
|
|
|
|
5,140,000
|
|
Walgreens-drugstore
|
|
Madeira, OH
|
|
March 5, 2007
|
|
|
13,905
|
|
|
|
4,425,000
|
|
Walgreens-drugstore
|
|
Sharonville, OH
|
|
March 5, 2007
|
|
|
13,905
|
|
|
|
4,085,000
|
|
AT&T-office building
|
|
Beaumont, TX
|
|
March 19, 2007
|
|
|
141,525
|
|
|
|
12,275,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
2,261,521
|
|
|
$
|
229,419,357
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Purchase price excludes related closing and acquisition costs. |
F-27
COLE
CREDIT PROPERTY TRUST II, INC.
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
The following mortgage notes require monthly interest-only
payments and either relate to the aforementioned acquisitions or
previous acquisitions of the Company:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed Rate
|
|
|
Fixed
|
|
|
|
|
Variable
|
|
|
|
|
|
|
|
|
|
|
Loan
|
|
|
Interest
|
|
|
|
|
Rate Loan
|
|
|
|
|
Total Loan
|
|
Property
|
|
Location
|
|
Amount
|
|
|
Rate
|
|
|
Maturity Date
|
|
Amount(1)
|
|
|
Maturity Date
|
|
Outstanding
|
|
|
Dicks Sporting Goods
|
|
Amherst, NY
|
|
$
|
6,321,000
|
|
|
|
5.62
|
%
|
|
February 1, 2017
|
|
$
|
|
|
|
N/A
|
|
$
|
6,321,000
|
|
HOM Furniture
|
|
Fargo, ND
|
|
|
4,800,000
|
|
|
|
5.56
|
%
|
|
February 1, 2017
|
|
|
|
|
|
N/A
|
|
|
4,800,000
|
|
Victoria Crossing
|
|
Victoria, TX
|
|
|
8,288,000
|
|
|
|
5.71
|
%
|
|
February 11, 2017
|
|
|
1,912,000
|
|
|
April 12, 2007
|
|
|
10,200,000
|
|
Academy Sports
|
|
Katy, TX
|
|
|
68,250,000
|
|
|
|
5.61
|
%
|
|
February 1, 2017
|
|
|
|
|
|
N/A
|
|
|
68,250,000
|
|
La-Z-Boy
|
|
Newington, CT
|
|
|
4,140,000
|
|
|
|
5.66
|
%
|
|
February 1, 2017
|
|
|
|
|
|
N/A
|
|
|
4,140,000
|
|
Gordmans
|
|
Peoria, IL
|
|
|
4,950,000
|
|
|
|
5.71
|
%
|
|
February 1, 2017
|
|
|
|
|
|
N/A
|
|
|
4,950,000
|
|
One Pacific Place
|
|
Omaha, NE
|
|
|
23,400,000
|
|
|
|
5.53
|
%
|
|
March 1, 2017
|
|
|
|
|
|
N/A
|
|
|
23,400,000
|
|
Sack N Save
|
|
Garland, TX
|
|
|
3,290,000
|
|
|
|
5.54
|
%
|
|
March 1, 2037
|
|
|
|
|
|
N/A
|
|
|
3,290,000
|
|
ABX Air
|
|
Coventry, RI
|
|
|
2,454,000
|
|
|
|
5.70
|
%
|
|
April 1, 2012
|
|
|
|
|
|
N/A
|
|
|
2,454,000
|
|
Office Depot
|
|
Enterprise, RI
|
|
|
1,850,000
|
|
|
|
6.29
|
%
|
|
March 1, 2017
|
|
|
|
|
|
N/A
|
|
|
1,850,000
|
|
Northern Tool
|
|
Blaine, MN
|
|
|
3,185,000
|
|
|
|
6.00
|
%
|
|
September 1, 2016
|
|
|
|
|
|
N/A
|
|
|
3,185,000
|
|
Office Max
|
|
Orangeburg, SC
|
|
|
1,875,000
|
|
|
|
5.61
|
%
|
|
April 1, 2012
|
|
|
|
|
|
N/A
|
|
|
1,875,000
|
|
Walgreens
|
|
Cincinnati, OH
|
|
|
3,341,000
|
|
|
|
6.00
|
%
|
|
September 1, 2016
|
|
|
|
|
|
N/A
|
|
|
3,341,000
|
|
Walgreens
|
|
Madeira, OH
|
|
|
2,876,000
|
|
|
|
5.70
|
%
|
|
April 1, 2012
|
|
|
|
|
|
N/A
|
|
|
2,876,000
|
|
Walgreens
|
|
Sharonville, OH
|
|
|
2,655,000
|
|
|
|
5.62
|
%
|
|
April 1, 2012
|
|
|
|
|
|
N/A
|
|
|
2,655,000
|
|
AT&T
|
|
Beaumont, TX
|
|
|
8,592,000
|
|
|
|
5.87
|
%
|
|
April 1, 2017
|
|
|
|
|
|
N/A
|
|
|
8,592,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
$
|
150,267,000
|
|
|
|
|
|
|
|
|
$
|
1,912,000
|
|
|
|
|
$
|
152,179,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
The variable rate debt mortgage notes bear interest at the
one-month LIBOR rate plus 200 basis points with interest
paid monthly. |
Extended
Rate Lock Agreement
During the period from January 1, 2007 through
March 16, 2007, the Company entered into Rate Locks with
Bear Stearns to lock interest rates ranging from 5.49% to 5.80%
for up to approximately $265.3 million in borrowings. Under
the terms of Rate Locks, the Company made rate lock deposits
totaling approximately $5.9 million to Bear Stearns. As of
March 16, 2007, the Company had available total borrowings
of approximately $347.6 million under the Rate Locks and
approximately $7.5 million in rate lock deposits
outstanding.
The deposits are refundable to the Company in amounts generally
equal to 2% of any loans funded under the agreements. The Rate
Locks expire 60 days from execution and may be extended by
30 days for a rate lock fee of 0.25% of the loan amount or,
at the borrowers election, by converting the fee into
interest rate spread.
F-28
SUMMARY FINANCIAL INFORMATION OF BUSINESSES ACQUIRED
Summary Financial Data
Tractor Supply Company
TS Ankeny Property
Overview
On February 9, 2007, we acquired an approximately 19,000 square foot single-tenant retail
building on an approximately 2.7 acre site in Ankeny, Iowa (the TS Ankeny Property), which was
constructed in 2006. The TS Ankeny Property is 100% leased to Tractor Supply Company (Tractor
Supply) The TS Ankeny Property is subject to a net lease pursuant to which the tenant is required
to pay substantially all operating expenses and capital expenditures in addition to base rent.
The purchase price of the TS Ankeny Property was $3.0 million, exclusive of closing costs. The
acquisition was funded by net proceeds from our ongoing public offering.
Tractor Supply currently operates more than 550 retail stores in 34 states, employs more than
7,800 and is headquartered in Brentwood, Tennessee. Tractor Supplys common stock is traded on The
Nasdaq Global Select Market under the symbol TSCO.
In evaluating the TS Ankeny Property as a potential acquisition and determining the
appropriate amount of consideration to be paid for our interests therein, a variety of factors were
considered, including our consideration of property condition reports; unit-level store
performance; property location, visibility and access; age of the property, physical condition and
curb appeal; neighboring property uses; local market conditions, including vacancy rates; area
demographics, including trade area population and average household income; neighborhood growth
patterns and economic conditions; and the presence of demand generators. After reasonable inquiry,
we are not aware of any material factors relating to the TS Ankeny Property, other than those
discussed above, that would cause the reported financial information not to be necessarily
indicative of future operating results.
Because the TS Ankeny Property is 100% leased to a single tenant on a long-term basis under a
net lease that transfers substantially all of the operating costs to the tenant, we believe that
the financial condition and results of operations of the tenant, Tractor Supply, are more relevant
to investors than the financial statements of the property acquired in order to enable investors to
evaluate the credit-worthiness of the lessee. Additionally, because the property is subject to a
net lease, the historical property financial statements provide limited information other than
rental income, which is disclosed in the section captioned Investment Objectives and Policies -
Real Property Investments beginning on page 82 of the prospectus. As a result, pursuant to the
guidance provided by the SEC, we have not provided audited statements of the property acquired.
Tractor Supply currently files its financial statements in reports filed with the Securities
and Exchange Commission, and the following summary financial data regarding Tractor Supply are
taken from its previously filed public reports:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Fiscal Year Ended |
|
|
12/31/2006 |
|
12/31/2005 |
|
12/31/2004 |
|
|
(in thousands) |
Consolidated Statements of
Operations |
|
|
|
|
|
|
|
|
|
|
|
|
Revenues |
|
$ |
2,369,612 |
|
|
$ |
2,067,979 |
|
|
$ |
1,738,843 |
|
Operating Income |
|
|
148,020 |
|
|
|
136,444 |
|
|
|
101,546 |
|
Net Income |
|
|
91,008 |
|
|
|
85,669 |
|
|
|
64,069 |
|
|
|
|
As of the Fiscal Year Ended |
|
|
12/31/2006 |
|
12/31/2005 |
|
12/31/2004 |
|
|
(in thousands) |
Consolidated Balance Sheets |
|
|
|
|
|
|
|
|
|
|
|
|
Total Assets |
|
$ |
1,007,992 |
|
|
$ |
814,795 |
|
|
$ |
678,485 |
|
Long-term Debt |
|
|
2,808 |
|
|
|
10,739 |
|
|
|
34,744 |
|
Stockholders Equity |
|
|
598,904 |
|
|
|
477,698 |
|
|
|
370,584 |
|
For more detailed financial information regarding Tractor Supply, please refer to its
financial statements, which are publicly available with the Securities and Exchange Commission at
http://www.sec.gov.
F-29
Summary Financial Data
OfficeMax, Inc.
OM Orangeburg Property
Overview
On February 28, 2007, we acquired an approximately 24,000 square foot single-tenant retail
building on an approximately 2.2 acre site located in Orangeburg, South Carolina (the OM
Orangeburg Property), which was constructed in 1999. The OM Orangeburg Property is 100% leased to
OfficeMax, Inc. (OfficeMax). The OM Orangeburg Property is subject to a net lease pursuant to
which the tenant is required to pay substantially all operating expenses and capital expenditures
in addition to base rent.
The purchase price of the OM Orangeburg Amherst Property was approximately $3.1 million,
exclusive of closing costs. The acquisition was funded by net proceeds from our ongoing public
offering, and an approximately $1.9 million loan secured by the
OM Orangeburg Property and the WG Sharonville Property, as defined
below.
OfficeMax currently operates more than 1,000 retail stores located in the United States,
Canada, and Mexico, employs more than 40,000 people and is headquartered in Naperville, Illinois.
OfficeMax has an S&P credit rating of B+ and its common stock is traded on The New York Stock
Exchange under the symbol OMX.
In evaluating the OM Orangeburg Property as a potential acquisition and determining the
appropriate amount of consideration to be paid for our interests therein, a variety of factors were
considered, including our consideration of property condition reports; unit-level store
performance; property location, visibility and access; age of the property, physical condition and
curb appeal; neighboring property uses; local market conditions, including vacancy rates; area
demographics, including trade area population and average household income; neighborhood growth
patterns and economic conditions; and the presence of demand generators.
Because the OM Orangeburg Property is 100% leased to a single tenant on a long-term basis
under a net lease that transfers substantially all of the operating costs to the tenant, we believe
that the financial condition and results of operations of the tenant, OfficeMax, are more relevant
to investors than the financial statements of the property acquired in order to enable investors to
evaluate the credit-worthiness of the lessee. Additionally, because the property is subject to a
net lease, the historical property financial statements provide limited information other than
rental income, which is disclosed in the section captioned Investment Objectives and Policies -
Real Property Investments beginning on page 82 of the prospectus. As a result, pursuant to the
guidance provided by the SEC, we have not provided audited statements of the property acquired.
OfficeMax currently files its financial statements in reports filed with the Securities and
Exchange Commission, and the following summary financial data regarding OfficeMax are taken from
its previously filed public reports:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Fiscal Year Ended |
|
|
|
12/31/2006 |
|
12/31/2005 |
|
12/31/2004 |
|
|
|
|
(in thousands) |
Consolidated
Statements of
Operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues |
|
|
$ |
8,965,707 |
|
|
$ |
9,157,660 |
|
|
$ |
13,270,196 |
|
Operating Income |
|
|
|
165,902 |
|
|
|
9,692 |
|
|
|
671,969 |
|
Net Income |
|
|
|
91,721 |
|
|
|
(73,762 |
) |
|
|
173,058 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of the Fiscal Year Ended |
|
|
|
12/31/2006 |
|
12/31/2005 |
|
12/31/2004 |
|
|
|
|
(in thousands) |
Consolidated
Balance Sheets |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Assets |
|
|
$ |
6,216,048 |
|
|
$ |
6,272,142 |
|
|
$ |
7,637,299 |
|
Long-term Debt |
|
|
|
384,000 |
|
|
|
407,000 |
|
|
|
585,082 |
|
Stockholders Equity |
|
|
|
1,985,644 |
|
|
|
1,735,679 |
|
|
|
2,610,478 |
|
For more detailed financial information regarding OfficeMax, please refer to its
financial statements, which are publicly available with the SEC at http://www.sec.gov.
F-30
Summary Financial Data
Walgreen Co.
WG Cincinnati Property
Overview
On March 6, 2007, we acquired an approximately 15,000 square foot single-tenant retail
building on an approximately 2.17 acre site located in Cincinnati, Ohio (the WG Cincinnati
Property), which was constructed in 2000. The WG Cincinnati Property is 100% leased to Walgreen Co
(Walgreens). The WG Cincinnati Property is subject to a net lease pursuant to which the tenant is
required to pay substantially all operating expenses and capital expenditures in addition to base
rent.
The purchase price of the WG Cincinnati Property was approximately $5.1 million,
exclusive of closing costs. The acquisition was funded by net proceeds from our public offering of
common stock and an approximately $3.3 million loan secured by
the WG Cincinnati Property and the NT Blaine Property, as defined
below.
WG Sharonville Property
Overview
On March 6, 2007, we acquired an approximately 14,000 square foot single-tenant retail
building on an approximately 2.00 acre site located in Sharonville, Ohio (the WG Sharonville
Property), which was constructed in 1998. The WG Sharonville Property is 100% leased to Walgreens.
The WG Sharonville Property is subject to a net lease pursuant to which the tenant is required to
pay substantially all operating expenses and capital expenditures in addition to base rent.
The purchase price of the WG Sharonville Property was approximately $4.1 million, exclusive of
closing costs. The acquisition was funded by net proceeds from our public offering of common stock
and an approximately $2.7 million loan secured by the WG
Sharonville Property and the OM Orangeburg Property.
WG Madeira Property
Overview
On March 6, 2007 we acquired an approximately 14,000 square foot single-tenant retail
building on an approximately 1.55 acre site located in Madeira, Ohio (the WG Madeira Property),
which was constructed in 1998. The WG Madeira Property is 100% leased to Walgreens. The WG Madeira
Property is subject to a net lease pursuant to which the tenant is required to pay substantially
all operating expenses and capital expenditures in addition to base rent.
The purchase price of the WG Madeira Property was approximately $4.4 million, exclusive
of closing costs. The acquisition was funded by net proceeds from our public offering of common
stock and an approximately $2.9 million loan secured by the WG
Madeira Property and the AB Coventry Property, as defined below.
Walgreens operates over 4,900 stores in 45 states and Puerto Rico. Walgreens has a
Standard & Poors credit rating of A+ and the companys stock is publicly traded on the New York
Stock Exchange under the ticker symbol WAG.
In evaluating the WG Cincinnati Property, WG Sharonville Property, and WG Madeira Property as
potential acquisitions and determining the appropriate amount of consideration to be paid for our
interests therein, a variety of factors were considered, including our consideration of property
condition reports; unit-level store performance; property location, visibility and access; age of
the property, physical condition and curb appeal; neighboring property uses; local market
conditions, including vacancy rates; area demographics, including trade area population and average
household income; neighborhood growth patterns and economic conditions; and the presence of demand
generators. After reasonable inquiry, we are not aware of any material factors relating to these
properties, other than those discussed above, that would cause the reported financial information
not to be necessarily indicative of future operating results.
Because the WG Madeira Property, WG Sharonville Property and WG Madeira Property each is
100% leased to a single tenant on a long-term basis under a net lease that transfers substantially
all of the operating costs to the tenant, we believe that the financial condition and results of
operations of the tenant, Walgreens, are more relevant to investors than the financial statements
of the property acquired in order to enable investors to evaluate the credit-worthiness of the
lessee. Additionally, because the property is subject to a net lease, the historical property
financial statements provide limited information other than rental income, which is disclosed in
the section captioned Investment Objectives and Policies Real Property Investments beginning on
page 82 of the
F-31
prospectus. As a result, pursuant to the guidance provided by the Securities and Exchange
Commission, we have not provided audited statements of the property acquired.
Walgreens currently files its financial statements in reports filed with the Securities and
Exchange Commission, and the following summary financial data regarding Walgreens are taken from
its previously filed public reports:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three |
|
|
|
|
Months Ended |
|
For the Fiscal Year Ended |
|
|
11/30/2006 |
|
8/31/2006 |
|
8/31/2005 |
|
8/31/2004 |
|
|
|
|
|
|
(in millions) |
Consolidated
Statements of
Operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues |
|
$ |
12,708.5 |
|
|
$ |
47,409.0 |
|
|
$ |
42,201.6 |
|
|
$ |
37,508.2 |
|
Operating Income |
|
|
12,036.6 |
|
|
|
44,707.5 |
|
|
|
39,777.6 |
|
|
|
35,365.8 |
|
Net Income |
|
|
431.7 |
|
|
|
1,750.6 |
|
|
|
1,559.5 |
|
|
|
1,349.8 |
|
|
|
|
As of |
|
As of the Fiscal Year Ended |
|
|
11/30/2006 |
|
8/31/2006 |
|
8/31/2005 |
|
8/31/2004 |
|
|
|
|
|
|
(in millions) |
Consolidated
Balance Sheets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Assets |
|
$ |
18,026.0 |
|
|
$ |
17,131.1 |
|
|
$ |
14,608.8 |
|
|
$ |
13,342.1 |
|
Long-term Debt |
|
|
1,165.1 |
|
|
|
1,118.9 |
|
|
|
997.7 |
|
|
|
850.4 |
|
Stockholders Equity |
|
|
10,154.5 |
|
|
|
10,115.8 |
|
|
|
8,889.7 |
|
|
|
8,139.7 |
|
For more detailed financial information regarding Walgreens, please refer to its
financial statements, which are publicly available with the Securities and Exchange Commission at
http://www.sec.gov.
F-32
AS Katy Property
Overview
On January 18, 2007, we acquired an approximately 1.5 million square foot single-tenant
corporate headquarters and distribution facility on an approximately 93.8 acre site located in
Katy, Texas (the AS Katy Property), which was constructed in four phases between 1976 and 2006.
The AS Katy Property is 100% leased to Academy, Ltd. (Academy). The AS Katy Property is subject
to a net lease pursuant to which the tenant is required to pay substantially all operating expenses
and capital expenditures in addition to base rent.
The purchase price of the AS Katy Property was $102.0 million, exclusive of closing costs. The
acquisition was funded by net proceeds from our ongoing public offering and an approximately $68.3
million loan secured by the AS Katy Property.
Academy is a sporting goods retailer, operating over 80 stores across the southeastern United
States. In determining the creditworthiness of Academy we considered a variety of factors,
including historical financial information and financial performance and regional market position.
After reasonable inquiry, we are not aware of any material factors relating to the AS Katy
Property, other than those discussed above, that would cause the reported financial information not
to be necessarily indicative of future operating results.
F-33
Independent Auditors Report
To the Board of Directors and Stockholders of
Cole Credit Property Trust II, Inc.
Phoenix, AZ
We have audited the accompanying statement of revenues and certain operating expenses (the
Historical Summary) of the AS Katy Property (the Property) for the year ended December 31,
2006. This Historical Summary is the responsibility of Cole Credit Property Trust II, Inc.
management. Our responsibility is to express an opinion on the Historical Summary based on our
audit.
We conducted our audit in accordance with auditing standards generally accepted in the United
States of America. Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the Historical Summary is free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in the Historical
Summary. An audit also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall presentation of the Historical Summary. We
believe that our audit provides a reasonable basis for our opinion.
The accompanying Historical Summary was prepared for the purpose of complying with the rules and
regulations of the Securities and Exchange Commission (for inclusion in Supplements to the original
Prospectus of Cole Credit Property Trust II, Inc.) as described in Note 1 to the Historical Summary
and is not intended to be a complete presentation of the Propertys revenues and expenses.
In our opinion, such Historical Summary presents fairly, in all material respects, the revenue and
certain operating expenses described in Note 1 to the Historical Summary of the AS Katy Property
for the year ended December 31, 2006, in conformity with accounting principles generally accepted
in the United States of America.
/s/ DELOITTE & TOUCHE LLP
Phoenix, Arizona
March 9, 2007
F-34
AS Katy Property
Statement of Revenues and Certain Operating Expenses
For the Year Ended December 31, 2006
|
|
|
|
|
Revenues: |
|
|
|
|
Rental revenue |
|
$ |
4,935,604 |
|
|
|
|
|
Total revenues |
|
|
4,935,604 |
|
|
Certain Operating Expenses: |
|
|
|
|
|
|
|
|
Total certain operating expenses |
|
|
|
|
|
|
|
|
Revenues in excess of certain
operating expenses |
|
$ |
4,935,604 |
|
|
|
|
|
See accompanying notes to statement of revenues and certain operating expenses.
F-35
AS Katy Property
Notes to the Statement of Revenues and Certain Operating Expenses
For the Year Ended December 31, 2006
1. Basis of Presentation
On
January 18, 2007, Cole Credit Property Trust II, Inc. (the
Company) acquired a single-tenant corporate headquarters and
distribution facility containing approximately 1.5 million
square feet of rentable space located on an approximately
93.8 acre site located in Katy, Texas (the AS Katy
Property). The AS Katy property is 100% leased to Academy,
Ltd., pursuant to a net lease.
The statement of revenues and certain operating expenses (the Historical Summary) has been
prepared for the purpose of complying with the provisions of Article 3-14 of Regulation S-X
promulgated by the Securities and Exchange Commission (the SEC), which requires certain
information with respect to real estate operations to be included with certain filings with the
SEC. These Historical Summaries include the historical revenues and certain operating expenses of
the AS Katy Property, exclusive of items which may not be comparable to the proposed future
operations of the AS Katy Property. Material amounts that would not be directly attributable to
future operating results of the AS Katy Property are excluded, and the financial statements are not
intended to be a complete presentation of the AS Katy Propertys revenues and expenses. Items
excluded consist of depreciation, amortization, bank service charges, fees relating to a letter of
credit, interest expense and professional expenses.
2. Significant Accounting Policies
Revenue Recognition
The lease is accounted for as an operating lease and minimum rental income is recognized on a
straight-line basis over the remaining term of the lease.
Repairs and Maintenance
Expenditures for repairs and maintenance are expensed as incurred.
Use of Estimates
The preparation of historical summaries in conformity with generally accepted accounting principles
requires the Companys management to make estimates and assumptions that affect the reported
amounts of revenues and certain operating expenses during the reporting period. Actual results
could differ from those estimates.
3. Lease
The aggregate annual minimum future rental payments on the non-cancelable operating lease in effect
as of December 31, 2006 are as follows:
|
|
|
|
|
Year ending December 31: |
|
|
|
|
2007 |
|
$ |
6,059,154 |
|
2008 |
|
|
6,157,764 |
|
2009 |
|
|
6,259,051 |
|
2010 |
|
|
6,362,042 |
|
2011 |
|
|
6,466,767 |
|
Thereafter |
|
|
63,235,212 |
|
|
|
|
|
Total |
|
$ |
94,539,990 |
|
|
|
|
|
The minimum future rental payments represents the base rent required to be paid under the terms of
the lease exclusive of charges for contingent rents, electrical services, real estate taxes, and
operating cost escalations.
F-36
4. Tenant Concentration
For the
year ended December 31, 2006, the sole tenant, Academy, Ltd. accounted for 100% of the
annual rental income for the AS Katy Property. If the tenant were to default on their lease, future
revenue of the AS Katy Property would be materially and adversely impacted.
5. Commitments and Contingencies
Litigation
The AS Katy Property may be subject to legal claims in the ordinary course of business. The Company
believes that the ultimate settlement of any potential claims will not have a material impact on
the AS Katy Propertys results of operations.
Environmental Matters
In connection with the ownership and operation of real estate, the AS Katy Property may be
potentially liable for costs and damages related to environmental matters. The AS Katy Property has
not been notified by any governmental authority of any non-compliance, liability or other claim,
and the Company is not aware of any other environmental condition that they believe will have a
material adverse effect on the AS Katy Propertys results of operations.
F-37
MT Omaha Property
Overview
On February 6,
2007, we acquired an approximately 92,000 square foot multi-tenant retail
shopping center on an approximately 10.5 acre site located in Omaha, Nebraska (the MT Omaha
Property), which was constructed in 1988 and most recently renovated in 2005. The MT Omaha
Property is approximately 95% leased to 24 tenants. Major tenants include Abercrombie & Fitch, Inc.
d/b/a Abercrombie & Fitch, Banana Republic, Inc. d/b/a Banana Republic, R.A. Popp Enterprises, Inc.
d/b/a Wheatfields and Sur La Table, Inc. d/b/a Sur La Table, however, no single tenant accounts for
more than 10.0% of the rentable square feet of the MT Omaha Property. The MT Omaha Property is
subject to 24 net leases (the MT Omaha Leases), pursuant to which each tenant is required to pay
substantially all operating expenses, capital expenditures and a proportionate amount of common
area maintenance charges in addition to base rent.
The purchase price of the MT Omaha Property was approximately $36.0 million, exclusive of
closing costs. The acquisition was funded by net proceeds from our ongoing public offering and an
approximately $23.8 million loan secured by the MT Omaha Property.
After reasonable inquiry, we are not aware of any material factors relating to the MT Omaha
Property, other than those discussed above, that would cause the reported financial information not
to be necessarily indicative of future operating results.
F-38
Independent Auditors Report
To the Board of Directors and Stockholders of
Cole Credit Property Trust II, Inc.
Phoenix, AZ
We have audited the accompanying statement of revenues and certain operating expenses (the
Historical Summary) of the MT Omaha Property (the Property) for the year ended June 30, 2006.
This Historical Summary is the responsibility of Cole Credit Property Trust II, Inc. management.
Our responsibility is to express an opinion on the Historical Summary based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United
States of America. Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the Historical Summary is free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in the Historical
Summary. An audit also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall presentation of the Historical Summary. We
believe that our audit provides a reasonable basis for our opinion.
The accompanying Historical Summary was prepared for the purpose of complying with the rules and
regulations of the Securities and Exchange Commission (for inclusion in Supplements to the original
Prospectus of Cole Credit Property Trust II, Inc.) as described in Note 1 to the Historical Summary
and is not intended to be a complete presentation of the Propertys revenues and expenses.
In our opinion, such Historical Summary presents fairly, in all material respects, the revenue and
certain operating expenses described in Note 1 to the Historical Summary of the MT Omaha Property
for the year ended June 30, 2006, in conformity with accounting principles generally accepted in
the United States of America.
/s/ DELOITTE & TOUCHE LLP
Phoenix, Arizona
March 9, 2007
F-39
MT Omaha Property
Statement of Revenues and Certain Operating Expenses
For the Year Ended June 30, 2006 and
the Six Month Period ended December 31, 2006 (unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended |
|
|
|
Year Ended |
|
|
December 31, 2006 |
|
|
|
June 30, 2006 |
|
|
(Unaudited) |
|
Revenues: |
|
|
|
|
|
|
|
|
Rental revenue |
|
$ |
2,583,418 |
|
|
$ |
1,339,612 |
|
Tenant reimbursement and other |
|
|
1,056,952 |
|
|
|
554,155 |
|
|
|
|
|
|
|
|
Total revenues |
|
|
3,640,370 |
|
|
|
1,893,767 |
|
|
|
|
|
|
|
|
|
|
Certain Operating Expenses: |
|
|
|
|
|
|
|
|
Operations and maintenance |
|
|
331,318 |
|
|
|
153,900 |
|
Real estate taxes |
|
|
345,385 |
|
|
|
171,972 |
|
Marketing |
|
|
160,029 |
|
|
|
101,840 |
|
Professional and administrative expenses |
|
|
108,525 |
|
|
|
63,301 |
|
Management fees |
|
|
108,352 |
|
|
|
60,591 |
|
Utilities |
|
|
80,045 |
|
|
|
34,469 |
|
|
|
|
|
|
|
|
Total certain operating expenses |
|
|
1,133,654 |
|
|
|
586,073 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues in excess of certain operating
expenses |
|
$ |
2,506,716 |
|
|
$ |
1,307,694 |
|
|
|
|
|
|
|
|
See accompanying notes to statement of revenues and certain operating expenses.
F-40
MT Omaha Property
Notes to the Statement of Revenues and Certain Operating Expenses
For the Year Ended June 30, 2006
and the Nine Month Period ended December 31, 2006 (unaudited)
1. Basis of Presentation
On February 6, 2007, Cole Credit Property Trust II, Inc. (the Company) acquired a multi-tenant
commercial retail shopping center containing approximately 92,000 square feet of rentable space
located on an approximately 10.5 acre site in Omaha, Nebraska (the MT Omaha Property). The MT
Omaha Property is approximately 95% leased to 24 tenants, pursuant to net leases.
The statement of revenues and certain operating expenses (the Historical Summary) has been
prepared for the purpose of complying with the provisions of Article 3-14 of Regulation S-X
promulgated by the Securities and Exchange Commission (the SEC), which requires certain
information with respect to real estate operations to be included with certain filings with the
SEC. These Historical Summaries include the historical revenues and certain operating expenses of
the MT Omaha Property, exclusive of items which may not be comparable to the proposed future
operations of the MT Omaha Property. Material amounts that would not be directly attributable to
future operating results of the MT Omaha Property are excluded, and the financial statements are
not intended to be a complete presentation of the MT Omaha Propertys revenues and expenses. Items
excluded consist of accounting and professional fees.
2. Significant Accounting Policies
Revenue Recognition
The leases are accounted for as operating leases and minimum rental income is recognized on a
straight-line basis over the remaining term of each lease. Tenant
reimbursement revenue is recognized in the same periods in which the
related expenses are incurred. Tenant reimbursement revenue includes
payments from tenants as reimbursements for property taxes,
utilities, and other property operating expenses.
Repairs and Maintenance
Expenditures
for repairs and maintenance are expensed as incurred.
Use of Estimates
The preparation of historical summaries in conformity with generally accepted accounting principles
requires the Companys management to make estimates and assumptions that affect the reported
amounts of revenues and certain operating expenses during the reporting period. Actual results
could differ from those estimates.
3. Leases
The aggregate annual minimum future rental payments on the non-cancelable operating leases in
effect as of June 30, 2006 are as follows:
|
|
|
|
|
Year ending June 30: |
|
|
|
|
2007 |
|
$ |
2,617,725 |
|
2008 |
|
|
2,441,213 |
|
2009 |
|
|
2,112,608 |
|
2010 |
|
|
1,649,869 |
|
2011 |
|
|
1,492,371 |
|
Thereafter |
|
|
3,809,809 |
|
|
|
|
|
Total |
|
$ |
14,123,955 |
|
|
|
|
|
The minimum future rental income represents the base rent required to be paid under the terms of
the lease exclusive of charges for contingent rents, electrical services, real estate taxes, and
operating cost escalations.
4. Tenant Concentration
For the year ended June 30, 2006, no one tenant accounted for 10% of the annual rental income for
the MT Omaha Property.
F-41
5. Commitments and Contingencies
Litigation
The MT Omaha Property may be subject to legal claims in the ordinary course of business as a
property owner. The Company believes that the ultimate settlement of any potential claims will not
have a material impact on the MT Omaha Propertys results of operations.
Environmental Matters
In connection with the ownership and operation of real estate, the MT Omaha Property may be
potentially liable for costs and damages related to environmental matters. The MT Omaha Property
has not been notified by any governmental authority of any non-compliance, liability or other
claim, and the Company is not aware of any other environmental condition that they believe will
have a material adverse effect on the MT Omaha Propertys results of operations.
F-42
DK Amherst Property
Overview
On December 20, 2006, we acquired an approximately 56,000 square foot single-tenant retail
building on an approximately 5.8 acre site located in Amherst, New York (the DK Amherst
Property), which was constructed in 1986. The DK Amherst Property is 100% leased to Dicks
Sporting Goods, Inc. (Dicks). The DK Amherst Property is subject to a net lease pursuant to
which the tenant is required to pay substantially all operating expenses and capital expenditures
in addition to base rent.
The purchase price of the DK Amherst Property was approximately $9.7 million, exclusive of
closing costs. The acquisition was funded by net proceeds from our
ongoing public offering and an approximately $6.3 million loan
secured by the DK Amherst Property.
Dicks is a full-line sporting goods retailer that offers brand name sporting goods equipment,
apparel, and footwear in a specialty store environment. Dicks operates over 255 stores in 34
states, the majority of which are located throughout the eastern half of the United States. Dicks
stock is publicly traded on the New York Stock Exchange under the symbol DKS. In determining the
creditworthiness of Dicks we considered a variety of factors, including historical financial
information and financial performance and regional market position.
The DK Amherst Property is considered an insignificant acquisition. As a result, we are not
required to file financial statements with respect to the acquired property. After reasonable
inquiry, we are not aware of any material factors relating to the property, other than those
discussed above, that would cause the reported financial information not to be necessarily
indicative of future operating results.
CH Paris Property
Overview
On December 28, 2006, we acquired an approximately 7,000 square foot single-tenant restaurant
building on an approximately 2.2 acre site in Paris, Texas (the CH Paris Property), which was
constructed in 1999. The CH Paris Property is 100% leased to Brinker Texas, L.P., which is a
wholly-owned subsidiary of Brinker International, Inc, (Brinker International) which guarantees
the lease. The CH Paris Property is subject to a net lease pursuant to which the tenant is required
to pay substantially all operating expenses and capital expenditures in addition to base rent. The
purchase price of the CH Paris Property was approximately $2.8 million, exclusive of closing costs.
The acquisition was funded by net proceeds from our ongoing public offering and an approximately
$1.8 million loan secured by the CH Paris Property.
Brinker International is a multi-concept restaurant operator which develops, operates and
franchises the Chilis Grill & Bar, Romanos Macaroni Grill, Maggianos Little Italy and On the
Border Mexican Grill & Cantina restaurant brands. Brinker International has a Standard & Poors
credit rating of BBB- and its stock is publicly traded on the New York Stock Exchange under the
symbol EAT.
The CH Paris Property is considered an insignificant acquisition. As a result, we are not
required to file financial statements with respect to the acquired property. After reasonable
inquiry, we are not aware of any material factors relating to the property, other than those
discussed above, that would cause the reported financial information not to be necessarily
indicative of future operating results.
ST Clarksville Property
Overview
On December 29, 2006, we acquired an approximately 20,000 square foot single-tenant building
on an approximately 2.0 acre site in Clarksville, Indiana (the ST Clarksville Property), which
was constructed in 2006. The ST Clarksville Property is 100% leased to Staples the Office
Superstore East, Inc. (Staples East), which is a wholly-owned subsidiary of Staples, Inc.
(Staples) The ST Clarksville Property is subject to a net lease pursuant to which the tenant is
required to pay substantially all operating expenses and capital expenditures in addition to base
rent.
The purchase price of the ST Clarksville Property was approximately $4.4 million, exclusive of
closing costs. The acquisition was funded by net proceeds from our ongoing public offering and an
approximately $2.9 million loan secured by the ST Clarksville Property.
Staples East operates retail office superstores. In determining the credit worthiness of
Staples East we considered a variety of factors, including historical financial information and
financial performance, regional market position, and the financial position of its parent, Staples.
Staples operates over 1,700 office superstores in 21 countries throughout North and South America,
Europe and Asia.
F-43
Staples has a Standard & Poors credit rating of BBB and its stock is publicly traded on the
Nasdaq Global Select Market under the symbol PLS.
The ST Clarksville Property is considered an insignificant acquisition. As a result, we are
not required to file financial statements with respect to the acquired property. After reasonable
inquiry, we are not aware of any material factors relating to the property, other than those
discussed above, that would cause the reported financial information not to be necessarily
indicative of future operating results.
HM Fargo Property
Overview
On January 4, 2007, we acquired 100% of the membership interests (the HM Fargo Interests) in
CRW Fargo, LLC (CRW). CRW owns, as its only asset, an approximately 122,000 square foot
single-tenant retail building which was constructed in 2004 on an approximately 5.9 acre site
located in Fargo, North Dakota (the HM Fargo Property). The HM Fargo Property is 100% leased to
HOM Furniture, Inc. (HOM). The HM Fargo Property is subject to a net lease pursuant to which the
tenant is required to pay substantially all operating expenses and capital expenditures in addition
to base rent.
The purchase price of the HM Fargo Property was $12.0 million, exclusive of closing costs. The
acquisition was funded by net proceeds from our ongoing public offering and an $4.8 million loan
secured by the HM Fargo Property.
HOM is a privately owned company headquartered in Minneapolis, Minnesota. HOM operates 11
furniture showrooms in the states of Minnesota, South Dakota, North Dakota, Iowa and Wisconsin. HOM
carries a full line of furniture including rugs, mattresses, accessories and patio furniture. In
determining the credit worthiness of HOM we considered a variety of factors, including historical
financial information and financial performance and local market position.
The HM Fargo Property had no significant operating history prior to our acquisition of the
property on January 4, 2007. As a result, we are not required to file financial statements with
respect to the acquired property. After reasonable inquiry, we are not aware of any material
factors relating to the property, other than those discussed above, that would cause the reported
financial information not to be necessarily indicative of future operating results.
LZ Newington Property
Overview
On January 5, 2007, we acquired an approximately 21,000 square foot single-tenant retail
building on an approximately 2.6 acre site in Newington, Connecticut (the LZ Newington Property),
which was constructed in 2006. The LZ Newington Property is 100% leased to LZB Furniture Galleries
of Paramus, Inc. (LZB Paramus), which is a wholly-owned subsidiary of La-Z-Boy Incorporated,
which guarantees the lease. The LZ Newington Property is subject to a net lease pursuant to which
the tenant is required to pay substantially all operating expenses and capital expenditures in
addition to base rent.
The purchase price of the LZ Newington Property was $6.9 million, exclusive of closing costs.
The acquisition was funded by net proceeds from our ongoing public offering and an approximately
$4.1 million loan secured by the LZ Newington Property.
La-Z-Boy operates retail furniture stores in the United States. In determining the credit
worthiness of La-Z-Boy we considered a variety of factors, including historical financial
information and financial performance, and regional market position. La-Z-Boys stock is publicly
traded on the New York Stock Exchange under the symbol LZB.
The LZ Newington Property had no significant operating history prior to our acquisition of the
property on January 5, 2007. As a result, we are not required to file financial statements with
respect to the acquired property. After reasonable inquiry, we are not aware of any material
factors relating to the property, other than those discussed above, that would cause the reported
financial information not to be necessarily indicative of future operating results.
AA Maryland Heights Property
Overview
On January 12, 2007, we acquired an approximately 7,000 square foot single-tenant retail
building on an approximately 1.3 acre site located in Maryland Heights, Missouri (the AA Maryland
Heights Property), which was constructed in 2005. The AA Maryland Heights Property is 100% leased
to Advance Stores Company, Incorporated (Advance Auto). The AA Maryland Heights Property is
subject to a net lease pursuant to which the tenant is required to pay substantially all operating
expenses and capital expenditures in
addition to base rent.
F-44
The purchase price of the AA Maryland Heights Property was approximately $1.9 million,
exclusive of closing costs. The acquisition was funded by net proceeds from our ongoing public
offering.
Advance Auto operates over 2,800 auto parts stores in 40 states, Puerto Rico and the Virgin
Islands. Advance Auto has a Standard and Poors credit rating of BB+ and its stock is publicly
traded on the New York Stock Exchange under the symbol AAP.
The AA Maryland Heights Property is considered an insignificant acquisition. As a result, we
are not required to file financial statements with respect to the acquired property. After
reasonable inquiry, we are not aware of any material factors relating to the property, other than
those discussed above, that would cause the reported financial information not to be necessarily
indicative of future operating results.
VC Victoria Property
Overview
On January 12, 2007, we acquired an approximately 87,000 square foot multi-tenant retail
building on an approximately 9.2 acre site located in Victoria, Texas (the VC Victoria Property),
which was constructed in 2006. The VC Victoria Property is approximately 92% leased to four
tenants. Three tenants occupy greater than 10.0% of the rentable square footage of the VC Victoria
Property including Ross Dress for Less, Inc. (Ross), Bed Bath & Beyond, Inc. (Bed Bath &
Beyond), and Petsmart, Inc. (Petsmart) Ross, Bed Bath & Beyond and Petsmart are each subject to
a separate net lease pursuant to which each tenant is required to pay substantially all operating
expenses and capital expenditures and a proportionate amount of common area maintenance charges in
addition to base rent.
The purchase price of the VC Victoria Property was approximately $12.6 million, exclusive of
closing costs. The acquisition was funded by net proceeds from our ongoing public offering and an
approximately $10.2 million loan secured by the VC Victoria Property.
Ross operates off-price retail stores in 26 states and Guam that feature branded apparel,
accessories, footwear and home fashions for men and women. Ross has a Standard & Poors credit
rating of BBB and its stock is publicly traded on the Nasdaq Global Select Market under the
symbol ROST.
Bed Bath & Beyond operates retail stores selling domestics merchandise and home furnishings
throughout 46 states and Puerto Rico. Bed Bath & Beyond has a Standard & Poors credit rating of
BBB and its stock is publicly traded on the Nasdaq Global Select Market under the symbol BBBY.
Petsmart provides specialty pet products and services including grooming, pet training and
veterinary services through its retail stores. Petsmart operates approximately 826 retail stores
throughout North America. Petsmart has a Standard & Poors credit rating of BB- and its stock is
publicly traded on the Nasdaq Global Select Market under the symbol PETM.
The VC Victoria Property had no significant operating history prior to our acquisition of the
property on January 12, 2007. As a result, we are not required to file financial statements with
respect to the acquired property. After reasonable inquiry, we are not aware of any material
factors relating to the property, other than those discussed above, that would cause the reported
financial information not to be necessarily indicative of future operating results.
GO Peoria Property
Overview
On January 18, 2007, we acquired an approximately 61,000 square foot single-tenant retail
building on an approximately 4.4 acre site in Peoria, Illinois (the GO Peoria Property), which
was constructed in 2006. The GO Peoria Property is 100% leased to Gordmans, Inc. (Gordmans) The
GO Peoria Property is subject to a net lease pursuant to which the tenant is required to pay
substantially all operating expenses and capital expenditures in addition to base rent.
The purchase price of the GO Peoria Property was $9.0 million, exclusive of closing costs. The
acquisition was funded by net proceeds from our ongoing public offering and an approximately $5.0
million loan secured by the GO Peoria Property.
Gordmans is a privately-held retail store chain with 62 locations in 15 states. Gordmans sells
brand name apparel, footwear, accessories, and home fashions at discounted prices. In determining
the credit worthiness of Gordmans we considered a variety of factors, including historical
financial information and financial performance and regional market position.
F-45
The GO Peoria Property had no significant operating history prior to our acquisition of the
property on January 18, 2007. As a result, we are not required to file financial statements with
respect to the acquired property. After reasonable inquiry, we are not aware of any material
factors relating to the property, other than those discussed above, that would cause the reported
financial information not to be necessarily indicative of future operating results.
NT Blaine Property
Overview
On February 28, 2007, we acquired an approximately 25,000 square foot single-tenant retail
building on an approximately 3.9 acre site located in Blaine, Minnesota (the NT Blaine Property),
which was constructed in 2006. The NT Blaine Property is 100% leased to Northern Tool. The NT
Blaine Property is subject to a net lease pursuant to which the tenant is required to pay
substantially all operating expenses and capital expenditures in addition to base rent.
The purchase price of the NT Blaine Property was approximately $4.9 million, exclusive of
closing costs. The acquisition was funded by net proceeds from our ongoing public offering and an
approximately $3.2 million loan secured by the NT Blaine Property and the WG Cincinnati Property.
Northern Tool currently operates 61 retail stores in 11 states, employs more than 2,000 people
and is headquartered in Burnsville, Minnesota. In determining the creditworthiness of Northern
Tool we considered a variety of factors, including historical financial information and financial
performance and market position.
The NT Blaine Property had no significant operating history prior to our acquisition of the
property on February 28, 2007. As a result, we are not required to file financial statements with
respect to the acquired property. After reasonable inquiry, we are not aware of any material
factors relating to the property, other than those discussed above, that would cause the reported
financial information not to be necessarily indicative of future operating results.
OD Enterprise Property
Overview
On February 27, 2007, we acquired an approximately 20,000 square foot single-tenant retail
building on an approximately 4.2 acre site located in Enterprise, Alabama (the OD Enterprise
Property), which was constructed in 2006. The OD Enterprise Property is 100% leased to Office
Depot, Inc. (Office Depot). The OD Enterprise Property is subject to a net lease pursuant to
which the tenant is required to pay substantially all operating expenses and capital expenditures
in addition to base rent.
The purchase price of the OD Enterprise Property was approximately $2.8 million, exclusive of
closing costs. The acquisition was funded by net proceeds from our ongoing public offering and an
approximately $1.9 million loan secured by the OD Enterprise Property.
Office Depot is a global supplier of office products and services. Office Depot has a Standard
& Poors credit rating of BBB- and its stock is publicly traded on the New York Stock Exchange
under the symbol ODP.
The OD Enterprise Property is considered an insignificant acquisition. As a result, we are not
required to file financial statements with respect to the acquired property. After reasonable
inquiry, we are not aware of any material factors relating to the property, other than those
discussed above, that would cause the reported financial information not to be necessarily
indicative of future operating results.
MT Dallas Property
Overview
On February 6, 2007, we acquired two single-tenant retail buildings, totaling approximately
65,000 square feet on an approximately 6.4 acre site located in Dallas, Texas (the MT Dallas
Property), which were constructed in 1970 and 2002. The MT Dallas Property is 100% leased to two
tenants, Minyard Food Stores, Inc. d/b/a Sack n Save (Sack n Save) and Hilo Auto Supply, LP
d/b/a OReilly Auto (OReilly). Sack n Save and OReilly are subject to separate net leases
pursuant to which each tenant is required to pay substantially all operating expenses and capital
expenditures in addition to base rent.
The purchase price of the MT Dallas Property was approximately $5.1 million, exclusive of
closing costs. The acquisition was funded by net proceeds from our ongoing public offering and an
approximately $3.3 million loan secured by the MT Dallas Property.
F-46
Minyard is a privately owned company that operates retail supermarket stores, pharmacies and
fuel stations under the trade names of Minyard, Sack n Save and Carnival Food Stores in the
Dallas/Fort Worth metropolitan area. In determining the creditworthiness of Minyard we considered a
variety of factors, including historical financial information and financial performance, and
regional market position.
Hilo Auto Supply is a wholly-owned subsidiary of OReilly. OReilly operates specialty retail
stores that sell new and used automotive parts. OReilly operates over 1,596 stores in the United
States and its stock is publicly traded on the Nasdaq Global Select Market under the symbol ORLY.
In determining the creditworthiness of Hilo Auto Supply we considered a variety of factors,
including historical financial information and financial performance, and regional market position.
The MT Dallas Property is considered an insignificant acquisition. As a result, we are not
required to file financial statements with respect to the acquired property. After reasonable
inquiry, we are not aware of any material factors relating to the property, other than those
discussed above, that would cause the reported financial information not to be necessarily
indicative of future operating results.
AB Coventry Property
Overview
On February 16, 2007, we acquired an approximately 33,000 square foot single-tenant
distribution facility on an approximately 7.4 acre site in Coventry, Rhode Island (the AB Coventry
Property), which was constructed in 1998. The AB Coventry Property is 100% leased to ABX Air, Inc.
(ABX), while Airborne Freight Corporation (Airborne) which guarantees the lease. The AB
Coventry Property is subject to a net lease pursuant to which the tenant is required to pay
substantially all operating expenses and capital expenditures in addition to base rent.
The purchase price of the AB Coventry Property was approximately $4.1 million, exclusive of
closing costs. The acquisition was funded by net proceeds from our ongoing public offering and an approximately $2.5 million loan secured by the AB Coventry Property and the WG Madeira Property.
ABX is an independent airline that provides air cargo transportation primarily for DHL Express
USA, Inc. ABX was an affiliate of Airborne, prior to a merger agreement between Airborne and DHL
Holdings, Inc., (DHL) a wholly-owned subsidiary of DHL Worldwide Express. In connection with the
merger agreement ABX became an independent publicly traded company and Airborne was merged into
DHL. Airborne remains the guarantor under the lease agreement. Airborne has an A credit rating
from Standard & Poors.
The AB Coventry Property is considered an insignificant acquisition. As a result, we are not
required to file financial statements with respect to the acquired property. After reasonable
inquiry, we are not aware of any material factors relating to the property, other than those
discussed above, that would cause the reported financial information not to be necessarily
indicative of future operating results.
AT Beaumont Property
Overview
On March 19, 2007, we acquired an approximately 142,000 square foot single-tenant office
building on an approximately 3.4 acre site in Beaumont, Texas (the AT Beaumont Property), which
was constructed in 1971. The AT Beaumont Property is 100% leased to AT&T Services, Inc. (AT&T
Services) The AT Beaumont Property is subject to a net lease pursuant to which the tenant is
required to pay substantially all operating expenses and capital expenditures in addition to base
rent.
The purchase price of the AT Beaumont Property was approximately $12.3 million, exclusive of
closing costs. The acquisition was funded by net proceeds from our ongoing public offering and an
approximately $8.6 million loan secured by the AT Beaumont Property.
AT&T Services is a wholly-owned subsidiary of AT&T, Inc (AT&T). AT&T is a holding company
whose subsidiaries and affiliates operate in the communications services industry both domestically
and internationally providing wireline and wireless telecommunications services and equipment, as
well as directory advertising and publishing services. AT&T has a Standard & Poors credit rating
of A and its stock is publicly traded on the New York Stock Exchange under the symbol T.
The AT Beaumont Property had no significant operating history prior to our acquisition of the
property on March 19, 2007. As a result, we are not required to file financial statements with
respect to the acquired property. After reasonable inquiry, we are not aware of any material
factors relating to the property, other than those discussed above, that would cause the reported
financial information not to be necessarily indicative of future operating results.
F-47
Summary Financial Information
Probable Business Acquisitions
WG Shreveport Property
Overview
Series B, LLC (Series B), an affiliate of us and our advisor, has entered into an agreement
to purchase an approximately 14,000 square foot single-tenant retail building on an approximately
1.7 acre site located in Shreveport, Louisiana (the WG Shreveport Property). Subject to
satisfactory completion of certain conditions to closing, we expect that Series B will assign all
of its rights and obligations under the WG Shreveport Agreement to a wholly-owned subsidiary of
Cole OP II prior to closing of the transaction. The WG Shreveport Property is 100% leased to
Walgreen Co. The WG Shreveport Property is subject to a net lease pursuant to which the tenant is
required to pay substantially all operating expenses and capital expenditures in addition to base
rent.
The purchase price of the WG Shreveport Property will be approximately $4.1 million, exclusive
of closing costs. We expect to purchase the WG Shreveport Property with proceeds from our ongoing
public offering and an approximately $2.7 million loan to be secured by the WG Shreveport Property.
We expect the loan to be a ten-year fixed rate, interest only loan.
WG Gainesville Property
Overview
Series B has entered into an agreement to purchase an approximately 14,000 square foot
single-tenant retail building on an approximately 1.7 acre site located in Gainesville, Florida
(the WG Gainesville Property). Subject to satisfactory completion of certain conditions to
closing, we expect that Series B will assign all of its rights and obligations under the WG
Gainesville Agreement to a wholly-owned subsidiary of Cole OP II prior to closing of the
transaction. The WG Gainesville Property is 100% leased to Walgreen Co. The WG Gainesville Property
is subject to a net lease pursuant to which the tenant is required to pay substantially all
operating expenses and capital expenditures in addition to base rent.
The purchase price of the WG Gainesville Property will be approximately $3.6 million,
exclusive of closing costs. We expect to purchase the WG Gainesville Property with proceeds from
our ongoing public offering and an approximately $2.4 million loan to be secured by the WG
Gainesville Property.
In evaluating the WG Shreveport Property and WG Gainesville Property as potential acquisitions
and determining the appropriate amount of consideration to be paid for our interests therein, a
variety of factors were considered, including our consideration of property condition reports;
unit-level store performance; property location, visibility and access; age of the property,
physical condition and curb appeal; neighboring property uses; local market conditions, including
vacancy rates; area demographics, including trade area population and average household income;
neighborhood growth patterns and economic conditions; and the presence of demand generators. After
reasonable inquiry, we are not aware of any material factors relating to these properties, other
than those discussed above, that would cause the reported financial information not to be
necessarily indicative of future operating results.
Because the WG Shreveport Property and WG Gainesville Property each is 100% leased to a single
tenant on a long-term basis under a net lease that transfers substantially all of the operating
costs to the tenant, we believe that the financial condition and results of operations of the
tenant, Walgreens, are more relevant to investors than the financial statements of the property
acquired in order to enable investors to evaluate the credit-worthiness of the lessee.
Additionally, because the property is subject to a net lease, the historical property financial
statements provide limited information other than rental income, which is disclosed in the section
captioned Investment Objectives and Policies-Real Property Investments beginning on page 82 of
the prospectus. As a result, pursuant to the guidance provided by the SEC, we have not provided
audited statements of the properties to be acquired. Certain summary financial data Walgreens, as
well as instructions on how to obtain additional information regarding Walgreens, is set forth
above on page F-32 under the caption Summary Financial Data Regarding Walgreens and is
incorporated herein by reference.
F-48
TS Greenfield Property
Overview
Series B has entered into an agreement to purchase an approximately 23,000 square foot
single-tenant retail building on an approximately 4.2 acre site located in Greenfield, Michigan
(the TS Greenfield Property). Subject to satisfactory completion of certain conditions to
closing, we expect that Series B will assign all of its rights and obligations under the TS
Greenfield Agreement to a wholly-owned subsidiary of Cole OP II prior to closing of the
transaction. The TS Greenfield Property is 100% leased to Tractor Supply. The TS Greenfield
Property is subject to a net lease pursuant to which the tenant is required to pay substantially
all operating expenses and capital expenditures in addition to base rent.
The purchase price of the TS Greenfield Property will be approximately $4.1 million, exclusive
of closing costs. We expect to purchase the TS Greenfield Property with proceeds from our ongoing
public offering and an approximately $2.6 million loan to be secured by the TS Greenfield Property.
TS Marinette Property
Overview
Series B has entered into an agreement to purchase an approximately 19,000 square foot
single-tenant retail building on an approximately 4.1 acre site located in Marinette, Wisconsin
(the TS Marinette Property). Subject to satisfactory completion of certain conditions to closing,
we expect that Series B will assign all of its rights and obligations under the TS Marinette
Agreement to a wholly-owned subsidiary of Cole OP II prior to closing of the transaction. The TS
Marinette Property is 100% leased to Tractor Supply. The TS Marinette Property is subject to a net
lease pursuant to which the tenant is required to pay substantially all operating expenses and
capital expenditures in addition to base rent.
The purchase price of the TS Marinette Property will be $3.0 million, exclusive of closing
costs. We expect to purchase the TS Marinette Property with proceeds from our ongoing public
offering and an approximately $1.9 million loan to be secured by the TS Marinette Property.
TS Paw Paw Property
Overview
Series B has entered into an agreement to purchase an approximately 23,000 square foot
single-tenant retail building on an approximately 5.0 acre site located in Paw Paw, Michigan (the
TS Paw Paw Property). Subject to satisfactory completion of certain conditions to closing, we
expect that Series B will assign all of its rights and obligations under the TS Paw Paw Agreement
to a wholly-owned subsidiary of Cole OP II prior to closing of the transaction. The TS Paw Paw
Property is 100% leased to Tractor Supply. The TS Paw Paw Property is subject to a net lease
pursuant to which the tenant is required to pay substantially all operating expenses and capital
expenditures in addition to base rent.
The purchase price of the TS Paw Paw Property will be $3.0 million, exclusive of closing
costs. We expect to purchase the TS Paw Paw Property with proceeds from our ongoing public offering
and an approximately $2.0 million loan to be secured by the TS Paw Paw Property.
In evaluating the TS Greenfield Property, TS Marinette Property and TS Paw Paw Property as
potential acquisitions and determining the appropriate amount of consideration to be paid for our
interests therein, a variety of factors were considered, including our consideration of property
condition reports; unit-level store performance; property location, visibility and access; age of
the property, physical condition and curb appeal; neighboring property uses; local market
conditions, including vacancy rates; area demographics, including trade area population and average
household income; neighborhood growth patterns and economic conditions; and the presence of demand
generators. After reasonable inquiry, we are not aware of any material factors relating to these
properties, other than those discussed above, that would cause the reported financial information
not to be necessarily indicative of future operating results.
Because the TS Greenfield, TS Marinette Property and TS Paw Paw Property each is 100% leased
to a single tenant on a long-term basis under a net lease that transfers substantially all of the
operating costs to the tenant, we believe that the financial condition and results of operations of
the tenant, Tractor Supply, are more relevant to investors than the financial statements of the
property acquired in order to enable investors to evaluate the credit-worthiness of the lessee.
Additionally, because the property is subject to a net lease, the historical property financial
statements provide limited information other than rental income, which is disclosed in the section
captioned Investment Objectives and Policies-Real Property Investments beginning on page 82 of
the prospectus. As a result, pursuant to the guidance provided by the SEC, we have not provided
audited statements of the properties to be acquired.
F-49
Certain summary financial data Tractor Supply, as well as instructions on how to obtain
additional information regarding Tractor Supply, is set forth above
on page F-29 under the caption
Summary Financial Information Regarding Tractor Supply and is incorporated herein by reference.
SC Anderson Property
Overview
Series B has entered into an agreement to purchase an approximately 135,000 square foot
single-tenant retail building on an approximately 27.9 acre site located in Anderson, South
Carolina (the SC Anderson Property). Subject to satisfactory completion of certain conditions to
closing, we expect that Series B will assign all of its rights and obligations under the SC
Anderson Agreement to a wholly-owned subsidiary of Cole OP II prior to closing of the transaction.
The SC Anderson Property is 100% leased to Wal-Mart Stores, Inc. (Wal-Mart). The SC Anderson
Property is subject to a net lease pursuant to which the tenant is required to pay substantially
all operating expenses and capital expenditures in addition to base rent.
The purchase price of the SC Anderson Property will be $12.0 million, exclusive of closing
costs. We expect to purchase the SC Anderson Property with proceeds from our ongoing public
offering and an approximately $7.8 million loan to be secured by the SC Anderson Property.
In evaluating the SC Anderson Property as a potential acquisition and determining the
appropriate amount of consideration to be paid for our interests therein, a variety of factors were
considered, including our consideration of property condition reports; unit-level store
performance; property location, visibility and access; age of the property, physical condition and
curb appeal; neighboring property uses; local market conditions, including vacancy rates; area
demographics, including trade area population and average household income; neighborhood growth
patterns and economic conditions; and the presence of demand generators. After reasonable inquiry,
we are not aware of any material factors relating to the property, other than those discussed
above, that would cause the reported financial information not to be necessarily indicative of
future operating results.
Because the SC Anderson Property is 100% leased to a single tenant on a long-term basis under
a net lease that transfers substantially all of the operating costs to the tenant, we believe that
the financial condition and results of operations of the tenant, Wal-Mart, are more relevant to
investors than the financial statements of the property acquired in order to enable investors to
evaluate the credit-worthiness of the lessee. Additionally, because the property is subject to a
net lease, the historical property financial statements provide limited information other than
rental income, which is disclosed in the section captioned Investment Objectives and Policies-Real
Property Investments beginning on page 82 of the prospectus. As a result, pursuant to the
guidance provided by the Securities and Exchange Commission, we have not provided audited
statements of the property to be acquired.
Wal-Mart currently files its financial statements in reports filed with the Securities and
Exchange Commission, and the following summary financial data regarding Wal-Mart are taken from its
previously filed public reports:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Nine |
|
|
|
|
Months Ended |
|
For the Fiscal Year Ended |
|
|
10/31/2006 |
|
1/31/2006 |
|
1/31/2005 |
|
1/31/2004 |
|
|
|
|
|
|
(in millions) |
Consolidated
Statements of
Operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues |
|
$ |
249,572 |
|
|
$ |
312,427 |
|
|
$ |
285,222 |
|
|
$ |
256,329 |
|
Operating Income |
|
|
14,065 |
|
|
|
18,530 |
|
|
|
17,091 |
|
|
|
15,025 |
|
Net Income |
|
|
7,345 |
|
|
|
11,231 |
|
|
|
10,267 |
|
|
|
9,054 |
|
|
|
|
As of |
|
As of the Fiscal Year Ended |
|
|
10/31/2006 |
|
1/31/2006 |
|
1/31/2005 |
|
1/31/2004 |
|
|
|
|
|
|
(in millions) |
Consolidated
Balance Sheets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Assets |
|
$ |
151,119 |
|
|
$ |
138,187 |
|
|
$ |
120,154 |
|
|
$ |
105,405 |
|
Long-term Debt |
|
|
24,154 |
|
|
|
26,429 |
|
|
|
20,087 |
|
|
|
17,102 |
|
Stockholders Equity |
|
|
58,763 |
|
|
|
53,171 |
|
|
|
49,396 |
|
|
|
43,623 |
|
For more detailed financial information regarding Wal-Mart, please refer to its financial
statements, which are publicly available with the SEC at http://www.sec.gov.
F-50
AH St. John Property
Overview
Series B has entered into an agreement to purchase an approximately 52,000 square foot
single-tenant office and warehouse facility on an approximately 6.9 acre site located in St. John,
Missouri (the AH St. John Property). Subject to satisfactory completion of certain conditions to
closing, we expect that Series B will assign all of its rights and obligations under the AH St.
John Agreement to a wholly-owned subsidiary of Cole OP II prior to closing of the transaction. The
AH St. John Property is 100% leased to Apria Healthcare, Inc. The AH St. John Property is subject
to a net lease pursuant to which the tenant is required to pay substantially all operating expenses
and capital expenditures in addition to base rent.
The purchase price of the AH St. John Property will be approximately $6.5 million, exclusive
of closing costs. We expect to purchase the AH St. John Property with proceeds from our ongoing
public offering and an approximately $4.2 million loan to be secured by the AH St. John Property.
In evaluating the AH St. John Property as a potential acquisition and determining the
appropriate amount of consideration to be paid for our interests therein, a variety of factors were
considered, including our consideration of property condition reports; unit-level store
performance; property location, visibility and access; age of the property, physical condition and
curb appeal; neighboring property uses; local market conditions, including vacancy rates; area
demographics, including trade area population and average household income; neighborhood growth
patterns and economic conditions; and the presence of demand generators.
Because the AP St. John Property is 100% leased to a single tenant on a long-term basis under
a net lease that transfers substantially all of the operating costs to the tenant, we believe that
the financial condition and results of operations of the tenant, Apria Healthcare, are more
relevant to investors than the financial statements of the property acquired in order to enable
investors to evaluate the credit-worthiness of the lessee. Additionally, because the property is
subject to a net lease, the historical property financial statements provide limited information
other than rental income, which is disclosed in the section captioned Investment Objectives and
Policies Real Property Investments beginning on page 82 of the prospectus. As a result,
pursuant to the guidance provided by the SEC, we have not provided audited statements of the
property acquired.
Apria Healthcare currently files its financial statements in reports filed with the Securities
and Exchange Commission, and the following summary financial data regarding Apria Healthcare are
taken from its previously filed public reports:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Fiscal Year Ended |
|
|
12/31/2006 |
|
12/31/2005 |
|
12/31/2004 |
|
|
(in thousands) |
Consolidated Statements of
Operations |
|
|
|
|
|
|
|
|
|
|
|
|
Revenues |
|
$ |
1,517,307 |
|
|
$ |
1,474,101 |
|
|
$ |
1,451,449 |
|
Operating Income |
|
|
147,700 |
|
|
|
129,489 |
|
|
|
201,055 |
|
Net Income |
|
|
74,980 |
|
|
|
66,941 |
|
|
|
114,008 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of the Fiscal Year Ended |
|
|
12/31/2006 |
|
12/31/2005 |
|
12/31/2004 |
|
|
(in thousands) |
Consolidated Balance Sheets |
|
|
|
|
|
|
|
|
|
|
|
|
Total Assets |
|
$ |
1,168,496 |
|
|
$ |
1,185,898 |
|
|
$ |
1,107,664 |
|
Long-term Debt |
|
|
485,000 |
|
|
|
640,855 |
|
|
|
475,957 |
|
Stockholders Equity |
|
|
410,431 |
|
|
|
327,164 |
|
|
|
406,185 |
|
For more detailed financial information regarding Apria Healthcare, please refer to its
financial statements, which are publicly available with the Securities and Exchange Commission at
http://www.sec.gov.
F-51
RA Fredericksburg Property
Overview
Series B has entered into an agreement to purchase an approximately 15,000 square foot
single-tenant retail building on an approximately 1.9 acre site located in Fredericksburg, Virginia
(the RA Fredericksburg Property). Subject to satisfactory completion of certain conditions to
closing, we expect that Series B will assign all of its rights and obligations under the RA
Fredericksburg Agreement to a wholly-owned subsidiary of Cole OP II prior to closing of the
transaction. The RA Fredericksburg Property is 100% leased to Rite Aid of Virginia, Inc., which is
a wholly-owned subsidiary of Rite Aid Corporation (Rite Aid), which guarantees the lease. The RA
Fredericksburg Property is subject to a net lease pursuant to which the tenant is required to pay
substantially all operating expenses and capital expenditures in addition to base rent.
The purchase price of the RA Fredericksburg Property will be approximately $5.4 million,
exclusive of closing costs. We expect to purchase the RA Fredericksburg Property with proceeds from
our ongoing public offering and an approximately $3.5 million loan to be secured by the RA
Fredericksburg Property. We expect the loan to be a ten-year fixed rate, interest only loan.
In evaluating the RA Fredericksburg Property as a potential acquisition and determining the
appropriate amount of consideration to be paid for our interests therein, a variety of factors were
considered, including our consideration of property condition reports; unit-level store
performance; property location, visibility and access; age of the property, physical condition and
curb appeal; neighboring property uses; local market conditions, including vacancy rates; area
demographics, including trade area population and average household income; neighborhood growth
patterns and economic conditions; and the presence of demand generators.
Because the RA Fredericksburg Property is 100% leased to a single tenant on a long-term basis
under a net lease that transfers substantially all of the operating costs to the tenant, we believe
that the financial condition and results of operations of the lease guarantor, Rite Aid, are more
relevant to investors than the financial statements of the property acquired in order to enable
investors to evaluate the credit-worthiness of the lessee. Additionally, because the property is
subject to a net lease, the historical property financial statements provide limited information
other than rental income, which is disclosed in the section captioned Investment Objectives and
Policies-Real Property Investments beginning on page 82 of the prospectus. As a result, pursuant
to the guidance provided by the Securities and Exchange Commission, we have not provided audited
statements of the property to be acquired
Rite Aid currently files its financial statements in reports filed with the Securities and
Exchange Commission, and the following summary financial data regarding Rite Aid are taken from its
previously filed public reports:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Nine |
|
|
|
|
Months Ended |
|
For the Fiscal Year Ended |
|
|
12/2/2006 |
|
3/4/2006 |
|
2/26/2005 |
|
2/28/2004 |
|
|
|
|
|
|
(in thousands) |
Consolidated
Statements of
Operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues |
|
$ |
12,945,650 |
|
|
$ |
17,270,968 |
|
|
$ |
16,816,439 |
|
|
$ |
16,600,449 |
|
Operating Income |
|
|
13,417 |
|
|
|
43,254 |
|
|
|
134,007 |
|
|
|
34,584 |
|
Net Income |
|
|
11,729 |
|
|
|
1,273,006 |
|
|
|
302,478 |
|
|
|
83,379 |
|
|
|
|
|
As of |
|
As of the Fiscal Year Ended |
|
|
12/2/2006 |
|
3/4/2006 |
|
2/26/2005 |
|
2/28/2004 |
|
|
|
|
|
|
(in thousands) |
Consolidated
Balance Sheets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Assets |
|
$ |
7,132,217 |
|
|
$ |
6,988,371 |
|
|
$ |
5,932,583 |
|
|
$ |
6,245,634 |
|
Long-term Debt |
|
|
2,784,954 |
|
|
|
2,298,706 |
|
|
|
2,680,998 |
|
|
|
3,451,352 |
|
Stockholders Equity |
|
|
1,625,275 |
|
|
|
1,606,921 |
|
|
|
322,934 |
|
|
|
(8,277 |
) |
For more detailed financial information regarding Rite Aid, please refer to its financial
statements, which are publicly available with the Securities and Exchange Commission at
http://www.sec.gov.
F-52
AS Sherwood Property
Overview
Cole Acquisitions I, LLC, f/k/a Cole Takedown, LLC, (Cole Acquisitions) an affiliate of our
advisor, has entered into an agreement to purchase an approximately 75,000 square foot
single-tenant retail building on an approximately 6.0 acre site located in Sherwood, Arkansas (the
AS Sherwood Property). Subject to satisfactory completion of certain conditions to closing, we
expect that Series B will assign all of its rights and obligations under the AS Sherwood Agreement
to a wholly-owned subsidiary of Cole OP II prior to closing of the transaction. The AS Sherwood
Property is 100% leased to Academy, Ltd. The AS Sherwood Property is subject to a net lease
pursuant to which the tenant is required to pay substantially all operating expenses and capital
expenditures in addition to base rent.
The purchase price of the AS Sherwood Property will be approximately $6.8 million, exclusive
of closing costs. We expect to purchase the AS Sherwood Property with proceeds from our ongoing
public offering and an approximately $4.4 million loan to be secured by the AS Sherwood Property.
We expect the loan to be a ten-year fixed rate, interest only loan.
The AS Sherwood Property is considered an insignificant acquisition. As a result, we are not
required to file financial statements with respect to the acquired property. After reasonable
inquiry, we are not aware of any material factors relating to the property, other than those
discussed above, that would cause the reported financial information not to be necessarily
indicative of future operating results.
MT Jenison Property
Overview
Series B has entered into an agreement to purchase an approximately 85,000 square foot
multi-tenant retail center on an approximately 8.6 acre site located in Jenison, Michigan (the MT
Jenison Property). Subject to satisfactory completion of certain conditions to closing, we expect
that Series B will assign all of its rights and obligations under the MT Jenison Agreement to a
wholly-owned subsidiary of Cole OP II prior to closing of the transaction. The MT Jenison Property
is 100% leased to four tenants, with three tenants each occupying greater than 10.0% of the
rentable square footage of the MT Jenison Property. The MT Jenison Property is subject to various
net leases pursuant to which each tenant is required to pay substantially all operating expenses
and capital expenditures and a proportionate amount of common area maintenance charges in addition
to base rent.
The purchase price of the MT Jenison Property will be approximately $5.4 million, exclusive of
closing costs. We expect to purchase the MT Jenison Property with proceeds from our ongoing public
offering.
The MT Jenison Property will have no significant operating history prior to our acquisition of
the property. Accordingly, we are not required to file financial statements with respect to the
potentially acquired property. After reasonable inquiry, we are not aware of any material factors
relating to the property that would cause the reported financial information not to be necessarily
indicative of future operating results.
CU St. Croix Property
Overview
Series B has entered into an agreement to purchase an approximately 38,000 square foot
single-tenant retail building on an approximately 4.0 acre site located in St. Croix, USVI (the CU
St. Croix Property). Subject to satisfactory completion of certain conditions to closing, we
expect that Series B will assign all of its rights and obligations under the CU St. Croix Agreement
to a wholly-owned subsidiary of Cole OP II prior to closing of the transaction. The CU St. Croix
Property is 100% leased to CULUSVI, Inc., which is a wholly-owned subsidiary of Cost-U-Less, Inc.,
which guarantees the lease. The CU St. Croix Property is subject to a net lease pursuant to which
the tenant is required to pay substantially all operating expenses and capital expenditures in
addition to base rent.
The purchase price of the CU St. Croix Property will be approximately $6.2 million, exclusive
of closing costs. We expect to purchase the CU St. Croix Property with proceeds from our ongoing
public offering and an approximately $4.0 million loan to be secured by the CU St. Croix Property.
The CU St. Croix Property is considered an insignificant acquisition. Accordingly, we are not
required to file financial statements with respect to the potentially acquired property. After
reasonable inquiry, we are not aware of any material factors relating to the property that would
cause the reported financial information not to be necessarily indicative of future operating
results.
F-53
MT Collierville Property
Overview
Series D has entered into an agreement to purchase an approximately 143,000 square foot
multi-tenant retail building on an approximately 16.8 acre site located in Collierville, Tennessee
(the MT Collierville Property). Subject to satisfactory completion of certain conditions to
closing, we expect that Series D will assign all of its rights and obligations under the MT
Collierville Agreement to a wholly-owned subsidiary of Cole OP II prior to closing of the
transaction. The MT Collierville Property is 100% leased to 11 tenants. Three tenants occupy
greater than 10.0% of the rentable square feet of the MT Collierville Property. The MT Collierville
Property is subject to various net leases pursuant to which each tenant is required to pay
substantially all operating expenses and capital expenditures and a proportionate amount of common
area maintenance charges in addition to base rent.
The purchase price of the MT Collierville Property will be approximately $17.8 million,
exclusive of closing costs. We expect to purchase the MT Collierville Property with proceeds from
our ongoing public offering and an approximately $14.2 million loan to be secured by the MT
Collierville Property.
The MT Collierville Property is considered an insignificant acquisition. Accordingly, we are
not required to file financial statements with respect to the potentially acquired property. After
reasonable inquiry, we are not aware of any material factors relating to the property that would
cause the reported financial information not to be necessarily indicative of future operating
results.
F-54
Cole Credit Property Trust II, Inc.
Pro Forma Consolidated Balance Sheet
As of December 31, 2006
(Unaudited)
The following unaudited Pro Forma Consolidated Balance Sheet is presented as if the Company had
acquired the properties described in Note B to the Pro Forma Consolidated Balance Sheet on December
31, 2006. Pursuant to a Registration Statement on Form S-11 under the Securities Act of 1933, as
amended, the Company is offering for sale to the public on a best efforts basis a minimum of
250,000 and a maximum of 45,000,000 shares of its common stock at a price of $10 per share, subject
to volume and other discounts (the Offering). On November 6, 2006, we filed a registration
statement with the SEC with respect to a proposed secondary public offering of up to 150,000,000
shares of common stock. The offering would include up to 125,000,000 shares to be offered for sale
at $10.00 per share in the primary offering and up to 25,000,000 shares to be offered for sale
pursuant to our DRIP.
On September 23, 2005, the Company issued the initial shares under the Offering and commenced its
principal operations. Prior to such date, the Company was considered a development stage company
and did not have any operations.
This Pro Forma Consolidated Balance Sheet should be read in conjunction with the historical
financial statements and notes thereto as filed in the Companys Annual Report on Form 10-K for the
year ended December 31, 2006. The Pro Forma Consolidated Balance Sheet is unaudited and is not
necessarily indicative of what the actual financial position would have been had the Company
completed the above transactions on December 31, 2006, nor does it purport to represent its future
financial position.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current |
|
|
|
|
|
|
December 31, |
|
|
Acquisition |
|
|
Pro Forma |
|
|
|
2006, |
|
|
Pro Forma |
|
|
December 31, |
|
|
|
As Reported |
|
|
Adjustments |
|
|
2006 |
|
|
|
(a) |
|
|
(b) |
|
|
|
|
|
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
Real estate assets, at cost: |
|
|
|
|
|
|
|
|
|
|
|
|
Land |
|
$ |
109,506,269 |
|
|
$ |
33,279,796 |
|
|
$ |
142,786,065 |
|
Buildings
and improvements, less accumulated depreciation on 4,547,932 at December 31, 2006 |
|
|
282,468,749 |
|
|
|
249,618,854 |
|
|
|
532,087,603 |
|
Acquired
intangible lease assets, less accumulated amortization of $2,251,172 at December
31, 2006 |
|
|
54,569,023 |
|
|
|
26,837,413 |
|
|
|
81,406,436 |
|
|
|
|
|
|
|
|
|
|
|
Total real estate assets |
|
|
446,544,041 |
|
|
|
309,736,063 |
|
|
|
756,280,104 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
|
37,566,490 |
|
|
|
(37,566,490 |
) |
|
|
|
|
Restricted cash |
|
|
5,839,733 |
|
|
|
|
|
|
|
5,839,733 |
|
Rents and tenant receivables, net |
|
|
2,432,536 |
|
|
|
|
|
|
|
2,432,536 |
|
Prepaid expenses, mortgage loan deposits and other assets |
|
|
4,248,973 |
|
|
|
|
|
|
|
4,248,973 |
|
Deferred financing costs, less accumulated amortization of $565,946 at
December 31, 2006 |
|
|
3,789,019 |
|
|
|
2,071,365 |
|
|
|
5,860,384 |
|
|
|
|
|
|
|
|
|
|
|
Total assets |
|
$ |
500,420,792 |
|
|
$ |
274,240,938 |
|
|
$ |
774,661,730 |
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS EQUITY |
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage notes payable |
|
$ |
218,265,916 |
|
|
$ |
189,405,050 |
|
|
$ |
407,670,966 |
|
Notes payable to affiliates |
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable and accrued expenses |
|
|
2,016,343 |
|
|
|
|
|
|
|
2,016,343 |
|
Escrowed investor proceeds |
|
|
5,710,730 |
|
|
|
|
|
|
|
5,710,730 |
|
Due to affiliates |
|
|
67,608 |
|
|
|
|
|
|
|
67,608 |
|
Acquired
below market lease intangibles, less accumulated amortization of $96,484 at
December 31, 2006 |
|
|
2,649,374 |
|
|
|
628,165 |
|
|
|
3,277,539 |
|
Distributions payable |
|
|
1,612,094 |
|
|
|
|
|
|
|
1,612,094 |
|
Deferred rent and other liabilities |
|
|
340,974 |
|
|
|
|
|
|
|
340,974 |
|
|
|
|
|
|
|
|
|
|
|
Total liabilities |
|
|
230,663,039 |
|
|
|
190,033,215 |
|
|
|
420,696,254 |
|
|
|
|
|
|
|
|
|
|
|
Redeemable common stock |
|
|
3,521,256 |
|
|
|
|
|
|
|
3,521,256 |
|
|
|
|
|
|
|
|
|
|
|
Preferred stock, $0.01 par value; 10,000,000 shares authorized, none issued and outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
Common stock, $.01 par value; 90,000,000 shares authorized, 30,691,204 shares issued and
outstanding at December 31, 2006 |
|
|
306,912 |
|
|
|
93,564 |
|
|
|
400,476 |
|
Capital in excess of par value |
|
|
273,385,603 |
|
|
|
84,114,159 |
|
|
|
357,499,762 |
|
Accumulated deficit |
|
|
(7,456,018 |
) |
|
|
|
|
|
|
(7,456,018 |
) |
|
|
|
|
|
|
|
|
|
|
Total stockholders equity |
|
|
266,236,497 |
|
|
|
84,207,723 |
|
|
|
350,444,220 |
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders equity |
|
$ |
500,420,792 |
|
|
$ |
274,240,938 |
|
|
$ |
774,661,730 |
|
|
|
|
|
|
|
|
|
|
|
F-55
Cole Credit Property Trust II, Inc.
Pro Forma Consolidated Statement of Operations
For the Year Ended December 31, 2006
(Unaudited)
The following unaudited Pro Forma Consolidated Statement of Operations is presented as if the
Company had acquired the properties described in Note C to the Pro Forma Consolidated Statements of
Operations on January 1, 2006 or the date significant operations commenced.
This Pro Forma Consolidated Statement of Operations should be read in conjunction with the
historical financial statements and notes thereto as filed in the Companys Annual Report on Form
10-K for the year ended December 31, 2006. The Pro Forma Consolidated Statement of Operations is
unaudited and is not necessarily indicative of what the actual results of operations would have
been had the Company completed the above transactions on January 1, 2006, nor does it purport to
represent its future operations.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the |
|
|
|
|
|
|
|
|
|
Year Ended |
|
|
Current Acquisition |
|
|
Pro Forma for the |
|
|
|
December 31, 2006, |
|
|
Pro Forma |
|
|
Year Ended |
|
|
|
As Reported |
|
|
Adjustments |
|
|
December 31, 2006 |
|
|
|
(a) |
|
|
(c) |
|
|
|
|
|
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
Rental income |
|
$ |
19,519,507 |
|
|
$ |
34,725,799 |
(d) |
|
$ |
54,245,306 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative |
|
|
952,789 |
|
|
|
63,346 |
|
|
|
1,016,135 |
|
Property operating expenses |
|
|
1,416,745 |
|
|
|
3,376,029 |
|
|
|
4,792,774 |
|
Property and asset management fees |
|
|
936,977 |
|
|
|
2,331,900 |
(e) (f) |
|
|
3,268,877 |
|
Depreciation |
|
|
4,396,460 |
|
|
|
9,320,138 |
(g) |
|
|
13,716,598 |
|
Amortization |
|
|
2,072,906 |
|
|
|
2,722,045 |
(g) |
|
|
4,794,951 |
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses |
|
|
9,775,877 |
|
|
|
17,813,458 |
|
|
|
27,589,335 |
|
|
|
|
|
|
|
|
|
|
|
Real estate operating income |
|
|
9,743,630 |
|
|
|
16,912,341 |
|
|
|
26,655,971 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense) |
|
|
|
|
|
|
|
|
|
|
|
|
Interest income |
|
|
503,479 |
|
|
|
|
|
|
|
503,479 |
|
Interest expense |
|
|
(8,901,113 |
) |
|
|
(16,563,273 |
)(h) |
|
|
(25,464,386 |
) |
|
|
|
|
|
|
|
|
|
|
Total other income (expense) |
|
|
(8,397,634 |
) |
|
|
(16,563,273 |
) |
|
|
(24,960,907 |
) |
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
1,345,996 |
|
|
$ |
349,068 |
|
|
$ |
1,695,064 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of common
shares outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted |
|
|
13,275,635 |
|
|
|
30,211,460 |
(i) |
|
|
43,487,095 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per common share |
|
$ |
0.10 |
|
|
|
|
|
|
$ |
0.04 |
|
F-56
Cole Credit Property Trust II, Inc.
Notes to Pro Forma Consolidated Financial Statements
December 31, 2006
(Unaudited)
a. |
|
Reflects the Companys historical balance sheet as of December 31, 2006 and the
Companys historical results of operations for the year ended December 31, 2006. |
|
b. |
|
Reflects preliminary purchase price allocations related to the following
acquisitions (collectively the Pro Forma Properties) : |
|
|
|
Completed Acquisitions |
|
|
|
The HM Fargo Property, the LZ Newington Property, the AA Maryland Heights Property, the
MT Victoria Property, the AS Katy Property, the GO Peoria Property, the MT Omaha
Property, the MT Dallas Property, the TS Ankeny Property, the AB Coventry Property, the
OD Enterprise Property, the NT Blaine Property, the OM Orangeburg Property, the WG
Cincinnati Property, the WG Madeira Property, the WG Sharonville Property, and the AT
Beaumont Property. |
|
|
|
Probable Acquisitions |
|
|
|
The AS Sherwood Property, the WG Shreveport Property, the RA Fredericksburg Property, the
MT Jenison Property, the CU St. Croix Property, the AH St. John Property, the MT
Collierville Property, the TS Greenfield Property, the SC Anderson Property, the TS
Marinette Property, the TS Paw Paw Property and the WG Gainesville Property. |
|
c. |
|
Reflects the pro forma results of operations for the year ended December
31, 2006 for the properties acquired during 2006 and the Pro Forma Properties. |
|
d. |
|
Represents the straight line rental revenues for the properties acquired during
2006 and the Pro Forma Properties in accordance with their respective lease agreements. |
|
e. |
|
Reflects the annualized asset management fee of 0.25% (a monthly rate of
0.02083%) of the aggregate asset value of the properties acquired during 2006 and the
Pro Forma Properties which is payable to our Advisor. |
|
f. |
|
Reflects the property management fee equal to 2% of gross revenues of the
properties acquired during 2006 and the Pro Forma Properties which is payable to an
affiliate of our Advisor. |
|
g. |
|
Represents depreciation and amortization expense for the properties acquired
during 2006 and the Pro Forma Properties. Depreciation and amortization expense are
based on the Companys preliminary purchase price allocation. All assets are depreciated
on a straight line basis. The estimated useful lives of our assets by class are
generally as follows: |
|
|
|
|
|
Building |
|
40 years |
|
Tenant improvements |
|
Lesser of useful life or lease term |
|
Intangible lease assets |
|
Lesser of useful life or lease term |
h. |
|
Represents interest expense associated with the debt incurred to finance the
acquisitions of the properties acquired during 2006 and the Pro Forma Properties. |
|
|
|
The variable rate mortgage debt has a 90 day repayment term. As such, the interest
expense for the year ended December 31, 2006 includes 90 days of interest expense
relating to the variable rate tranches as they are scheduled to be paid down 90 days
after the acquisition of the Pro Forma Properties. |
|
|
|
The following table provides certain information about each of the loans: |
Fixed Rate Tranches
|
|
|
|
|
|
|
|
|
Property |
|
Loan Amount |
|
Interest Rate |
|
Maturity |
AS Macon |
|
$ |
3,478,000 |
|
|
5.69% |
|
January 11, 2016 |
DB Lenexa |
|
|
1,799,000 |
|
|
5.86% |
|
January 11, 2011 |
RA Enterprise |
|
|
2,043,000 |
|
|
5.80% |
|
February 11, 2016 |
RA Wauseon |
|
|
2,142,000 |
|
|
5.80% |
|
February 11, 2016 |
ST Crossville |
|
|
1,885,000 |
|
|
5.71% |
|
February 11, 2011 |
F-57
|
|
|
|
|
|
|
|
|
Property |
|
Loan Amount |
|
Interest Rate |
|
Maturity |
RA Saco |
|
|
1,375,000 |
|
|
5.82% |
|
February 11, 2011 |
MT Denver |
|
|
12,025,000 |
|
|
5.57% |
|
March 1, 2011 |
DH Hickory |
|
|
2,763,000 |
|
|
5.80% |
|
March 11, 2011 |
MT Spring |
|
|
5,940,000 |
|
|
5.63% |
|
April 1, 2016 |
CV Scioto |
|
|
1,424,000 |
|
|
5.67% |
|
March 11, 2011 |
MT Lakewood |
|
|
1,348,000 |
|
|
5.77% |
|
May 11, 2011 |
RA Cleveland |
|
|
1,413,000 |
|
|
6.05% |
|
May 11, 2011 |
RA Fremont |
|
|
1,388,000 |
|
|
6.05% |
|
May 11, 2011 |
WG Knoxville |
|
|
3,088,000 |
|
|
5.80% |
|
May 11, 2011 |
CO San Antonio |
|
|
2,461,000 |
|
|
5.86% |
|
May 11, 2011 |
RA Defiance |
|
|
2,321,000 |
|
|
5.76% |
|
January 11, 2016 |
CV Madison |
|
|
2,809,000 |
|
|
5.60% |
|
February 11, 2016 |
DG Ardmore |
|
|
1,804,000 |
|
|
5.79% |
|
June 11, 2016 |
CG Crossville |
|
|
1,950,000 |
|
|
5.75% |
|
June 11, 2016 |
DG Livingston |
|
|
1,856,000 |
|
|
5.79% |
|
July 11, 2016 |
RA Lansing |
|
|
1,041,000 |
|
|
5.90% |
|
July 1, 2016 |
AA Columbia Heights |
|
|
1,038,000 |
|
|
5.83% |
|
July 11, 2016 |
AA Fergus Falls |
|
|
722,000 |
|
|
5.83% |
|
July 12, 2016 |
CV Okeechobee |
|
|
4,076,000 |
|
|
5.60% |
|
February 11, 2016 |
OD Dayton |
|
|
2,130,000 |
|
|
5.73% |
|
January 11, 2016 |
AA Holland |
|
|
1,193,000 |
|
|
5.83% |
|
April 11, 2016 |
AA Holland Township |
|
|
1,231,000 |
|
|
5.83% |
|
April 11, 2016 |
AA Zeeland |
|
|
1,057,000 |
|
|
5.83% |
|
April 11, 2016 |
CV Orlando |
|
|
3,016,000 |
|
|
5.68% |
|
April 11, 2016 |
OD Greenville |
|
|
2,192,000 |
|
|
5.76% |
|
March 11, 2011 |
OD Warrensburg |
|
|
1,810,000 |
|
|
5.85% |
|
April 11, 2011 |
CV Gulfport |
|
|
2,611,000 |
|
|
5.28% |
|
April 11, 2016 |
AA Grand Forks |
|
|
840,000 |
|
|
5.87% |
|
September 11, 2016 |
CV Clinton |
|
|
1,983,000 |
|
|
5.74% |
|
September 11, 2016 |
OT Oxford |
|
|
5,175,000 |
|
|
6.11% |
|
September 1, 2016 |
WG Picayune |
|
|
2,766,000 |
|
|
5.53% |
|
October 11, 2016 |
LO Midland |
|
|
7,150,000 |
|
|
6.11% |
|
September 1, 2016 |
LO Lubbock |
|
|
7,475,000 |
|
|
6.11% |
|
September 1, 2016 |
GG OFallon |
|
|
3,650,000 |
|
|
5.83% |
|
September 1, 2016 |
KO Wichita |
|
|
5,200,000 |
|
|
6.11% |
|
September 1, 2016 |
AA Duluth |
|
|
860,000 |
|
|
5.87% |
|
October 11, 2016 |
RA Glassport |
|
|
2,325,000 |
|
|
6.09% |
|
November 1, 2016 |
RA Hanover |
|
|
4,115,000 |
|
|
6.11% |
|
November 1, 2016 |
AM Peoria |
|
|
7,358,971 |
|
|
6.00% |
|
October 1, 2018 |
TS La Grange |
|
|
1,405,000 |
|
|
5.99% |
|
September 1, 2016 |
ST Peru |
|
|
1,929,000 |
|
|
5.66% |
|
December 1, 2014 |
FE Council Bluffs |
|
|
2,815,000 |
|
|
5.96% |
|
December 1, 2016 |
FE Edwardsville |
|
|
12,880,000 |
|
|
5.96% |
|
December 1, 2016 |
CV Glenville Scotia |
|
|
3,413,000 |
|
|
5.74% |
|
December 11, 2016 |
TS Livingston |
|
|
1,725,000 |
|
|
5.99% |
|
September 1, 2016 |
TS New Braunfels |
|
|
1,750,000 |
|
|
5.99% |
|
September 1, 2016 |
HM Fargo |
|
|
4,800,000 |
|
|
5.56% |
|
February 1, 2017 |
LZ Newington |
|
|
4,140,000 |
|
|
5.60% |
|
November 14, 2017 |
VC Victoria |
|
|
8,288,000 |
|
|
5.71% |
|
February 11, 2017 |
AS Katy |
|
|
68,250,000 |
|
|
5.61% |
|
February 1, 2017 |
GO Peoria |
|
|
4,950,000 |
|
|
5.71% |
|
February 1, 2017 |
AS Sherwood |
|
|
4,093,800 |
|
|
5.64% |
|
March 1, 2017 |
OD Enterprise |
|
|
1,850,000 |
|
|
6.29% |
|
March 1, 2017 |
MT Dallas |
|
|
3,289,000 |
|
|
5.54% |
|
March 1, 2017 |
MT Omaha |
|
|
23,400,000 |
|
|
5.53% |
|
March 1, 2017 |
OM Orangeburg |
|
|
1,875,000 |
|
|
5.61% |
|
April 1, 2012 |
WG Cincinnati |
|
|
3,341,000 |
|
|
6.00% |
|
March 1, 2017 |
F-58
|
|
|
|
|
|
|
|
|
Property |
|
Loan Amount |
|
Interest Rate |
|
Maturity |
WG Madeira |
|
|
2,876,250 |
|
|
6.00% |
|
March 1, 2017 |
WG Sharonville |
|
|
2,655,250 |
|
|
5.71% |
|
March 1, 2017 |
WG Shreveport |
|
|
2,691,000 |
|
|
5.63% |
|
March 1, 2017 |
CL St. Croix |
|
|
4,036,500 |
|
|
5.75% |
|
March 1, 2017 |
AH St. John |
|
|
4,225,000 |
|
|
5.77% |
|
March 1, 2017 |
TS Greenfield |
|
|
2,632,500 |
|
|
5.66% |
|
March 1, 2017 |
SC Anderson |
|
|
7,800,000 |
|
|
5.53% |
|
March 1, 2017 |
AT Beaumont |
|
|
8,592,000 |
|
|
5.87% |
|
March 1, 2017 |
RA Fredericksburg |
|
|
3,519,750 |
|
|
5.71% |
|
March 1, 2017 |
TS Marinette |
|
|
3,965,000 |
|
|
5.74% |
|
March 1, 2017 |
WG Gainesville |
|
|
2,356,250 |
|
|
5.77% |
|
March 1, 2017 |
GC Collierville |
|
|
11,537,500 |
|
|
5.75% |
|
March 1, 2017 |
NT Blaine |
|
|
3,185,000 |
|
|
6.00% |
|
March 1, 2017 |
TS Paw Paw |
|
|
2,047,500 |
|
|
5.74% |
|
March 1, 2017 |
Variable Rate Tranches
|
|
|
|
|
|
|
|
|
Property |
|
Loan Amount |
|
Interest Rate |
|
Maturity |
AS Macon |
|
$ |
802,000 |
|
|
Libor plus 2% |
|
April 6, 2006 |
DB Lenexa |
|
|
817,000 |
|
|
Libor plus 2% |
|
April 11, 2006 |
RA Enterprise |
|
|
928,000 |
|
|
Libor plus 2% |
|
April 26, 2006 |
RA Wauseon |
|
|
973,000 |
|
|
Libor plus 2% |
|
April 26, 2006 |
ST Crossville |
|
|
435,000 |
|
|
Libor plus 2% |
|
April 26, 2006 |
RA Saco |
|
|
625,000 |
|
|
Libor plus 2% |
|
April 27, 2006 |
MT Denver |
|
|
2,275,000 |
|
|
Libor plus 2% |
|
December 31, 2006 |
MF Chandler |
|
|
4,690,400 |
|
|
Libor plus 2% |
|
December 31, 2006 |
DH Hickory |
|
|
637,000 |
|
|
Libor plus 2% |
|
May 22, 2006 |
CV Scioto |
|
|
329,000 |
|
|
Libor plus 2% |
|
June 8, 2006 |
Wawa Portfolio |
|
|
7,234,787 |
|
|
Libor plus 2.2% |
|
February 26, 2010 |
MT Lakewood |
|
|
612,000 |
|
|
Libor plus 2% |
|
July 20, 2006 |
RA Cleveland |
|
|
642,000 |
|
|
Libor plus 2% |
|
July 27, 2006 |
RA Fremont |
|
|
632,000 |
|
|
Libor plus 2% |
|
July 27, 2006 |
WG Knoxville |
|
|
712,000 |
|
|
Libor plus 2% |
|
August 8, 2006 |
CO San Antonio |
|
|
1,119,000 |
|
|
Libor plus 2% |
|
July 25, 2006 |
DG Ardmore |
|
|
416,000 |
|
|
Libor plus 2% |
|
September 9, 2006 |
AA Columbia Heights |
|
|
346,000 |
|
|
Libor plus 2% |
|
October 6, 2006 |
AA Fergus Falls |
|
|
241,000 |
|
|
Libor plus 2% |
|
October 6, 2006 |
AA Grand Forks |
|
|
280,000 |
|
|
Libor plus 2% |
|
November 15, 2006 |
CV Clinton |
|
|
457,000 |
|
|
Libor plus 2% |
|
December 24, 2006 |
WG Picayune |
|
|
638,000 |
|
|
Libor plus 2% |
|
January 12, 2007 |
GG OFallon |
|
|
2,190,000 |
|
|
Libor plus 2% |
|
January 12, 2007 |
AA Duluth |
|
|
286,000 |
|
|
Libor plus 2% |
|
December 22, 2006 |
CV Glenville Scotia |
|
|
787,000 |
|
|
Libor plus 2% |
|
March 16, 2007 |
OL Fairview Heights |
|
|
1,284,000 |
|
|
Libor plus 2% |
|
March 21, 2007 |
SP Wichita |
|
|
6,173,250 |
|
|
Libor plus 2% |
|
December 27, 2006 |
DG Crossville |
|
|
450,000 |
|
|
Libor plus 2% |
|
August 26, 2006 |
DG Livingston |
|
|
416,000 |
|
|
Libor plus 2% |
|
October 12, 2006 |
VC Victoria |
|
|
1,912,000 |
|
|
Libor plus 2% |
|
April 12, 2007 |
i. |
|
Represents a pro forma adjustment to the weighted average common shares outstanding
to reflect all shares outstanding on December 31, 2006 as though they were issued on
January 1, 2006. As the Company had insufficient capital at January 1, 2006 to acquire
the respective properties which are included in the pro forma results of operations, it
is necessary to assume all of the shares outstanding as of December 31, 2006 were
outstanding on January 1, 2006. |
F-59
COLE CREDIT PROPERTY TRUST II, INC.
SUPPLEMENT NO. 17 DATED MARCH 29, 2007
TO THE PROSPECTUS DATED JUNE 27, 2005
This document supplements, and should be read in conjunction with, the prospectus of Cole
Credit Property Trust II, Inc. dated June 27, 2005, Supplement No. 13 dated December 20, 2006,
Supplement No. 14 dated January 11, 2007, Supplement No. 15 dated January 24, 2007 and Supplement
No. 16 dated March 20, 2007. Supplement 13 supersedes and replaces all prior supplements to the
prospectus. Unless otherwise defined in this supplement, capitalized terms used in this supplement
shall have the same meanings as set forth in the prospectus.
The purpose of this supplement is to describe the following:
|
(1) |
|
the status of the offering of shares in Cole Credit Property Trust II, Inc.; and |
|
|
(2) |
|
the transfer of shares reserved for issuance pursuant to our distribution
reinvestment plan to our primary offering. |
Status of the Offering
We commenced our initial public offering of shares of our common stock on June 27, 2005. We
have accepted investors subscriptions received through March 27, 2007, and have issued an
aggregate of approximately 43.4 million shares of our common stock to stockholders, with gross
proceeds of approximately $434 million distributed to us. For additional information, see the
Plan of Distribution Subscription Process section of the prospectus beginning on page 133.
Transfer of Shares Reserved for Issuance Pursuant to our Distribution Reinvestment Plan to Our
Primary Offering
The following information replaces the second paragraph on the cover of our prospectus:
We are offering up to a maximum of 54,140,000 shares of our common stock in our primary
offering for $10.00 per share, with discounts available for certain categories of purchasers. We
also are offering up to 1,202,000 shares pursuant to our distribution reinvestment plan at a
purchase price during this offering of $9.50 per share. We will offer these shares until June 27,
2007, which is two years after the effective date of this offering, unless the offering is
extended.
The following information replaces the table on the cover of our prospectus:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Price |
|
Selling |
|
Dealer |
|
Net Proceeds |
|
|
to Public |
|
Commissions |
|
Manager Fee |
|
(Before Expenses) |
Primary Offering |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per Share |
|
$ |
10.00 |
|
|
$ |
0.70 |
|
|
$ |
0.15 |
|
|
$ |
9.15 |
|
Total Minimum |
|
$ |
2,500,000 |
|
|
$ |
175,000 |
|
|
$ |
37,500 |
|
|
$ |
2,287,500 |
|
Total Maximum |
|
$ |
541,400,000 |
|
|
$ |
37,898,000 |
|
|
$ |
8,121,000 |
|
|
$ |
495,381,000 |
|
Distribution Reinvestment Plan |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per Share |
|
$ |
9.50 |
|
|
$ |
|
|
|
$ |
|
|
|
$ |
9.50 |
|
Total Maximum |
|
$ |
11,419,000 |
|
|
$ |
|
|
|
$ |
|
|
|
$ |
11,419,000 |
|
The following information replaces the section of our prospectus captioned Prospectus Summary
Estimated Use of Proceeds of This Offering on page 8 of the prospectus:
Depending primarily on the number of shares we sell in this offering and assuming all shares
sold under our distribution reinvestment plan are sold at $9.50 per share, we estimate for each
share sold in this offering that approximately $8.80 will be available for the purchase of real
estate. We will use the remainder of the offering proceeds to pay the costs of the offering,
including selling commissions and the dealer manager fee, and to pay a fee to our advisor for its
services in connection with the selection and acquisition of properties. We will not pay selling
commissions or a dealer manager fee on shares sold under our distribution reinvestment plan. The
table below sets forth our estimated use of proceeds from this offering:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Minimum Offering |
|
|
Maximum Offering |
|
|
|
Amount |
|
|
Percent |
|
|
Amount |
|
|
Percent |
|
Gross Offering Proceeds |
|
$ |
2,500,000 |
|
|
|
100.0 |
% |
|
$ |
552,819,000 |
|
|
|
100.0 |
% |
Less Public Offering Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling Commissions and Dealer Manager Fee |
|
|
212,500 |
|
|
|
8.5 |
% |
|
|
46,019,000 |
|
|
|
8.3 |
% |
Organization and Offering Expenses |
|
|
37,500 |
|
|
|
1.5 |
% |
|
|
8,292,285 |
|
|
|
1.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount Available for Investment |
|
$ |
2,250,000 |
|
|
|
90.0 |
% |
|
$ |
498,507,715 |
|
|
|
90.2 |
% |
Acquisition and Development: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition and Advisory Fees |
|
|
43,902 |
|
|
|
1.8 |
% |
|
|
9,726,980 |
|
|
|
1.8 |
% |
Acquisition Expenses |
|
|
10,976 |
|
|
|
0.4 |
% |
|
|
2,431,745 |
|
|
|
0.4 |
% |
Initial Working Capital Reserve |
|
|
|
|
|
|
0 |
% |
|
|
|
|
|
|
0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount Invested in Properties |
|
$ |
2,195,122 |
|
|
|
87.8 |
% |
|
$ |
486,348,990 |
|
|
|
88.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
The following information replaces the first paragraph of the section of our prospectus
caption Prospectus Summary The Offering on page 11 of the prospectus:
We are offering an aggregate of 54,140,000 shares of common stock in our primary offering on a
best-efforts basis at $10.00 per share. Discounts are available for certain categories of
purchasers as described in the Plan of Distribution section of this prospectus. We are also
offering 1,202,000 shares of common stock under our distribution reinvestment plan at $9.50 per
share, subject to certain limitations, as described in the Distribution Reinvestment Plan section
of this prospectus. We will offer shares of common stock in our primary offering until the earlier
of June 27, 2007, which is two years from the effective date of this offering, unless the offering
is extended, or the date we sell 54,140,000 shares. We may sell shares under the distribution
reinvestment plan beyond the termination of our primary offering until we have sold 1,202,000
shares through the reinvestment of distributions, but only if there is an effective registration
statement with respect to the shares. Under the Securities Act of 1933, as amended (Securities
Act), and in some states, we may not be able to continue the offering for these periods without
filing a new registration statement, or in the case of shares sold under the distribution
reinvestment plan, renew or extend the registration statement in such state. We may terminate this
offering at any time prior to the stated termination date.
The following information replaces the section of our prospectus captioned Prospectus Summary
Compensation to Cole Advisors II and its Affiliates beginning on page 11 of the prospectus:
Cole Advisors II and its affiliates will receive compensation and reimbursement for services
relating to this offering and the investment and management of our assets. The most significant
items of compensation are included in the table below. The selling commissions and dealer manager
fee may vary for different categories of purchasers. See the Plan of Distribution section of
this prospectus. The table below assumes the shares are sold through distribution channels
associated with the highest possible selling commissions and dealer manager fees and accounts for
the fact that shares are sold through our distribution reinvestment plan at $9.50 per share with no
selling commissions and no dealer manager fee.
|
|
|
|
|
|
|
|
|
Estimated Amount for |
|
|
|
|
Minimum Offering |
|
|
|
|
(250,000 shares)/Maximum |
|
|
|
|
Offering |
Type of Compensation |
|
Determination of Amount |
|
(55,342,000 shares) |
|
|
Offering Stage |
|
|
|
|
|
|
|
Selling Commissions
|
|
We will pay to Cole
Capital Corporation 7.0%
of gross proceeds of our
primary offering; we will
not pay any selling
commissions on sales of
shares under our
distribution reinvestment
plan; Cole Capital
Corporation will reallow
all selling commissions
to participating
broker-dealers.
|
|
$175,000/$37,898,000 |
2
|
|
|
|
|
|
|
|
|
Estimated Amount for |
|
|
|
|
Minimum Offering |
|
|
|
|
(250,000 shares)/Maximum |
|
|
|
|
Offering |
Type of Compensation |
|
Determination of Amount |
|
(55,342,000 shares) |
Dealer Manager Fee
|
|
We will pay to Cole
Capital Corporation 1.5%
of gross proceeds of our
primary offering; we will
not pay a dealer manager
fee with respect to sales
under our distribution
reinvestment plan.
|
|
$37,500/$8,121,000 |
|
|
|
|
|
Other Organization and
Offering Expenses
|
|
We will reimburse Cole
Advisors II up to 1.5% of
gross offering proceeds
for organization and
offering expenses.
|
|
$37,500/$8,292,285 |
|
|
|
|
|
|
|
Operational Stage |
|
|
|
|
|
|
|
Acquisition and Advisory Fees
|
|
We will pay Cole Advisors
II 2.0% of the contract
purchase price of each
property acquired.
|
|
$43,902/$9,726,980 |
|
|
|
|
|
Acquisition Expenses
|
|
We will reimburse Cole
Advisors II for
acquisition expenses
incurred in acquiring
property. We expect
these fees to be
approximately 0.5% of the
purchase price of each
property. In no event
will the total of all
acquisition and advisory
fees and acquisition
expenses payable with
respect to a particular
investment exceed 4% of
the contract purchase
price.
|
|
Actual amounts are dependent
upon the actual expenses
incurred in acquiring a
property or asset, and
therefore cannot be
determined at this time. |
|
|
|
|
|
Asset Management Fees
|
|
We will pay Cole Advisors
II a monthly fee equal to
0.02083%, which is
one-twelfth of 0.25%, of
the aggregate assets
value plus costs and
expenses incurred by the
advisor in providing
asset management
services.
|
|
Not determinable at this
time. Because the fee is
based on a fixed percentage
of aggregate asset value,
there is no maximum dollar
amount of this fee. |
|
|
|
|
|
Property Management and
Leasing Fees
|
|
For the management and
leasing of our
properties, we will pay
Cole Realty Advisors, an
affiliate of our advisor,
a property management fee
equal to 2.0% of gross
revenues plus
market-based leasing
commissions applicable to
the geographic location
of the property. We also
will reimburse Cole
Realty Advisors costs of
managing the properties.
Cole Realty Advisors or
its affiliates may also
receive a fee for the
initial leasing of newly
constructed properties,
which would generally
equal one months rent.
The aggregate of all
property management and
leasing fees paid to our
affiliates plus all
payments to third parties
for such fees will not
exceed the amount that
other nonaffiliated
management and leasing
companies generally
charge for similar
services in the same
geographic location as
determined by a survey of
brokers and agents in
such area.
|
|
Not determinable at this
time. Because the fee is
based on a fixed percentage
of gross revenue and/or
market rates, there is no
maximum dollar amount of this
fee |
3
|
|
|
|
|
|
|
|
|
Estimated Amount for |
|
|
|
|
Minimum Offering |
|
|
|
|
(250,000 shares)/Maximum |
|
|
|
|
Offering |
Type of Compensation |
|
Determination of Amount |
|
(55,342,000 shares) |
Operating Expenses
|
|
We will reimburse our
advisors costs of
providing administrative
services, subject to the
limitation that we will
not reimburse our advisor
for any amount by which
our operating expenses
(including the asset
management fee) at the
end of the four preceding
fiscal quarters exceeds
the greater of (i) 2% of
average invested assets,
or (ii) 25% of net income
other than any additions
to reserves for
depreciation, bad debt or
other similar non-cash
reserves and excluding
any gain from the sale of
assets for that period.
Additionally, we will not
reimburse our advisor for
personnel costs in
connection with services
for which the advisor
receives acquisition fees
or real estate
commissions.
|
|
Not determinable at this time. |
|
|
|
|
|
Financing Coordination Fee
|
|
If our advisor provides
services in connection
the origination or
refinancing of any debt
that we obtain, and use
to acquire properties or
to make other permitted
investments, or that is
assumed, directly or
indirectly, in connection
with the acquisition of
properties, we will pay
the advisor a financing
coordination fee equal to
1% of the amount
available and/or
outstanding under such
financing, subject to
certain limitations.
|
|
Not determinable at this
time. Because the fee is
based on a fixed percentage
of any debt financing, there
is no maximum dollar amount
of this fee. |
|
|
|
|
|
|
|
Liquidation/ Listing Stage |
|
|
|
|
|
|
|
Real Estate Commissions
|
|
Up to one-half of the
brokerage commission paid
on the sale of property,
not to exceed 2.0% of the
contract price for
property sold, in each
case, payable to our
advisor if our advisor or
its affiliates, as
determined by a majority
of the independent
directors, provided a
substantial amount of
services in connection
with the sale.
|
|
Not determinable at this
time. Because the commission
is based on a fixed
percentage of the contract
price for a sold property,
there is no maximum dollar
amount of these commissions. |
|
|
|
|
|
Subordinated Participation
in Net Sale Proceeds
(payable only if we are not
listed on an exchange)
|
|
10.0% of remaining net
sale proceeds after
return of capital plus
payment to investors of
an 8.0% cumulative,
non-compounded return on
the capital contributed
by investors. We cannot
assure you that we will
provide this 8.0% return,
which we have disclosed
solely as a measure for
our advisors incentive
compensation.
|
|
Not determinable at this
time. There is no maximum
amount of these payments. |
4
|
|
|
|
|
|
|
|
|
Estimated Amount for |
|
|
|
|
Minimum Offering |
|
|
|
|
(250,000 shares)/Maximum |
|
|
|
|
Offering |
Type of Compensation |
|
Determination of Amount |
|
(55,342,000 shares) |
Subordinated Incentive
Listing Fee (payable only if
we are listed on an
exchange, which we have no
intent to do at this time)
|
|
10.0% of the amount by
which our adjusted market
value plus distributions
exceeds the aggregate
capital contributed by
investors plus an amount
equal to an 8.0%
cumulative,
non-compounded annual
return to investors. We
cannot assure you that we
will provide this 8.0%
return, which we have
disclosed solely as a
measure for our advisors
incentive compensation.
|
|
Not determinable at this
time. There is no maximum
amount of this fee. |
The following information replaces the section of our prospectus captioned Prospectus Summary
Distribution Reinvestment Plan on page 15 of the prospectus:
Under our distribution reinvestment plan, you may have the distributions you receive
reinvested in additional shares of our common stock. The purchase price per share under our
distribution reinvestment plan will be the higher of 95% of the fair market value per share as
determined by our board of directors and $9.50 per share. No sales commissions or dealer manager
fees will be paid on shares sold under the distribution reinvestment plan. If you participate in
the distribution reinvestment plan, you will not receive the cash from your distributions, other
than special distributions that are designated by our board of directors. As a result, you may
have a tax liability with respect to your share of our taxable income, but you will not receive
cash distributions to pay such liability. We may terminate the distribution reinvestment plan at
our discretion at any time upon ten days prior written notice to you. Additionally, we will be
required to discontinue sales of shares under the distribution reinvestment plan on the earlier of
June 27, 2007, which is two years from the effective date of this offering, unless the offering is
extended, or the date we sell 1,202,000 shares under the plan, unless we file a new registration
statement with the Securities and Exchange Commission and applicable states.
The following information replaces the section of our prospectus captioned Estimated Use of
Proceeds beginning on page 43 of the prospectus:
ESTIMATED USE OF PROCEEDS
The following table sets forth information about how we intend to use the proceeds raised in
this offering, assuming that we sell either the minimum offering of 250,000 shares, or the maximum
offering of 55,342,000 shares, respectively, of common stock pursuant to this offering. Many of
the figures set forth below represent managements best estimate since they cannot be precisely
calculated at this time. Assuming a maximum offering we expect that approximately 88.0% of the
money that stockholders invest will be used to buy real estate or make other investments, while the
remaining approximately 12.0% will be used for working capital, including reserves for working
capital, and to pay expenses and fees including the payment of fees to Cole Advisors II, our
advisor, and Cole Capital Corporation, our dealer manager.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Minimum Offering |
|
|
Maximum Offering |
|
|
|
Amount (1) |
|
|
Percent |
|
|
Amount (2) |
|
|
Percent |
|
Gross Offering Proceeds |
|
$ |
2,500,000 |
|
|
|
100.0 |
% |
|
$ |
552,819,000 |
|
|
|
100.0 |
% |
Less Public Offering Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling Commissions and Dealer Manager Fee (3) |
|
|
212,500 |
|
|
|
8.5 |
% |
|
|
46,019,000 |
|
|
|
8.3 |
% |
Organization and Offering Expenses (4) |
|
|
37,500 |
|
|
|
1.5 |
% |
|
|
8,292,285 |
|
|
|
1.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount Available for Investment (5) |
|
$ |
2,250,000 |
|
|
|
90.0 |
% |
|
$ |
498,507,715 |
|
|
|
90.2 |
% |
Acquisition and Development: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition and Advisory Fees (6) |
|
|
43,902 |
|
|
|
1.8 |
% |
|
|
9,726,980 |
|
|
|
1.8 |
% |
Acquisition Expenses (7) |
|
|
10,976 |
|
|
|
0.4 |
% |
|
|
2,431,745 |
|
|
|
0.4 |
% |
Initial Working Capital Reserve (8) |
|
|
|
|
|
|
0 |
% |
|
|
|
|
|
|
0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount Invested in Properties (9) |
|
$ |
2,195,122 |
|
|
|
87.8 |
% |
|
$ |
486,348,990 |
|
|
|
88.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
5
|
|
|
(1) |
|
Assumes the minimum offering of 250,000 shares are sold in this offering. |
|
(2) |
|
Assumes the maximum offering is sold, which includes 54,140,000 shares offered to
the public at $10.00 per share and 1,202,000 shares offered pursuant to our
distribution reinvestment plan at $9.50 per share.
|
|
(3) |
|
Includes selling commissions equal to 7.0% of aggregate gross offering proceeds,
which commissions may be reduced under certain circumstances, and a dealer manager
fee equal to 1.5% of aggregate gross offering proceeds, both of which are payable
to the dealer manager, an affiliate of our advisor. The dealer manager, in its
sole discretion, may reallow selling commissions of up to 7.0% of gross offering
proceeds to other broker-dealers participating in this offering attributable to
the units sold by them and may reallow its dealer manager fee up to 1.5% of gross
offering proceeds in marketing fees and due diligence expenses to broker-dealers
participating in this offering based on such factors including the participating
broker-dealers level of marketing support, level of due diligence review and
success of its sales efforts, each as compared to those of the other participating
broker-dealers. Additionally, we will not pay a selling commission or a dealer
manager fee on shares purchased pursuant to our distribution reinvestment plan.
The amount of selling commissions may be reduced under certain circumstances for
volume discounts. See the Plan of Distribution section of this prospectus for a
description of such provisions. |
|
(4) |
|
Organization and offering expenses consist of reimbursement of actual legal,
accounting, printing and other accountable offering expenses, including amounts to
reimburse Cole Advisors II, our advisor, for marketing, salaries and direct
expenses of its employees while engaged in registering and marketing the shares
and other marketing and organization costs, other than selling commissions and the
dealer manager fee. Cole Advisors II and its affiliates will be responsible for
the payment of organization and offering expenses, other than selling commissions
and the dealer manager fee, to the extent they exceed 1.5% of gross offering
proceeds without recourse against or reimbursement by us. We currently estimate
that approximately $8,292,285 of organization and offering costs will be incurred
if the maximum offering of 55,342,000 (approximately $552,819,000) shares is sold. |
|
(5) |
|
Until required in connection with the acquisition and development of properties,
substantially all of the net proceeds of the offering and, thereafter, any working
capital reserves we may have may be invested in short-term, highly-liquid
investments including government obligations, bank certificates of deposit,
short-term debt obligations and interest-bearing accounts. |
|
(6) |
|
Acquisition and advisory fees are defined generally as fees and commissions paid
by any party to any person in connection with identifying, reviewing, evaluating,
investing in and the purchase, development or construction of properties. We will
pay our advisor acquisition and advisory fees up to a maximum amount of 2.0% of
the contract purchase price of each property acquired, which for purposes of this
table we have assumed is an aggregate amount equal to our estimated amount
invested in properties. Acquisition and advisory fees do not include acquisition
expenses. For purposes of this table, we have assumed that no financing is used
to acquire properties or other real estate assets. |
|
(7) |
|
Acquisition expenses include legal fees and expenses, travel expenses, costs of
appraisals, nonrefundable option payments on property not acquired, accounting
fees and expenses, title insurance premiums and other closing costs and
miscellaneous expenses relating to the selection, acquisition and development of
real estate properties. For purposes of this table, we have assumed expenses of
0.5% of average invested assets, which for purposes of this table we have assumed
is our estimated amount invested in properties; however, expenses on a particular
acquisition may be higher. Notwithstanding the foregoing, pursuant to our
charter, the total of all acquisition expenses and acquisition fees payable with
respect to a particular property or investment shall be reasonable, and shall not
exceed an amount equal to 4% of the contract price of the property, or in the case
of a mortgage loan 4% of the funds advanced, unless a majority of our directors
(including a majority of our independent directors) not otherwise interested in
the transaction approve fees and expenses in excess of the limit and determine the
transaction to be commercially competitive, fair and reasonable to us. |
|
(8) |
|
Working capital reserves typically are utilized for extraordinary expenses that
are not covered by revenue generation of the property, such as tenant
improvements, leasing commissions and major capital expenditures. Alternatively,
a lender may require its own formula for escrow of working capital reserves. We
do not expect to maintain working capital reserves. |
|
(9) |
|
Includes amounts anticipated to be invested in properties net of fees and expenses. |
6
The following information replaces the section of our Management Compensation beginning on
page 59 of the prospectus:
MANAGEMENT COMPENSATION
We have no paid employees. Cole Advisors II, our advisor, and its affiliates will manage our
day-to-day affairs. The following table summarizes all of the compensation and fees we will pay to
Cole Advisors II and its affiliates, including amounts to reimburse their costs in providing
services. The selling commissions may vary for different categories of purchasers. See Plan of
Distribution. This table assumes the shares are sold through distribution channels associated
with the highest possible selling commissions and dealer manager fee.
|
|
|
|
|
|
|
|
|
Estimated Amount for |
|
|
|
|
Minimum Offering |
|
|
|
|
(250,000 shares)/Maximum |
|
|
|
|
Offering |
Type of Compensation(1) |
|
Determination of Amount |
|
(55,342,000 shares)(2) |
|
|
Offering Stage |
|
|
|
|
|
|
|
Selling Commissions Cole Capital
Corporation(3)
|
|
We will pay to Cole Capital
Corporation 7.0% of the gross
offering proceeds before
reallowance of commissions
earned by participating
broker-dealers, except that no
selling commission is payable on
shares sold under our
distribution reinvestment plan.
Cole Capital Corporation, our
dealer manager, will reallow
100.0% of commissions earned to
participating broker-dealers.
|
|
$175,000/$37,898,000 |
|
|
|
|
|
Dealer Manager Fee Cole Capital
Corporation(3)
|
|
We will pay to Cole Capital
Corporation 1.5% of the gross
offering proceeds before
reallowance to participating
broker-dealers, except that no
dealer manager fee is payable on
shares sold under our
distribution reinvestment plan.
Cole Capital Corporation will
reallow a portion of its dealer
manager fee to participating
broker-dealers. See Plan of
Distribution.
|
|
$37,500/$8,121,000 |
|
|
|
|
|
Reimbursement of Other Organization and
Offering Expenses Cole Advisors II(4)
|
|
We will reimburse Cole Advisors
II up to 1.5% of our gross
offering proceeds. Cole
Advisors II will incur or pay
our organization and offering
expenses (excluding selling
commissions and the dealer
manager fee). We will then
reimburse Cole Advisors II for
these amounts up to 1.5% of
aggregate gross offering
proceeds.
|
|
$37,500/$8,292,285 |
|
|
|
|
|
|
|
Acquisition and Operational Stage |
|
|
|
|
|
|
|
Acquisition and Advisory Fees
Cole Advisors II(5)(6)
|
|
We will pay to Cole Advisors II
a 2.0% of the contract purchase
price of each property or asset.
|
|
$43,902/$9,726,980 |
|
|
|
|
|
Acquisition Expenses Cole Advisors II
|
|
We will reimburse our advisor
for acquisition expenses
incurred in the process of
acquiring property. We expect
these expenses to be
approximately 0.5% of the
purchase price of each property.
In no event will the total of
all fees and acquisition
expenses payable with respect to
a particular property or
investment exceed 4% of the
contract purchase price.
|
|
Actual amounts are
dependent upon the
expenses incurred in
acquiring a property or
asset, and therefore,
cannot be determined at
this time. |
7
|
|
|
|
|
|
|
|
|
Estimated Amount for |
|
|
|
|
Minimum Offering |
|
|
|
|
(250,000 shares)/Maximum |
|
|
|
|
Offering |
Type of Compensation(1) |
|
Determination of Amount |
|
(55,342,000 shares)(2) |
Asset Management Fee Cole Advisors
II(7)(8)
|
|
We will pay to Cole Advisors II
a monthly fee equal to 0.02083%,
which is one-twelfth of 0.25%,
of the aggregate asset value.
|
|
Actual amounts are
dependent upon the
aggregate asset value
of our properties and,
therefore, cannot be
determined at the
present time. Because
the fee is based on a
fixed percentage of
aggregate asset value,
there is no limit on
the aggregate amount of
these fees. |
|
|
|
|
|
Property Management Fees Cole Realty
Advisors(8)
|
|
We will pay to Cole Realty
Advisors up to 2.0% of the gross
revenues from the properties
plus reimbursement of Cole
Realty Advisors costs of
managing the properties.
|
|
Actual amounts are
dependent upon the
gross revenues from
properties and,
therefore, cannot be
determined at the
present time. Because
the fee is based on a
fixed percentage of the
gross revenue and/or
market rates, there is
no limit on the
aggregate amount of
these fees. |
|
|
|
|
|
Leasing Commissions Cole Realty
Advisors(8)
|
|
We will pay to Cole Realty
Advisors prevailing market
rates. Cole Realty Advisors may
also receive a fee for the
initial listing of newly
constructed properties, which
generally would equal one
months rent.
|
|
Actual amounts are
dependent upon
prevailing market rates
in the geographic
regions in which we
acquire property and,
therefore, cannot be
determined at the
present time. There is
no limit on the
aggregate amount of
these commissions. |
|
|
|
|
|
Financing Coordination Fee Cole
Advisors
II(6)
|
|
For services in connection with
the origination or refinancing
of any debt financing obtained
that we use to acquire
properties or to make other
permitted investments, or that
is assumed, directly or
indirectly, in connection with
the acquisition of properties,
we will pay our advisor a
financing coordination fee equal
to 1.0% of the amount available
and/or outstanding under such
financing; provided, however,
that our advisor will not be
entitled to a financing
coordination fee in connection
with the refinancing of any loan
secured by any particular
property that was previously
subject to a refinancing in
which our advisor received such
a fee. Financing coordination
fees payable from loan proceeds
from permanent financing will be
paid to our advisor as we
acquire such permanent
financing. However, no
acquisition fees will be paid on
the investments of loan proceeds
from any line of credit until
such time as we have invested
all net offering proceeds.
|
|
Actual amounts are
dependent on the amount
of any debt financing
or refinancing and,
therefore, cannot be
determined at the
present time. Because
the fee is based on a
fixed percentage of any
debt financing, there
is no limit on the
aggregate amount of
these fees. |
8
|
|
|
|
|
|
|
|
|
Estimated Amount for |
|
|
|
|
Minimum Offering |
|
|
|
|
(250,000 shares)/Maximum |
|
|
|
|
Offering |
Type of Compensation(1) |
|
Determination of Amount |
|
(55,342,000 shares)(2) |
Operating Expenses Cole Advisors II(9)
|
|
We will reimburse the expenses
incurred by Cole Advisors II in
connection with its provision of
administrative services,
including related personnel
costs, subject to the limitation
that we will not reimburse our
advisor for any amount by which
the operating expenses
(including the asset management
fee) at the end of the four
preceding fiscal quarters
exceeds the greater of (i) 2% of
average invested assets, or (ii)
25% of net income other than any
additions to reserves for
depreciation, bad debt or other
similar non-cash reserves and
excluding any gain from the sale
of assets for that period.
|
|
Actual amounts are
dependent upon the
expenses incurred and,
therefore, cannot be
determined at the
present time. |
|
|
|
|
|
|
|
Liquidation/ Listing Stage |
|
|
|
|
|
|
|
Real Estate Commissions Cole Advisors II
or its Affiliates(10)
|
|
For substantial assistance in
connection with the sale of
properties, we will pay our
advisor or its affiliates an
amount equal to up to one-half
of the brokerage commission paid
on the sale of property, not to
exceed 2.0% of the contract
price of each property sold;
provided, however, in no event
may the real estate commissions
paid to our advisor, its
affiliates and unaffiliated
third parties exceed 6.0% of the
contract sales price.
|
|
Actual amounts are
dependent upon the
contract price of
properties sold and,
therefore, cannot be
determined at the
present time. Because
the commission is based
on a fixed percentage
of the contract price
for a sold property,
there is no limit on
the aggregate amount of
these commissions. |
|
|
|
|
|
Subordinated Participation in Net Sale
Proceeds Cole Advisors II(11)
|
|
After investors have received a
return of their net capital
invested and an 8.0% annual
cumulative, non- compounded
return, then Cole Advisors II is
entitled to receive 10.0% of
remaining net sale proceeds. We
cannot assure you that we will
provide this 8.0% return, which
we have disclosed solely as a
measure for our advisors
incentive compensation.
|
|
Actual amounts are
dependent upon results
of operations and,
therefore, cannot be
determined at the
present time. There is
no limit on the
aggregate amount of
these payments. |
|
|
|
|
|
|
|
Offering Stage |
|
|
|
|
|
|
|
Subordinated Incentive Listing Fee Cole
Advisors II(11)(12)
|
|
Upon listing our common stock on
a national securities exchange
or for quotation on The Nasdaq
National Market, our advisor is
entitled to a fee equal to 10.0%
of the amount, if any, by which
(1) the market value of our
outstanding stock plus
distributions paid by us prior
to listing, exceeds (2) the sum
of the total amount of capital
raised from investors and the
amount of cash flow necessary to
generate an 8.0% annual
cumulative, non- compounded
return to investors. We have no
intent to list our shares at
this time. We cannot assure you
that we will provide this 8.0%
return, which we have disclosed
solely as a measure for our
advisors incentive
compensation.
|
|
Actual amounts are
dependent upon total
equity and debt capital
we raise and results of
operations and,
therefore, cannot be
determined at the
present time. There is
no limit on the
aggregate amount of
this fee. |
9
|
|
|
(1) |
|
We will pay all fees, commissions and expenses in cash, other than the
subordinated participation in net sales proceeds and incentive listing fees
with respect to which we may pay to Cole Advisors II in cash, common stock,
a promissory note or any combination of the foregoing, as we may determine
in our discretion. |
|
(2) |
|
The estimated maximum dollar amounts are based on the sale of a maximum of
54,140,000 shares to the public at $10.00 per share and the sale of
1,202,000 shares at $9.50 per share pursuant to our distribution
reinvestment plan. |
|
(3) |
|
Selling commissions and, in some cases, the dealer manager fee, will not be
charged with regard to shares sold to or for the account of certain
categories of purchasers. See Plan of Distribution. Selling commissions
and the dealer manager fee will not be charged with regard to shares
purchased pursuant to our distribution reinvestment plan. |
|
(4) |
|
These organization and offering expenses include all expenses (other than
selling commissions and the dealer manager fee) to be paid by us in
connection with the offering, including our legal, accounting, printing,
mailing and filing fees, charges of our escrow holder, due diligence
expense reimbursements to participating broker-dealers and amounts to
reimburse Cole Advisors II for its portion of the salaries of the employees
of its affiliates who provide services to our advisor and other costs in
connection with preparing supplemental sales materials, holding educational
conferences and attending retail seminars conducted by broker-dealers. Our
advisor will be responsible for the payment of all such organization and
offering expenses to the extent such expenses exceed 1.5% of the aggregate
gross proceeds of this offering. |
|
(5) |
|
This estimate assumes the amount of proceeds available for investment is
equal to the gross offering proceeds less the public offering expenses, and
we have assumed that no financing is used to acquire properties or other
real estate assets. Our charter limits our ability to purchase property if
the total of all acquisition fees and expenses relating to the purchase
exceeds 4.0% of the contract purchase price unless a majority of our
directors (including a majority of our independent directors) not otherwise
interested in the transaction approve fees and expenses in excess of this
limit and determine the transaction to be commercially competitive, fair
and reasonable to us. |
|
(6) |
|
Included in the computation of such fees will be any real estate
commission, acquisition and advisory fee, development fee, construction
fee, non-recurring management fee, loan fees, financing coordination fees
or points or any fee of a similar nature. |
|
(7) |
|
Aggregate asset value will be equal to the aggregate value of our assets
(other than investments in bank accounts, money market funds or other
current assets) at cost before deducting depreciation, bad debts or other
similar non-cash reserves and without reduction for any debt relating to
such assets at the date of measurement, except that during such periods in
which our board of directors is determining on a regular basis the current
value of our net assets for purposes of enabling fiduciaries of employee
benefit plan stockholders to comply with applicable Department of Labor
reporting requirements, aggregate asset value is the greater of (i) the
amount determined pursuant to the foregoing or (ii) our assets aggregate
valuation most recently established by our board without reduction for
depreciation, bad debts or other similar non-cash reserves and without
reduction for any debt secured by or relating to such assets. |
|
(8) |
|
The property management and leasing fees payable to Cole Realty Advisors
are subject to the limitation that the aggregate of all property management
and leasing fees paid to Cole Realty Advisors and its affiliates plus all
payments to third parties for property management and leasing services may
not exceed the amount that other non-affiliated property management and
leasing companies generally charge for similar services in the same
geographic location. Additionally, all property management and leasing
fees, including both those paid to Cole Realty Advisors and third parties,
are subject to the limit on total operating expenses as described in
footnote (5). Cole Realty Advisors may subcontract its duties for a fee
that may be less than the fee provided for in our property management
agreement with Cole Realty Advisors. |
|
(9) |
|
We may reimburse our advisor in excess of that limit in the event that a
majority of our independent directors determine, based on unusual and
non-recurring factors, that a higher level of expense is justified. In
such an event, we will send notice to each of our stockholders within 60
days after the end of the fiscal quarter for which such determination was
made, along with an explanation of the factors our independent directors
considered in making such determination. We will not reimburse our advisor
for personnel costs in connection with services for which the advisor
receives acquisition fees or real estate commissions. |
|
|
|
We lease our office space from an affiliate of our advisor and share the
space with other Cole-related entities. The amount we will pay under the
lease will be determined on a monthly basis based upon on the allocation of
the overall lease cost to the approximate percentage of time, size of the
area that we utilize and other resources allocated to us. |
|
(10) |
|
Although we are most likely to pay real estate commissions to Cole Advisors
II or an affiliate in the event of our liquidation, these fees may also be
earned during our operational stage. |
10
|
|
|
(11) |
|
Upon termination of the advisory agreement, Cole Advisors II may be
entitled to a similar performance fee if Cole Advisors II would have been
entitled to a subordinated participation in net sale proceeds had the
portfolio been liquidated (based on an independent appraised value of the
portfolio) on the date of termination. Under our charter, we could not
increase these success-based fees without the approval of a majority of our
independent directors, and any increase in the subordinated participation
in net sale proceeds would have to be reasonable. Our charter provides
that such incentive fee is presumptively reasonable if it does not exceed
10.0% of the balance of such net proceeds remaining after investors have
received a return of their net capital contributions and an 8.0% per year
cumulative, non-compounded return. |
|
|
|
Cole Advisors II cannot earn both the subordinated participation in net
sale proceeds and the subordinated incentive listing fee. The subordinated
participation in net sale proceeds or the subordinated listing fee, as the
case may be, will be paid in the form of an interest bearing promissory
note that will be repaid from the net sale proceeds of each sale after the
date of the termination or listing. At the time of such sale, we may,
however, at our discretion, pay all or a portion of such promissory note
with shares of our common stock. If shares are used for payment, we do not
anticipate that they will be registered under the Securities Act and
therefore, will be subject to restrictions on transferability. Any portion
of the subordinated participation in net sale proceeds that Cole Advisors
II receives prior to our listing will offset the amount otherwise due
pursuant to the subordinated incentive listing fee. In no event will the
amount paid to Cole Advisors II under the promissory note, if any,
including interest thereon, exceed the amount considered preemptively
reasonable by the NASAA REIT Guidelines. |
|
(12) |
|
If at any time the shares become listed on a national securities exchange
or included for quotation on The Nasdaq National Market, we will negotiate
in good faith with Cole Advisors II a fee structure appropriate for an
entity with a perpetual life. Our independent directors must approve the
new fee structure negotiated with Cole Advisors II. The market value of
our outstanding stock will be calculated based on the average market value
of the shares issued and outstanding at listing over the 30 trading days
beginning 180 days after the shares are first listed or included for
quotation. We have the option to pay the subordinated incentive listing
fee in the form of stock, cash, a promissory note or any combination
thereof. In the event the subordinated incentive listing fee is earned by
Cole Advisors II as a result of the listing of the shares, any previous
payments of the subordinated participation in net sale proceeds will offset
the amounts due pursuant to the subordinated incentive listing fee, and we
will not be required to pay Cole Advisors II any further subordinated
participation in net sale proceeds. |
At least a majority of our independent directors must determine, from time to time but at
least annually, that our total fees and expenses are reasonable in light of our investment
performance, net assets, net income and the fees and expenses of other comparable unaffiliated
REITs. Each such determination will be reflected in the minutes of our board of directors. Our
independent directors shall also supervise the performance of our advisor and the compensation that
we pay to it to determine that the provisions of our advisory agreement are being carried out.
Each such determination will be recorded in the minutes of our board of directors and based on
the factors set forth below and other factors that the independent directors deem relevant:
|
|
|
the size of the advisory fee in relation to the size, composition and profitability of our portfolio; |
|
|
|
|
the success of Cole Advisors II in generating opportunities that meet our investment objectives; |
|
|
|
|
the rates charged to other REITs, especially similarly structured REITs, and to investors other than REITs by advisors
performing similar services; |
|
|
|
|
additional revenues realized by Cole Advisors II through its relationship with us; |
|
|
|
|
the quality and extent of service and advice furnished by Cole Advisors II; |
|
|
|
|
the performance of our investment portfolio, including income, conservation or appreciation of capital, frequency of problem
investments and competence in dealing with distress situations; and |
|
|
|
|
the quality of our portfolio in relationship to the investments generated by Cole Advisors II for the account of other clients. |
Since Cole Advisors II and its affiliates are entitled to differing levels of compensation for
undertaking different transactions on our behalf, such as the property management fees for
operating our properties and the subordinated participation in net sale proceeds, our advisor has
the ability to affect the nature of the compensation it receives by undertaking different
transactions. However, Cole Advisors II is obligated to exercise good faith and integrity in all
its dealings with respect to our affairs pursuant to the advisory agreement. See Management The
Advisory Agreement.
11
The following information replaces the section of our prospectus captioned Share Redemption
Program beginning on page 119 of the prospectus:
Our board of directors has adopted a share redemption program that enables our stockholders to
sell their shares to us in limited circumstances. Our share redemption program permits you to sell
your shares back to us after you have held them for at least one year, subject to the significant
conditions and limitations described below.
Our common stock is currently not listed on a national securities exchange, or included for
quotation on a national securities market, and we will not seek to list our stock until such time
as our independent directors believe that the listing of our stock would be in the best interest of
our stockholders. In order to provide stockholders with the benefit of interim liquidity,
stockholders who have held their shares for at least one year may present all or a portion
consisting of at least 25%, of the holders shares to us for redemption at any time in accordance
with the procedures outlined below. At that time, we may, subject to the conditions and
limitations described below, redeem the shares presented for redemption for cash to the extent that
we have sufficient funds available to us to fund such redemption. We will not pay to our board of
directors, advisor or its affiliates any fees to complete any transactions under our share
redemption program.
During the term of this offering, the redemption price per share will depend on the length of
time you have held such shares as follows: after one year from the purchase date 92.5% of the
amount you paid for each share; after two years from the purchase date 95.0% of the amount you
paid for each share, after three years from the purchase date 97.5% of the amount you paid for
each share; and after four years from the purchase date 100.0% of the amount you paid for each
share (in each case, as adjusted for any stock dividends, combinations, splits, recapitalizations
and the like with respect to our common stock). At any time we are engaged in an offering of
shares, the per share price for shares purchased under our redemption plan will always be equal to
or lower than the applicable per share offering price. Thereafter the per share redemption price
will be based on the then-current net asset value of the shares (as adjusted for any stock
dividends, combinations, splits, recapitalizations and the like with respect to our common stock).
Our board of directors will announce any redemption price adjustment and the time period of its
effectiveness as a part of its regular communications with our stockholders. At any time the
redemption price is determined by any method other than the net asset value of the shares, if we
have sold property and have made one or more special distributions to our stockholders of all or a
portion of the net proceeds from such sales, the per share redemption price will be reduced by the
net sale proceeds per share distributed to investors prior to the redemption date as a result of
the sale of such property in the special distribution. Our board of directors will, in its sole
discretion, determine which distributions, if any, constitute a special distribution. While our
board of directors does not have specific criteria for determining a special distribution, we
expect that a special distribution will only occur upon the sale of a property and the subsequent
distribution of the net sale proceeds. Upon receipt of a request for redemption, we will conduct a
Uniform Commercial Code search to ensure that no liens are held against the shares. For this
Uniform Commercial Code search, we will charge an administrative fee equal to the lesser of $250 or
4.0% of the original purchase price of the shares to be redeemed to the stockholder, which will be
deducted from the proceeds of the redemption. For example, if a stockholder wishes to redeem
shares for which he paid an aggregate amount of $5,000, the administrative fee that we will charge
pursuant to such redemption will be $200, which is the lesser of (i) $250 or (ii) 4.0% of the
$5,000 aggregate purchase price paid by this stockholder. If a lien exists, the fee will be
charged to the stockholder, although no shares will be redeemed. The administrative fee will be
paid to us and any additional costs in conducting the Uniform Commercial Code search will be borne
by us. The payment of this administrative fee will be waived if the redemption occurs upon the
death of a stockholder or if our advisor, in its sole discretion, determines that the redeeming
stockholder has suffered an economic hardship. Subject to our waiver of the one-year holding
period requirement, shares required to be redeemed in connection with the death of a stockholder
may be repurchased without the one-year activity period requirement, at a purchase price equal to
the price actually paid for the shares.
During any calendar year, we will not redeem in excess of 3.0% of the weighted average number
of shares outstanding during the prior calendar year. The cash available for redemption will be
limited to the proceeds from the sale of shares pursuant to our distribution reinvestment plan.
We will redeem our shares on the last business day of the month following the end of each
quarter. Requests for redemption would have to be received on or prior to the end of the quarter
in order for us to repurchase the shares as of the end of the next month. You may withdraw your
request to have your shares redeemed at any time prior to the last day of the applicable quarter.
If we could not purchase all shares presented for redemption in any quarter, based upon
insufficient cash available and the limit on the number of shares we may redeem during any calendar
year, we would attempt to honor redemption requests on a pro rata basis. We would treat the
unsatisfied portion of the redemption request as a request for redemption the following quarter.
At such
time, you may then (1) withdraw your request for redemption at any time prior to the last day
of the new quarter or (2) ask that we honor your request at such time, if, any, when sufficient
funds become available. Such pending requests will generally be honored on a pro rata basis. We
will determine whether we have sufficient funds available as soon as practicable after the end of
each quarter, but in any event prior to the applicable payment date.
12
Our board of directors may choose to amend, suspend or terminate our share redemption program
upon 30 days notice at any time. Additionally we will be required to discontinue sales of shares
under the distribution reinvestment plan on the earlier of June 27, 2007, which is two years from
the effective date of this offering, unless the offering is extended, or the date we sell 1,202,000
shares under the plan, unless we file a new registration statement with the Securities and Exchange
Commission and applicable states. Because the redemption of shares will be funded with the net
proceeds we receive from the sale of shares under the distribution reinvestment plan, the
discontinuance or termination of the distribution reinvestment plan will adversely affect our
ability to redeem shares under the share redemption program. We would notify you of such
developments (i) in the annual or quarterly reports mentioned above or (ii) by means of a separate
mailing to you, accompanied by disclosure in a current or periodic report under the Exchange Act.
During this offering, we would also include this information in a prospectus supplement or
post-effective amendment to the registration statement, as then required under federal securities
laws.
Our share redemption program is only intended to provide interim liquidity for stockholders
until a liquidity event occurs, such as the listing of the shares on a national securities
exchange, inclusion of the shares for quotation on a national market system, or our merger with a
listed company. The share redemption program will be terminated if the shares become listed on a
national securities exchange or included for quotation on a national market system. We cannot
guarantee that a liquidity event will occur.
The shares we redeem under our share redemption program will be cancelled and return to the
status of authorized but unissued shares. We do not intend to resell such shares to the public
unless they are first registered with the Securities and Exchange Commission under the Securities
Act and under appropriate state securities laws or otherwise sold in compliance with such laws.
The following information replaces the first paragraph of the section of our prospectus
captioned Summary of Distribution Reinvestment Plan on page 123 of the prospectus:
We have adopted a distribution reinvestment plan pursuant to which our stockholders and,
subject to certain conditions set forth in our distribution reinvestment plan, any stockholder or
partner of any other publicly offered limited partnership, real estate investment trust or other
real estate program sponsored by our advisor or its affiliates, may participate in our distribution
reinvestment plan and elect to purchase shares of our common stock with our distributions or
distributions from such other programs. We are offering 1,202,000 shares for sale pursuant to our
distribution reinvestment plan. We intend to offer shares at the higher of 95% of the estimated
value of a share of our common stock, as estimated by our board of directors, or $9.50 per share.
The per share price for our distribution reinvestment plan was determined based in part upon
federal income tax considerations. The United States Internal Revenue Service has ruled that in
connection with a reinvestment plan, a REIT may give a discount of up to 5% on reinvested shares,
as a result of the savings to the REIT resulting from directly issuing the reinvestment plan
shares, but that a discount in excess of 5% will be treated as a preferential, non-deductible
dividend. We have the discretion to extend the offering period for the shares being offered
pursuant to this prospectus under our distribution reinvestment plan beyond the termination of this
offering until we have sold 1,202,000 shares through the reinvestment of distributions. We may
also offer shares pursuant to a new registration statement.
The following information replaces the section of our prospectus captioned Plan of
Distribution The Offering on page 130 of the prospectus:
We are offering a maximum of 55,342,000 shares of our common stock to the public through Cole
Capital Corporation, our dealer manager, a registered broker-dealer affiliated with our advisor.
Of this amount, we are offering 54,140,000 shares in our primary offering at a price of $10.00 per
share, except as provided below. The shares are being offered on a best efforts basis, which
means generally that the dealer manager will be required to use only its best efforts to sell the
shares and it has no firm commitment or obligation to purchase any of the shares. We are also
offering 1,202,000 shares for sale pursuant to our distribution reinvestment plan. The purchase
price for shares sold under our distribution reinvestment plan will be equal to the higher of 95%
of the estimated value of a share of common stock, as estimated by our board of directors, and
$9.50 per share. The reduced purchase price for shares purchased pursuant to our distribution
reinvestment plan reflects that there will be no fees, commissions or expenses paid with respect to
these shares. The offering of shares of our common stock will terminate on or before June 27,
2007, which is two years after the effective date of this offering, unless the offering is
extended. At the discretion of our board of directors, we may elect to extend the termination date
of our offering of shares reserved for issuance pursuant to our distribution reinvestment plan
until we have sold 1,202,000 shares through the reinvestment of distributions, in which case
participants in the plan will be notified. This offering must be registered in every state in
which we offer or sell shares. Generally, such registrations are for a period of one year. Thus,
we may have to stop selling shares in any state in which our registration is not renewed or
otherwise extended annually. We reserve the right to terminate this offering at any time prior to
the stated termination date.
13
The following information replaces the table in the section of our prospectus captioned Plan
of Distribution Compensation We Will Pay for the Sale of our Shares beginning on page 130 of the
prospectus:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per Share |
|
|
Total Minimum |
|
|
Total Maximum |
|
Primary Offering |
|
|
|
|
|
|
|
|
|
|
|
|
Price to Public |
|
$ |
10.00 |
|
|
$ |
2,500,000 |
|
|
$ |
541,400,000 |
|
Selling Commissions |
|
|
0.70 |
|
|
|
175,000 |
|
|
|
37,898,000 |
|
Dealer Manager fees |
|
|
0.15 |
|
|
|
37,500 |
|
|
|
8,121,000 |
|
|
|
|
|
|
|
|
|
|
|
Proceeds to Cole REIT II |
|
$ |
9.15 |
|
|
$ |
2,287,500 |
|
|
$ |
495,381,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reinvestment Plan |
|
|
|
|
|
|
|
|
|
|
|
|
Price to Public |
|
$ |
9.50 |
|
|
|
|
|
|
$ |
11,419,000 |
|
Distribution Selling Commissions |
|
|
|
|
|
|
|
|
|
|
|
|
Dealer Manager Fees |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds to Cole REIT II |
|
$ |
9.50 |
|
|
|
|
|
|
$ |
11,419,000 |
|
|
|
|
|
|
|
|
|
|
|
|
14
COLE
CREDIT PROPERTY TRUST II, INC.
SUPPLEMENT
NO. 18 DATED APRIL 18, 2007
TO THE
PROSPECTUS DATED JUNE 27, 2005
This document supplements, and should be read in conjunction
with, the prospectus of Cole Credit Property Trust II, Inc.
dated June 27, 2005, Supplement No. 13 dated
December 20, 2006, Supplement No. 14 dated
January 11, 2007, Supplement No. 15 dated
January 24, 2007,Supplement No. 16 dated
March 20, 2007 and Supplement No. 17 dated
March 29, 2007. Supplement 13 supersedes and replaces all
prior supplements to the prospectus. Unless otherwise defined in
this supplement, capitalized terms used in this supplement shall
have the same meanings as set forth in the prospectus.
The purpose of this supplement is to describe the following:
(1) the status of the offering of shares in Cole Credit
Property Trust II, Inc.;
(2) the replacement and supplement of our real property
investments;
(3) the disclosure of distributions made; and
|
|
|
|
(4)
|
the termination of a purchase agreement for a single-tenant, net
leased commercial retail property containing approximately
75,000 rentable square feet in Sherwood, Arkansas.
|
Status
of the Offering
We commenced our initial public offering of shares of our common
stock on June 27, 2005. We have accepted investors
subscriptions received through April 13, 2007, and have
issued an aggregate of approximately 47.8 million shares of
our common stock to stockholders, with gross proceeds of
approximately $478 million distributed to us. For
additional information, see the Plan of
Distribution Subscription Process section of
the prospectus beginning on page 133.
Replace
and Supplement Real Property Investments
The following information replaces the section of our
prospectus captioned Prospectus Summary
Description of Real Estate Investments beginning on
page 8 of the prospectus:
Description
of Real Estate Investments
As of April 11, 2007, we owned 124 properties, comprising
approximately 6,000,000 rentable square feet of commercial
space located in 43 states and the U.S. Virgin
Islands. Our properties as of April 11, 2007, are listed
below.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rentable Square
|
|
|
Purchase
|
|
Property Description
|
|
Tenant
|
|
Feet
|
|
|
Price
|
|
|
Tractor Supply
Parkersburg, WV
|
|
Tractor Supply Company
|
|
|
21,688
|
|
|
$
|
3,259,243
|
|
Walgreens Brainerd, MN
|
|
Walgreen Co.
|
|
|
15,120
|
|
|
|
4,328,500
|
|
Rite Aid Alliance, OH
|
|
Rite Aid of Ohio, Inc.
|
|
|
11,348
|
|
|
|
2,100,000
|
|
La-Z-Boy
Glendale, AZ
|
|
EBCO, Inc.
|
|
|
23,000
|
|
|
|
5,691,525
|
|
Walgreens Florissant, MO
|
|
Walgreen Co.
|
|
|
15,120
|
|
|
|
5,187,632
|
|
Walgreens Saint Louis,
MO (Gravois)
|
|
Walgreen Co.
|
|
|
15,120
|
|
|
|
6,152,942
|
|
Walgreens Saint Louis,
MO (Telegraph)
|
|
Walgreen Co.
|
|
|
15,120
|
|
|
|
5,059,426
|
|
Walgreens Columbia, MO
|
|
Walgreen Co.
|
|
|
13,973
|
|
|
|
6,271,371
|
|
Walgreens Olivette, MO
|
|
Walgreen Co.
|
|
|
15,030
|
|
|
|
7,822,222
|
|
CVS Alpharetta, GA
|
|
Mayfield CVS, Inc.,
|
|
|
10,125
|
|
|
|
3,100,000
|
|
Lowes Enterprise,
AL
|
|
Lowes Home Centers, Inc
|
|
|
95,173
|
|
|
|
7,475,000
|
|
CVS Richland Hills, TX
|
|
CVS EGL Grapevine N Richland Hills
Texas, LP
|
|
|
10,908
|
|
|
|
3,660,000
|
|
FedEx Rockford, IL
|
|
Fed Ex Ground Package System, Inc.
|
|
|
67,925
|
|
|
|
6,150,000
|
|
Plastech Auburn Hills,
MI
|
|
LDM Technologies, Inc.
|
|
|
111,881
|
|
|
|
23,600,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rentable Square
|
|
|
Purchase
|
|
Property Description
|
|
Tenant
|
|
Feet
|
|
|
Price
|
|
|
Academy Sports Macon, GA
|
|
Academy, LTD
|
|
|
74,532
|
|
|
|
5,600,000
|
|
Davids Bridal
Lenexa, KS
|
|
Davids Bridal, Inc.
|
|
|
12,083
|
|
|
|
3,270,000
|
|
Rite Aid Enterprise, AL
|
|
Harco, Inc.
|
|
|
14,564
|
|
|
|
3,714,000
|
|
Rite Aid Wauseon, OH
|
|
Rite Aid of Ohio, Inc.
|
|
|
14,564
|
|
|
|
3,893,679
|
|
Staples Crossville, TN
|
|
Staples the Office Superstore East,
Inc
|
|
|
23,942
|
|
|
|
2,900,000
|
|
Rite Aid Saco, ME
|
|
Rite Aid of Maine, Inc.
|
|
|
11,180
|
|
|
|
2,500,000
|
|
Wadsworth Boulevard
Denver, CO
|
|
Various
|
|
|
198,477
|
|
|
|
18,500,000
|
|
Mountainside Fitness
Chandler, AZ
|
|
Hatten Holdings, Inc.
|
|
|
31,063
|
|
|
|
5,863,000
|
|
Drexel Heritage
Hickory, NC
|
|
Drexel Heritage Furniture
Industries, Inc.
|
|
|
261,057
|
|
|
|
4,250,000
|
|
Rayford Square Spring,
TX
|
|
Various
|
|
|
79,968
|
|
|
|
9,900,000
|
|
CVS Portsmouth, OH
|
|
Revco Discount Drug Centers, inc.
|
|
|
10,170
|
|
|
|
2,166,000
|
|
Wawa Hockessin, DE
|
|
Wawa, Inc.
|
|
|
5,160
|
|
|
|
4,830,000
|
|
Wawa Manahawkin, NJ
|
|
Wawa, Inc.
|
|
|
4,695
|
|
|
|
4,414,000
|
|
Wawa Narbeth, PA
|
|
Wawa, Inc.
|
|
|
4,461
|
|
|
|
4,206,000
|
|
CVS (Sublease)
Lakewood, OH
|
|
Various
|
|
|
12,800
|
|
|
|
2,450,000
|
|
Rite Aid Cleveland, OH
|
|
Rite Aid of Ohio, Inc.
|
|
|
11,325
|
|
|
|
2,568,700
|
|
Rite Aid Fremont, OH
|
|
Rite Aid of Ohio, Inc.
|
|
|
11,325
|
|
|
|
2,524,500
|
|
Walgreens Knoxville, TN
|
|
Walgreen Co.
|
|
|
15,120
|
|
|
|
4,750,000
|
|
CVS Madison, MS
|
|
CVS EGL Highland Madison MS, Inc.
|
|
|
13,824
|
|
|
|
4,463,088
|
|
Rite Aid Defiance, OH
|
|
Rite Aid of Ohio, Inc.
|
|
|
14,564
|
|
|
|
4,326,165
|
|
Conns San Antonio,
TX
|
|
CAI, LP
|
|
|
25,230
|
|
|
|
4,624,619
|
|
Dollar General
Crossville, TN
|
|
Dolgencorp, Inc.
|
|
|
24,341
|
|
|
|
3,000,000
|
|
Dollar General Ardmore,
TN
|
|
Dolgencorp, Inc.
|
|
|
24,341
|
|
|
|
2,775,000
|
|
Dollar General
Livingston, TN
|
|
Dolgencorp, Inc.
|
|
|
24,341
|
|
|
|
2,856,000
|
|
Wehrenberg Arnold, MO
|
|
Wehrenberg, Inc.
|
|
|
50,000
|
|
|
|
8,200,000
|
|
Sportmans Warehouse
Wichita, KS
|
|
Sportsmans Warehouse, Inc.,
|
|
|
50,003
|
|
|
|
8,231,000
|
|
CVS Portsmouth, OH
|
|
Revco Discount Drug Centers, Inc.
|
|
|
10,650
|
|
|
|
2,101,708
|
|
Advance Auto
Greenfield, IN
|
|
Advance Stores Company, Inc.
|
|
|
7,000
|
|
|
|
1,375,500
|
|
Advance Auto Trenton, OH
|
|
Advance Stores Company, Inc.
|
|
|
7,000
|
|
|
|
1,060,000
|
|
Rite Aid Lansing, MI
|
|
Rite Aid of Michigan, Inc.
|
|
|
11,680
|
|
|
|
1,735,000
|
|
Advance Auto Columbia
Heights, MN
|
|
Advance Stores Company, Inc.
|
|
|
7,000
|
|
|
|
1,730,578
|
|
Advance Auto Fergus
Falls, MN
|
|
Advance Stores Company, Inc.
|
|
|
7,000
|
|
|
|
1,203,171
|
|
CVS Okeechobee, FL
|
|
Eckerd Corporation
|
|
|
13,050
|
|
|
|
6,459,262
|
|
Office Depot Dayton, OH
|
|
Office Depot, Inc.
|
|
|
19,880
|
|
|
|
3,416,526
|
|
Advance Auto Holland, MI
|
|
Advance Stores Company, Inc.
|
|
|
7,000
|
|
|
|
2,071,843
|
|
Advance Auto Holland
Township, MI
|
|
Advance Stores Company, Inc.
|
|
|
7,000
|
|
|
|
2,137,244
|
|
Advance Auto Zeeland, MI
|
|
Advance Stores Company, Inc.
|
|
|
7,000
|
|
|
|
1,840,715
|
|
CVS Orlando, FL
|
|
CVS EGL Lake Pickett FL, LLC
|
|
|
13,013
|
|
|
|
4,956,763
|
|
Office Depot
Greenville, MS
|
|
Office Depot, Inc.
|
|
|
25,083
|
|
|
|
3,491,470
|
|
Office Depot
Warrensburg, MO
|
|
Office Depot, Inc.
|
|
|
20,000
|
|
|
|
2,880,552
|
|
CVS Gulfport, MS
|
|
CVS EGL East Pass Gulfport MS, Inc.
|
|
|
11,359
|
|
|
|
4,414,117
|
|
Advance Auto Grand
Forks, ND
|
|
Advance Stores Company, Inc.
|
|
|
7,000
|
|
|
|
1,399,657
|
|
CVS Clinton, NY
|
|
CVS BDI, Inc.,
|
|
|
10,055
|
|
|
|
3,050,000
|
|
Oxford Theatre Oxford,
MS
|
|
Oxford Theater Company, Inc.
|
|
|
35,000
|
|
|
|
9,692,503
|
|
Advance Auto Duluth, MN
|
|
Advance Stores Company, Inc.
|
|
|
7,000
|
|
|
|
1,432,565
|
|
Walgreens Picayune, MS
|
|
Walgreen Co.
|
|
|
14,820
|
|
|
|
4,255,000
|
|
Kohls Wichita, KS
|
|
Kohls Illinois, Inc.
|
|
|
86,584
|
|
|
|
7,866,000
|
|
2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rentable Square
|
|
|
Purchase
|
|
Property Description
|
|
Tenant
|
|
Feet
|
|
|
Price
|
|
|
Lowes Lubbock, TX
|
|
Lowes Home Centers, Inc
|
|
|
137,480
|
|
|
|
11,508,000
|
|
Lowes Midland, TX
|
|
Lowes Home Centers, Inc
|
|
|
134,050
|
|
|
|
11,099,000
|
|
Advance Auto Grand Bay,
AL
|
|
Advance Stores Company, Inc.
|
|
|
7,000
|
|
|
|
1,115,605
|
|
Advance Auto Hurley, MS
|
|
Advance Stores Company, Inc.
|
|
|
7,000
|
|
|
|
1,083,195
|
|
Advance Auto
Rainsville, AL
|
|
Advance Stores Company, Inc.
|
|
|
7,000
|
|
|
|
1,328,000
|
|
Golds Gym
OFallon, IL
|
|
Golds St Louis, LLC
|
|
|
38,000
|
|
|
|
7,300,000
|
|
Rite Aid Glassport, PA
|
|
Rite Aid of Pennsylvania, Inc.
|
|
|
14,564
|
|
|
|
3,788,000
|
|
Davids BridalRadio
Shack Topeka, KS
|
|
Federated Dept. Stores &
Radio Shack Corp.
|
|
|
10,150
|
|
|
|
3,021,000
|
|
Rite Aid Hanover, PA
|
|
Rite Aid
|
|
|
14,584
|
|
|
|
6,330,000
|
|
American TV &
Appliance Peoria, IL
|
|
American TV & Appliance of
Madison, Inc.
|
|
|
126,852
|
|
|
|
11,336,983
|
|
Tractor Supply
La Grange, TX
|
|
Tractor Supply Texas
|
|
|
24,727
|
|
|
|
2,580,000
|
|
Staples Peru, IL
|
|
Staples the Office Superstore East,
Inc
|
|
|
23,925
|
|
|
|
3,215,000
|
|
Fedex Council Bluffs, IA
|
|
Fedex Freight East, Inc.
|
|
|
23,510
|
|
|
|
3,361,000
|
|
Fedex Edwardsville, KS
|
|
Fedex Freight East, Inc.
|
|
|
155,965
|
|
|
|
19,815,000
|
|
CVS Glenville Scotia, NY
|
|
CVS Mack Drug of New York, LLC
|
|
|
12,900
|
|
|
|
5,250,000
|
|
Advance Auto Ashland, KY
|
|
Advance Stores Company, Inc.
|
|
|
7,000
|
|
|
|
1,681,000
|
|
Advance Auto Jackson, OH
|
|
Advance Stores Company, Inc.
|
|
|
7,000
|
|
|
|
1,352,000
|
|
Advance Auto New
Boston, OH
|
|
Advance Stores Company, Inc.
|
|
|
7,000
|
|
|
|
1,516,000
|
|
Advance Auto
Scottsburg, IN
|
|
Advance Stores Company, Inc.
|
|
|
7,000
|
|
|
|
1,272,000
|
|
Tractor Supply
Livingston, TN
|
|
Tractor Supply Texas
|
|
|
24,727
|
|
|
|
3,100,000
|
|
Tractor Supply New
Braunfels, TX
|
|
Tractor Supply Texas
|
|
|
24,727
|
|
|
|
3,150,000
|
|
Office Depot Benton, AR
|
|
Office Depot, Inc.
|
|
|
20,515
|
|
|
|
3,275,000
|
|
Old Time Pottery
Fairview Heights, IL
|
|
Old Time Pottery, Inc.
|
|
|
97,849
|
|
|
|
4,280,000
|
|
Infiniti Davie, FL
|
|
Warren Henry Automobiles, Inc.
|
|
|
20,927
|
|
|
|
9,432,000
|
|
Office Depot Oxford, MS
|
|
Office Depot, Inc.
|
|
|
20,000
|
|
|
|
3,487,450
|
|
Tractor Supply
Crockett, TX
|
|
Tractor Supply Texas
|
|
|
24,727
|
|
|
|
2,450,000
|
|
Mercedes Benz Atlanta,
GA
|
|
Atlanta Eurocars
|
|
|
40,588
|
|
|
|
11,760,000
|
|
Dicks Sporting
Goods Amherst, NY
|
|
Dicks Sporting Goods
|
|
|
55,745
|
|
|
|
9,725,000
|
|
Chilis Paris, TX
|
|
Brinker Texas, L.P.
|
|
|
6,698
|
|
|
|
2,750,000
|
|
Staples Clarksville, IN
|
|
Staples the Office Superstore East,
Inc.
|
|
|
20,388
|
|
|
|
4,430,000
|
|
HOM Fargo, ND
|
|
HOM Furniture, Inc.
|
|
|
122,108
|
|
|
|
12,000,000
|
|
La-Z-Boy
Newington, CT
|
|
LZB Furniture Galleries of Paramus,
Inc
|
|
|
20,701
|
|
|
|
6,900,000
|
|
Advance Auto Maryland
Heights, MO
|
|
Advance Stores Company, Inc.
|
|
|
7,000
|
|
|
|
1,893,000
|
|
Victoria Crossing
Victoria, TX
|
|
Various
|
|
|
87,473
|
|
|
|
12,608,000
|
|
Academy Sports Katy, TX
|
|
Academy Ltd
|
|
|
1,500,596
|
|
|
|
102,000,000
|
|
Gordmans Peoria, IL
|
|
Gordmans, Inc.
|
|
|
60,947
|
|
|
|
9,000,000
|
|
One Pacific Place
Omaha, NE
|
|
Various
|
|
|
91,564
|
|
|
|
36,000,000
|
|
Sack n SaveOReilly
Auto Garland, TX
|
|
Various
|
|
|
65,295
|
|
|
|
5,060,000
|
|
Tractor Supply Ankeny,
IA
|
|
Tractor Supply Company
|
|
|
19,097
|
|
|
|
3,000,000
|
|
ABX Air Coventry, RI
|
|
ABX Air, Inc.
|
|
|
33,000
|
|
|
|
4,090,000
|
|
Office Depot
Enterprise, AL
|
|
Office Depot, Inc.
|
|
|
20,000
|
|
|
|
2,776,357
|
|
Northern Tool Blaine, MN
|
|
Northern Tool and Equipment, Inc.
|
|
|
25,488
|
|
|
|
4,900,000
|
|
Office Max Orangeburg,
SC
|
|
OfficeMax, Inc.
|
|
|
23,500
|
|
|
|
3,125,000
|
|
Walgreens Cincinnati, OH
|
|
Walgreen Co.
|
|
|
15,120
|
|
|
|
5,140,000
|
|
Walgreens Madeira, OH
|
|
Walgreen Co.
|
|
|
13,905
|
|
|
|
4,425,000
|
|
Walgreens Sharonville,
OH
|
|
Walgreen Co.
|
|
|
13,905
|
|
|
|
4,085,000
|
|
AT&T Beaumont, TX
|
|
AT&T Services, Inc.
|
|
|
141,525
|
|
|
|
12,275,000
|
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rentable Square
|
|
|
Purchase
|
|
Property Description
|
|
Tenant
|
|
Feet
|
|
|
Price
|
|
|
Walgreens Shreveport, LA
|
|
Walgreen Co.
|
|
|
13,905
|
|
|
|
4,140,000
|
|
Cost-U-Less, St. Croix, USVI
|
|
CULUSVI, Inc.
|
|
|
38,365
|
|
|
|
6,210,000
|
|
Gallina Centro
Collierville, TN
|
|
Various
|
|
|
142,727
|
|
|
|
17,750,000
|
|
Apria Healthcare St.
John, MO
|
|
Apria Healthcare, Inc.
|
|
|
52,200
|
|
|
|
6,500,000
|
|
Logans Roadhouse
Fairfax, VA
|
|
Logans Roadhouse, Inc.
|
|
|
7,839
|
|
|
|
3,209,000
|
|
Logans Roadhouse
Johnson City, TN
|
|
Logans Roadhouse, Inc.
|
|
|
7,839
|
|
|
|
3,866,000
|
|
Center at 7500
Cottonwood Jenison, MI
|
|
Hob-Lob Limited Partnership
|
|
|
84,933
|
|
|
|
5,290,000
|
|
Eckerd Lincolnton, NC
|
|
ECK-001, LLC
|
|
|
10,908
|
|
|
|
2,262,000
|
|
Tractor Supply
Greenfield, MN
|
|
Tractor Supply Company
|
|
|
22,675
|
|
|
|
4,050,000
|
|
Lincoln Place Fairview
Heights, IL
|
|
Various
|
|
|
272,829
|
|
|
|
44,000,000
|
|
Ashley Furniture
Amarillo, TX
|
|
Choice Furniture, Inc.
|
|
|
74,797
|
|
|
|
5,920,000
|
|
Pocatello Square
Pocatello, ID
|
|
Various
|
|
|
138,925
|
|
|
|
23,000,000
|
|
Tractor Supply Paw Paw,
MI
|
|
Tractor Supply Company
|
|
|
22,670
|
|
|
|
3,095,000
|
|
Tractor Supply
Marinette, MI
|
|
Tractor Supply Company
|
|
|
19,097
|
|
|
|
2,950,000
|
|
Staples Greenville, SC
|
|
Staples the Office Superstore East,
Inc.
|
|
|
20,388
|
|
|
|
4,545,000
|
|
Big 5 Center Aurora, CO
|
|
Various
|
|
|
15,800
|
|
|
|
4,290,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,032,670
|
|
|
$
|
811,349,376
|
|
|
|
|
|
|
|
|
|
|
|
|
For additional information regarding our prior acquisitions, see
the discussion below under the caption Real Property
Investments.
We expect to use substantially all of the net proceeds from this
offering to acquire and operate a portfolio of commercial real
estate consisting primarily of freestanding, single-tenant
commercial properties net leased to investment grade tenants,
which generally are companies that have a debt rating by
Moodys of Baa3 or better or a credit rating by
Standard & Poors of BBB or better, or are
guaranteed by a company with such rating, and other creditworthy
tenants located throughout the United States. We also may invest
in a smaller number of multi-tenant properties that compliment
our overall investment objectives. In addition, we may invest in
entities that make similar investments. If our advisor
determines that, due to the state of the real estate market or
in order to diversify our investment portfolio, it would be
advantageous to us, we also may invest in mortgage loans secured
by commercial properties similar to those in which we invest
directly. We intend to hold each property for eight to ten years.
Our advisor, Cole Advisors II, makes recommendations to our
board of directors for our investments. All acquisitions of
commercial properties are evaluated for tenant creditworthiness
and the reliability and stability of their future income and
capital appreciation potential. We consider the risk profile,
credit quality and reputation of potential tenants and the
impact of each particular acquisition as it relates to the
portfolio as a whole. Our board of directors will exercise its
fiduciary duties to our stockholders in determining to approve
or reject each of these investment recommendations. See the
section of this prospectus captioned Investment Objectives
and Policies Real Property Investments for a
description of our properties as of the date of this prospectus.
As we acquire properties, we will supplement this prospectus to
describe material changes to our portfolio.
The following information replaces the first paragraph of the
section of our prospectus captioned Investment Objectives
and Policies Real Property Investments
beginning on page 82 of the prospectus:
Real
Property Investments
We engage in the acquisition and ownership of commercial
properties throughout the United States. We invest primarily in
income-generating retail properties, net leased to investment
grade and other creditworthy tenants.
4
As of April 11, 2007, we, through separate wholly-owned
limited partnerships or limited liability companies, have
acquired a 100% fee simple interest in 124 properties consisting
of an aggregate of approximately 6,000,000 gross rentable
square feet located in 43 states and the U.S. Virgin
Islands. The properties were generally acquired through the use
of mortgage notes payable and proceeds from our ongoing public
offering of our common stock. The following table summarizes
these properties in order of acquisition date.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rentable
|
|
|
|
|
|
|
|
|
|
|
Year
|
|
Purchase
|
|
|
Fees Paid to
|
|
|
Square
|
|
|
Physical
|
|
Property
|
|
Type
|
|
Date Acquired
|
|
Built
|
|
Price
|
|
|
Sponsor(1)
|
|
|
Feet
|
|
|
Occupancy
|
|
|
Tractor
Supply Parkersburg, WV
|
|
Specialty retail
|
|
September 26, 2005
|
|
2005
|
|
$
|
3,259,243
|
|
|
$
|
83,115
|
|
|
|
21,688
|
|
|
|
100
|
%
|
Walgreens Brainerd, MN
|
|
Drugstore
|
|
October 5, 2005
|
|
2000
|
|
|
4,328,500
|
|
|
|
114,710
|
|
|
|
15,120
|
|
|
|
100
|
%
|
Rite Aid Alliance, OH
|
|
Drugstore
|
|
October 20, 2005
|
|
1996
|
|
|
2,100,000
|
|
|
|
42,000
|
|
|
|
11,348
|
|
|
|
100
|
%
|
La-Z-Boy
Glendale, AZ
|
|
Home furnishings
|
|
October 25, 2005
|
|
2001
|
|
|
5,691,525
|
|
|
|
148,000
|
|
|
|
23,000
|
|
|
|
100
|
%
|
Walgreens Florissant, MO
|
|
Drugstore
|
|
November 2, 2005
|
|
2001
|
|
|
5,187,632
|
|
|
|
111,671
|
|
|
|
15,120
|
|
|
|
100
|
%
|
Walgreens Saint Louis,
MO (Gravois)
|
|
Drugstore
|
|
November 2, 2005
|
|
2001
|
|
|
6,152,942
|
|
|
|
108,917
|
|
|
|
15,120
|
|
|
|
100
|
%
|
Walgreens Saint Louis,
MO (Telegraph)
|
|
Drugstore
|
|
November 2, 2005
|
|
2001
|
|
|
5,059,426
|
|
|
|
132,412
|
|
|
|
15,120
|
|
|
|
100
|
%
|
Walgreens Columbia, MO
|
|
Drugstore
|
|
November 22, 2005
|
|
2002
|
|
|
6,271,371
|
|
|
|
125,000
|
|
|
|
13,973
|
|
|
|
100
|
%
|
Walgreens Olivette, MO
|
|
Drugstore
|
|
November 22, 2005
|
|
2001
|
|
|
7,822,222
|
|
|
|
156,000
|
|
|
|
15,030
|
|
|
|
100
|
%
|
CVS Alpharetta, GA
|
|
Drugstore
|
|
December 1, 2005
|
|
1998
|
|
|
3,100,000
|
|
|
|
82,000
|
|
|
|
10,125
|
|
|
|
100
|
%
|
Lowes Enterprise,
AL
|
|
Home improvement
|
|
December 1, 2005
|
|
1995
|
|
|
7,475,000
|
|
|
|
184,000
|
|
|
|
95,173
|
|
|
|
100
|
%
|
CVS Richland Hills, TX
|
|
Drugstore
|
|
December 8, 2005
|
|
1997
|
|
|
3,660,000
|
|
|
|
97,000
|
|
|
|
10,908
|
|
|
|
100
|
%
|
FedEx Rockford, IL
|
|
Distribution
|
|
December 9, 2005
|
|
1994
|
|
|
6,150,000
|
|
|
|
149,000
|
|
|
|
67,925
|
|
|
|
100
|
%
|
Plastech Auburn Hills,
MI
|
|
Automotive parts
|
|
December 15, 2005
|
|
1995
|
|
|
23,600,000
|
|
|
|
472,000
|
|
|
|
111,881
|
|
|
|
100
|
%
|
Academy Sports Macon, GA
|
|
Sporting goods
|
|
January 6, 2006
|
|
2005
|
|
|
5,600,000
|
|
|
|
148,000
|
|
|
|
74,532
|
|
|
|
100
|
%
|
Davids Bridal
Lenexa, KS
|
|
Specialty retail
|
|
January 11, 2006
|
|
2005
|
|
|
3,270,000
|
|
|
|
83,000
|
|
|
|
12,083
|
|
|
|
100
|
%
|
Rite Aid Enterprise, AL
|
|
Drugstore
|
|
January 26, 2006
|
|
2005
|
|
|
3,714,000
|
|
|
|
94,000
|
|
|
|
14,564
|
|
|
|
100
|
%
|
Rite Aid Wauseon, OH
|
|
Drugstore
|
|
January 26, 2006
|
|
2005
|
|
|
3,893,679
|
|
|
|
79,000
|
|
|
|
14,564
|
|
|
|
100
|
%
|
Staples Crossville, TN
|
|
Office supply
|
|
January 26, 2006
|
|
2001
|
|
|
2,900,000
|
|
|
|
77,000
|
|
|
|
23,942
|
|
|
|
100
|
%
|
Rite Aid Saco, ME
|
|
Drugstore
|
|
January 27, 2006
|
|
1997
|
|
|
2,500,000
|
|
|
|
64,000
|
|
|
|
11,180
|
|
|
|
100
|
%
|
Wadsworth Boulevard
Denver, CO
|
|
Specialty Retail/Warehouse Club
|
|
February 6, 2006
|
|
1991
|
|
|
18,500,000
|
|
|
|
490,000
|
|
|
|
198,477
|
|
|
|
100
|
%
|
Mountainside Fitness
Chandler, AZ
|
|
Health and fitness
|
|
February 9, 2006
|
|
2001
|
|
|
5,863,000
|
|
|
|
117,000
|
|
|
|
31,063
|
|
|
|
100
|
%
|
Drexel Heritage
Hickory, NC
|
|
Furnishings
|
|
February 24, 2006
|
|
1963
|
|
|
4,250,000
|
|
|
|
113,000
|
|
|
|
261,057
|
|
|
|
100
|
%
|
Rayford Square Spring,
TX
|
|
Automotive
parts/Restaurant/Specialty Retail
|
|
March 2, 2006
|
|
1973
|
|
|
9,900,000
|
|
|
|
257,000
|
|
|
|
79,968
|
|
|
|
100
|
%
|
CVS Portsmouth, OH
|
|
Drugstore
|
|
March 8, 2006
|
|
1997
|
|
|
2,166,000
|
|
|
|
57,000
|
|
|
|
10,170
|
|
|
|
100
|
%
|
Wawa Hockessin, DE
|
|
Convenience stores
|
|
March 29, 2006
|
|
2000
|
|
|
4,830,000
|
|
|
|
|
|
|
|
5,160
|
|
|
|
100
|
%
|
Wawa Manahawkin, NJ
|
|
Convenience stores
|
|
March 29, 2006
|
|
2000
|
|
|
4,414,000
|
|
|
|
|
|
|
|
4,695
|
|
|
|
100
|
%
|
Wawa Narbeth, PA
|
|
Convenience stores
|
|
March 29, 2006
|
|
2000
|
|
|
4,206,000
|
|
|
|
|
|
|
|
4,461
|
|
|
|
100
|
%
|
CVS Lakewood, OH
|
|
Drugstore/Financial Services
|
|
April 20, 2006
|
|
1996
|
|
|
2,450,000
|
|
|
|
62,000
|
|
|
|
12,800
|
|
|
|
100
|
%
|
Rite Aid Cleveland, OH
|
|
Drugstore
|
|
April 27, 2006
|
|
1997
|
|
|
2,568,700
|
|
|
|
71,000
|
|
|
|
11,325
|
|
|
|
100
|
%
|
Rite Aid Fremont, OH
|
|
Drugstore
|
|
April 27, 2006
|
|
1997
|
|
|
2,524,500
|
|
|
|
70,000
|
|
|
|
11,325
|
|
|
|
100
|
%
|
Walgreens Knoxville, TN
|
|
Drugstore
|
|
May 8, 2006
|
|
2000
|
|
|
4,750,000
|
|
|
|
125,000
|
|
|
|
15,120
|
|
|
|
100
|
%
|
CVS Madison, MS
|
|
Drugstore
|
|
May 26, 2006
|
|
2004
|
|
|
4,463,088
|
|
|
|
28,000
|
|
|
|
13,824
|
|
|
|
100
|
%
|
Rite Aid Defiance, OH
|
|
Drugstore
|
|
May 26, 2006
|
|
2005
|
|
|
4,326,165
|
|
|
|
23,000
|
|
|
|
14,564
|
|
|
|
100
|
%
|
Conns San Antonio,
TX
|
|
Consumer electronics
|
|
May 26, 2006
|
|
2002
|
|
|
4,624,619
|
|
|
|
36,000
|
|
|
|
25,230
|
|
|
|
100
|
%
|
Dollar General
Crossville, TN
|
|
Specialty retail
|
|
June 2, 2006
|
|
2006
|
|
|
3,000,000
|
|
|
|
80,000
|
|
|
|
24,341
|
|
|
|
100
|
%
|
Dollar General Ardmore,
TN
|
|
Specialty retail
|
|
June 9, 2006
|
|
2005
|
|
|
2,775,000
|
|
|
|
73,000
|
|
|
|
24,341
|
|
|
|
100
|
%
|
Dollar General
Livingston, TN
|
|
Specialty retail
|
|
June 12, 2006
|
|
2006
|
|
|
2,856,000
|
|
|
|
76,000
|
|
|
|
24,341
|
|
|
|
100
|
%
|
Wehrenberg Arnold, MO
|
|
Theaters
|
|
June 14, 2006
|
|
1998
|
|
|
8,200,000
|
|
|
|
82,000
|
|
|
|
50,000
|
|
|
|
100
|
%
|
Sportmans Warehouse
Wichita, KS
|
|
Specialty retail
|
|
June 27, 2006
|
|
2006
|
|
|
8,231,000
|
|
|
|
226,000
|
|
|
|
50,003
|
|
|
|
100
|
%
|
CVS Portsmouth, OH
|
|
Drugstore
|
|
June 28, 2006
|
|
1997
|
|
|
2,101,708
|
|
|
|
61,000
|
|
|
|
10,650
|
|
|
|
100
|
%
|
Advance Auto
Greenfield, IN
|
|
Automotive parts
|
|
June 29, 2006
|
|
2003
|
|
|
1,375,500
|
|
|
|
28,000
|
|
|
|
7,000
|
|
|
|
100
|
%
|
5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rentable
|
|
|
|
|
|
|
|
|
|
|
Year
|
|
Purchase
|
|
|
Fees Paid to
|
|
|
Square
|
|
|
Physical
|
|
Property
|
|
Type
|
|
Date Acquired
|
|
Built
|
|
Price
|
|
|
Sponsor(1)
|
|
|
Feet
|
|
|
Occupancy
|
|
|
Advance Auto Trenton, OH
|
|
Automotive parts
|
|
June 29, 2006
|
|
2003
|
|
|
1,060,000
|
|
|
|
21,000
|
|
|
|
7,000
|
|
|
|
100
|
%
|
Rite Aid Lansing, MI
|
|
Drugstore
|
|
June 29, 2006
|
|
1950
|
|
|
1,735,000
|
|
|
|
45,000
|
|
|
|
11,680
|
|
|
|
100
|
%
|
Advance Auto
Columbia
Heights, MN
|
|
Automotive parts
|
|
July 6, 2006
|
|
2005
|
|
|
1,730,578
|
|
|
|
45,000
|
|
|
|
7,000
|
|
|
|
100
|
%
|
Advance Auto Fergus
Falls, MN
|
|
Automotive parts
|
|
July 6, 2006
|
|
2005
|
|
|
1,203,171
|
|
|
|
31,000
|
|
|
|
7,000
|
|
|
|
100
|
%
|
CVS Okeechobee, FL
|
|
Drugstore
|
|
July 7, 2006
|
|
2001
|
|
|
6,459,262
|
|
|
|
41,000
|
|
|
|
13,050
|
|
|
|
100
|
%
|
Office Depot Dayton, OH
|
|
Office supply
|
|
July 7, 2006
|
|
2005
|
|
|
3,416,526
|
|
|
|
21,000
|
|
|
|
19,880
|
|
|
|
100
|
%
|
Advance Auto Holland, MI
|
|
Automotive parts
|
|
July 12, 2006
|
|
2006
|
|
|
2,071,843
|
|
|
|
12,000
|
|
|
|
7,000
|
|
|
|
100
|
%
|
Advance Auto Holland
Township, MI
|
|
Automotive parts
|
|
July 12, 2006
|
|
2006
|
|
|
2,137,244
|
|
|
|
12,000
|
|
|
|
7,000
|
|
|
|
100
|
%
|
Advance Auto Zeeland, MI
|
|
Automotive parts
|
|
July 12, 2006
|
|
2006
|
|
|
1,840,715
|
|
|
|
11,000
|
|
|
|
7,000
|
|
|
|
100
|
%
|
CVS Orlando, FL
|
|
Drugstore
|
|
July 12, 2006
|
|
2005
|
|
|
4,956,763
|
|
|
|
30,000
|
|
|
|
13,013
|
|
|
|
100
|
%
|
Office Depot
Greenville, MS
|
|
Office supply
|
|
July 12, 2006
|
|
2000
|
|
|
3,491,470
|
|
|
|
22,000
|
|
|
|
25,083
|
|
|
|
100
|
%
|
Office Depot
Warrensburg, MO
|
|
Office supply
|
|
July 19, 2006
|
|
2001
|
|
|
2,880,552
|
|
|
|
18,000
|
|
|
|
20,000
|
|
|
|
100
|
%
|
CVS Gulfport, MS
|
|
Drugstore
|
|
August 10, 2006
|
|
2000
|
|
|
4,414,117
|
|
|
|
26,000
|
|
|
|
11,359
|
|
|
|
100
|
%
|
Advance Auto Grand
Forks, ND
|
|
Automotive parts
|
|
August 15, 2006
|
|
2005
|
|
|
1,399,657
|
|
|
|
36,000
|
|
|
|
7,000
|
|
|
|
100
|
%
|
CVS Clinton, NY
|
|
Drugstore
|
|
August 24, 2006
|
|
2006
|
|
|
3,050,000
|
|
|
|
80,000
|
|
|
|
10,055
|
|
|
|
100
|
%
|
Oxford Theatre Oxford,
MS
|
|
Theaters
|
|
August 31, 2006
|
|
2006
|
|
|
9,692,503
|
|
|
|
246,000
|
|
|
|
35,000
|
|
|
|
100
|
%
|
Advance Auto Duluth, MN
|
|
Automotive parts
|
|
September 8, 2006
|
|
2006
|
|
|
1,432,565
|
|
|
|
9,000
|
|
|
|
7,000
|
|
|
|
100
|
%
|
Walgreens Picayune, MS
|
|
Drugstore
|
|
September 15, 2006
|
|
2006
|
|
|
4,255,000
|
|
|
|
113,000
|
|
|
|
14,820
|
|
|
|
100
|
%
|
Kohls Wichita, KS
|
|
Apparel
|
|
September 27, 2006
|
|
1996
|
|
|
7,866,000
|
|
|
|
209,000
|
|
|
|
86,584
|
|
|
|
100
|
%
|
Lowes Lubbock, TX
|
|
Home improvement
|
|
September 27, 2006
|
|
1996
|
|
|
11,508,000
|
|
|
|
305,000
|
|
|
|
137,480
|
|
|
|
100
|
%
|
Lowes Midland, TX
|
|
Home improvement
|
|
September 27, 2006
|
|
1996
|
|
|
11,099,000
|
|
|
|
293,000
|
|
|
|
134,050
|
|
|
|
100
|
%
|
Advance Auto Grand Bay,
AL
|
|
Automotive parts
|
|
September 29, 2006
|
|
2005
|
|
|
1,115,605
|
|
|
|
22,000
|
|
|
|
7,000
|
|
|
|
100
|
%
|
Advance Auto Hurley, MS
|
|
Automotive parts
|
|
September 29, 2006
|
|
2005
|
|
|
1,083,195
|
|
|
|
22,000
|
|
|
|
7,000
|
|
|
|
100
|
%
|
Advance Auto
Rainsville, AL
|
|
Automotive parts
|
|
September 29, 2006
|
|
2005
|
|
|
1,328,000
|
|
|
|
27,000
|
|
|
|
7,000
|
|
|
|
100
|
%
|
Golds Gym
OFallon, IL
|
|
Health and fitness
|
|
September 29, 2006
|
|
2005
|
|
|
7,300,000
|
|
|
|
183,000
|
|
|
|
38,000
|
|
|
|
100
|
%
|
Rite Aid Glassport, PA
|
|
Drugstore
|
|
October 4, 2006
|
|
2006
|
|
|
3,788,000
|
|
|
|
99,000
|
|
|
|
14,564
|
|
|
|
100
|
%
|
Davids Bridal/Radio
Shack
Topeka, KS
|
|
Specialty Retail/Consumer
Electronics
|
|
October 13, 2006
|
|
2006
|
|
|
3,021,000
|
|
|
|
60,000
|
|
|
|
10,150
|
|
|
|
100
|
%
|
Rite Aid Hanover, PA
|
|
Drugstore
|
|
October 17, 2006
|
|
2006
|
|
|
6,330,000
|
|
|
|
168,000
|
|
|
|
14,584
|
|
|
|
100
|
%
|
American TV &
Appliance
Peoria, IL
|
|
Consumer electronics
|
|
October 23, 2006
|
|
2003
|
|
|
11,336,983
|
|
|
|
304,000
|
|
|
|
126,852
|
|
|
|
100
|
%
|
Tractor Supply
La Grange, TX
|
|
Specialty retail
|
|
November 6, 2006
|
|
2006
|
|
|
2,580,000
|
|
|
|
66,000
|
|
|
|
24,727
|
|
|
|
100
|
%
|
Staples Peru, IL
|
|
Office supply
|
|
November 9, 2006
|
|
1998
|
|
|
3,215,000
|
|
|
|
83,000
|
|
|
|
23,925
|
|
|
|
100
|
%
|
Fedex Council Bluffs, IA
|
|
Distribution
|
|
November 15, 2006
|
|
1999
|
|
|
3,361,000
|
|
|
|
89,000
|
|
|
|
23,510
|
|
|
|
100
|
%
|
Fedex Edwardsville, KS
|
|
Distribution
|
|
November 15, 2006
|
|
1999
|
|
|
19,815,000
|
|
|
|
525,000
|
|
|
|
155,965
|
|
|
|
100
|
%
|
CVS Glenville Scotia, NY
|
|
Drugstore
|
|
November 16, 2006
|
|
2006
|
|
|
5,250,000
|
|
|
|
139,000
|
|
|
|
12,900
|
|
|
|
100
|
%
|
Advance Auto Ashland, KY
|
|
Automotive parts
|
|
November 17, 2006
|
|
2006
|
|
|
1,681,000
|
|
|
|
34,000
|
|
|
|
7,000
|
|
|
|
100
|
%
|
Advance Auto Jackson, OH
|
|
Automotive parts
|
|
November 17, 2006
|
|
2005
|
|
|
1,352,000
|
|
|
|
27,000
|
|
|
|
7,000
|
|
|
|
100
|
%
|
Advance Auto New
Boston, OH
|
|
Automotive parts
|
|
November 17, 2006
|
|
2005
|
|
|
1,516,000
|
|
|
|
30,000
|
|
|
|
7,000
|
|
|
|
100
|
%
|
Advance Auto
Scottsburg, IN
|
|
Automotive parts
|
|
November 17, 2006
|
|
2006
|
|
|
1,272,000
|
|
|
|
25,000
|
|
|
|
7,000
|
|
|
|
100
|
%
|
Tractor Supply
Livingston, TN
|
|
Specialty retail
|
|
November 22, 2006
|
|
2006
|
|
|
3,100,000
|
|
|
|
79,000
|
|
|
|
24,727
|
|
|
|
100
|
%
|
Tractor Supply New
Braunfels, TX
|
|
Specialty retail
|
|
November 22, 2006
|
|
2006
|
|
|
3,150,000
|
|
|
|
81,000
|
|
|
|
24,727
|
|
|
|
100
|
%
|
Office Depot Benton, AR
|
|
Office supply
|
|
November 21, 2006
|
|
2001
|
|
|
3,275,000
|
|
|
|
87,000
|
|
|
|
20,515
|
|
|
|
100
|
%
|
Old Time Pottery
Fairview
Heights, IL
|
|
Home furnishings
|
|
November 21, 2006
|
|
1979
|
|
|
4,280,000
|
|
|
|
107,000
|
|
|
|
97,849
|
|
|
|
100
|
%
|
Infiniti Davie, FL
|
|
Motor vehicle dealerships
|
|
November 30, 2006
|
|
2006
|
|
|
9,432,000
|
|
|
|
189,000
|
|
|
|
20,927
|
|
|
|
100
|
%
|
Office Depot Oxford, MS
|
|
Office supply
|
|
December 1, 2006
|
|
2006
|
|
|
3,487,450
|
|
|
|
93,000
|
|
|
|
20,000
|
|
|
|
100
|
%
|
Tractor Supply
Crockett, TX
|
|
Specialty retail
|
|
December 1, 2006
|
|
2006
|
|
|
2,450,000
|
|
|
|
62,000
|
|
|
|
24,727
|
|
|
|
100
|
%
|
Mercedes Benz Atlanta,
GA
|
|
Motor vehicle dealerships
|
|
December 15, 2006
|
|
2000
|
|
|
11,760,000
|
|
|
|
235,000
|
|
|
|
40,588
|
|
|
|
100
|
%
|
6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rentable
|
|
|
|
|
|
|
|
|
|
|
Year
|
|
Purchase
|
|
|
Fees Paid to
|
|
|
Square
|
|
|
Physical
|
|
Property
|
|
Type
|
|
Date Acquired
|
|
Built
|
|
Price
|
|
|
Sponsor(1)
|
|
|
Feet
|
|
|
Occupancy
|
|
|
Dicks Sporting
Goods
Amherst, NY
|
|
Sporting goods
|
|
December 20, 2006
|
|
1986
|
|
|
9,725,000
|
|
|
|
195,000
|
|
|
|
55,745
|
|
|
|
100
|
%
|
Chilis Paris, TX
|
|
Restaurant
|
|
December 28, 2006
|
|
1999
|
|
|
2,750,000
|
|
|
|
73,000
|
|
|
|
6,698
|
|
|
|
100
|
%
|
Staples Clarksville, IN
|
|
Office supply
|
|
December 29, 2006
|
|
2006
|
|
|
4,430,000
|
|
|
|
118,000
|
|
|
|
20,388
|
|
|
|
100
|
%
|
HOM Fargo, ND
|
|
Furniture retail
|
|
January 4, 2007
|
|
2004
|
|
|
12,000,000
|
|
|
|
288,000
|
|
|
|
122,108
|
|
|
|
100
|
%
|
La-Z-Boy
Newington, CT
|
|
Furnishings store
|
|
January 5, 2007
|
|
2006
|
|
|
6,900,000
|
|
|
|
179,000
|
|
|
|
20,701
|
|
|
|
100
|
%
|
Advance Auto
Maryland
Heights, MO
|
|
Specialty retailer
|
|
January 12, 2007
|
|
2005
|
|
|
1,893,000
|
|
|
|
38,000
|
|
|
|
7,000
|
|
|
|
100
|
%
|
Victoria Crossing
Victoria, TX
|
|
Shopping center
|
|
January 12, 2007
|
|
2006
|
|
|
12,608,000
|
|
|
|
338,000
|
|
|
|
87,473
|
|
|
|
92.3
|
%
|
Academy Sports Katy, TX
|
|
Headquarters
|
|
January 18, 2007
|
|
1976
|
|
|
102,000,000
|
|
|
|
2,683,000
|
|
|
|
1,500,596
|
|
|
|
100
|
%
|
Gordmans Peoria, IL
|
|
Department store
|
|
January 18, 2007
|
|
2006
|
|
|
9,000,000
|
|
|
|
230,000
|
|
|
|
60,947
|
|
|
|
100
|
%
|
One Pacific Place
Omaha, NE
|
|
Shopping center
|
|
February 6, 2007
|
|
1988
|
|
|
36,000,000
|
|
|
|
954,000
|
|
|
|
91,564
|
|
|
|
95.2
|
%
|
Sack n
Save/OReilly Auto Garland, TX
|
|
Shopping center
|
|
February 6, 2007
|
|
1970
|
|
|
5,060,000
|
|
|
|
134,000
|
|
|
|
65,295
|
|
|
|
100
|
%
|
Tractor Supply Ankeny,
IA
|
|
Specialty retail
|
|
February 9, 2007
|
|
2006
|
|
|
3,000,000
|
|
|
|
60,000
|
|
|
|
19,097
|
|
|
|
100
|
%
|
ABX Air Coventry, RI
|
|
distribution center
|
|
February 16, 2007
|
|
1998
|
|
|
4,090,000
|
|
|
|
107,000
|
|
|
|
33,000
|
|
|
|
100
|
%
|
Office Depot
Enterprise, AL
|
|
office supply
|
|
February 27, 2007
|
|
2006
|
|
|
2,776,357
|
|
|
|
75,000
|
|
|
|
20,000
|
|
|
|
100
|
%
|
Northern Tool Blaine, MN
|
|
Specialty retail
|
|
February 28, 2007
|
|
2006
|
|
|
4,900,000
|
|
|
|
130,000
|
|
|
|
25,488
|
|
|
|
100
|
%
|
Office Max Orangeburg,
SC
|
|
office supply
|
|
February 28, 2007
|
|
1999
|
|
|
3,125,000
|
|
|
|
82,000
|
|
|
|
23,500
|
|
|
|
100
|
%
|
Walgreens Cincinnati, OH
|
|
drug store
|
|
March 6, 2007
|
|
2000
|
|
|
5,140,000
|
|
|
|
136,000
|
|
|
|
15,120
|
|
|
|
100
|
%
|
Walgreens Madeira, OH
|
|
drug store
|
|
March 6, 2007
|
|
1998
|
|
|
4,425,000
|
|
|
|
118,000
|
|
|
|
13,905
|
|
|
|
100
|
%
|
Walgreens Sharonville,
OH
|
|
drug store
|
|
March 6, 2007
|
|
1998
|
|
|
4,085,000
|
|
|
|
109,000
|
|
|
|
13,905
|
|
|
|
100
|
%
|
AT&T Beaumont, TX
|
|
office building
|
|
March 19, 2007
|
|
1971
|
|
|
12,275,000
|
|
|
|
332,000
|
|
|
|
141,525
|
|
|
|
100
|
%
|
Walgreens Shreveport, LA
|
|
Drugstore
|
|
March 23, 2007
|
|
1998
|
|
|
4,140,000
|
|
|
|
111,000
|
|
|
|
13,905
|
|
|
|
100
|
%
|
Cost-U-Less St. Croix,
USVI
|
|
Warehouse Club
|
|
March 26, 2007
|
|
2005
|
|
|
6,210,000
|
|
|
|
164,000
|
|
|
|
38,365
|
|
|
|
100
|
%
|
Gallina Centro
Collierville, TN
|
|
Shopping center
|
|
March 26, 2007
|
|
2000
|
|
|
17,750,000
|
|
|
|
497,000
|
|
|
|
142,727
|
|
|
|
100
|
%
|
Apria Healthcare St.
John, MO
|
|
Healthcare
|
|
March 28, 2007
|
|
1996
|
|
|
6,500,000
|
|
|
|
130,000
|
|
|
|
52,200
|
|
|
|
100
|
%
|
Logans Roadhouse
Fairfax, VA
|
|
Restaurant
|
|
March 28, 2007
|
|
1998
|
|
|
3,209,000
|
|
|
|
80,000
|
|
|
|
7,839
|
|
|
|
100
|
%
|
Logans
Roadhouse
Johnson City, TN
|
|
Restaurant
|
|
March 28, 2007
|
|
1996
|
|
|
3,866,000
|
|
|
|
97,000
|
|
|
|
7,839
|
|
|
|
100
|
%
|
Center at 7500
Cottonwood
Jenison, MI
|
|
Shopping center
|
|
March 30, 2007
|
|
1993
|
|
|
5,290,000
|
|
|
|
106,000
|
|
|
|
84,933
|
|
|
|
100
|
%
|
Eckerd Lincolnton, NC
|
|
Drugstore
|
|
April 3, 2007
|
|
1998
|
|
|
2,262,000
|
|
|
|
61,000
|
|
|
|
10,908
|
|
|
|
100
|
%
|
Tractor Supply
Greenfield, MN
|
|
Specialty retail
|
|
April 2, 2007
|
|
2006
|
|
|
4,050,000
|
|
|
|
103,000
|
|
|
|
22,675
|
|
|
|
100
|
%
|
Lincoln Place
Fairview
Heights, IL
|
|
Shopping center
|
|
April 5, 2007
|
|
1998
|
|
|
44,000,000
|
|
|
|
1,234,320
|
|
|
|
272,829
|
|
|
|
100
|
%
|
Ashley Furniture
Amarillo, TX
|
|
Furniture retail
|
|
April 6, 2007
|
|
1980
|
|
|
5,920,000
|
|
|
|
159,000
|
|
|
|
74,797
|
|
|
|
100
|
%
|
Pocatello Square
Pocatello, ID
|
|
Shopping center
|
|
April 6, 2007
|
|
2006
|
|
|
23,000,000
|
|
|
|
632,500
|
|
|
|
138,925
|
|
|
|
90
|
%
|
Tractor Supply Paw Paw,
MI
|
|
Specialty retail
|
|
April 9, 2007
|
|
2006
|
|
|
3,095,000
|
|
|
|
82,000
|
|
|
|
22,670
|
|
|
|
100
|
%
|
Tractor Supply
Marinette, WI
|
|
Specialty retail
|
|
April 9, 2007
|
|
2006
|
|
|
2,950,000
|
|
|
|
78,000
|
|
|
|
19,097
|
|
|
|
100
|
%
|
Staples Greenville, SC
|
|
Office supply
|
|
April 11, 2007
|
|
2007
|
|
|
4,545,000
|
|
|
|
120,000
|
|
|
|
20,388
|
|
|
|
100
|
%
|
Big 5 Center Aurora, CO
|
|
Retail center
|
|
April 11, 2007
|
|
2006
|
|
|
4,290,000
|
|
|
|
114,000
|
|
|
|
15,800
|
|
|
|
100
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
811,349,376
|
|
|
$
|
19,235,845
|
|
|
|
6,032,670
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Fees paid to sponsor include payments made to an affiliate of
our advisor for acquisition fees in connection with the property
acquisition and payments to our advisor for finance coordination
fees for services in connection with the origination or
assumption of debt financing obtained to acquire the respective
property. For more detailed information on fees paid to
affiliates of our sponsor, see the section captioned
Management Compensation beginning on page 59 of
the prospectus. |
7
The following table sets forth the principal provisions of the
lease terms for the major tenants at each property listed above.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
% of
|
|
|
|
|
Current
|
|
Base
|
|
|
|
|
|
|
Number
|
|
|
|
Square
|
|
|
Total
|
|
|
|
|
Annual
|
|
Rent per
|
|
|
|
|
|
|
of
|
|
|
|
Feet
|
|
|
Square
|
|
|
Renewal
|
|
Base
|
|
Square
|
|
Lease Term
|
Property
|
|
Tenants
|
|
Major Tenants*
|
|
Leased
|
|
|
Feet
|
|
|
Options**
|
|
Rent
|
|
Foot
|
|
Beginning
|
|
To
|
|
Tractor
Supply Parkersburg, WV
|
|
1
|
|
Tractor Supply Company
|
|
|
21,688
|
|
|
|
100
|
%
|
|
|
4/5 yr.
|
|
|
$
|
228,147
|
|
$
|
10.52
|
|
9/26/2005
|
|
7/31/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
250,962
|
|
|
11.57
|
|
8/1/2010
|
|
7/31/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
276,058
|
|
|
12.73
|
|
8/1/2015
|
|
7/31/2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Walgreens Brainerd, MN
|
|
1
|
|
Walgreen Co.
|
|
|
15,120
|
|
|
|
100
|
%
|
|
|
8/5 yr.
|
|
|
|
303,000
|
|
|
20.04
|
|
10/5/2005
|
|
6/30/2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rite Aid Alliance, OH
|
|
1
|
|
Rite Aid of
Ohio, Inc.
|
|
|
11,348
|
|
|
|
100
|
%
|
|
|
6/5 yr.
|
|
|
|
189,023
|
|
|
16.66
|
|
10/20/2005
|
|
4/30/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
La-Z-Boy
Glendale, AZ
|
|
1
|
|
EBCO, Inc.
|
|
|
23,000
|
|
|
|
100
|
%
|
|
|
3/5 yr.
|
|
|
|
419,750
|
|
|
18.25
|
|
10/25/2005
|
|
10/31/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Walgreens Florissant, MO
|
|
1
|
|
Walgreen Co.
|
|
|
15,120
|
|
|
|
100
|
%
|
|
|
8/5 yr.
|
|
|
|
344,000
|
|
|
22.75
|
|
11/2/2005
|
|
2/28/2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Walgreens Saint Louis,
MO (Gravois)
|
|
1
|
|
Walgreen Co.
|
|
|
15,120
|
|
|
|
100
|
%
|
|
|
8/5 yr.
|
|
|
|
408,000
|
|
|
26.98
|
|
11/2/2005
|
|
10/31/2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Walgreens Saint Louis,
MO (Telegraph)
|
|
1
|
|
Walgreen Co.
|
|
|
15,120
|
|
|
|
100
|
%
|
|
|
8/5 yr.
|
|
|
|
335,500
|
|
|
22.19
|
|
11/2/2005
|
|
12/31/2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Walgreens Columbia, MO
|
|
1
|
|
Walgreen Co.
|
|
|
13,973
|
|
|
|
100
|
%
|
|
|
8/5 yr.
|
|
|
|
427,300
|
|
|
30.58
|
|
11/22/2005
|
|
6/30/2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Walgreens Olivette, MO
|
|
1
|
|
Walgreen Co.
|
|
|
15,030
|
|
|
|
100
|
%
|
|
|
10/5
yr.
|
|
|
|
528,000
|
|
|
35.13
|
|
11/22/2005
|
|
10/31/2026
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CVS Alpharetta, GA
|
|
1
|
|
Mayfield
CVS, Inc.,
|
|
|
10,125
|
|
|
|
100
|
%
|
|
|
3/5 yr.
|
|
|
|
206,600
|
|
|
20.40
|
|
12/1/2005
|
|
5/31/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
218,997
|
|
|
21.63
|
|
6/1/2008
|
|
5/31/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
232,136
|
|
|
22.93
|
|
6/1/2013
|
|
1/31/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lowes Enterprise,
AL
|
|
1
|
|
Lowes Home Centers, Inc
|
|
|
95,173
|
|
|
|
100
|
%
|
|
|
6/5 yr.
|
|
|
|
500,000
|
|
|
5.25
|
|
12/1/2005
|
|
4/30/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CVS Richland Hills, TX
|
|
1
|
|
CVS EGL Grapevine
N Richland Hills Texas, LP
|
|
|
10,908
|
|
|
|
100
|
%
|
|
|
4/5 yr.
|
|
|
|
265,249
|
|
|
24.32
|
|
12/8/2005
|
|
8/28/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
270,849
|
|
|
24.83
|
|
8/29/2007
|
|
8/28/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
276,449
|
|
|
25.34
|
|
8/29/2012
|
|
8/28/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FedEx Rockford, IL
|
|
1
|
|
Fed Ex Ground Package
System, Inc.
|
|
|
67,925
|
|
|
|
100
|
%
|
|
|
2/5 yr.
|
|
|
|
445,632
|
|
|
6.56
|
|
12/9/2005
|
|
9/30/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plastech Auburn Hills,
MI
|
|
1
|
|
LDM Technologies, Inc.
|
|
|
111,881
|
|
|
|
100
|
%
|
|
|
2/5 yr.
|
|
|
|
1,790,100
|
|
|
16.00
|
|
12/15/2005
|
|
1/31/2021(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Academy Sports Macon, GA
|
|
1
|
|
Academy, LTD
|
|
|
74,532
|
|
|
|
100
|
%
|
|
|
4/5 yr.
|
|
|
|
408,804
|
|
|
5.48
|
|
1/6/2006
|
|
1/31/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
421,064
|
|
|
5.65
|
|
2/1/2011
|
|
1/31/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
433,695
|
|
|
5.82
|
|
2/1/2016
|
|
1/31/2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
446,706
|
|
|
5.99
|
|
2/1/2021
|
|
1/31/2026
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Davids Bridal
Lenexa, KS
|
|
1
|
|
Davids Bridal, Inc.
|
|
|
12,083
|
|
|
|
100
|
%
|
|
|
2/5 yr.
|
|
|
|
235,200
|
|
|
19.47
|
|
1/11/2006
|
|
12/31/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
258,720
|
|
|
21.41
|
|
1/1/2011
|
|
12/31/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rite Aid Enterprise, AL
|
|
1
|
|
Harco, Inc.
|
|
|
14,564
|
|
|
|
100
|
%
|
|
|
6/5 yr.
|
|
|
|
289,629
|
|
|
19.89
|
|
1/26/2006
|
|
1/31/2026
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rite Aid Wauseon, OH
|
|
1
|
|
Rite Aid of Ohio, Inc.
|
|
|
14,564
|
|
|
|
100
|
%
|
|
|
6/5 yr.
|
|
|
|
311,720
|
|
|
21.40
|
|
1/26/2006
|
|
1/31/2026
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Staples Crossville, TN
|
|
1
|
|
Staples the Office Superstore
East, Inc
|
|
|
23,942
|
|
|
|
100
|
%
|
|
|
3/5 yr.
|
|
|
|
221,463
|
|
|
9.25
|
|
1/26/2006
|
|
6/30/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rite Aid Saco, ME
|
|
1
|
|
Rite Aid of Maine, Inc.
|
|
|
11,180
|
|
|
|
100
|
%
|
|
|
4/5 yr.
|
|
|
|
210,743
|
|
|
18.85
|
|
1/27/2006
|
|
2/28/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wadsworth Boulevard
Denver, CO
|
|
2
|
|
Sams PW, Inc.
|
|
|
108,224
|
|
|
|
55
|
%
|
|
|
10/5
yr.
|
|
|
|
820,245
|
|
|
7.58
|
|
2/8/2006
|
|
11/30/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hob-Lob Limited Partnership
|
|
|
90,253
|
|
|
|
45
|
%
|
|
|
10/5
yr.
|
|
|
|
585,000
|
|
|
6.48
|
|
2/8/2006
|
|
10/31/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mountainside Fitness
Chandler, AZ
|
|
1
|
|
Hatten Holdings, Inc.
|
|
|
31,063
|
|
|
|
100
|
%
|
|
|
2/5 yr.
|
|
|
|
469,051
|
|
|
15.10
|
|
2/10/2006
|
|
12/31/2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
523,101
|
|
|
16.84
|
|
1/1/2007
|
|
12/31/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
583,363
|
|
|
18.78
|
|
1/1/2012
|
|
12/31/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
651,391
|
|
|
20.97
|
|
1/1/2017
|
|
7/18/2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Drexel Heritage
Hickory, NC
|
|
1
|
|
Drexel Heritage Furniture
|
|
|
261,057
|
|
|
|
100
|
%
|
|
|
3/5 yr.
|
|
|
|
338,078
|
|
|
1.30
|
|
2/24/2006
|
|
9/8/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Industries, Inc.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
390,090
|
|
|
1.49
|
|
9/9/2010
|
|
9/8/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rayford Square Spring,
TX
|
|
5
|
|
Academy Corp
|
|
|
50,500
|
|
|
|
63
|
%
|
|
|
2/5 yr.
|
|
|
|
371,175
|
|
|
7.35
|
|
3/1/2006
|
|
10/31/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
383,800
|
|
|
7.60
|
|
11/1/2009
|
|
10/31/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
396,425
|
|
|
7.85
|
|
11/1/2014
|
|
10/31/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
409,050
|
|
|
8.10
|
|
11/1/2019
|
|
10/31/2024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CB Jackson
|
|
|
12,302
|
|
|
|
15
|
%
|
|
|
None
|
|
|
|
125,484
|
|
|
10.20
|
|
3/1/2006
|
|
12/31/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hi-Lo Auto Supply, LP
|
|
|
8,136
|
|
|
|
10
|
%
|
|
|
1/5 yr.
|
|
|
|
60,720
|
|
|
7.46
|
|
3/1/2006
|
|
3/31/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CVS
Portsmouth OH (Scioto Trail)
|
|
1
|
|
Revco Discount Drug
Centers, inc.
|
|
|
10,170
|
|
|
|
100
|
%
|
|
|
4/5 yr.
|
|
|
|
153,333
|
|
|
15.08
|
|
3/8/2006
|
|
7/31/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
156,666
|
|
|
15.40
|
|
8/1/2008
|
|
7/31/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
160,000
|
|
|
15.73
|
|
8/1/2013
|
|
7/31/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wawa Hockessin, DE
|
|
1
|
|
Wawa, Inc.
|
|
|
5,160
|
|
|
|
100
|
%
|
|
|
6/5-9 yrs.
|
|
|
|
365,185
|
|
|
70.77
|
|
3/29/2006
|
|
12/31/2021(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wawa Manahawkin, NJ
|
|
1
|
|
Wawa, Inc.
|
|
|
4,695
|
|
|
|
100
|
%
|
|
|
6/5-9 yrs.
|
|
|
|
332,276
|
|
|
70.77
|
|
3/29/2006
|
|
12/31/2021(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wawa Narbeth, PA
|
|
1
|
|
Wawa, Inc.
|
|
|
4,461
|
|
|
|
100
|
%
|
|
|
6/5-9 yrs.
|
|
|
|
315,715
|
|
|
70.77
|
|
3/29/2006
|
|
12/31/2021(3)
|
8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
% of
|
|
|
|
|
Current
|
|
Base
|
|
|
|
|
|
|
Number
|
|
|
|
Square
|
|
|
Total
|
|
|
|
|
Annual
|
|
Rent per
|
|
|
|
|
|
|
of
|
|
|
|
Feet
|
|
|
Square
|
|
|
Renewal
|
|
Base
|
|
Square
|
|
Lease Term
|
Property
|
|
Tenants
|
|
Major Tenants*
|
|
Leased
|
|
|
Feet
|
|
|
Options**
|
|
Rent
|
|
Foot
|
|
Beginning
|
|
To
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CVS Lakewood, OH
|
|
2
|
|
Revco Discount
Drug Centers
|
|
|
10,800
|
|
|
|
84
|
%
|
|
|
2/5 yr.
|
|
|
|
180,900
|
|
|
16.75
|
|
4/20/2006
|
|
9/30/2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
191,700
|
|
|
17.75
|
|
10/1/2006
|
|
9/30/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charter One Bank, N.A
|
|
|
2,000
|
|
|
|
16
|
%
|
|
|
1/5yr
|
|
|
|
30,992
|
|
|
15.50
|
|
4/20/2006
|
|
7/31/2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
33,898
|
|
|
16.95
|
|
8/1/2006
|
|
7/31/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rite Aid Cleveland, OH
|
|
1
|
|
Rite Aid of Ohio, Inc.
|
|
|
11,325
|
|
|
|
100
|
%
|
|
|
6/5 yr.
|
|
|
|
220,470
|
|
|
19.47
|
|
4/27/2006
|
|
6/30/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rite Aid Fremont, OH
|
|
1
|
|
Rite Aid of Ohio, Inc.
|
|
|
11,325
|
|
|
|
100
|
%
|
|
|
6/5 yr.
|
|
|
|
201,955
|
|
|
17.83
|
|
4/27/2006
|
|
2/28/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Walgreens Knoxville, TN
|
|
1
|
|
Walgreen Co.
|
|
|
15,120
|
|
|
|
100
|
%
|
|
|
8/5 yr.
|
|
|
|
350,000
|
|
|
23.15
|
|
5/8/2006
|
|
5/31/2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CVS Madison, MS
|
|
1
|
|
CVS EGL Highland
Madison MS, Inc.
|
|
|
13,824
|
|
|
|
100
|
%
|
|
|
4/5 yr.
|
|
|
|
302,484
|
|
|
21.88
|
|
5/26/2006
|
|
6/10/2024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rite Aid Defiance, OH
|
|
1
|
|
Rite Aid of Ohio, Inc.
|
|
|
14,564
|
|
|
|
100
|
%
|
|
|
6/5 yr.
|
|
|
|
337,917
|
|
|
23.20
|
|
5/26/2006
|
|
1/31/2026
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Conns San Antonio,
TX
|
|
1
|
|
CAI, LP
|
|
|
25,230
|
|
|
|
100
|
%
|
|
|
5/3 yr.
|
|
|
|
338,000
|
|
|
13.40
|
|
5/26/2006
|
|
4/30/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
351,520
|
|
|
13.93
|
|
5/1/2008
|
|
4/30/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
365,581
|
|
|
14.49
|
|
5/1/2011
|
|
4/30/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
380,204
|
|
|
15.07
|
|
5/1/2014
|
|
4/30/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dollar General
Crossville, TN
|
|
1
|
|
Dolgencorp, Inc.
|
|
|
24,341
|
|
|
|
100
|
%
|
|
|
6/5 yr.
|
|
|
|
217,852
|
|
|
8.95
|
|
6/2/2006
|
|
3/31/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
239,637
|
|
|
9.84
|
|
4/1/2016
|
|
3/31/2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dollar General Ardmore,
TN
|
|
1
|
|
Dolgencorp, Inc.
|
|
|
24,341
|
|
|
|
100
|
%
|
|
|
6/5 yr.
|
|
|
|
208,116
|
|
|
8.55
|
|
6/9/2006
|
|
11/30/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
228,928
|
|
|
9.41
|
|
12/1/2015
|
|
11/30/2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dollar General
Livingston, TN
|
|
1
|
|
Dolgencorp, Inc.
|
|
|
24,341
|
|
|
|
100
|
%
|
|
|
6/5 yr.
|
|
|
|
214,200
|
|
|
8.80
|
|
6/12/2006
|
|
4/30/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
235,620
|
|
|
9.68
|
|
5/1/2016
|
|
4/30/2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wehrenberg Theatre
Arnold, MO
|
|
1
|
|
Wehrenberg, Inc.
|
|
|
50,000
|
|
|
|
100
|
%
|
|
|
2/5 yr.
|
|
|
|
784,453
|
|
|
15.69
|
|
6/14/2006
|
|
3/31/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
836,094
|
|
|
16.72
|
|
4/1/2009
|
|
3/31/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
897,572
|
|
|
17.95
|
|
4/1/2014
|
|
3/31/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sportmans Warehouse
Wichita, KS
|
|
1
|
|
Sportsmans Warehouse, Inc.,
|
|
|
50,003
|
|
|
|
100
|
%
|
|
|
5/5 yr.
|
|
|
|
639,046
|
|
|
12.78
|
|
6/27/2006
|
|
4/30/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
670,998
|
|
|
13.42
|
|
5/1/2011
|
|
4/30/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
704,548
|
|
|
14.09
|
|
5/1/2016
|
|
4/30/2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CVS
Portsmouth OH (Chillicothe)
|
|
1
|
|
Revco Discount Drug Centers, Inc.
|
|
|
10,650
|
|
|
|
100
|
%
|
|
|
4/5 yr.
|
|
|
|
143,700
|
|
|
13.49
|
|
6/28/2006
|
|
11/30/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
149,100
|
|
|
14.00
|
|
12/1/2007
|
|
11/30/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Advance Auto
Greenfield, IN
|
|
1
|
|
Advance Stores Company, Inc.
|
|
|
7,000
|
|
|
|
100
|
%
|
|
|
2/5 yr.
|
|
|
|
110,040
|
|
|
15.72
|
|
6/29/2006
|
|
6/30/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Advance Auto Trenton, OH
|
|
1
|
|
Advance Stores Company, Inc.
|
|
|
7,000
|
|
|
|
100
|
%
|
|
|
2/5 yr.
|
|
|
|
84,782
|
|
|
12.11
|
|
6/29/2006
|
|
6/30/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rite Aid Lansing, MI
|
|
1
|
|
Rite Aid of Michigan, Inc.
|
|
|
11,680
|
|
|
|
100
|
%
|
|
|
4/5 yr.
|
|
|
|
160,480
|
|
|
13.74
|
|
6/29/2006
|
|
12/31/2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
166,320
|
|
|
14.24
|
|
1/1/2007
|
|
12/31/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
172,160
|
|
|
14.74
|
|
1/1/2012
|
|
12/31/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Advance Auto Columbia
Heights, MN
|
|
1
|
|
Advance Stores Company, Inc.
|
|
|
7,000
|
|
|
|
100
|
%
|
|
|
3/5 yr.
|
|
|
|
131,524
|
|
|
18.79
|
|
7/6/2006
|
|
1/31/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
138,100
|
|
|
19.73
|
|
2/1/2016
|
|
1/31/2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Advance Auto Fergus
Falls, MN
|
|
1
|
|
Advance Stores Company, Inc.
|
|
|
7,000
|
|
|
|
100
|
%
|
|
|
3/5 yr.
|
|
|
|
91,441
|
|
|
13.06
|
|
7/6/2006
|
|
11/30/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
96,013
|
|
|
13.72
|
|
12/1/2015
|
|
11/30/2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CVS Okeechobee, FL
|
|
1
|
|
Eckerd Corporation
|
|
|
13,050
|
|
|
|
100
|
%
|
|
|
5/5 yr.
|
|
|
|
435,130
|
|
|
33.34
|
|
7/7/2006
|
|
7/5/2026
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Office Depot Dayton, OH
|
|
1
|
|
Office Depot, Inc.
|
|
|
19,880
|
|
|
|
100
|
%
|
|
|
4/5 yr.
|
|
|
|
237,566
|
|
|
11.95
|
|
7/7/2006
|
|
12/31/2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Advance Auto Holland, MI
|
|
1
|
|
Advance Stores Company, Inc.
|
|
|
7,000
|
|
|
|
100
|
%
|
|
|
3/5 yr.
|
|
|
|
149,063
|
|
|
21.29
|
|
7/12/2006
|
|
1/31/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
163,969
|
|
|
23.42
|
|
2/1/2016
|
|
1/31/2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Advance Auto Holland
Township, MI
|
|
1
|
|
Advance Stores Company, Inc.
|
|
|
7,000
|
|
|
|
100
|
%
|
|
|
3/5 yr.
|
|
|
|
153,908
|
|
|
21.99
|
|
7/12/2006
|
|
1/31/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
169,299
|
|
|
24.19
|
|
2/1/2016
|
|
1/31/2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Advance Auto Zeeland, MI
|
|
1
|
|
Advance Stores Company, Inc.
|
|
|
7,000
|
|
|
|
100
|
%
|
|
|
3/5 yr.
|
|
|
|
132,089
|
|
|
18.87
|
|
7/12/2006
|
|
1/31/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
145,298
|
|
|
20.76
|
|
2/1/2016
|
|
1/31/2026
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CVS Orlando, FL
|
|
1
|
|
CVS EGL Lake Pickett FL, LLC
|
|
|
13,013
|
|
|
|
100
|
%
|
|
|
4/5 yr.
|
|
|
|
324,765
|
|
|
24.96
|
|
7/12/2006
|
|
11/1/2025
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Office Depot
Greenville, MS
|
|
1
|
|
Office Depot, Inc.
|
|
|
25,083
|
|
|
|
100
|
%
|
|
|
3/5 yr.
|
|
|
|
256,804
|
|
|
10.24
|
|
7/12/2006
|
|
9/30/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Office Depot
Warrensburg, MO
|
|
1
|
|
Office Depot, Inc.
|
|
|
20,000
|
|
|
|
100
|
%
|
|
|
4/5 yr.
|
|
|
|
210,000
|
|
|
10.50
|
|
7/19/2006
|
|
8/31/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CVS Gulfport, MS
|
|
1
|
|
CVS EGL East Pass Gulfport MS, Inc.
|
|
|
11,359
|
|
|
|
100
|
%
|
|
|
4/5 yr.
|
|
|
|
281,136
|
|
|
24.75
|
|
8/10/2006
|
|
10/24/2025
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Advance Auto Grand
Forks, ND
|
|
1
|
|
Advance Stores Company, Inc.
|
|
|
7,000
|
|
|
|
100
|
%
|
|
|
3/5 yr.
|
|
|
|
106,375
|
|
|
15.20
|
|
8/15/2006
|
|
12/31/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
111,694
|
|
|
15.96
|
|
1/1/2016
|
|
12/31/2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CVS Clinton, NY
|
|
1
|
|
CVS BDI, Inc.,
|
|
|
10,055
|
|
|
|
100
|
%
|
|
|
4/5 yr.
|
|
|
|
222,661
|
|
|
22.14
|
|
8/24/2006
|
|
1/31/2032
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oxford Theatre Oxford,
MS
|
|
1
|
|
Oxford Theater Company, Inc.
|
|
|
35,000
|
|
|
|
100
|
%
|
|
|
N/A
|
|
|
|
848,088
|
|
|
24.23
|
|
8/31/2006
|
|
7/31/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
883,092
|
|
|
25.23
|
|
8/1/2011
|
|
7/31/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
918,084
|
|
|
26.23
|
|
8/1/2016
|
|
7/31/2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
953,088
|
|
|
27.23
|
|
8/1/2021
|
|
7/31/2026
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Advance Auto Duluth, MN
|
|
1
|
|
Advance Stores Company, Inc.
|
|
|
7,000
|
|
|
|
100
|
%
|
|
|
3/5 yr.
|
|
|
|
108,875
|
|
|
15.55
|
|
9/8/2006
|
|
2/28/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
114,319
|
|
|
16.33
|
|
3/1/2016
|
|
2/28/2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Walgreens Picayune, MS
|
|
1
|
|
Walgreen Co.
|
|
|
14,820
|
|
|
|
100
|
%
|
|
|
10/5
yr.
|
|
|
|
291,385
|
|
|
19.66
|
|
9/15/2006
|
|
3/31/2031
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kohls Wichita, KS
|
|
1
|
|
Kohls Illinois, Inc.
|
|
|
86,584
|
|
|
|
100
|
%
|
|
|
6/5 yr.
|
|
|
|
601,759
|
|
|
6.95
|
|
9/27/2006
|
|
1/28/2017
|
9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
% of
|
|
|
|
|
Current
|
|
Base
|
|
|
|
|
|
|
Number
|
|
|
|
Square
|
|
|
Total
|
|
|
|
|
Annual
|
|
Rent per
|
|
|
|
|
|
|
of
|
|
|
|
Feet
|
|
|
Square
|
|
|
Renewal
|
|
Base
|
|
Square
|
|
Lease Term
|
Property
|
|
Tenants
|
|
Major Tenants*
|
|
Leased
|
|
|
Feet
|
|
|
Options**
|
|
Rent
|
|
Foot
|
|
Beginning
|
|
To
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lowes Lubbock, TX
|
|
1
|
|
Lowes Home Centers, Inc.
|
|
|
137,480
|
|
|
|
100
|
%
|
|
|
6/5 yr.
|
|
|
|
861,280
|
|
|
6.26
|
|
9/27/2006
|
|
4/30/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lowes Midland, TX
|
|
1
|
|
Lowes Home Centers, Inc.
|
|
|
134,050
|
|
|
|
100
|
%
|
|
|
6/5 yr.
|
|
|
|
829,960
|
|
|
6.19
|
|
9/27/2006
|
|
4/30/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Advance Auto Grand Bay,
AL
|
|
1
|
|
Advance Stores Company, Inc.
|
|
|
7,000
|
|
|
|
100
|
%
|
|
|
3/5 yr.
|
|
|
|
84,786
|
|
|
12.11
|
|
9/29/2006
|
|
8/31/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
93,265
|
|
|
13.32
|
|
9/1/2015
|
|
8/31/2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Advance Auto Hurley, MS
|
|
1
|
|
Advance Stores Company, Inc.
|
|
|
7,000
|
|
|
|
100
|
%
|
|
|
3/5 yr.
|
|
|
|
82,324
|
|
|
11.76
|
|
9/29/2006
|
|
3/31/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
90,556
|
|
|
12.94
|
|
4/1/2016
|
|
3/31/2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Advance Auto
Rainsville, AL
|
|
1
|
|
Advance Stores Company, Inc.
|
|
|
7,000
|
|
|
|
100
|
%
|
|
|
3/5 yr.
|
|
|
|
100,928
|
|
|
14.42
|
|
9/29/2006
|
|
12/31/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
111,021
|
|
|
15.86
|
|
1/1/2015
|
|
12/31/2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Golds Gym
OFallon, IL
|
|
1
|
|
Golds St Louis, LLC
|
|
|
38,000
|
|
|
|
100
|
%
|
|
|
2/5 yr.
|
|
|
|
588,000
|
|
|
15.47
|
|
9/29/2006
|
|
9/30/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
616,800
|
|
|
16.23
|
|
10/1/2015
|
|
9/30/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rite Aid Glassport, PA
|
|
1
|
|
Rite Aid of Pennsylvania, Inc.
|
|
|
14,564
|
|
|
|
100
|
%
|
|
|
6/5 yr.
|
|
|
|
295,504
|
|
|
20.29
|
|
10/4/2006
|
|
7/31/2026
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Davids Bridal/Radio
Shack Topeka, KS
|
|
2
|
|
Davids Bridal, Inc.
|
|
|
7,750
|
|
|
|
76
|
%
|
|
|
|
|
|
|
166,625
|
|
|
21.50
|
|
10/13/2006
|
|
10/31/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
183,288
|
|
|
23.65
|
|
11/1/2011
|
|
10/31/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Radio Shack Corporation
|
|
|
2,400
|
|
|
|
24
|
%
|
|
|
|
|
|
|
60,000
|
|
|
25.00
|
|
10/13/2006
|
|
1/31/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rite Aid Hanover, PA
|
|
1
|
|
Rite Aid
|
|
|
14,584
|
|
|
|
100
|
%
|
|
|
4/5 yr.
|
|
|
|
493,787
|
|
|
33.86
|
|
10/17/2006
|
|
10/31/2026
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
American TV &
Appliance Peoria, IL
|
|
1
|
|
American TV & Appliance of
Madison, Inc.
|
|
|
126,852
|
|
|
|
100
|
%
|
|
|
8/5 yr.
|
|
|
|
840,750
|
|
|
6.63
|
|
10/23/2006
|
|
9/23/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
924,825
|
|
|
7.29
|
|
9/24/2008
|
|
9/23/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,017,308
|
|
|
8.02
|
|
9/24/2013
|
|
9/23/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tractor Supply
La Grange, TX
|
|
1
|
|
Tractor Supply Texas
|
|
|
24,727
|
|
|
|
100
|
%
|
|
|
4/5 yr.
|
|
|
|
189,000
|
|
|
7.64
|
|
11/6/2006
|
|
5/31/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
207,900
|
|
|
8.41
|
|
6/1/2011
|
|
5/31/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
228,690
|
|
|
9.25
|
|
6/1/2016
|
|
5/31/2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Staples Peru, IL
|
|
1
|
|
Staples the Office Superstore East,
Inc
|
|
|
23,925
|
|
|
|
100
|
%
|
|
|
3/5 yr.
|
|
|
|
255,998
|
|
|
10.70
|
|
11/10/2006
|
|
6/30/2003
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
257,194
|
|
|
10.75
|
|
7/1/2003
|
|
6/30/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fedex Council Bluffs, IA
|
|
1
|
|
Fedex Freight East, Inc.
|
|
|
23,510
|
|
|
|
100
|
%
|
|
|
4/5 yr.
|
|
|
|
258,390
252,054
|
|
|
10.80
10.72
|
|
7/1/2008
11/15/2006
|
|
6/30/2013
9/30/2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fedex Edwardsville, KS
|
|
1
|
|
Fedex Freight East, Inc.
|
|
|
155,965
|
|
|
|
100
|
%
|
|
|
4/5 yr.
|
|
|
|
1,486,123
|
|
|
9.53
|
|
11/15/2006
|
|
9/30/2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CVS Glenville Scotia, NY
|
|
1
|
|
CVS Mack Drug of New York, LLC
|
|
|
12,900
|
|
|
|
100
|
%
|
|
|
4/5 yr.
|
|
|
|
371,912
|
|
|
28.83
|
|
11/16/2006
|
|
1/31/2032
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Advance Auto Ashland, KY
|
|
1
|
|
Advance Stores Company, Inc.
|
|
|
7,000
|
|
|
|
100
|
%
|
|
|
3/5 yr.
|
|
|
|
126,948
|
|
|
18.14
|
|
11/17/2006
|
|
6/30/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
139,643
|
|
|
19.95
|
|
7/1/2016
|
|
6/30/2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Advance Auto Jackson, OH
|
|
1
|
|
Advance Stores Company, Inc.
|
|
|
7,000
|
|
|
|
100
|
%
|
|
|
3/5 yr.
|
|
|
|
102,100
|
|
|
14.59
|
|
11/17/2006
|
|
9/30/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
112,304
|
|
|
16.04
|
|
10/1/2015
|
|
9/30/2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Advance Auto New
Boston, OH
|
|
1
|
|
Advance Stores Company, Inc.
|
|
|
7,000
|
|
|
|
100
|
%
|
|
|
3/5 yr.
|
|
|
|
114,501
|
|
|
16.36
|
|
11/17/2006
|
|
6/30/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
125,951
|
|
|
17.99
|
|
7/1/2015
|
|
6/30/2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Advance Auto
Scottsburg, IN
|
|
1
|
|
Advance Stores Company, Inc.
|
|
|
7,000
|
|
|
|
100
|
%
|
|
|
3/5 yr.
|
|
|
|
96,008
|
|
|
13.72
|
|
11/17/2006
|
|
8/31/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100,808
|
|
|
14.40
|
|
9/1/2016
|
|
8/31/2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tractor Supply
Livingston, TN
|
|
1
|
|
Tractor Supply Texas
|
|
|
24,727
|
|
|
|
100
|
%
|
|
|
4/5 yr.
|
|
|
|
225,000
|
|
|
9.10
|
|
11/22/2006
|
|
11/13/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
247,500
|
|
|
10.01
|
|
11/14/2011
|
|
11/13/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
272,250
|
|
|
11.01
|
|
11/14/2016
|
|
11/13/2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tractor Supply New
Braunfels, TX
|
|
1
|
|
Tractor Supply Texas
|
|
|
24,727
|
|
|
|
100
|
%
|
|
|
4/5 yr.
|
|
|
|
224,500
|
|
|
9.08
|
|
11/22/2006
|
|
2/28/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
246,950
|
|
|
9.99
|
|
3/1/2011
|
|
2/28/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
271,645
|
|
|
10.99
|
|
3/1/2016
|
|
2/28/2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Office Depot Benton, AR
|
|
1
|
|
Office Depot, Inc.
|
|
|
20,515
|
|
|
|
100
|
%
|
|
|
4/5 yr.
|
|
|
|
246,180
|
|
|
12.00
|
|
11/21/2006
|
|
11/30/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
251,309
|
|
|
12.25
|
|
12/1/2011
|
|
11/30/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Old Time Pottery
Fairview Heights, IL
|
|
1
|
|
Old Time Pottery, Inc.
|
|
|
97,849
|
|
|
|
100
|
%
|
|
|
3/5 yr.
|
|
|
|
342,472
|
|
|
3.50
|
|
11/21/2006
|
|
12/31/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
366,934
|
|
|
3.75
|
|
1/1/2011
|
|
12/30/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Infiniti Davie, FL
|
|
1
|
|
Warren Henry Automobiles, Inc.
|
|
|
20,927
|
|
|
|
100
|
%
|
|
|
4/5 yr.
|
|
|
|
707,395
|
|
|
33.80
|
|
11/30/2006
|
|
7/1/2021(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Office Depot Oxford, MS
|
|
1
|
|
Office Depot, Inc.
|
|
|
20,000
|
|
|
|
100
|
%
|
|
|
3/5 yr.
|
|
|
|
264,000
|
|
|
13.20
|
|
12/1/2006
|
|
10/31/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
290,000
|
|
|
14.50
|
|
11/1/2016
|
|
10/31/2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tractor Supply
Crockett, TX
|
|
1
|
|
Tractor Supply Texas
|
|
|
24,727
|
|
|
|
100
|
%
|
|
|
4/5 yr.
|
|
|
|
179,000
|
|
|
7.24
|
|
12/1/2006
|
|
10/23/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
196,900
|
|
|
7.96
|
|
10/24/2011
|
|
10/23/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
216,590
|
|
|
8.76
|
|
10/24/2016
|
|
10/23/2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mercedes Benz Atlanta,
GA
|
|
1
|
|
Atlanta Eurocars
|
|
|
40,588
|
|
|
|
100
|
%
|
|
|
4/5 yr.
|
|
|
|
900,000
|
|
|
22.17
|
|
12/15/2006
|
|
12/31/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
990,000
|
|
|
24.39
|
|
1/1/2012
|
|
12/31/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,089,000
|
|
|
26.83
|
|
1/1/2017
|
|
12/31/2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,197,900
|
|
|
29.51
|
|
1/1/2022
|
|
12/31/2026
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dicks Sporting
Goods Amherst, NY
|
|
1
|
|
Dicks Sporting Goods
|
|
|
55,745
|
|
|
|
100
|
%
|
|
|
3/5 yr.
|
|
|
|
762,592
|
|
|
13.68
|
|
12/20/2006
|
|
11/30/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
790,464
|
|
|
14.18
|
|
12/1/2010
|
|
11/30/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chilis Paris, TX
|
|
1
|
|
Brinker Texas, L.P.
|
|
|
6,698
|
|
|
|
100
|
%
|
|
|
2/5 yr.
|
|
|
|
200,913
|
|
|
30.00
|
|
12/28/2006
|
|
11/30/2025
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Staples Clarksville, IN
|
|
1
|
|
Staples the Office Superstore East,
Inc.
|
|
|
20,388
|
|
|
|
100
|
%
|
|
|
3/5 yr.
|
|
|
|
326,208
|
|
|
16.00
|
|
12/29/2006
|
|
10/31/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
356,790
|
|
|
17.50
|
|
11/1/2011
|
|
10/31/2016
|
10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
% of
|
|
|
|
|
Current
|
|
Base
|
|
|
|
|
|
|
Number
|
|
|
|
Square
|
|
|
Total
|
|
|
|
|
Annual
|
|
Rent per
|
|
|
|
|
|
|
of
|
|
|
|
Feet
|
|
|
Square
|
|
|
Renewal
|
|
Base
|
|
Square
|
|
Lease Term
|
Property
|
|
Tenants
|
|
Major Tenants*
|
|
Leased
|
|
|
Feet
|
|
|
Options**
|
|
Rent
|
|
Foot
|
|
Beginning
|
|
To
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
HOM Fargo, ND
|
|
1
|
|
HOM Furniture, Inc.
|
|
|
122,108
|
|
|
|
100
|
%
|
|
|
4/5 yr.
|
|
|
|
968,000
|
|
|
7.93
|
|
1/4/2007
|
|
12/31/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,017,159
|
|
|
8.33
|
|
1/1/2012
|
|
12/31/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,070,877
|
|
|
8.77
|
|
1/1/2017
|
|
1/31/2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
La-Z-Boy
Newington, CT
|
|
1
|
|
LZB Furniture Galleries of Paramus,
Inc.
|
|
|
20,701
|
|
|
|
100
|
%
|
|
|
2/5 yr.
|
|
|
|
496,824
|
|
|
24.00
|
|
1/5/2007
|
|
12/31/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
558,297
|
|
|
27.00
|
|
1/1/2017
|
|
12/26/2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Advance Auto Maryland
Heights, MO
|
|
1
|
|
Advance Stores Company, Inc.
|
|
|
7,000
|
|
|
|
100
|
%
|
|
|
3/5 yr.
|
|
|
|
142,940
|
|
|
20.42
|
|
1/12/2007
|
|
2/28/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
150,088
|
|
|
21.44
|
|
3/1/2016
|
|
2/28/2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Victoria Crossing
Victoria, TX
|
|
3
|
|
Ross Dress for Less, Inc.
|
|
|
30,187
|
|
|
|
35
|
%
|
|
|
5/5 yr.
|
|
|
|
279,230
|
|
|
9.25
|
|
1/12/2007
|
|
1/31/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
286,777
|
|
|
9.50
|
|
2/1/2012
|
|
1/31/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bed Bath & Beyond, Inc.
|
|
|
23,000
|
|
|
|
26
|
%
|
|
|
5/5 yr.
|
|
|
|
172,500
|
|
|
7.50
|
|
1/12/2007
|
|
1/31/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Petsmart, Inc.
|
|
|
20,087
|
|
|
|
23
|
%
|
|
|
6/5 yr.
|
|
|
|
270,959
|
|
|
13.50
|
|
1/12/2007
|
|
5/31/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Academy Sports Katy, TX
|
|
1
|
|
Academy Ltd
|
|
|
1,500,596
|
|
|
|
100
|
%
|
|
|
8/5 yr.
|
|
|
|
7,038,000
|
|
|
4.69
|
|
1/18/2007
|
|
1/31/2027(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gordmans Peoria, IL
|
|
1
|
|
Gordmans, Inc.
|
|
|
60,947
|
|
|
|
100
|
%
|
|
|
4/5 yr.
|
|
|
|
684,000
|
|
|
11.22
|
|
1/18/2007
|
|
3/31/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
714,000
|
|
|
11.72
|
|
4/1/2011
|
|
3/31/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
One Pacific Place
Omaha, NE
|
|
24
|
|
No single tenant occupies greater
than 10.0% of the rentable square feet of this property.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sack n
Save/OReilly Auto Garland, TX
|
|
2
|
|
Minyard Food Stores, Inc.
|
|
|
58,695
|
|
|
|
90
|
%
|
|
|
3/10 yr.
|
|
|
|
375,648
|
|
|
6.40
|
|
2/6/2007
|
|
4/30/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
396,191
|
|
|
6.75
|
|
5/1/2010
|
|
4/30/2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hi-Lo Auto Supply, LP
|
|
|
6,600
|
|
|
|
10
|
%
|
|
|
3/5 yr.
|
|
|
|
25,920
|
|
|
3.93
|
|
2/6/2007
|
|
6/30/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27,994
|
|
|
4.24
|
|
7/1/2011
|
|
6/30/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30,233
|
|
|
4.58
|
|
7/1/2016
|
|
6/30/2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tractor Supply Ankeny,
IA
|
|
1
|
|
Tractor Supply Company
|
|
|
19,097
|
|
|
|
100
|
%
|
|
|
4/5 yr.
|
|
|
|
213,252
|
|
|
11.17
|
|
2/9/2007
|
|
8/23/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
234,576
|
|
|
12.28
|
|
8/24/2011
|
|
8/23/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
258,036
|
|
|
13.51
|
|
8/24/2016
|
|
8/23/2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ABX Air Coventry, RI
|
|
1
|
|
ABX Air, Inc.
|
|
|
33,000
|
|
|
|
100
|
%
|
|
|
4/5 yr.
|
|
|
|
316,990
|
|
|
9.61
|
|
2/14/2007
|
|
1/31/2014(6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Office Depot
Enterprise, AL
|
|
1
|
|
Office Depot, Inc.
|
|
|
20,000
|
|
|
|
100
|
%
|
|
|
3/5 yr.
|
|
|
|
215,129
|
|
|
10.76
|
|
2/27/2007
|
|
10/31/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
225,135
|
|
|
11.26
|
|
11/1/2016
|
|
10/31/2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Northern Tool Blaine, MN
|
|
1
|
|
Northern Tool and Equipment, Inc.
|
|
|
25,488
|
|
|
|
100
|
%
|
|
|
3/5 yr.
|
|
|
|
344,598
|
|
|
13.52
|
|
2/28/2007
|
|
11/30/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
380,536
|
|
|
14.93
|
|
12/1/2016
|
|
11/30/2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Office Max Orangeburg,
SC
|
|
1
|
|
OfficeMax, Inc.
|
|
|
23,500
|
|
|
|
100
|
%
|
|
|
4/5 yr.
|
|
|
|
252,625
|
|
|
10.75
|
|
2/28/2007
|
|
6/30/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Walgreens Cincinnati, OH
|
|
1
|
|
Walgreen Co.
|
|
|
15,120
|
|
|
|
100
|
%
|
|
|
8/5 yr.
|
|
|
|
365,000
|
|
|
24.14
|
|
3/5/2007
|
|
3/31/2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Walgreens Madeira, OH
|
|
1
|
|
Walgreen Co.
|
|
|
13,905
|
|
|
|
100
|
%
|
|
|
8/5 yr.
|
|
|
|
314,000
|
|
|
22.58
|
|
3/5/2007
|
|
8/31/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Walgreens Sharonville,
OH
|
|
1
|
|
Walgreen Co.
|
|
|
13,905
|
|
|
|
100
|
%
|
|
|
8/5 yr.
|
|
|
|
290,000
|
|
|
20.86
|
|
3/5/2007
|
|
10/31/2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AT&T Beaumont, TX
|
|
1
|
|
AT&T Services, Inc.
|
|
|
141,525
|
|
|
|
100
|
%
|
|
|
2/5 yr.
|
|
|
|
900,473
|
|
|
6.36
|
|
3/19/2007
|
|
3/18/2012(7)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Walgreens Shreveport, LA
|
|
1
|
|
Walgreen Co.
|
|
|
13,905
|
|
|
|
100
|
%
|
|
|
8/5 yr.
|
|
|
|
327,000
|
|
|
23.52
|
|
3/23/2007
|
|
9/30/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost-U-Less St. Croix,
USVI
|
|
1
|
|
CULUSVI, Inc.
|
|
|
38,365
|
|
|
|
100
|
%
|
|
|
2/5 yr.
|
|
|
|
512,000
|
|
|
13.35
|
|
3/26/2007
|
|
3/31/2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gallina Centro
Collierville, TN
|
|
11
|
|
Stein Mart, Inc.
|
|
|
36,000
|
|
|
|
34
|
%
|
|
|
3/5 yr.
|
|
|
|
234,000
|
|
|
6.50
|
|
3/28/2007
|
|
3/31/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
252,000
|
|
|
7.00
|
|
4/1/2011
|
|
3/31/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kroger Limited Partnership, I
|
|
|
59,670
|
|
|
|
41
|
%
|
|
|
11/5
yr.
|
|
|
|
172,000
|
|
|
2.88
|
|
3/28/2007
|
|
3/31/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
189,200
|
|
|
3.17
|
|
4/1/2011
|
|
3/31/2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Walgreen Co.
|
|
|
20,071
|
|
|
|
14
|
%
|
|
|
8/5 yr.
|
|
|
|
350,000
|
|
|
17.44
|
|
5/9/2006
|
|
5/31/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Apria Healthcare St.
John, MO
|
|
1
|
|
Apria Healthcare, Inc.
|
|
|
52,200
|
|
|
|
100
|
%
|
|
|
1/5 yr.
|
|
|
|
514,464
|
|
|
9.86
|
|
3/28/2007
|
|
10/31/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Logans Roadhouse
Fairfax, VA
|
|
1
|
|
Logans Roadhouse, Inc.
|
|
|
7,839
|
|
|
|
100
|
%
|
|
|
5/5 yr.
|
|
|
|
224,619
|
|
|
28.65
|
|
3/28/2007
|
|
11/29/2026(8)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Logans Roadhouse
Johnson City, TN
|
|
1
|
|
Logans Roadhouse, Inc.
|
|
|
7,839
|
|
|
|
100
|
%
|
|
|
5/5 yr.
|
|
|
|
270,623
|
|
|
34.52
|
|
3/28/2007
|
|
11/29/2026(9)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Center at 7500
Cottonwood Jenison, MI
|
|
4
|
|
Hob-Lob Limited Partnership
|
|
|
54,533
|
|
|
|
64
|
%
|
|
|
2/5 yr.
|
|
|
|
259,032
|
|
|
4.75
|
|
3/30/2007
|
|
10/31/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Leppinks, Inc.
|
|
|
16,000
|
|
|
|
19
|
%
|
|
|
3/5 yr.
|
|
|
|
97,104
|
|
|
6.07
|
|
3/30/2007
|
|
7/31/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
99,046
|
|
|
6.19
|
|
8/1/2007
|
|
7/31/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101,027
|
|
|
6.31
|
|
8/1/2008
|
|
7/31/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
103,048
|
|
|
6.44
|
|
8/1/2009
|
|
7/31/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
105,108
|
|
|
6.57
|
|
8/1/2010
|
|
7/31/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Eckerd Lincolnton, NC
|
|
1
|
|
ECK-001, LLC
|
|
|
10,908
|
|
|
|
100
|
%
|
|
|
4/5 yr.
|
|
|
|
169,648
|
|
|
15.55
|
|
4/30/2007
|
|
8/7/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
175,100
|
|
|
16.05
|
|
8/8/2007
|
|
8/7/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
180,552
|
|
|
16.55
|
|
8/8/2012
|
|
8/7/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tractor Supply
Greenfield, MN
|
|
1
|
|
Tractor Supply Company
|
|
|
22,675
|
|
|
|
100
|
%
|
|
|
4/5 yr.
|
|
|
|
289,228
|
|
|
12.76
|
|
4/2/2007
|
|
3/31/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
318,150
|
|
|
14.03
|
|
4/1/2011
|
|
3/31/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
349,965
|
|
|
15.43
|
|
4/1/2016
|
|
3/31/2021
|
11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
% of
|
|
|
|
|
Current
|
|
Base
|
|
|
|
|
|
|
Number
|
|
|
|
Square
|
|
|
Total
|
|
|
|
|
Annual
|
|
Rent per
|
|
|
|
|
|
|
of
|
|
|
|
Feet
|
|
|
Square
|
|
|
Renewal
|
|
Base
|
|
Square
|
|
Lease Term
|
Property
|
|
Tenants
|
|
Major Tenants*
|
|
Leased
|
|
|
Feet
|
|
|
Options**
|
|
Rent
|
|
Foot
|
|
Beginning
|
|
To
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lincoln Place Fairview
Heights, IL
|
|
19
|
|
Kohls Department Stores, Inc.
|
|
|
86,584
|
|
|
|
32
|
%
|
|
|
5/5 yr.
|
|
|
|
530,760
|
|
|
6.13
|
|
4/5/2007
|
|
2/1/2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ultimate Electronics, Inc.
|
|
|
31,000
|
|
|
|
13
|
%
|
|
|
2/5 yr.
|
|
|
|
367,816
|
|
|
11.50
|
|
4/5/2007
|
|
2/28/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
409,780
|
|
|
12.81
|
|
3/1/2008
|
|
2/28/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
439,780
|
|
|
13.75
|
|
3/1/2010
|
|
2/28/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
483,758
|
|
|
15.13
|
|
3/1/2013
|
|
2/28/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Marshalls of IL, LLC
|
|
|
30,000
|
|
|
|
11
|
%
|
|
|
3/5 yr.
|
|
|
|
292,500
|
|
|
9.75
|
|
4/5/2007
|
|
8/31/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
307,500
|
|
|
10.25
|
|
9/1/2007
|
|
8/31/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LNT, Inc.
|
|
|
28,023
|
|
|
|
10
|
%
|
|
|
|
|
|
|
308,000
|
|
|
10.99
|
|
4/5/2007
|
|
8/31/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
322,000
|
|
|
11.49
|
|
9/1/2007
|
|
8/31/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amarillo Furniture
Ashley, TX
|
|
1
|
|
Choice Furniture, Inc.
|
|
|
74,797
|
|
|
|
100
|
%
|
|
|
N/A
|
|
|
|
463,741
|
|
|
6.20
|
|
4/6/2007
|
|
4/30/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
493,660
|
|
|
6.60
|
|
5/1/2011
|
|
4/30/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
523,579
|
|
|
7.00
|
|
5/1/2016
|
|
4/30/2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pocatello Square
Pocatello, ID
|
|
5
|
|
Sportsmans Warehouse, Inc
|
|
|
47,979
|
|
|
|
35
|
%
|
|
|
5/5 yr.
|
|
|
|
428,705
|
|
|
8.94
|
|
4/6/2007
|
|
11/30/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
476,605
|
|
|
9.93
|
|
12/1/2007
|
|
11/30/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
493,370
|
|
|
10.28
|
|
12/1/2008
|
|
11/30/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
514,925
|
|
|
10.73
|
|
12/1/2009
|
|
11/30/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
535,522
|
|
|
11.16
|
|
12/1/2010
|
|
11/30/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
562,346
|
|
|
11.72
|
|
12/1/2011
|
|
11/30/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
590,607
|
|
|
12.31
|
|
12/1/2016
|
|
11/30/2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ross Dress for Less, Inc.
|
|
|
30,187
|
|
|
|
22
|
%
|
|
|
|
|
|
|
530,760
|
|
|
17.58
|
|
4/6/2007
|
|
1/31/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Staples the Office Superstore, Inc.
|
|
|
20,388
|
|
|
|
15
|
%
|
|
|
|
|
|
|
243,637
|
|
|
11.95
|
|
4/6/2007
|
|
9/30/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tractor Supply Paw Paw,
MI
|
|
1
|
|
Tractor Supply Company
|
|
|
22,670
|
|
|
|
100
|
%
|
|
|
4/5 yr.
|
|
|
|
277,840
|
|
|
10.05
|
|
4/9/2007
|
|
12/10/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
250,624
|
|
|
11.06
|
|
12/11/2011
|
|
12/10/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
275,686
|
|
|
12.16
|
|
12/11/2016
|
|
12/10/2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tractor Supply
Marinette, WI
|
|
|
|
Tractor Supply Company
|
|
|
19,097
|
|
|
|
100
|
%
|
|
|
4/5 yr.
|
|
|
|
213,933
|
|
|
11.20
|
|
4/9/2007
|
|
12/15/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
235,326
|
|
|
12.32
|
|
12/16/2011
|
|
12/15/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
258,858
|
|
|
13.55
|
|
12/16/2016
|
|
12/15/2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Staples Greenville, SC
|
|
1
|
|
Staples the Office Superstore East,
Inc.
|
|
|
20,388
|
|
|
|
100
|
%
|
|
|
4/5 yr.
|
|
|
|
318,053
|
|
|
15.60
|
|
4/11/2007
|
|
3/31/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
339,460
|
|
|
16.65
|
|
4/1/2012
|
|
3/31/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Big 5 Center Aurora, CO
|
|
4
|
|
Big 5 Corporation
|
|
|
10,000
|
|
|
|
63
|
%
|
|
|
3/5 yr.
|
|
|
|
150,000
|
|
|
15.00
|
|
4/11/2007
|
|
12/31/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
162,000
|
|
|
16.20
|
|
1/1/2012
|
|
12/31/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
178,200
|
|
|
17.82
|
|
1/1/2017
|
|
1/31/2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
M-Fast, Inc.
|
|
|
3,500
|
|
|
|
22
|
%
|
|
|
2/5 yr.
|
|
|
|
87,500
|
|
|
25.00
|
|
4/11/2007
|
|
12/31/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
88,900
|
|
|
25.40
|
|
1/1/2008
|
|
12/31/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
90,300
|
|
|
25.80
|
|
1/1/2009
|
|
12/31/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
91,700
|
|
|
26.20
|
|
1/1/2010
|
|
12/31/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
93,100
|
|
|
26.60
|
|
1/1/2011
|
|
12/31/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
94,500
|
|
|
27.00
|
|
1/1/2012
|
|
12/31/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
95,900
|
|
|
27.40
|
|
1/1/2013
|
|
12/31/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
97,300
|
|
|
27.80
|
|
1/1/2014
|
|
12/31/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
98,700
|
|
|
28.20
|
|
1/1/2015
|
|
12/31/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100,100
|
|
|
28.60
|
|
1/1/2016
|
|
12/31/2016
|
|
|
|
* |
|
Major tenants include those tenants that occupy greater than
10.0% of the rentable square feet of their respective property. |
|
** |
|
Represents option renewal period / term of each option. |
|
(1) |
|
The initial annual rent of $419,750 as displayed in
the table above is subject to rental escalations of
2% each year through the remainder of the lease, which expires
October 31, 2015. For the purposes of presentation the
individual rental escalations were not displayed in the table
above. |
|
(2) |
|
The annual base rent of $1,790,100 as displayed in
the table above is fixed through the first
13 months of the initial lease term, with a 2.5% rental
escalation beginning 14 months after the start of the
initial lease term, and every 12 months thereafter for the
remaining term of the lease, which expires January 31,
2021. For the purposes of presentation the individual rental
escalations were not displayed in the table above. |
12
|
|
|
(3) |
|
The Wawa Properties are 100% leased to Wawa under a master lease
agreement. The current aggregate annual base rent of $1,013,117
is fixed through the initial lease term and was allocated based
on the square feet of each property as a percentage of the total
square feet for all three properties. |
|
(4) |
|
The current aggregate annual base rent of $707,395
as displayed in the table above is fixed through
July 1, 2007 with rental escalations of 1.25% each year for
the remainder of the initial lease term, which expires
July 1, 2021. For the purposes of presentation the
individual rental escalations were not displayed in the table
above. |
|
(5) |
|
The initial annual base rent under the lease is
$7,038,000 as displayed in the table
above increases each year, by 1.5% of the then
current annual base rent. The initial term of the lease expires
January 31, 2027. For the purposes of presentation the
individual rental escalations were not displayed in the table
above. |
|
(6) |
|
The current aggregate annual base rent of $316,990
as displayed in the table above is fixed through the
first year of the initial lease term and increases 3% each year
through the remainder of the lease term, which expires
January 31, 2014. For the purposes of presentation the
individual rental escalations were not displayed in the table
above. |
|
(7) |
|
The current aggregate annual base rent of $900,473 is fixed
through the first year of the initial lease, and increases 1.5%
each year through the initial lease term, which expires
March 31, 2017. For the purposes of presentation the
individual rental escalations were not displayed in the table
above. |
|
(8) |
|
The current aggregate annual base rent of $224,619
as displayed in the table above is fixed through
November 29, 2007 with rental escalations of 1.75% each
year for the remainder of the initial lease term, which expires
November 29, 2026. For the purposes of presentation the
individual rental escalations were not displayed in the table
above. |
|
(9) |
|
The current aggregate annual base rent of $270,623
as displayed in the table above is fixed through
November 29, 2007 with rental escalations of 1.75% each
year for the remainder of the initial lease term, which expires
November 29, 2026. For the purposes of presentation the
individual rental escalations were not displayed in the table
above. |
Cole Realty Advisors has the sole and exclusive right to manage,
operate, lease and supervise the overall maintenance of the
properties listed above and currently will receive a property
management fee of 2.0% of the monthly gross revenues from our
properties. We currently have no plan for any renovations,
improvements or development of the properties listed above and
we believe that all are adequately insured.
In connection with the property acquisitions noted above we
incurred or assumed the following fixed and variable rate
mortgage notes:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed
|
|
|
|
|
|
|
|
Variable
|
|
|
|
|
|
|
|
|
Rate
|
|
|
Fixed
|
|
|
|
|
Rate
|
|
|
|
|
Total
|
|
|
|
Loan
|
|
|
Interest
|
|
|
Maturity
|
|
Loan
|
|
|
Maturity
|
|
Loan
|
|
Property
|
|
Amount
|
|
|
Rate
|
|
|
Date
|
|
Amount
|
|
|
Date
|
|
Outstanding
|
|
|
Tractor Supply
Parkersburg, WV
|
|
$
|
1,793,000
|
|
|
|
5.57
|
%
|
|
10/11/15
|
|
$
|
814,000
|
|
|
12/26/05
|
|
$
|
2,607,000
|
(7)
|
Walgreens Brainerd, MN
|
|
|
2,814,000
|
|
|
|
5.44
|
%
|
|
10/11/15
|
|
|
649,000
|
|
|
1/4/06
|
|
|
3,463,000
|
(7)
|
Rite Aid Alliance, OH
|
|
|
|
|
|
|
N/A
|
|
|
N/A
|
|
|
|
|
|
N/A
|
|
|
|
|
La-Z-Boy
Glendale, AZ
|
|
|
3,415,000
|
|
|
|
5.76
|
%
|
|
11/11/10
|
|
|
1,138,000
|
|
|
1/25/06
|
|
|
4,553,000
|
(7)
|
Walgreens Florissant,
MO
|
|
|
3,372,000
|
|
|
|
5.48
|
%
|
|
11/11/15
|
|
|
778,000
|
|
|
2/2/06
|
|
|
4,150,000
|
(7)
|
Walgreens Saint Louis,
MO (Gravois)
|
|
|
3,289,000
|
|
|
|
5.48
|
%
|
|
11/11/15
|
|
|
759,000
|
|
|
2/2/06
|
|
|
4,048,000
|
(7)
|
Walgreens Saint Louis,
MO (Telegraph)
|
|
|
3,999,000
|
|
|
|
5.48
|
%
|
|
11/11/15
|
|
|
923,000
|
|
|
2/2/06
|
|
|
4,922,000
|
(7)
|
Walgreens Columbia, MO
|
|
|
4,645,369
|
|
|
|
5.15
|
%
|
|
7/11/08
|
|
|
|
|
|
N/A
|
|
|
4,487,895
|
(7)
|
Walgreens Olivette, MO
|
|
|
5,567,894
|
|
|
|
5.15
|
%
|
|
7/11/08
|
|
|
|
|
|
N/A
|
|
|
5,379,146
|
(7)
|
CVS Alpharetta, GA
|
|
|
2,015,000
|
|
|
|
5.52
|
%
|
|
12/11/10
|
|
|
465,000
|
|
|
3/1/06
|
|
|
2,480,000
|
(7)
|
Lowes
Enterprise, AL
|
|
|
4,859,000
|
|
|
|
5.52
|
%
|
|
12/11/10
|
|
|
1,121,000
|
|
|
3/1/06
|
|
|
5,980,000
|
(7)
|
CVS Richland Hills, TX
|
|
|
2,379,000
|
|
|
|
5.52
|
%
|
|
12/11/10
|
|
|
549,000
|
|
|
3/8/06
|
|
|
2,928,000
|
(7)
|
FedEx Rockford, IL
|
|
|
3,998,000
|
|
|
|
5.61
|
%
|
|
12/11/10
|
|
|
922,000
|
|
|
3/10/06
|
|
|
4,920,000
|
(7)
|
13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed
|
|
|
|
|
|
|
|
Variable
|
|
|
|
|
|
|
|
|
Rate
|
|
|
Fixed
|
|
|
|
|
Rate
|
|
|
|
|
Total
|
|
|
|
Loan
|
|
|
Interest
|
|
|
Maturity
|
|
Loan
|
|
|
Maturity
|
|
Loan
|
|
Property
|
|
Amount
|
|
|
Rate
|
|
|
Date
|
|
Amount
|
|
|
Date
|
|
Outstanding
|
|
|
Plastech Auburn Hills,
MI
|
|
|
|
|
|
|
N/A
|
|
|
N/A
|
|
|
17,700,000
|
|
|
12/14/06
|
|
|
17,700,000
|
(7)
|
Academy Sports Macon,
GA
|
|
|
3,478,000
|
|
|
|
5.69
|
%
|
|
1/11/16
|
|
|
802,000
|
|
|
4/6/06
|
|
|
4,280,000
|
(7)
|
Davids Bridal
Lenexa, KS
|
|
|
1,799,000
|
|
|
|
5.86
|
%
|
|
1/11/11
|
|
|
817,000
|
|
|
4/11/06
|
|
|
2,616,000
|
(7)
|
Rite Aid Enterprise, AL
|
|
|
2,043,000
|
|
|
|
5.80
|
%
|
|
2/11/16
|
|
|
928,000
|
|
|
4/26/06
|
|
|
2,971,000
|
(7)
|
Rite Aid Wauseon, OH
|
|
|
2,142,000
|
|
|
|
5.80
|
%
|
|
2/11/16
|
|
|
973,000
|
|
|
4/26/06
|
|
|
3,115,000
|
(7)
|
Staples Crossville, TN
|
|
|
1,885,000
|
|
|
|
5.71
|
%
|
|
2/11/11
|
|
|
435,000
|
|
|
4/26/06
|
|
|
2,320,000
|
(7)
|
Rite Aid Saco, ME
|
|
|
1,375,000
|
|
|
|
5.82
|
%
|
|
2/11/11
|
|
|
625,000
|
|
|
4/27/06
|
|
|
2,000,000
|
(7)
|
Wadsworth Boulevard
Denver, CO
|
|
|
12,025,000
|
|
|
|
5.57
|
%
|
|
3/1/11
|
|
|
2,275,000
|
|
|
12/31/06
|
|
|
14,300,000
|
(7)
|
Mountainside Fitness
Chandler, AZ
|
|
|
|
|
|
|
N/A
|
|
|
N/A
|
|
|
4,690,400
|
|
|
12/31/06
|
|
|
4,690,400
|
|
Drexel Heritage
Hickory, NC
|
|
|
2,763,000
|
|
|
|
5.80
|
%
|
|
3/11/11
|
|
|
637,000
|
|
|
5/24/06
|
|
|
3,400,000
|
(7)
|
Rayford Square Spring,
TX
|
|
|
5,940,000
|
|
|
|
5.64
|
%
|
|
4/1/16
|
|
|
|
|
|
N/A
|
|
|
5,940,000
|
(5)
|
CVS Portsmouth, OH
|
|
|
1,424,000
|
|
|
|
5.67
|
%
|
|
3/11/11
|
|
|
329,000
|
|
|
6/8/06
|
|
|
1,753,000
|
(7)
|
Wawa Hockessin, DE,
Manahawkin, NJ, Narberth, PA
|
|
|
|
|
|
|
N/A
|
|
|
N/A
|
|
|
7,234,787
|
|
|
2/26/10
|
|
|
7,234,787
|
(7)
|
CVS Lakewood, OH
|
|
|
1,348,000
|
|
|
|
5.77
|
%
|
|
5/11/11
|
|
|
612,000
|
|
|
7/20/06
|
|
|
1,960,000
|
(7)
|
Rite Aid Cleveland, OH
|
|
|
1,413,000
|
|
|
|
6.05
|
%
|
|
5/11/11
|
|
|
642,000
|
|
|
7/27/06
|
|
|
2,055,000
|
(7)
|
Rite Aid Fremont, OH
|
|
|
1,388,000
|
|
|
|
6.05
|
%
|
|
5/11/11
|
|
|
632,000
|
|
|
7/27/06
|
|
|
2,020,000
|
(7)
|
Walgreens Knoxville, TN
|
|
|
3,088,000
|
|
|
|
5.80
|
%
|
|
5/11/11
|
|
|
712,000
|
|
|
8/8/06
|
|
|
3,800,000
|
(7)
|
CVS Madison, MS
|
|
|
2,809,000
|
|
|
|
5.60
|
%
|
|
2/11/16
|
|
|
|
|
|
N/A
|
|
|
2,809,000
|
(7)
|
Rite Aid Defiance, OH
|
|
|
2,321,000
|
|
|
|
5.76
|
%
|
|
1/11/16
|
|
|
|
|
|
N/A
|
|
|
2,321,000
|
(7)
|
Conns
San Antonio, TX
|
|
|
2,461,000
|
|
|
|
5.86
|
%
|
|
5/11/11
|
|
|
1,119,000
|
|
|
7/25/06
|
|
|
3,580,000
|
(7)
|
Dollar General
Crossville, TN
|
|
|
1,950,000
|
|
|
|
5.75
|
%
|
|
6/11/16
|
|
|
450,000
|
|
|
9/2/06
|
|
|
2,400,000
|
(7)
|
Dollar General
Ardmore, TN
|
|
|
1,804,000
|
|
|
|
5.79
|
%
|
|
6/11/16
|
|
|
416,000
|
|
|
9/9/06
|
|
|
2,220,000
|
(7)
|
Dollar General
Livingston, TN
|
|
|
1,856,000
|
|
|
|
5.79
|
%
|
|
7/11/16
|
|
|
429,000
|
|
|
10/12/06
|
|
|
2,285,000
|
(7)
|
Wehrenberg Arnold, MO
|
|
|
|
|
|
|
N/A
|
|
|
N/A
|
|
|
|
|
|
N/A
|
|
|
|
|
Sportmans Warehouse
Wichita, KS
|
|
|
|
|
|
|
N/A
|
|
|
N/A
|
|
|
6,173,250
|
|
|
12/27/06
|
|
|
6,173,250
|
(7)
|
CVS Portsmouth, OH
|
|
|
|
|
|
|
N/A
|
|
|
N/A
|
|
|
|
|
|
N/A
|
|
|
|
|
Advance Auto
Greenfield, IN
|
|
|
|
|
|
|
N/A
|
|
|
N/A
|
|
|
|
|
|
N/A
|
|
|
|
|
Advance Auto Trenton,
OH
|
|
|
|
|
|
|
N/A
|
|
|
N/A
|
|
|
|
|
|
N/A
|
|
|
|
|
Rite Aid Lansing, MI
|
|
|
1,041,000
|
|
|
|
5.90
|
%
|
|
7/1/16
|
|
|
|
|
|
N/A
|
|
|
1,041,000
|
|
Advance Auto Columbia
Heights, MN
|
|
|
1,038,000
|
|
|
|
5.83
|
%
|
|
7/11/16
|
|
|
346,000
|
|
|
10/6/06
|
|
|
1,384,000
|
(7)
|
Advance Auto Fergus
Falls, MN
|
|
|
722,000
|
|
|
|
5.83
|
%
|
|
7/11/16
|
|
|
241,000
|
|
|
10/6/06
|
|
|
963,000
|
(7)
|
CVS Okeechobee, FL
|
|
|
4,076,000
|
|
|
|
5.60
|
%
|
|
2/11/16
|
|
|
|
|
|
N/A
|
|
|
4,076,000
|
(7)
|
Office Depot Dayton, OH
|
|
|
2,130,000
|
|
|
|
5.73
|
%
|
|
2/11/16
|
|
|
|
|
|
N/A
|
|
|
2,130,000
|
(7)
|
Advance Auto Holland,
MI
|
|
|
1,193,000
|
|
|
|
5.83
|
%
|
|
4/11/16
|
|
|
|
|
|
N/A
|
|
|
1,193,000
|
(7)
|
Advance Auto Holland
Township, MI
|
|
|
1,231,000
|
|
|
|
5.83
|
%
|
|
4/11/16
|
|
|
|
|
|
N/A
|
|
|
1,231,000
|
(7)
|
Advance Auto Zeeland,
MI
|
|
|
1,057,000
|
|
|
|
5.83
|
%
|
|
4/11/16
|
|
|
|
|
|
N/A
|
|
|
1,057,000
|
(7)
|
CVS Orlando, FL
|
|
|
3,016,000
|
|
|
|
5.68
|
%
|
|
4/11/16
|
|
|
|
|
|
N/A
|
|
|
3,016,000
|
(7)
|
Office Depot
Greenville, MS
|
|
|
2,192,000
|
|
|
|
5.76
|
%
|
|
3/11/11
|
|
|
|
|
|
N/A
|
|
|
2,192,000
|
(7)
|
Office Depot
Warrensburg, MO
|
|
|
1,810,000
|
|
|
|
5.85
|
%
|
|
4/11/11
|
|
|
|
|
|
N/A
|
|
|
1,810,000
|
(7)
|
CVS Gulfport, MS
|
|
|
2,611,000
|
|
|
|
5.28
|
%
|
|
4/11/16
|
|
|
|
|
|
N/A
|
|
|
2,611,000
|
(7)
|
Advance Auto Grand
Forks, ND
|
|
|
840,000
|
|
|
|
5.87
|
%
|
|
9/11/16
|
|
|
280,000
|
|
|
11/15/06
|
|
|
1,120,000
|
(7)
|
CVS Clinton, NY
|
|
|
1,983,000
|
|
|
|
5.74
|
%
|
|
9/11/16
|
|
|
457,000
|
|
|
12/24/06
|
|
|
2,440,000
|
(2)(7)
|
14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed
|
|
|
|
|
|
|
|
Variable
|
|
|
|
|
|
|
|
|
Rate
|
|
|
Fixed
|
|
|
|
|
Rate
|
|
|
|
|
Total
|
|
|
|
Loan
|
|
|
Interest
|
|
|
Maturity
|
|
Loan
|
|
|
Maturity
|
|
Loan
|
|
Property
|
|
Amount
|
|
|
Rate
|
|
|
Date
|
|
Amount
|
|
|
Date
|
|
Outstanding
|
|
|
Oxford Theatre Oxford,
MS
|
|
|
5,175,000
|
|
|
|
6.11
|
%
|
|
9/1/16
|
|
|
|
|
|
N/A
|
|
|
5,175,000
|
(1)(5)
|
Advance Auto Duluth, MN
|
|
|
860,000
|
|
|
|
5.87
|
%
|
|
10/11/16
|
|
|
286,000
|
|
|
12/22/06
|
|
|
1,146,000
|
|
Walgreens Picayune, MS
|
|
|
2,766,000
|
|
|
|
5.53
|
%
|
|
10/11/16
|
|
|
638,000
|
|
|
1/15/07
|
|
|
3,404,000
|
(2)(7)
|
Kohls Wichita, KS
|
|
|
5,200,000
|
|
|
|
6.11
|
%
|
|
9/1/16
|
|
|
|
|
|
N/A
|
|
|
5,200,000
|
(1)(5)
|
Lowes Lubbock, TX
|
|
|
7,150,000
|
|
|
|
6.11
|
%
|
|
9/1/16
|
|
|
|
|
|
N/A
|
|
|
7,150,000
|
(1)(5)
|
Lowes Midland, TX
|
|
|
7,475,000
|
|
|
|
6.11
|
%
|
|
9/1/16
|
|
|
|
|
|
N/A
|
|
|
7,475,000
|
(1)(5)
|
Advance Auto Grand
Bay, AL
|
|
|
|
|
|
|
N/A
|
|
|
N/A
|
|
|
|
|
|
N/A
|
|
|
|
|
Advance Auto Hurley, MS
|
|
|
|
|
|
|
N/A
|
|
|
N/A
|
|
|
|
|
|
N/A
|
|
|
|
|
Advance Auto
Rainsville, AL
|
|
|
|
|
|
|
N/A
|
|
|
N/A
|
|
|
|
|
|
N/A
|
|
|
|
|
Golds Gym
OFallon, IL
|
|
|
3,650,000
|
|
|
|
5.83
|
%
|
|
10/11/16
|
|
|
2,190,000
|
|
|
17/27/06
|
|
|
5,840,000
|
(2)(7)
|
Rite Aid Glassport, PA
|
|
|
2,325,000
|
|
|
|
6.10
|
%
|
|
11/1/16
|
|
|
|
|
|
N/A
|
|
|
2,325,000
|
(5)
|
Davids Bridal/Radio
Shack Topeka, KS
|
|
|
2,000,000
|
|
|
|
5.77
|
%
|
|
12/1/16
|
|
|
|
|
|
N/A
|
|
|
2,000,000
|
(8)
|
Rite Aid Hanover, PA
|
|
|
4,115,000
|
|
|
|
6.11
|
%
|
|
11/1/16
|
|
|
|
|
|
N/A
|
|
|
4,115,000
|
(5)
|
American TV &
Appliance Peoria, IL
|
|
|
7,358,971
|
|
|
|
6.00
|
%
|
|
10/1/18
|
|
|
|
|
|
N/A
|
|
|
7,358,971
|
(6)
|
Tractor Supply
La Grange, TX
|
|
|
1,405,000
|
|
|
|
5.99
|
%
|
|
12/1/16
|
|
|
|
|
|
N/A
|
|
|
1,405,000
|
(3)(5)
|
Staples Peru, IL
|
|
|
1,930,000
|
|
|
|
5.66
|
%
|
|
12/1/11
|
|
|
|
|
|
N/A
|
|
|
1,930,000
|
(5)
|
Fedex Council Bluffs,
IA
|
|
|
2,185,000
|
|
|
|
5.97
|
%
|
|
12/1/16
|
|
|
|
|
|
N/A
|
|
|
2,185,000
|
(5)
|
Fedex Edwardsville, KS
|
|
|
12,880,000
|
|
|
|
5.97
|
%
|
|
12/1/16
|
|
|
|
|
|
N/A
|
|
|
12,880,000
|
(5)
|
CVS Glenville Scotia,
NY
|
|
|
3,413,000
|
|
|
|
5.74
|
%
|
|
12/11/16
|
|
|
787,000
|
|
|
3/16/07
|
|
|
4,200,000
|
(7)
|
Advance Auto Ashland,
KY
|
|
|
|
|
|
|
N/A
|
|
|
N/A
|
|
|
|
|
|
N/A
|
|
|
|
|
Advance Auto Jackson,
OH
|
|
|
|
|
|
|
N/A
|
|
|
N/A
|
|
|
|
|
|
N/A
|
|
|
|
|
Advance Auto New
Boston, OH
|
|
|
|
|
|
|
N/A
|
|
|
N/A
|
|
|
|
|
|
N/A
|
|
|
|
|
Advance Auto
Scottsburg, IN
|
|
|
|
|
|
|
N/A
|
|
|
N/A
|
|
|
|
|
|
N/A
|
|
|
|
|
Tractor Supply
Livingston, TN
|
|
|
1,725,000
|
|
|
|
5.99
|
%
|
|
12/1/16
|
|
|
|
|
|
N/A
|
|
|
1,725,000
|
(3)(5)
|
Tractor Supply New
Braunfels, TX
|
|
|
1,750,000
|
|
|
|
5.99
|
%
|
|
12/1/16
|
|
|
|
|
|
N/A
|
|
|
1,750,000
|
(3)(5)
|
Office Depot Benton, AR
|
|
|
2,130,000
|
|
|
|
5.77
|
%
|
|
12/1/16
|
|
|
|
|
|
N/A
|
|
|
2,130,000
|
(8)
|
Old Time Pottery
Fairview Heights, IL
|
|
|
2,140,000
|
|
|
|
6.31
|
%
|
|
12/11/11
|
|
|
1,284,000
|
|
|
3/21/07
|
|
|
3,424,000
|
(7)
|
Infiniti Davie, FL
|
|
|
|
|
|
|
N/A
|
|
|
N/A
|
|
|
|
|
|
N/A
|
|
|
|
|
Office Depot Oxford, MS
|
|
|
2,295,000
|
|
|
|
6.17
|
%
|
|
12/1/16
|
|
|
|
|
|
N/A
|
|
|
2,295,000
|
(5)
|
Tractor Supply
Crockett, TX
|
|
|
1,325,000
|
|
|
|
5.99
|
%
|
|
12/1/16
|
|
|
|
|
|
N/A
|
|
|
1,325,000
|
(3)(5)
|
Mercedes Benz Atlanta,
GA
|
|
|
|
|
|
|
N/A
|
|
|
N/A
|
|
|
|
|
|
N/A
|
|
|
|
|
Dicks Sporting
Goods Amherst, NY
|
|
|
6,321,000
|
|
|
|
5.62
|
%
|
|
2/1/17
|
|
|
|
|
|
N/A
|
|
|
6,321,000
|
(8)
|
Chilis Paris, TX
|
|
|
1,790,000
|
|
|
|
5.65
|
%
|
|
1/1/17
|
|
|
|
|
|
N/A
|
|
|
1,790,000
|
(5)
|
Staples Clarksville, IN
|
|
|
2,900,000
|
|
|
|
5.78
|
%
|
|
1/1/17
|
|
|
|
|
|
N/A
|
|
|
2,900,000
|
(8)
|
HOM Fargo, ND
|
|
|
4,800,000
|
|
|
|
5.56
|
%
|
|
2/1/2017
|
|
|
|
|
|
N/A
|
|
|
4,800,000
|
(5)
|
La-Z-Boy
Newington, CT
|
|
|
4,140,000
|
|
|
|
5.66
|
%
|
|
2/1/2017
|
|
|
|
|
|
N/A
|
|
|
4,140,000
|
(5)
|
Advance Auto Maryland
Heights, MO
|
|
|
|
|
|
|
N/A
|
|
|
N/A
|
|
|
|
|
|
N/A
|
|
|
|
|
Victoria Crossing
Victoria, TX
|
|
|
8,288,000
|
|
|
|
5.71
|
%
|
|
2/11/17
|
|
|
1,912,000
|
|
|
4/12/07
|
|
|
10,200,000
|
(7)
|
Academy Sports Katy, TX
|
|
|
68,250,000
|
|
|
|
5.61
|
%
|
|
2/1/17
|
|
|
|
|
|
N/A
|
|
|
68,250,000
|
(5)
|
Gordmans Peoria, IL
|
|
|
4,950,000
|
|
|
|
5.71
|
%
|
|
2/1/17
|
|
|
|
|
|
N/A
|
|
|
4,950,000
|
(8)
|
One Pacific Place
Omaha, NE
|
|
|
23,400,000
|
|
|
|
5.53
|
%
|
|
3/1/17
|
|
|
|
|
|
N/A
|
|
|
23,400,000
|
(5)
|
Sack n
Save/OReilly Auto Garland, TX
|
|
|
3,290,000
|
|
|
|
5.54
|
%
|
|
3/1/17
|
|
|
|
|
|
N/A
|
|
|
3,290,000
|
(5)
|
15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed
|
|
|
|
|
|
|
|
Variable
|
|
|
|
|
|
|
|
|
Rate
|
|
|
Fixed
|
|
|
|
|
Rate
|
|
|
|
|
Total
|
|
|
|
Loan
|
|
|
Interest
|
|
|
Maturity
|
|
Loan
|
|
|
Maturity
|
|
Loan
|
|
Property
|
|
Amount
|
|
|
Rate
|
|
|
Date
|
|
Amount
|
|
|
Date
|
|
Outstanding
|
|
|
Tractor Supply Ankeny,
IA
|
|
|
1,950,000
|
|
|
|
5.65
|
%
|
|
5/1/17
|
|
|
|
|
|
N/A
|
|
|
1,950,000
|
(5)
|
ABX Air Coventry, RI
|
|
|
2,454,000
|
|
|
|
5.70
|
%
|
|
4/1/12
|
|
|
|
|
|
N/A
|
|
|
2,454,000
|
(5)
|
Office Depot
Enterprise, AL
|
|
|
1,850,000
|
|
|
|
6.29
|
%
|
|
3/1/17
|
|
|
|
|
|
N/A
|
|
|
1,850,000
|
(5)
|
Northern Tool Blaine,
MN
|
|
|
3,185,000
|
|
|
|
6.00
|
%
|
|
9/1/16
|
|
|
|
|
|
N/A
|
|
|
3,185,000
|
(4)(5)
|
Office Max Orangeburg,
SC
|
|
|
1,875,000
|
|
|
|
5.61
|
%
|
|
4/1/12
|
|
|
|
|
|
N/A
|
|
|
1,875,000
|
(5)
|
Walgreens Cincinnati,
OH
|
|
|
3,341,000
|
|
|
|
6.00
|
%
|
|
9/1/16
|
|
|
|
|
|
N/A
|
|
|
3,341,000
|
(4)(5)
|
Walgreens Madeira, OH
|
|
|
2,876,000
|
|
|
|
5.70
|
%
|
|
4/1/12
|
|
|
|
|
|
N/A
|
|
|
2,876,000
|
(5)
|
Walgreens Sharonville,
OH
|
|
|
2,655,000
|
|
|
|
5.62
|
%
|
|
4/1/12
|
|
|
|
|
|
N/A
|
|
|
2,655,000
|
(5)
|
AT&T Beaumont, TX
|
|
|
8,592,000
|
|
|
|
5.87
|
%
|
|
4/1/17
|
|
|
|
|
|
N/A
|
|
|
8,592,000
|
(8)
|
Walgreens Shreveport,
LA
|
|
|
2,815,000
|
|
|
|
5.56
|
%
|
|
4/11/17
|
|
|
497,000
|
|
|
6/23/07
|
|
|
3,312,000
|
(7)
|
Cost-U-Less,- St. Croix, USVI
|
|
|
4,035,000
|
|
|
|
5.76
|
%
|
|
4/1/17
|
|
|
|
|
|
N/A
|
|
|
4,035,000
|
(5)
|
Gallina Centro
Collierville, TN
|
|
|
14,200,000
|
|
|
|
5.72
|
%
|
|
4/11/17
|
|
|
|
|
|
N/A
|
|
|
14,200,000
|
(7)
|
Apria Healthcare St.
John, MO
|
|
|
|
|
|
|
N/A
|
|
|
N/A
|
|
|
|
|
|
N/A
|
|
|
|
|
Logans Roadhouse
Fairfax, VA
|
|
|
1,605,000
|
|
|
|
6.00
|
%
|
|
4/11/17
|
|
|
962,000
|
|
|
6/27/07
|
|
|
2,567,000
|
(7)
|
Logans Roadhouse
Johnson City, TN
|
|
|
1,933,000
|
|
|
|
6.00
|
%
|
|
4/11/17
|
|
|
1,160,000
|
|
|
6/27/07
|
|
|
3,093,000
|
(7)
|
Center at 7500
Cottonwood Jenison, MI
|
|
|
|
|
|
|
N/A
|
|
|
N/A
|
|
|
|
|
|
N/A
|
|
|
|
|
Eckerd Lincolnton, NC
|
|
|
1,538,000
|
|
|
|
5.80
|
%
|
|
4/11/17
|
|
|
271,000
|
|
|
7/3/07
|
|
|
1,809,000
|
(7)
|
Tractor Supply
Greenfield, MN
|
|
|
2,227,500
|
|
|
|
5.57
|
%
|
|
7/1/17
|
|
|
|
|
|
N/A
|
|
|
2,227,500
|
(5)
|
Lincoln Place Fairview
Heights, IL
|
|
|
35,432,000
|
|
|
|
5.70
|
%
|
|
5/1/17
|
|
|
|
|
|
N/A
|
|
|
35,432,000
|
(8)
|
Amarillo Furniture
Ashley, TX
|
|
|
4,026,000
|
|
|
|
5.59
|
%
|
|
4/11/17
|
|
|
710,000
|
|
|
7/5/07
|
|
|
4,736,000
|
(7)
|
Pocatello Square
Pocatello, ID
|
|
|
17,250,000
|
|
|
|
5.53
|
%
|
|
4/11/17
|
|
|
1,150,000
|
|
|
8/6/07
|
|
|
18,400,000
|
(7)
|
Tractor Supply Paw
Paw, MI
|
|
|
2,048,000
|
|
|
|
5.65
|
%
|
|
5/1/17
|
|
|
|
|
|
N/A
|
|
|
2,048,000
|
(7)
|
Tractor Supply
Marinette, WI
|
|
|
1,918,000
|
|
|
|
5.65
|
%
|
|
5/1/17
|
|
|
|
|
|
N/A
|
|
|
1,918,000
|
(7)
|
Staples Greenville, SC
|
|
|
2,955,000
|
|
|
|
5.51
|
%
|
|
6/11/17
|
|
|
|
|
|
N/A
|
|
|
2,955,000
|
(5)
|
Big 5 Center Aurora, CO
|
|
|
2,804,000
|
|
|
|
5.57
|
%
|
|
6/11/17
|
|
|
|
|
|
N/A
|
|
|
2,804,000
|
(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
455,344,734
|
|
|
|
|
|
|
|
|
$
|
69,920,437
|
|
|
|
|
$
|
525,265,171
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Mortgage note is cross-collateralized and cross-secured with the
LO Midland Property, LO Lubbock Property, KO Wichita Property
and OT Oxford Property. |
|
(2) |
|
Mortgage note is cross-collateralized and cross-secured with the
CV Clinton Property, WG Picayune Property and GG OFallon
Property. |
|
(3) |
|
Mortgage note is cross-collateralized and cross-secured with the
TS La Grange Property, TS Crockett Property, TS Livingston
Property and TS New Braunfels Property. |
|
(4) |
|
Mortgage note is cross-collateralized and cross-secured with the
NT Blaine Property and the WG Cincinnati Property. |
|
(5) |
|
Lender: Bear Stearns Commercial Mortgage. |
|
(6) |
|
Lender: GE Commercial Finance Business Property Corporation. |
|
(7) |
|
Lender: Wachovia Bank, N.A. |
|
(8) |
|
Lender: JP Morgan Chase Bank, N.A. |
The fixed rate debt mortgage notes require monthly interest-only
payments with the principal balance due on various dates from
July 2008 through October 2018. The variable rate debt mortgage
notes bear interest at the one-month LIBOR rate plus
200 basis points and require monthly interest-only payments
and generally mature within 90 days. Each of the mortgage
notes are secured by the respective property. The mortgage notes
16
are generally non-recourse to the Company and Cole Op II,
but both are liable for customary non-recourse carveouts.
The fixed rate mortgage notes generally may not be prepaid, in
whole or in part, except under the following circumstances:
(i) full prepayment may be made on any of the three
(3) monthly payment dates occurring immediately prior to
the maturity date, and (ii) partial prepayments resulting
from the application of insurance or condemnation proceeds to
reduce the outstanding principal balance of the mortgage notes.
Notwithstanding the prepayment limitations, the Company may sell
the properties to a buyer that assumes the respective mortgage
loan. The transfer would be subject to the conditions set forth
in the individual propertys mortgage note document,
including without limitation, the lenders approval of the
proposed buyer and the payment of the lenders fees, costs
and expenses associated with the sale of the property and the
assumption of the loan.
In the event that a mortgage note is not paid off on the
respective maturity date, each mortgage note includes
hyperamortization provisions. The interest rate during the
hyperamortization period shall be the fixed interest rate as
stated on the respective mortgage note agreement plus two
percent (2.0%). The individual mortgage note maturity date,
under the hyperamortization provisions, will be extended by
twenty (20) years. During such period, the lender will
apply 100% of the rents collected to (i) all payments for
escrow or reserve accounts, (ii) payment of interest at the
original fixed interest rate, (iii) payments for the
replacement reserve account, (iv) any other amounts due in
accordance with the mortgage note agreement other than any
additional interest expense, (v) any operating expenses of
the property pursuant to an approved annual budget,
(vi) any extraordinary expenses, (vii) payments to be
applied to the reduction of the principal balance of the
mortgage note, and (viii) any additional interest expense,
which is not paid will be added to the principal balance of the
mortgage note.
For federal income tax purposes, the depreciable basis in the
properties noted above is approximately $708 million in
total. When we calculate depreciation expense for tax purposes,
we will use the straight-line method. We depreciate buildings
and improvements based upon estimated useful lives of
40 years, respectively. The depreciable basis in the
properties noted above are detailed as follows:
|
|
|
|
|
|
|
Depreciable
|
|
Property
|
|
Tax Basis
|
|
|
Tractor Supply
Parkersburg, WV
|
|
$
|
2,419,149
|
|
Walgreens Brainerd, MN
|
|
|
3,455,534
|
|
Rite Aid Alliance, OH
|
|
|
1,721,992
|
|
La-Z-Boy
Glendale, AZ
|
|
|
3,308,706
|
|
Walgreens Florissant,
MO
|
|
|
3,798,660
|
|
Walgreens Saint Louis,
MO (Gravois)
|
|
|
4,041,203
|
|
Walgreens Saint Louis,
MO (Telegraph)
|
|
|
3,405,433
|
|
Walgreens Columbia, MO
|
|
|
4,066,885
|
|
Walgreens Olivette, MO
|
|
|
4,920,452
|
|
CVS Alpharetta, GA
|
|
|
1,974,033
|
|
Lowes
Enterprise, AL
|
|
|
6,620,785
|
|
CVS Richland Hills, TX
|
|
|
2,617,497
|
|
FedEx Rockford, IL
|
|
|
4,810,302
|
|
Plastech Auburn Hills,
MI
|
|
|
20,812,140
|
|
Academy Sports Macon,
GA
|
|
|
4,546,122
|
|
Davids Bridal
Lenexa, KS
|
|
|
2,588,991
|
|
Rite Aid Enterprise, AL
|
|
|
2,892,211
|
|
Rite Aid Wauseon, OH
|
|
|
2,920,310
|
|
Staples Crossville, TN
|
|
|
2,421,793
|
|
Rite Aid Saco, ME
|
|
|
2,188,010
|
|
17
|
|
|
|
|
|
|
Depreciable
|
|
Property
|
|
Tax Basis
|
|
|
Wadsworth Boulevard
Denver, CO
|
|
|
14,190,910
|
|
Mountainside Fitness
Chandler, AZ
|
|
|
4,818,016
|
|
Drexel Heritage
Hickory, NC
|
|
|
3,958,998
|
|
Rayford Square Spring,
TX
|
|
|
7,936,443
|
|
CVS Portsmouth, OH
|
|
|
1,667,154
|
|
Wawa Hockessin, DE
|
|
|
3,087,470
|
|
Wawa Manahawkin, NJ
|
|
|
2,821,552
|
|
Wawa Narbeth, PA
|
|
|
2,688,592
|
|
CVS Lakewood, OH
|
|
|
1,973,647
|
|
Rite Aid Cleveland, OH
|
|
|
2,070,669
|
|
Rite Aid Fremont, OH
|
|
|
1,728,442
|
|
Walgreens Knoxville, TN
|
|
|
3,068,515
|
|
CVS Madison, MS
|
|
|
3,368,662
|
|
Rite Aid Defiance, OH
|
|
|
3,126,556
|
|
Conns
San Antonio, TX
|
|
|
3,562,750
|
|
Dollar General
Crossville, TN
|
|
|
2,435,881
|
|
Dollar General
Ardmore, TN
|
|
|
2,114,108
|
|
Dollar General
Livingston, TN
|
|
|
2,033,053
|
|
Wehrenberg Arnold, MO
|
|
|
5,698,096
|
|
Sportmans Warehouse
Wichita, KS
|
|
|
6,843,371
|
|
CVS Portsmouth, OH
|
|
|
1,770,141
|
|
Advance Auto
Greenfield, IN
|
|
|
755,462
|
|
Advance Auto Trenton,
OH
|
|
|
772,177
|
|
Rite Aid Lansing, MI
|
|
|
1,547,295
|
|
Advance Auto Columbia
Heights, MN
|
|
|
1,236,120
|
|
Advance Auto Fergus
Falls, MN
|
|
|
1,058,994
|
|
CVS Okeechobee, FL
|
|
|
4,812,804
|
|
Office Depot Dayton, OH
|
|
|
2,583,810
|
|
Advance Auto Holland,
MI
|
|
|
1,432,089
|
|
Advance Auto Holland
Township, MI
|
|
|
1,463,900
|
|
Advance Auto Zeeland,
MI
|
|
|
1,384,950
|
|
CVS Orlando, FL
|
|
|
2,807,200
|
|
Office Depot
Greenville, MS
|
|
|
2,583,810
|
|
Office Depot
Warrensburg, MO
|
|
|
1,829,024
|
|
CVS Gulfport, MS
|
|
|
3,032,978
|
|
Advance Auto Grand
Forks, ND
|
|
|
1,070,994
|
|
CVS Clinton, NY
|
|
|
2,462,819
|
|
Oxford Theatre Oxford,
MS
|
|
|
9,636,227
|
|
Advance Auto Duluth, MN
|
|
|
1,190,975
|
|
Walgreens Picayune, MS
|
|
|
3,153,167
|
|
Kohls Wichita, KS
|
|
|
6,289,365
|
|
Staples Greenville, SC
|
|
|
4,545,000
|
|
Lowes Lubbock, TX
|
|
|
7,247,827
|
|
Lowes Midland, TX
|
|
|
7,883,933
|
|
18
|
|
|
|
|
|
|
Depreciable
|
|
Property
|
|
Tax Basis
|
|
|
Advance Auto Grand
Bay, AL
|
|
|
905,396
|
|
Advance Auto Hurley, MS
|
|
|
952,326
|
|
Advance Auto
Rainsville, AL
|
|
|
991,239
|
|
Golds Gym
OFallon, IL
|
|
|
6,060,922
|
|
Rite Aid Glassport, PA
|
|
|
3,268,815
|
|
Davids Bridal/Radio
Shack Topeka, KS
|
|
|
2,535,491
|
|
Rite Aid Hanover, PA
|
|
|
4,638,296
|
|
American TV &
Appliance Peoria, IL
|
|
|
9,573,469
|
|
Tractor Supply
La Grange, TX
|
|
|
2,402,825
|
|
Staples Peru, IL
|
|
|
2,024,975
|
|
Fedex Council Bluffs,
IA
|
|
|
2,932,591
|
|
Fedex Edwardsville, KS
|
|
|
18,589,934
|
|
CVS Glenville Scotia,
NY
|
|
|
3,796,109
|
|
Advance Auto Ashland,
KY
|
|
|
1,096,360
|
|
Advance Auto Jackson,
OH
|
|
|
952,219
|
|
Advance Auto New
Boston, OH
|
|
|
1,092,304
|
|
Advance Auto
Scottsburg, IN
|
|
|
1,054,818
|
|
Tractor Supply
Livingston, TN
|
|
|
2,761,104
|
|
Tractor Supply New
Braunfels, TX
|
|
|
2,733,111
|
|
Office Depot Benton, AR
|
|
|
2,803,944
|
|
Old Time Pottery
Fairview Heights, IL
|
|
|
3,338,050
|
|
Infiniti Davie, FL
|
|
|
6,661,739
|
|
Office Depot Oxford, MS
|
|
|
2,666,293
|
|
Tractor Supply
Crockett, TX
|
|
|
2,236,043
|
|
Mercedes Benz Atlanta,
GA
|
|
|
9,401,653
|
|
Dicks Sporting
Goods Amherst, NY
|
|
|
6,873,019
|
|
Chilis Paris, TX
|
|
|
2,234,337
|
|
Staples Clarksville, IN
|
|
|
3,598,588
|
|
HOM Fargo, ND
|
|
|
12,288,100
|
|
La-Z-Boy
Newington, CT
|
|
|
7,055,777
|
|
Advance Auto Maryland
Heights, MO
|
|
|
1,954,435
|
|
Victoria Crossing
Victoria, TX
|
|
|
12,900,521
|
|
Academy Sports Katy, TX
|
|
|
104,953,899
|
|
Gordmans Peoria, IL
|
|
|
9,192,935
|
|
One Pacific Place
Omaha, NE
|
|
|
36,779,512
|
|
Sack n
Save/OReilly Auto Garland, TX
|
|
|
5,257,530
|
|
Tractor Supply Ankeny,
IA
|
|
|
3,075,880
|
|
ABX Air Coventry, RI
|
|
|
4,193,919
|
|
Office Depot
Enterprise, AL
|
|
|
2,859,725
|
|
Northern Tool Blaine,
MN
|
|
|
5,022,678
|
|
Office Max Orangeburg,
SC
|
|
|
3,216,571
|
|
Walgreens Cincinnati,
OH
|
|
|
5,140,000
|
|
Walgreens Madeira, OH
|
|
|
4,425,000
|
|
Walgreens Sharonville,
OH
|
|
|
4,085,000
|
|
19
|
|
|
|
|
|
|
Depreciable
|
|
Property
|
|
Tax Basis
|
|
|
AT&T Beaumont, TX
|
|
|
12,275,000
|
|
Walgreens Shreveport,
LA
|
|
|
4,140,000
|
|
Cost-U-Less, St. Croix, USVI
|
|
|
6,210,000
|
|
Gallina Centro
Collierville, TN
|
|
|
17,750,000
|
|
Apria Healthcare St.
John, MO
|
|
|
6,500,000
|
|
Logans Roadhouse
Fairfax, VA
|
|
|
3,209,000
|
|
Logans Roadhouse
Johnson City, TN
|
|
|
3,866,000
|
|
Center at 7500
Cottonwood Jenison, MI
|
|
|
5,390,000
|
|
Eckerd Lincolnton, NC
|
|
|
2,262,000
|
|
Tractor Supply
Greenfield, MN
|
|
|
4,050,000
|
|
Lincoln Place Fairview
Heights, IL
|
|
|
44,000,000
|
|
Ashley Furniture
Amarillo, TX
|
|
|
5,920,000
|
|
Pocatello Square
Pocatello, ID
|
|
|
23,000,000
|
|
Tractor Supply Paw
Paw, MI
|
|
|
3,095,000
|
|
Tractor Supply
Marinette, MI
|
|
|
2,950,000
|
|
Big 5 Center Aurora, CO
|
|
|
4,290,000
|
|
|
|
|
|
|
|
|
$
|
716,758,606
|
|
|
|
|
|
|
Tenant
Lease Expirations
The following table sets forth, as of April 11, 2007,
lease expirations of our portfolio for each of the next ten
years assuming no renewal options are exercised. For purposes of
the table, the total annual base rent column
represents annualized base rent, based on rent in effect on
January 1 of the respective year, for each lease which expires
during the respective year.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Approx. Square
|
|
|
Total Annual
|
|
|
% of Total
|
|
Year Ending December 31,
|
|
Leases Expiring
|
|
|
Feet Expiring
|
|
|
Base Rent
|
|
|
Annual Base Rent
|
|
|
2007
|
|
|
1
|
|
|
|
2,000
|
|
|
$
|
37,500
|
|
|
|
0
|
%
|
2008
|
|
|
8
|
|
|
|
43,210
|
|
|
|
644,731
|
|
|
|
1
|
%
|
2009
|
|
|
9
|
|
|
|
80,143
|
|
|
|
718,694
|
|
|
|
1
|
%
|
2010
|
|
|
6
|
|
|
|
20,968
|
|
|
|
398,731
|
|
|
|
1
|
%
|
2011
|
|
|
7
|
|
|
|
34,703
|
|
|
|
410,627
|
|
|
|
1
|
%
|
2012
|
|
|
9
|
|
|
|
90,077
|
|
|
|
891,923
|
|
|
|
2
|
%
|
2013
|
|
|
11
|
|
|
|
138,594
|
|
|
|
1,530,973
|
|
|
|
3
|
%
|
2014
|
|
|
5
|
|
|
|
74,699
|
|
|
|
1,042,450
|
|
|
|
2
|
%
|
2015
|
|
|
9
|
|
|
|
649,513
|
|
|
|
3,544,096
|
|
|
|
6
|
%
|
2016
|
|
|
18
|
|
|
|
720,817
|
|
|
|
6,073,290
|
|
|
|
10
|
%
|
2017
|
|
|
13
|
|
|
|
487,150
|
|
|
|
4,423,552
|
|
|
|
8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
96
|
|
|
|
2,341,874
|
|
|
$
|
19,716,565
|
|
|
|
35
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Potential
Property Investments
Our advisor has identified the following properties as potential
suitable investments for us. The acquisition of each such
property is subject to a number of conditions. A significant
condition to acquiring any one of these potential acquisitions
is our ability to raise sufficient proceeds in this offering to
pay a portion of the purchase price. An additional condition to
acquiring these properties will be our securing debt financing
to pay the balance of the purchase price. Such financing may not
be available on acceptable terms or at all.
20
Our evaluation of a property as a potential acquisition,
including the appropriate purchase price, will include our
consideration of a property condition report; unit-level store
performance; property location, visibility and access; age of
the property, physical condition and curb appeal; neighboring
property uses; local market conditions, including vacancy rates;
area demographics, including trade area population and average
household income; neighborhood growth patterns and economic
conditions; and the presence of demand generators.
We will decide whether to acquire these properties generally
based upon:
|
|
|
|
|
satisfaction of the conditions to the acquisitions contained in
the respective contracts;
|
|
|
|
no material adverse change occurring relating to the properties,
the tenants or in the local economic conditions;
|
|
|
|
our receipt of sufficient net proceeds from the offering of our
common stock to the public and financing proceeds to make these
acquisitions; and
|
|
|
|
our receipt of satisfactory due diligence information including
appraisals, environmental reports and tenant and lease
information.
|
Other properties may be identified in the future that we may
acquire before or instead of these properties. Due to the
considerable conditions to the consummation of the acquisition
of these properties, we cannot make any assurances that the
closing of these acquisitions is probable.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Approximate
|
|
|
|
Expected
|
|
|
|
Approximate
|
|
|
Compensation to
|
|
Property
|
|
Acquisition Date
|
|
Seller(1)
|
|
Purchase Price(2)
|
|
|
Sponsor(3)
|
|
|
Rite Aid
Fredericksburg, VA
|
|
April, 2007
|
|
NNN Development, Inc.
|
|
|
5,415,000
|
|
|
|
189,525
|
|
Eckerd Easton, PA
|
|
April, 2007
|
|
GV (William Penn & 25th),
LP
|
|
|
5,970,000
|
|
|
|
208,950
|
|
Sportsmans
Warehouse DePere, WI
|
|
April, 2007
|
|
Spirit Master Funding, LLC
|
|
|
6,010,000
|
|
|
|
210,350
|
|
Rite Aid Plains, PA
|
|
April, 2007
|
|
Rap Plain, LP
|
|
|
5,200,000
|
|
|
|
182,000
|
|
Tractor Supply
Navasota, TX
|
|
April, 2007
|
|
Navasota Marketplace, LP
|
|
|
3,015,000
|
|
|
|
105,525
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
25,610,000
|
|
|
$
|
896,350
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Seller is an unaffiliated third party. |
|
(2) |
|
Approximate purchase price does not include acquisition costs. |
|
(3) |
|
Amounts include acquisition fees payable to an affiliate of our
advisor for acquisition fees in connection with the property
acquisition and payments to our advisor for finance coordination
fees for services in connection with the origination or
assumption of debt financing to acquire the respective property. |
Each potential property acquisition is subject to a net lease,
pursuant to which the tenants are required to pay substantially
all operating expenses and capital expenditures in addition to
base rent. In the case of a multi-tenant commercial property the
tenants are also required to pay a proportionate amount of
common area maintenance charges in addition to the items listed
above.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Square
|
|
|
% of Total Square
|
|
Property
|
|
Major Tenants*
|
|
Guarantor
|
|
Feet Leased
|
|
|
Feet Leased
|
|
|
Rite Aid
Fredericksburg, VA
|
|
Rite Aid of Virginia, Inc.
|
|
Rite Aid Corporation
|
|
|
14,564
|
|
|
|
100
|
%
|
Eckerd Easton, PA
|
|
Thrift Drug, Inc.
|
|
Eckerd Corporation
|
|
|
13,813
|
|
|
|
100
|
%
|
Sportsmans
Warehouse DePere, WI
|
|
Sportsmans Warehouse, Inc.
|
|
Sportsmans Warehouse
Holdings, Inc.
|
|
|
48,153
|
|
|
|
100
|
%
|
Rite Aid Plains, PA
|
|
Rite Aid of Pennsylvania, Inc.
|
|
Rite Aid Corporation
|
|
|
14,564
|
|
|
|
100
|
%
|
Tractor Supply
Navasota, TX
|
|
Tractor Supply Co. of Texas, LP
|
|
Tractor Supply Company
|
|
|
22,670
|
|
|
|
100
|
%
|
|
|
|
* |
|
Major tenants are those tenants that occupy greater than 10.0%
of the rentable square of their respective property. |
21
The table below provides leasing information for the major
tenants at each respective property.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Renewal
|
|
Annual
|
|
|
Base Rent per
|
|
|
Lease Term
|
Property
|
|
Major Tenants*
|
|
Options
|
|
Base Rent
|
|
|
Square Foot
|
|
|
Beginning
|
|
To
|
|
Rite Aid
Fredericksburg, PA
|
|
Rite Aid of Virginia, Inc.
|
|
4/5 yr.
|
|
|
392,063
|
|
|
$
|
8.09
|
|
|
3/1/07
|
|
2/28/27
|
Eckerd Easton, PA
|
|
Thrift Drug, Inc.
|
|
2/5 yr.
|
|
|
442,266
|
|
|
$
|
30.37
|
|
|
2/1/06
|
|
1/31/26
|
Sportsmans
Warehouse DePere, WI
|
|
Sportsmans Warehouse, Inc.
|
|
5/5 yr.
|
|
|
474,839
|
|
|
$
|
20.95
|
|
|
11/1/04
|
|
10/31/09
|
|
|
|
|
|
|
|
523,292
|
|
|
$
|
23.08
|
|
|
11/1/09
|
|
10/31/14
|
|
|
|
|
|
|
|
571,745
|
|
|
$
|
25.22
|
|
|
11/1/14
|
|
10/31/19
|
Rite Aid Plains, PA
|
|
Rite Aid of Pennsylvania, Inc.
|
|
6/5 yr.
|
|
|
390,173
|
|
|
$
|
26.79
|
|
|
5/15/06
|
|
5/31/26
|
Tractor Supply
Navasota, TX
|
|
Tractor Supply Co. of Texas, LP
|
|
4/5 yr.
|
|
|
215,640
|
|
|
$
|
9.51
|
|
|
9/27/06
|
|
9/30/11
|
|
|
|
|
|
|
|
229,657
|
|
|
$
|
10.13
|
|
|
10/1/11
|
|
9/30/16
|
|
|
|
|
|
|
|
244,584
|
|
|
$
|
10.79
|
|
|
10/1/16
|
|
9/30/21
|
The following table outlines the anticipated loan terms on debt
financing to be secured in connection with the purchase of the
potential property acquisitions our advisor has identified for
us. Generally, we expect the loans to have a fixed rate, with
interest only payments and a five to ten-year maturity.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property
|
|
Debt Financing
|
|
|
Type
|
|
|
Rate
|
|
|
Maturity Date
|
|
|
Rite Aid
Fredericksburg, VA
|
|
|
3,519,750
|
|
|
|
Interest Only
|
|
|
|
5.71
|
%
|
|
|
May, 2017
|
|
Eckerd Easton, PA
|
|
|
4,059,600
|
|
|
|
Interest Only
|
|
|
|
5.77
|
%
|
|
|
May, 2017
|
|
Sportsmans
Warehouse DePere, WI
|
|
|
3,906,500
|
|
|
|
Interest Only
|
|
|
|
6.21
|
%
|
|
|
May, 2017
|
|
Rite Aid Plains, PA
|
|
|
3,380,000
|
|
|
|
Interest Only
|
|
|
|
5.68
|
%
|
|
|
May, 2017
|
|
Tractor Supply
Navasota, TX
|
|
|
2,050,200
|
|
|
|
Interest Only
|
|
|
|
5.80
|
%
|
|
|
May, 2017
|
|
Cole Advisors II, our advisor, is continually evaluating
various potential property investments and engaging in
discussions and negotiations with sellers, developers and
potential tenants regarding the purchase and development of
properties for us and other Cole-sponsored programs. At such
time while this offering is pending, if we believe that a
reasonable probability exists that we will acquire a specific
property, this prospectus will be supplemented to disclose the
negotiations and pending acquisition of such property. We expect
that this will normally occur upon the signing of a purchase
agreement for the acquisition of a specific property, but may
occur before or after such signing or upon the satisfaction or
expiration of major contingencies in any such purchase
agreement, depending on the particular circumstances surrounding
each potential investment. A supplement to this prospectus will
describe any improvements proposed to be constructed thereon and
other information that we consider appropriate for an
understanding of the transaction. Further data will be made
available after any pending acquisition is consummated, also by
means of a supplement to this prospectus, if appropriate. YOU
SHOULD UNDERSTAND THAT THE DISCLOSURE OF ANY PROPOSED
ACQUISITION CANNOT BE RELIED UPON AS AN ASSURANCE THAT WE WILL
ULTIMATELY CONSUMMATE SUCH ACQUISITION OR THAT THE INFORMATION
PROVIDED CONCERNING THE PROPOSED ACQUISITION WILL NOT CHANGE
PRIOR TO ANY ACTUAL PURCHASE.
Each of our properties is adequately covered by insurance and we
intend to obtain adequate insurance coverage for all future
properties that we acquire.
Distributions
The following information replaces the section of our prospectus
captioned Distribution Policies
beginning on page 81 of the prospectus:
Distribution
Policy and Distributions
We currently pay distributions to our stockholders and we intend
to continue to pay regular distributions to our stockholders. We
currently calculate our monthly distributions on a daily record
and declaration date. Therefore, new investors will be entitled
to distributions immediately upon the purchase of their shares.
22
Because substantially all of our operations will be performed
indirectly through Cole OP II, our operating partnership,
our ability to pay distributions depends in large part on Cole
OP IIs ability to pay distributions to its partners,
including to us. In the event we do not have enough cash from
operations to fund the distribution, we may borrow, issue
additional securities or sell assets in order to fund the
distributions or make the distributions out of net proceeds from
this offering.
Historically, we have primarily declared distributions to
stockholders as of daily record dates and aggregated and paid
such distributions monthly. Our board of directors declared
distributions equal to $0.05 per share for stockholders of
record as of the close of business on the seventh day of each
month during the period from October 2005 through February 2006
and $0.0521 per share for stockholders of record on
March 7, 2006. During the period from April 1, 2006
through June 30, 2006, our board of directors declared
daily distributions of $0.0017123 per share for
stockholders of record as of the close of business on each day
during the period. During the period from July 1, 2006
through March 31, 2007, our board of directors declared
daily distributions of $0.0017808 per share for
stockholders of record as of the close of business on each day
during the period.
Our board of directors began declaring distributions in October
2005, after we commenced business operations. We have primarily
declared distributions on a quarterly basis, with daily record
dates. These distributions generally are aggregated and paid
monthly. Our board of directors intends to continue this
distribution policy for so long as it decides this policy is in
the best interests of our stockholders. We have made the
following distributions to our stockholders:
|
|
|
|
|
|
|
|
|
Period Ended
|
|
Date Paid
|
|
|
Distribution
|
|
|
12/31/2005(1)
|
|
|
1/3/2006
|
|
|
$
|
195,209
|
|
3/31/2006(1)
|
|
|
4/3/2006
|
|
|
|
621,070
|
|
4/30/2006
|
|
|
5/26/2006
|
|
|
|
368,157
|
|
5/31/2006
|
|
|
6/15/2006
|
|
|
|
462,055
|
|
6/30/2006
|
|
|
7/15/2006
|
|
|
|
536,858
|
|
7/31/2006
|
|
|
8/15/2006
|
|
|
|
688,819
|
|
8/30/2006
|
|
|
9/15/2006
|
|
|
|
830,693
|
|
9/30/2006
|
|
|
10/15/2006
|
|
|
|
940,028
|
|
10/31/2006
|
|
|
11/15/2006
|
|
|
|
1,123,576
|
|
11/30/2006
|
|
|
12/15/2006
|
|
|
|
1,308,857
|
|
12/31/2006
|
|
|
1/15/2007
|
|
|
|
1,612,094
|
|
1/31/2007
|
|
|
2/15/2007
|
|
|
|
1,803,080
|
|
2/28/2007
|
|
|
3/15/2007
|
|
|
|
1,835,149
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
12,325,645
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Distribution was paid on a quarterly basis. |
Distributions to stockholders are characterized for federal
income tax purposes as ordinary income, capital gains,
non-taxable return of capital or a combination of the three.
Distributions that exceed our current and accumulated earnings
and profits (calculated for tax purposes) constitute a return of
capital for tax purposes rather than a distribution and reduce
the shareholders basis in our common shares. To the extent
that a distribution exceeds both current and accumulated
earnings and profits and the shareholders basis in the
common shares, it will generally be treated as a capital gain.
We annually notify stockholders of the taxability of
distributions paid during the preceding year.
For the year ended December 31, 2006, approximately 42% of
the distributions paid were taxable to the investor as ordinary
taxable income and approximately 58% were treated as return of
capital for federal income tax purposes. No distributions were
paid during the year ended December 31, 2005. The amount of
distributions paid and taxable portion in this period are not
indicative or predictive of amounts anticipated in future
periods.
23
We expect to continue to regularly pay distributions on a
monthly basis, unless our results of operations, our general
financial condition, general economic conditions, or other
factors inhibit us from doing so. Distributions will be
authorized at the discretion of our board of directors, which
will be directed, in substantial part, by its obligation to
cause us to comply with the REIT requirements of the Internal
Revenue Code. The funds we receive from operations that are
available for distribution may be affected by a number of
factors, including the following:
|
|
|
|
|
the amount of time required for us to invest the funds received
in the offering;
|
|
|
|
our operating and interest expenses;
|
|
|
|
the ability of tenants to meet their obligations under the
leases associated with our properties;
|
|
|
|
the amount of distributions or dividends received by us from our
indirect real estate investments;
|
|
|
|
our ability to keep our properties occupied;
|
|
|
|
our ability to maintain or increase rental rates when renewing
or replacing current leases;
|
|
|
|
capital expenditures and reserves for such expenditures;
|
|
|
|
the issuance of additional shares; and
|
|
|
|
financings and refinancings.
|
We must distribute to our stockholders at least 90% of our
taxable income each year in order to meet the requirements for
being treated as a REIT under the Internal Revenue Code. This
requirement is described in greater detail in the Federal
Income Tax Considerations Requirements For
Qualification as a REIT Operational
Requirements Annual Distribution Requirements
section of this prospectus. Our directors may authorize
distributions in excess of this percentage as they deem
appropriate. Because we may receive income from interest or
rents at various times during our fiscal year, distributions may
not reflect our income earned in that particular distribution
period, but may be made in anticipation of cash flow that we
expect to receive during a later period and may be made in
advance of actual receipt of funds in an attempt to make
distributions relatively uniform. To allow for such differences
in timing between the receipt of income and the payment of
expenses, and the effect of required debt payments, among other
things, could require us to borrow funds from third parties on a
short-term basis, issue new securities, or sell assets to meet
the distribution requirements that are necessary to achieve the
tax benefits associated with qualifying as a REIT. These methods
of obtaining funding could affect future distributions by
increasing operating costs and decreasing available cash. In
addition, such distributions may constitute a return of capital.
See Federal Income Tax Considerations
Requirements for Qualification as a REIT.
Prior
Potential Property Investments
A prior supplement to this prospectus described a potential
acquisition of an approximately 75,000 square foot
single-tenant retail building on an approximately 6.0 acre
site located in Sherwood, Arkansas. The purchase agreement
between Cole Acquisitions I, LLC, an affiliate of our
advisor, and the seller for the acquisition of the property was
terminated prior to assignment to the Company, and this property
is no longer under consideration for purchase.
24
COLE CREDIT PROPERTY TRUST II, INC.
SUPPLEMENT NO. 19
DATED APRIL 27, 2007
TO THE PROSPECTUS DATED JUNE 27, 2005
This document supplements, and should be read in conjunction with, the prospectus of Cole
Credit Property Trust II, Inc. dated June 27, 2005, Supplement No. 13 dated December 20, 2006,
Supplement No. 14 dated January 11, 2007, Supplement No. 15 dated January 24, 2007, Supplement No.
16 dated March 20, 2007, Supplement No. 17 dated March 29, 2007 and Supplement No. 18 dated April
18, 2007. Supplement 13 supersedes and replaces all prior supplements to the prospectus. Unless
otherwise defined in this supplement, capitalized terms used in this supplement shall have the same
meanings as set forth in the prospectus.
The purpose of this supplement is to describe the following:
|
(1) |
|
the status of the offering of shares in Cole Credit Property Trust II, Inc.; |
|
|
(2) |
|
the supplement of our real property investments; |
|
|
(3) |
|
the replacement and supplement of our Prior Performance Tables and Summary; and |
|
|
(4) |
|
updated financial information regarding acquired properties. |
Status of the Offering
We commenced our initial public offering of shares of our common stock on June 27, 2005. We
have accepted investors subscriptions received through April 26, 2007, and have issued an
aggregate of approximately 49.1 million shares of our common stock to stockholders, with gross
proceeds of approximately $490.6 million distributed to us. For additional information, see the
Plan of Distribution Subscription Process section of the prospectus beginning on page 133.
Replace and Supplement Real Property Investments
The following information replaces the table in the section of our prospectus captioned
Prospectus Summary Description of Real Estate Investments beginning on page 8 of the
prospectus:
Description of Real Estate Investments
As of April 26, 2007, we owned 149 properties, comprising approximately 6.3 million
rentable square feet of commercial space located in 43 states and the U.S. Virgin Islands. Our
properties as of April 27, 2007, are listed below.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rentable Square |
|
|
Purchase |
|
Property Description |
|
Tenant |
|
Feet |
|
|
Price |
|
Tractor Supply Parkersburg, WV |
|
Tractor Supply Company |
|
|
21,688 |
|
|
$ |
3,259,243 |
|
Walgreens Brainerd, MN |
|
Walgreen Co. |
|
|
15,120 |
|
|
|
4,328,500 |
|
Rite Aid Alliance, OH |
|
Rite Aid of Ohio, Inc. |
|
|
11,348 |
|
|
|
2,100,000 |
|
La-Z-Boy Glendale, AZ |
|
EBCO, Inc. |
|
|
23,000 |
|
|
|
5,691,525 |
|
Walgreens Florissant, MO |
|
Walgreen Co. |
|
|
15,120 |
|
|
|
5,187,632 |
|
Walgreens Saint Louis, MO (Gravois) |
|
Walgreen Co. |
|
|
15,120 |
|
|
|
6,152,942 |
|
Walgreens Saint Louis, MO (Telegraph) |
|
Walgreen Co. |
|
|
15,120 |
|
|
|
5,059,426 |
|
Walgreens Columbia, MO |
|
Walgreen Co. |
|
|
13,973 |
|
|
|
6,271,371 |
|
Walgreens Olivette, MO |
|
Walgreen Co. |
|
|
15,030 |
|
|
|
7,822,222 |
|
CVS Alpharetta, GA |
|
Mayfield CVS, Inc., |
|
|
10,125 |
|
|
|
3,100,000 |
|
Lowes Enterprise, AL |
|
Lowes Home Centers, Inc. |
|
|
95,173 |
|
|
|
7,475,000 |
|
CVS Richland Hills, TX |
|
CVS EGL Grapevine N Richland Hills Texas, LP |
|
|
10,908 |
|
|
|
3,660,000 |
|
FedEx Rockford, IL |
|
Fed Ex Ground Package System, Inc. |
|
|
67,925 |
|
|
|
6,150,000 |
|
Plastech Auburn Hills, MI |
|
LDM Technologies, Inc. |
|
|
111,881 |
|
|
|
23,600,000 |
|
Academy Sports Macon, GA |
|
Academy, LTD |
|
|
74,532 |
|
|
|
5,600,000 |
|
Davids Bridal Lenexa, KS |
|
Davids Bridal, Inc. |
|
|
12,083 |
|
|
|
3,270,000 |
|
Rite Aid Enterprise, AL |
|
Harco, Inc. |
|
|
14,564 |
|
|
|
3,714,000 |
|
Rite Aid Wauseon, OH |
|
Rite Aid of Ohio, Inc. |
|
|
14,564 |
|
|
|
3,893,679 |
|
Staples Crossville, TN |
|
Staples the Office Superstore East,
Inc. |
|
|
23,942 |
|
|
|
2,900,000 |
|
Rite Aid Saco, ME |
|
Rite Aid of Maine, Inc. |
|
|
11,180 |
|
|
|
2,500,000 |
|
Wadsworth Boulevard Denver, CO |
|
Various |
|
|
198,477 |
|
|
|
18,500,000 |
|
Mountainside Fitness Chandler, AZ |
|
Hatten Holdings, Inc. |
|
|
31,063 |
|
|
|
5,863,000 |
|
Drexel Heritage Hickory, NC |
|
Drexel Heritage Furniture Industries, Inc. |
|
|
261,057 |
|
|
|
4,250,000 |
|
Rayford Square Spring, TX |
|
Various |
|
|
79,968 |
|
|
|
9,900,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rentable Square |
|
|
Purchase |
|
Property Description |
|
Tenant |
|
Feet |
|
|
Price |
|
CVS Portsmouth, OH |
|
Revco Discount Drug Centers, inc. |
|
|
10,170 |
|
|
|
2,166,000 |
|
Wawa Hockessin, DE |
|
Wawa, Inc. |
|
|
5,160 |
|
|
|
4,830,000 |
|
Wawa Manahawkin, NJ |
|
Wawa, Inc. |
|
|
4,695 |
|
|
|
4,414,000 |
|
Wawa Narbeth, PA |
|
Wawa, Inc. |
|
|
4,461 |
|
|
|
4,206,000 |
|
CVS (Sublease) Lakewood, OH |
|
Various |
|
|
12,800 |
|
|
|
2,450,000 |
|
Rite Aid Cleveland, OH |
|
Rite Aid of Ohio, Inc. |
|
|
11,325 |
|
|
|
2,568,700 |
|
Rite Aid Fremont, OH |
|
Rite Aid of Ohio, Inc. |
|
|
11,325 |
|
|
|
2,524,500 |
|
Walgreens Knoxville, TN |
|
Walgreen Co. |
|
|
15,120 |
|
|
|
4,750,000 |
|
CVS Madison, MS |
|
CVS EGL Highland Madison MS, Inc. |
|
|
13,824 |
|
|
|
4,463,088 |
|
Rite Aid Defiance, OH |
|
Rite Aid of Ohio, Inc. |
|
|
14,564 |
|
|
|
4,326,165 |
|
Conns San Antonio, TX |
|
CAI, LP |
|
|
25,230 |
|
|
|
4,624,619 |
|
Dollar General Crossville, TN |
|
Dolgencorp, Inc. |
|
|
24,341 |
|
|
|
3,000,000 |
|
Dollar General Ardmore, TN |
|
Dolgencorp, Inc. |
|
|
24,341 |
|
|
|
2,775,000 |
|
Dollar General Livingston, TN |
|
Dolgencorp, Inc. |
|
|
24,341 |
|
|
|
2,856,000 |
|
Wehrenberg Arnold, MO |
|
Wehrenberg, Inc. |
|
|
50,000 |
|
|
|
8,200,000 |
|
Sportmans Warehouse Wichita, KS |
|
Sportsmans Warehouse, Inc., |
|
|
50,003 |
|
|
|
8,231,000 |
|
CVS Portsmouth, OH |
|
Revco Discount Drug Centers, Inc. |
|
|
10,650 |
|
|
|
2,101,708 |
|
Advance Auto Greenfield, IN |
|
Advance Stores Company, Inc. |
|
|
7,000 |
|
|
|
1,375,500 |
|
Advance Auto Trenton, OH |
|
Advance Stores Company, Inc. |
|
|
7,000 |
|
|
|
1,060,000 |
|
Rite Aid Lansing, MI |
|
Rite Aid of Michigan, Inc. |
|
|
11,680 |
|
|
|
1,735,000 |
|
Advance Auto Columbia Heights, MN |
|
Advance Stores Company, Inc. |
|
|
7,000 |
|
|
|
1,730,578 |
|
Advance Auto Fergus Falls, MN |
|
Advance Stores Company, Inc. |
|
|
7,000 |
|
|
|
1,203,171 |
|
CVS Okeechobee, FL |
|
Eckerd Corporation |
|
|
13,050 |
|
|
|
6,459,262 |
|
Office Depot Dayton, OH |
|
Office Depot, Inc. |
|
|
19,880 |
|
|
|
3,416,526 |
|
Advance Auto Holland, MI |
|
Advance Stores Company, Inc. |
|
|
7,000 |
|
|
|
2,071,843 |
|
Advance Auto Holland Township, MI |
|
Advance Stores Company, Inc. |
|
|
7,000 |
|
|
|
2,137,244 |
|
Advance Auto Zeeland, MI |
|
Advance Stores Company, Inc. |
|
|
7,000 |
|
|
|
1,840,715 |
|
CVS Orlando, FL |
|
CVS EGL Lake Pickett FL, LLC |
|
|
13,013 |
|
|
|
4,956,763 |
|
Office Depot Greenville, MS |
|
Office Depot, Inc. |
|
|
25,083 |
|
|
|
3,491,470 |
|
Office Depot Warrensburg, MO |
|
Office Depot, Inc. |
|
|
20,000 |
|
|
|
2,880,552 |
|
CVS Gulfport, MS |
|
CVS EGL East Pass Gulfport MS, Inc. |
|
|
11,359 |
|
|
|
4,414,117 |
|
Advance Auto Grand Forks, ND |
|
Advance Stores Company, Inc. |
|
|
7,000 |
|
|
|
1,399,657 |
|
CVS Clinton, NY |
|
CVS BDI, Inc., |
|
|
10,055 |
|
|
|
3,050,000 |
|
Oxford Theatre Oxford, MS |
|
Oxford Theater Company, Inc. |
|
|
35,000 |
|
|
|
9,692,503 |
|
Advance Auto Duluth, MN |
|
Advance Stores Company, Inc. |
|
|
7,000 |
|
|
|
1,432,565 |
|
Walgreens Picayune, MS |
|
Walgreen Co. |
|
|
14,820 |
|
|
|
4,255,000 |
|
Kohls Wichita, KS |
|
Kohls Illinois, Inc. |
|
|
86,584 |
|
|
|
7,866,000 |
|
Lowes Lubbock, TX |
|
Lowes Home Centers, Inc |
|
|
137,480 |
|
|
|
11,508,000 |
|
Lowes Midland, TX |
|
Lowes Home Centers, Inc |
|
|
134,050 |
|
|
|
11,099,000 |
|
Advance Auto Grand Bay, AL |
|
Advance Stores Company, Inc. |
|
|
7,000 |
|
|
|
1,115,605 |
|
Advance Auto Hurley, MS |
|
Advance Stores Company, Inc. |
|
|
7,000 |
|
|
|
1,083,195 |
|
Advance Auto Rainsville, AL |
|
Advance Stores Company, Inc. |
|
|
7,000 |
|
|
|
1,328,000 |
|
Golds Gym OFallon, IL |
|
Golds St Louis, LLC |
|
|
38,000 |
|
|
|
7,300,000 |
|
Rite Aid Glassport, PA |
|
Rite Aid of Pennsylvania, Inc. |
|
|
14,564 |
|
|
|
3,788,000 |
|
Davids BridalRadio Shack Topeka, KS |
|
Federated Dept. Stores & Radio Shack Corp. |
|
|
10,150 |
|
|
|
3,021,000 |
|
Rite Aid Hanover, PA |
|
Rite Aid |
|
|
14,584 |
|
|
|
6,330,000 |
|
American TV & Appliance Peoria, IL |
|
American TV & Appliance of Madison, Inc. |
|
|
126,852 |
|
|
|
11,336,983 |
|
Tractor Supply La Grange, TX |
|
Tractor Supply Texas |
|
|
24,727 |
|
|
|
2,580,000 |
|
Staples Peru, IL |
|
Staples the Office Superstore East, Inc |
|
|
23,925 |
|
|
|
3,215,000 |
|
Fedex Council Bluffs, IA |
|
Fedex Freight East, Inc. |
|
|
23,510 |
|
|
|
3,361,000 |
|
Fedex Edwardsville, KS |
|
Fedex Freight East, Inc. |
|
|
155,965 |
|
|
|
19,815,000 |
|
CVS Glenville Scotia, NY |
|
CVS Mack Drug of New York, LLC |
|
|
12,900 |
|
|
|
5,250,000 |
|
Advance Auto Ashland, KY |
|
Advance Stores Company, Inc. |
|
|
7,000 |
|
|
|
1,681,000 |
|
Advance Auto Jackson, OH |
|
Advance Stores Company, Inc. |
|
|
7,000 |
|
|
|
1,352,000 |
|
Advance Auto New Boston, OH |
|
Advance Stores Company, Inc. |
|
|
7,000 |
|
|
|
1,516,000 |
|
Advance Auto Scottsburg, IN |
|
Advance Stores Company, Inc. |
|
|
7,000 |
|
|
|
1,272,000 |
|
Tractor Supply Livingston, TN |
|
Tractor Supply Texas |
|
|
24,727 |
|
|
|
3,100,000 |
|
Tractor Supply New Braunfels, TX |
|
Tractor Supply Texas |
|
|
24,727 |
|
|
|
3,150,000 |
|
Office Depot Benton, AR |
|
Office Depot, Inc. |
|
|
20,515 |
|
|
|
3,275,000 |
|
Old Time Pottery Fairview Heights, IL |
|
Old Time Pottery, Inc. |
|
|
97,849 |
|
|
|
4,280,000 |
|
Infiniti Davie, FL |
|
Warren Henry Automobiles, Inc. |
|
|
20,927 |
|
|
|
9,432,000 |
|
Office Depot Oxford, MS |
|
Office Depot, Inc. |
|
|
20,000 |
|
|
|
3,487,450 |
|
Tractor Supply Crockett, TX |
|
Tractor Supply Texas |
|
|
24,727 |
|
|
|
2,450,000 |
|
Mercedes Benz Atlanta, GA |
|
Atlanta Eurocars |
|
|
40,588 |
|
|
|
11,760,000 |
|
Dicks Sporting Goods Amherst, NY |
|
Dicks Sporting Goods |
|
|
55,745 |
|
|
|
9,725,000 |
|
Chilis Paris, TX |
|
Brinker Texas, L.P. |
|
|
6,698 |
|
|
|
2,750,000 |
|
2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rentable Square |
|
|
Purchase |
|
Property Description |
|
Tenant |
|
Feet |
|
|
Price |
|
Staples Clarksville, IN |
|
Staples the Office Superstore East, Inc. |
|
|
20,388 |
|
|
|
4,430,000 |
|
HOM Fargo, ND |
|
HOM Furniture, Inc. |
|
|
122,108 |
|
|
|
12,000,000 |
|
La-Z-Boy Newington, CT |
|
LZB Furniture Galleries of Paramus, Inc |
|
|
20,701 |
|
|
|
6,900,000 |
|
Advance Auto Maryland Heights, MO |
|
Advance Stores Company, Inc. |
|
|
7,000 |
|
|
|
1,893,000 |
|
Victoria Crossing Victoria, TX |
|
Various |
|
|
87,473 |
|
|
|
12,608,000 |
|
Academy Sports Katy, TX |
|
Academy Ltd |
|
|
1,500,596 |
|
|
|
102,000,000 |
|
Gordmans Peoria, IL |
|
Gordmans, Inc. |
|
|
60,947 |
|
|
|
9,000,000 |
|
One Pacific Place Omaha, NE |
|
Various |
|
|
91,564 |
|
|
|
36,000,000 |
|
Sack n SaveOReilly Auto Garland, TX |
|
Various |
|
|
65,295 |
|
|
|
5,060,000 |
|
Tractor Supply Ankeny, IA |
|
Tractor Supply Company |
|
|
19,097 |
|
|
|
3,000,000 |
|
ABX Air Coventry, RI |
|
ABX Air, Inc. |
|
|
33,000 |
|
|
|
4,090,000 |
|
Office Depot Enterprise, AL |
|
Office Depot, Inc. |
|
|
20,000 |
|
|
|
2,776,357 |
|
Northern Tool Blaine, MN |
|
Northern Tool and Equipment, Inc. |
|
|
25,488 |
|
|
|
4,900,000 |
|
Office Max Orangeburg, SC |
|
OfficeMax, Inc. |
|
|
23,500 |
|
|
|
3,125,000 |
|
Walgreens Cincinnati, OH |
|
Walgreen Co. |
|
|
15,120 |
|
|
|
5,140,000 |
|
Walgreens Madeira, OH |
|
Walgreen Co. |
|
|
13,905 |
|
|
|
4,425,000 |
|
Walgreens Sharonville, OH |
|
Walgreen Co. |
|
|
13,905 |
|
|
|
4,085,000 |
|
AT&T Beaumont, TX |
|
AT&T Services, Inc. |
|
|
141,525 |
|
|
|
12,275,000 |
|
Walgreens Shreveport, LA |
|
Walgreen Co. |
|
|
13,905 |
|
|
|
4,140,000 |
|
Cost-U-Less, St. Croix, USVI |
|
CULUSVI, Inc. |
|
|
38,365 |
|
|
|
6,210,000 |
|
Gallina Centro Collierville, TN |
|
Various |
|
|
142,727 |
|
|
|
17,750,000 |
|
Apria Healthcare St. John, MO |
|
Apria Healthcare, Inc. |
|
|
52,200 |
|
|
|
6,500,000 |
|
Logans Roadhouse Fairfax, VA |
|
Logans Roadhouse, Inc. |
|
|
7,839 |
|
|
|
3,209,000 |
|
Logans Roadhouse Johnson City, TN |
|
Logans Roadhouse, Inc. |
|
|
7,839 |
|
|
|
3,866,000 |
|
Center at 7500 Cottonwood Jenison, MI |
|
Hob-Lob Limited Partnership |
|
|
84,933 |
|
|
|
5,290,000 |
|
Eckerd Lincolnton, NC |
|
ECK-001, LLC |
|
|
10,908 |
|
|
|
2,262,000 |
|
Tractor Supply Greenfield, MN |
|
Tractor Supply Company |
|
|
22,675 |
|
|
|
4,050,000 |
|
Lincoln Place Fairview Heights, IL |
|
Various |
|
|
272,829 |
|
|
|
44,000,000 |
|
Ashley Furniture Amarillo, TX |
|
Choice Furniture, Inc. |
|
|
74,797 |
|
|
|
5,920,000 |
|
Pocatello Square Pocatello, ID |
|
Various |
|
|
138,925 |
|
|
|
23,000,000 |
|
Tractor Supply Paw Paw, MI |
|
Tractor Supply Company |
|
|
22,670 |
|
|
|
3,095,000 |
|
Tractor Supply Marinette, MI |
|
Tractor Supply Company |
|
|
19,097 |
|
|
|
2,950,000 |
|
Staples Greenville, SC |
|
Staples the Office Superstore East, Inc. |
|
|
20,388 |
|
|
|
4,545,000 |
|
Big 5 Center Aurora, CO |
|
Various |
|
|
15,800 |
|
|
|
4,290,000 |
|
Rite Aid Plains, PA |
|
Rite Aid of Pennsylvania, Inc. |
|
|
14,564 |
|
|
|
5,200,000 |
|
Tractor Supply Navasota, TX |
|
Tractor Supply Company of Texas, LP |
|
|
22,670 |
|
|
|
3,015,000 |
|
Sportsmans Warehouse De Pere, WI |
|
Sportsmans Warehouse, Inc. |
|
|
48,453 |
|
|
|
6,010,000 |
|
Eckerd Easton, PA |
|
Thrift Drug, Inc. |
|
|
13,813 |
|
|
|
5,970,000 |
|
Applebees
Portfolio Various(1) |
|
Restaurant Concepts II, LLC |
|
|
120,246 |
|
|
|
65,000,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,252,416 |
|
|
$ |
896,544,376 |
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
The Applebees Portfolio consists of 22 single-tenant restaurants located in various
states, which were purchased under three separate sole leaseback agreements, and the properties are
subject to three master lease agreements. |
For additional information regarding our prior acquisitions, see the discussion below
under the caption Real Property Investments.
3
The following information replaces the first paragraph of the section of our prospectus
captioned Investment Objectives and Policies Real Property Investments beginning on page 82 of
the prospectus:
Real Property Investments
As of April 26, 2007, we, through separate wholly-owned limited partnerships or limited
liability companies, had acquired a 100% fee simple interest in 149 properties consisting of an
aggregate of approximately 6.3 million gross rentable square feet located in 43 states and the U.S.
Virgin Islands. The properties were generally acquired through the use of mortgage notes payable
and proceeds from our ongoing public offering of our common stock. The following table summarizes
these properties in order of acquisition date.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rentable |
|
|
|
|
|
|
|
|
Date |
|
Year |
|
|
Purchase |
|
|
Fees Paid to |
|
|
Square |
|
|
Physical |
|
Property |
|
Type |
|
Acquired |
|
Built |
|
|
Price |
|
|
Sponsor(1) |
|
|
Feet |
|
|
Occupancy |
|
Tractor Supply Parkersburg, WV |
|
Specialty retail |
|
September 26, 2005 |
|
|
2005 |
|
|
$ |
3,259,243 |
|
|
$ |
83,115 |
|
|
|
21,688 |
|
|
|
100 |
% |
Walgreens Brainerd, MN |
|
Drugstore |
|
October 5, 2005 |
|
|
2000 |
|
|
|
4,328,500 |
|
|
|
114,710 |
|
|
|
15,120 |
|
|
|
100 |
% |
Rite Aid Alliance, OH |
|
Drugstore |
|
October 20, 2005 |
|
|
1996 |
|
|
|
2,100,000 |
|
|
|
42,000 |
|
|
|
11,348 |
|
|
|
100 |
% |
La-Z-Boy Glendale, AZ |
|
Home furnishings |
|
October 25, 2005 |
|
|
2001 |
|
|
|
5,691,525 |
|
|
|
148,000 |
|
|
|
23,000 |
|
|
|
100 |
% |
Walgreens Florissant, MO |
|
Drugstore |
|
November 2, 2005 |
|
|
2001 |
|
|
|
5,187,632 |
|
|
|
111,671 |
|
|
|
15,120 |
|
|
|
100 |
% |
Walgreens Saint Louis, MO (Gravois) |
|
Drugstore |
|
November 2, 2005 |
|
|
2001 |
|
|
|
6,152,942 |
|
|
|
108,917 |
|
|
|
15,120 |
|
|
|
100 |
% |
Walgreens Saint Louis, MO
(Telegraph) |
|
Drugstore |
|
November 2, 2005 |
|
|
2001 |
|
|
|
5,059,426 |
|
|
|
132,412 |
|
|
|
15,120 |
|
|
|
100 |
% |
Walgreens Columbia, MO |
|
Drugstore |
|
November 22, 2005 |
|
|
2002 |
|
|
|
6,271,371 |
|
|
|
125,000 |
|
|
|
13,973 |
|
|
|
100 |
% |
Walgreens Olivette, MO |
|
Drugstore |
|
November 22, 2005 |
|
|
2001 |
|
|
|
7,822,222 |
|
|
|
156,000 |
|
|
|
15,030 |
|
|
|
100 |
% |
CVS Alpharetta, GA |
|
Drugstore |
|
December 1, 2005 |
|
|
1998 |
|
|
|
3,100,000 |
|
|
|
82,000 |
|
|
|
10,125 |
|
|
|
100 |
% |
Lowes Enterprise, AL |
|
Home improvement |
|
December 1, 2005 |
|
|
1995 |
|
|
|
7,475,000 |
|
|
|
184,000 |
|
|
|
95,173 |
|
|
|
100 |
% |
CVS Richland Hills, TX |
|
Drugstore |
|
December 8, 2005 |
|
|
1997 |
|
|
|
3,660,000 |
|
|
|
97,000 |
|
|
|
10,908 |
|
|
|
100 |
% |
FedEx Rockford, IL |
|
Distribution |
|
December 9, 2005 |
|
|
1994 |
|
|
|
6,150,000 |
|
|
|
149,000 |
|
|
|
67,925 |
|
|
|
100 |
% |
Plastech Auburn Hills, MI |
|
Automotive parts |
|
December 15, 2005 |
|
|
1995 |
|
|
|
23,600,000 |
|
|
|
472,000 |
|
|
|
111,881 |
|
|
|
100 |
% |
Academy Sports Macon, GA |
|
Sporting goods |
|
January 6, 2006 |
|
|
2005 |
|
|
|
5,600,000 |
|
|
|
148,000 |
|
|
|
74,532 |
|
|
|
100 |
% |
Davids Bridal Lenexa, KS |
|
Specialty retail |
|
January 11, 2006 |
|
|
2005 |
|
|
|
3,270,000 |
|
|
|
83,000 |
|
|
|
12,083 |
|
|
|
100 |
% |
Rite Aid Enterprise, AL |
|
Drugstore |
|
January 26, 2006 |
|
|
2005 |
|
|
|
3,714,000 |
|
|
|
94,000 |
|
|
|
14,564 |
|
|
|
100 |
% |
Rite Aid Wauseon, OH |
|
Drugstore |
|
January 26, 2006 |
|
|
2005 |
|
|
|
3,893,679 |
|
|
|
79,000 |
|
|
|
14,564 |
|
|
|
100 |
% |
Staples Crossville, TN |
|
Office supply |
|
January 26, 2006 |
|
|
2001 |
|
|
|
2,900,000 |
|
|
|
77,000 |
|
|
|
23,942 |
|
|
|
100 |
% |
Rite Aid Saco, ME |
|
Drugstore |
|
January 27, 2006 |
|
|
1997 |
|
|
|
2,500,000 |
|
|
|
64,000 |
|
|
|
11,180 |
|
|
|
100 |
% |
Wadsworth Boulevard Denver, CO |
|
Specialty Retail/Warehouse Club |
|
February 6, 2006 |
|
|
1991 |
|
|
|
18,500,000 |
|
|
|
490,000 |
|
|
|
198,477 |
|
|
|
100 |
% |
Mountainside Fitness Chandler, AZ |
|
Health and fitness |
|
February 9, 2006 |
|
|
2001 |
|
|
|
5,863,000 |
|
|
|
117,000 |
|
|
|
31,063 |
|
|
|
100 |
% |
Drexel Heritage Hickory, NC |
|
Furnishings |
|
February 24, 2006 |
|
|
1963 |
|
|
|
4,250,000 |
|
|
|
113,000 |
|
|
|
261,057 |
|
|
|
100 |
% |
Rayford Square Spring, TX |
|
Automotive parts/Restaurant/Specialty Retail |
|
March 2, 2006 |
|
|
1973 |
|
|
|
9,900,000 |
|
|
|
257,000 |
|
|
|
79,968 |
|
|
|
100 |
% |
CVS Portsmouth, OH |
|
Drugstore |
|
March 8, 2006 |
|
|
1997 |
|
|
|
2,166,000 |
|
|
|
57,000 |
|
|
|
10,170 |
|
|
|
100 |
% |
Wawa Hockessin, DE |
|
Convenience stores |
|
March 29, 2006 |
|
|
2000 |
|
|
|
4,830,000 |
|
|
|
|
|
|
|
5,160 |
|
|
|
100 |
% |
Wawa Manahawkin, NJ |
|
Convenience stores |
|
March 29, 2006 |
|
|
2000 |
|
|
|
4,414,000 |
|
|
|
|
|
|
|
4,695 |
|
|
|
100 |
% |
Wawa Narbeth, PA |
|
Convenience stores |
|
March 29, 2006 |
|
|
2000 |
|
|
|
4,206,000 |
|
|
|
|
|
|
|
4,461 |
|
|
|
100 |
% |
CVS Lakewood, OH |
|
Drugstore/Financial Services |
|
April 20, 2006 |
|
|
1996 |
|
|
|
2,450,000 |
|
|
|
62,000 |
|
|
|
12,800 |
|
|
|
100 |
% |
Rite Aid Cleveland, OH |
|
Drugstore |
|
April 27, 2006 |
|
|
1997 |
|
|
|
2,568,700 |
|
|
|
71,000 |
|
|
|
11,325 |
|
|
|
100 |
% |
Rite Aid Fremont, OH |
|
Drugstore |
|
April 27, 2006 |
|
|
1997 |
|
|
|
2,524,500 |
|
|
|
70,000 |
|
|
|
11,325 |
|
|
|
100 |
% |
Walgreens Knoxville, TN |
|
Drugstore |
|
May 8, 2006 |
|
|
2000 |
|
|
|
4,750,000 |
|
|
|
125,000 |
|
|
|
15,120 |
|
|
|
100 |
% |
CVS Madison, MS |
|
Drugstore |
|
May 26, 2006 |
|
|
2004 |
|
|
|
4,463,088 |
|
|
|
28,000 |
|
|
|
13,824 |
|
|
|
100 |
% |
Rite Aid Defiance, OH |
|
Drugstore |
|
May 26, 2006 |
|
|
2005 |
|
|
|
4,326,165 |
|
|
|
23,000 |
|
|
|
14,564 |
|
|
|
100 |
% |
Conns San Antonio, TX |
|
Consumer electronics |
|
May 26, 2006 |
|
|
2002 |
|
|
|
4,624,619 |
|
|
|
36,000 |
|
|
|
25,230 |
|
|
|
100 |
% |
Dollar General Crossville, TN |
|
Specialty retail |
|
June 2, 2006 |
|
|
2006 |
|
|
|
3,000,000 |
|
|
|
80,000 |
|
|
|
24,341 |
|
|
|
100 |
% |
Dollar General Ardmore, TN |
|
Specialty retail |
|
June 9, 2006 |
|
|
2005 |
|
|
|
2,775,000 |
|
|
|
73,000 |
|
|
|
24,341 |
|
|
|
100 |
% |
Dollar General Livingston, TN |
|
Specialty retail |
|
June 12, 2006 |
|
|
2006 |
|
|
|
2,856,000 |
|
|
|
76,000 |
|
|
|
24,341 |
|
|
|
100 |
% |
Wehrenberg Arnold, MO |
|
Theaters |
|
June 14, 2006 |
|
|
1998 |
|
|
|
8,200,000 |
|
|
|
82,000 |
|
|
|
50,000 |
|
|
|
100 |
% |
Sportmans Warehouse Wichita, KS |
|
Specialty retail |
|
June 27, 2006 |
|
|
2006 |
|
|
|
8,231,000 |
|
|
|
226,000 |
|
|
|
50,003 |
|
|
|
100 |
% |
CVS Portsmouth, OH |
|
Drugstore |
|
June 28, 2006 |
|
|
1997 |
|
|
|
2,101,708 |
|
|
|
61,000 |
|
|
|
10,650 |
|
|
|
100 |
% |
Advance Auto Greenfield, IN |
|
Automotive parts |
|
June 29, 2006 |
|
|
2003 |
|
|
|
1,375,500 |
|
|
|
28,000 |
|
|
|
7,000 |
|
|
|
100 |
% |
Advance Auto Trenton, OH |
|
Automotive parts |
|
June 29, 2006 |
|
|
2003 |
|
|
|
1,060,000 |
|
|
|
21,000 |
|
|
|
7,000 |
|
|
|
100 |
% |
Rite Aid Lansing, MI |
|
Drugstore |
|
June 29, 2006 |
|
|
1950 |
|
|
|
1,735,000 |
|
|
|
45,000 |
|
|
|
11,680 |
|
|
|
100 |
% |
Advance Auto Columbia Heights, MN |
|
Automotive parts |
|
July 6, 2006 |
|
|
2005 |
|
|
|
1,730,578 |
|
|
|
45,000 |
|
|
|
7,000 |
|
|
|
100 |
% |
Advance Auto Fergus Falls, MN |
|
Automotive parts |
|
July 6, 2006 |
|
|
2005 |
|
|
|
1,203,171 |
|
|
|
31,000 |
|
|
|
7,000 |
|
|
|
100 |
% |
CVS Okeechobee, FL |
|
Drugstore |
|
July 7, 2006 |
|
|
2001 |
|
|
|
6,459,262 |
|
|
|
41,000 |
|
|
|
13,050 |
|
|
|
100 |
% |
Office Depot Dayton, OH |
|
Office supply |
|
July 7, 2006 |
|
|
2005 |
|
|
|
3,416,526 |
|
|
|
21,000 |
|
|
|
19,880 |
|
|
|
100 |
% |
Advance Auto Holland, MI |
|
Automotive parts |
|
July 12, 2006 |
|
|
2006 |
|
|
|
2,071,843 |
|
|
|
12,000 |
|
|
|
7,000 |
|
|
|
100 |
% |
Advance Auto Holland Township, MI |
|
Automotive parts |
|
July 12, 2006 |
|
|
2006 |
|
|
|
2,137,244 |
|
|
|
12,000 |
|
|
|
7,000 |
|
|
|
100 |
% |
Advance Auto Zeeland, MI |
|
Automotive parts |
|
July 12, 2006 |
|
|
2006 |
|
|
|
1,840,715 |
|
|
|
11,000 |
|
|
|
7,000 |
|
|
|
100 |
% |
CVS Orlando, FL |
|
Drugstore |
|
July 12, 2006 |
|
|
2005 |
|
|
|
4,956,763 |
|
|
|
30,000 |
|
|
|
13,013 |
|
|
|
100 |
% |
Office Depot Greenville, MS |
|
Office supply |
|
July 12, 2006 |
|
|
2000 |
|
|
|
3,491,470 |
|
|
|
22,000 |
|
|
|
25,083 |
|
|
|
100 |
% |
Office Depot Warrensburg, MO |
|
Office supply |
|
July 19, 2006 |
|
|
2001 |
|
|
|
2,880,552 |
|
|
|
18,000 |
|
|
|
20,000 |
|
|
|
100 |
% |
CVS Gulfport, MS |
|
Drugstore |
|
August 10, 2006 |
|
|
2000 |
|
|
|
4,414,117 |
|
|
|
26,000 |
|
|
|
11,359 |
|
|
|
100 |
% |
Advance Auto Grand Forks, ND |
|
Automotive parts |
|
August 15, 2006 |
|
|
2005 |
|
|
|
1,399,657 |
|
|
|
36,000 |
|
|
|
7,000 |
|
|
|
100 |
% |
CVS Clinton, NY |
|
Drugstore |
|
August 24, 2006 |
|
|
2006 |
|
|
|
3,050,000 |
|
|
|
80,000 |
|
|
|
10,055 |
|
|
|
100 |
% |
Oxford Theatre Oxford, MS |
|
Theaters |
|
August 31, 2006 |
|
|
2006 |
|
|
|
9,692,503 |
|
|
|
246,000 |
|
|
|
35,000 |
|
|
|
100 |
% |
Advance Auto Duluth, MN |
|
Automotive parts |
|
September 8, 2006 |
|
|
2006 |
|
|
|
1,432,565 |
|
|
|
9,000 |
|
|
|
7,000 |
|
|
|
100 |
% |
Walgreens Picayune, MS |
|
Drugstore |
|
September 15, 2006 |
|
|
2006 |
|
|
|
4,255,000 |
|
|
|
113,000 |
|
|
|
14,820 |
|
|
|
100 |
% |
Kohls Wichita, KS |
|
Apparel |
|
September 27, 2006 |
|
|
1996 |
|
|
|
7,866,000 |
|
|
|
209,000 |
|
|
|
86,584 |
|
|
|
100 |
% |
4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rentable |
|
|
|
|
|
|
|
|
Date |
|
Year |
|
|
Purchase |
|
|
Fees Paid to |
|
|
Square |
|
|
Physical |
|
Property |
|
Type |
|
Acquired |
|
Built |
|
|
Price |
|
|
Sponsor(1) |
|
|
Feet |
|
|
Occupancy |
|
Lowes Lubbock, TX |
|
Home improvement |
|
September 27, 2006 |
|
|
1996 |
|
|
|
11,508,000 |
|
|
|
305,000 |
|
|
|
137,480 |
|
|
|
100 |
% |
Lowes Midland, TX |
|
Home improvement |
|
September 27, 2006 |
|
|
1996 |
|
|
|
11,099,000 |
|
|
|
293,000 |
|
|
|
134,050 |
|
|
|
100 |
% |
Advance Auto Grand Bay, AL |
|
Automotive parts |
|
September 29, 2006 |
|
|
2005 |
|
|
|
1,115,605 |
|
|
|
22,000 |
|
|
|
7,000 |
|
|
|
100 |
% |
Advance Auto Hurley, MS |
|
Automotive parts |
|
September 29, 2006 |
|
|
2005 |
|
|
|
1,083,195 |
|
|
|
22,000 |
|
|
|
7,000 |
|
|
|
100 |
% |
Advance Auto Rainsville, AL |
|
Automotive parts |
|
September 29, 2006 |
|
|
2005 |
|
|
|
1,328,000 |
|
|
|
27,000 |
|
|
|
7,000 |
|
|
|
100 |
% |
Golds Gym OFallon, IL |
|
Health and fitness |
|
September 29, 2006 |
|
|
2005 |
|
|
|
7,300,000 |
|
|
|
183,000 |
|
|
|
38,000 |
|
|
|
100 |
% |
Rite Aid Glassport, PA |
|
Drugstore |
|
October 4, 2006 |
|
|
2006 |
|
|
|
3,788,000 |
|
|
|
99,000 |
|
|
|
14,564 |
|
|
|
100 |
% |
Davids Bridal/Radio Shack Topeka,
KS |
|
Specialty Retail/Consumer Electronics |
|
October 13, 2006 |
|
|
2006 |
|
|
|
3,021,000 |
|
|
|
60,000 |
|
|
|
10,150 |
|
|
|
100 |
% |
Rite Aid Hanover, PA |
|
Drugstore |
|
October 17, 2006 |
|
|
2006 |
|
|
|
6,330,000 |
|
|
|
168,000 |
|
|
|
14,584 |
|
|
|
100 |
% |
American TV & Appliance Peoria, IL |
|
Consumer electronics |
|
October 23, 2006 |
|
|
2003 |
|
|
|
11,336,983 |
|
|
|
304,000 |
|
|
|
126,852 |
|
|
|
100 |
% |
Tractor Supply La Grange, TX |
|
Specialty retail |
|
November 6, 2006 |
|
|
2006 |
|
|
|
2,580,000 |
|
|
|
66,000 |
|
|
|
24,727 |
|
|
|
100 |
% |
Staples Peru, IL |
|
Office supply |
|
November 9, 2006 |
|
|
1998 |
|
|
|
3,215,000 |
|
|
|
83,000 |
|
|
|
23,925 |
|
|
|
100 |
% |
Fedex Council Bluffs, IA |
|
Distribution |
|
November 15, 2006 |
|
|
1999 |
|
|
|
3,361,000 |
|
|
|
89,000 |
|
|
|
23,510 |
|
|
|
100 |
% |
Fedex Edwardsville, KS |
|
Distribution |
|
November 15, 2006 |
|
|
1999 |
|
|
|
19,815,000 |
|
|
|
525,000 |
|
|
|
155,965 |
|
|
|
100 |
% |
CVS Glenville Scotia, NY |
|
Drugstore |
|
November 16, 2006 |
|
|
2006 |
|
|
|
5,250,000 |
|
|
|
139,000 |
|
|
|
12,900 |
|
|
|
100 |
% |
Advance Auto Ashland, KY |
|
Automotive parts |
|
November 17, 2006 |
|
|
2006 |
|
|
|
1,681,000 |
|
|
|
34,000 |
|
|
|
7,000 |
|
|
|
100 |
% |
Advance Auto Jackson, OH |
|
Automotive parts |
|
November 17, 2006 |
|
|
2005 |
|
|
|
1,352,000 |
|
|
|
27,000 |
|
|
|
7,000 |
|
|
|
100 |
% |
Advance Auto New Boston, OH |
|
Automotive parts |
|
November 17, 2006 |
|
|
2005 |
|
|
|
1,516,000 |
|
|
|
30,000 |
|
|
|
7,000 |
|
|
|
100 |
% |
Advance Auto Scottsburg, IN |
|
Automotive parts |
|
November 17, 2006 |
|
|
2006 |
|
|
|
1,272,000 |
|
|
|
25,000 |
|
|
|
7,000 |
|
|
|
100 |
% |
Tractor Supply Livingston, TN |
|
Specialty retail |
|
November 22, 2006 |
|
|
2006 |
|
|
|
3,100,000 |
|
|
|
79,000 |
|
|
|
24,727 |
|
|
|
100 |
% |
Tractor Supply New Braunfels, TX |
|
Specialty retail |
|
November 22, 2006 |
|
|
2006 |
|
|
|
3,150,000 |
|
|
|
81,000 |
|
|
|
24,727 |
|
|
|
100 |
% |
Office Depot Benton, AR |
|
Office supply |
|
November 21, 2006 |
|
|
2001 |
|
|
|
3,275,000 |
|
|
|
87,000 |
|
|
|
20,515 |
|
|
|
100 |
% |
Old Time Pottery Fairview Heights,
IL |
|
Home furnishings |
|
November 21, 2006 |
|
|
1979 |
|
|
|
4,280,000 |
|
|
|
107,000 |
|
|
|
97,849 |
|
|
|
100 |
% |
Infiniti Davie, FL |
|
Motor vehicle dealerships |
|
November 30, 2006 |
|
|
2006 |
|
|
|
9,432,000 |
|
|
|
189,000 |
|
|
|
20,927 |
|
|
|
100 |
% |
Office Depot Oxford, MS |
|
Office supply |
|
December 1, 2006 |
|
|
2006 |
|
|
|
3,487,450 |
|
|
|
93,000 |
|
|
|
20,000 |
|
|
|
100 |
% |
Tractor Supply Crockett, TX |
|
Specialty retail |
|
December 1, 2006 |
|
|
2006 |
|
|
|
2,450,000 |
|
|
|
62,000 |
|
|
|
24,727 |
|
|
|
100 |
% |
Mercedes Benz Atlanta, GA |
|
Motor vehicle dealerships |
|
December 15, 2006 |
|
|
2000 |
|
|
|
11,760,000 |
|
|
|
235,000 |
|
|
|
40,588 |
|
|
|
100 |
% |
Dicks Sporting Goods Amherst, NY |
|
Sporting goods |
|
December 20, 2006 |
|
|
1986 |
|
|
|
9,725,000 |
|
|
|
195,000 |
|
|
|
55,745 |
|
|
|
100 |
% |
Chilis Paris, TX |
|
Restaurant |
|
December 28, 2006 |
|
|
1999 |
|
|
|
2,750,000 |
|
|
|
73,000 |
|
|
|
6,698 |
|
|
|
100 |
% |
Staples Clarksville, IN |
|
Office supply |
|
December 29, 2006 |
|
|
2006 |
|
|
|
4,430,000 |
|
|
|
118,000 |
|
|
|
20,388 |
|
|
|
100 |
% |
HOM Fargo, ND |
|
Furniture retail |
|
January 4, 2007 |
|
|
2004 |
|
|
|
12,000,000 |
|
|
|
288,000 |
|
|
|
122,108 |
|
|
|
100 |
% |
La-Z-Boy Newington, CT |
|
Furnishings store |
|
January 5, 2007 |
|
|
2006 |
|
|
|
6,900,000 |
|
|
|
179,000 |
|
|
|
20,701 |
|
|
|
100 |
% |
Advance Auto Maryland Heights, MO |
|
Specialty retailer |
|
January 12, 2007 |
|
|
2005 |
|
|
|
1,893,000 |
|
|
|
38,000 |
|
|
|
7,000 |
|
|
|
100 |
% |
Victoria Crossing Victoria, TX |
|
Shopping center |
|
January 12, 2007 |
|
|
2006 |
|
|
|
12,608,000 |
|
|
|
338,000 |
|
|
|
87,473 |
|
|
|
92.3 |
% |
Academy Sports Katy, TX |
|
Headquarters |
|
January 18, 2007 |
|
|
1976 |
|
|
|
102,000,000 |
|
|
|
2,683,000 |
|
|
|
1,500,596 |
|
|
|
100 |
% |
Gordmans Peoria, IL |
|
Department store |
|
January 18, 2007 |
|
|
2006 |
|
|
|
9,000,000 |
|
|
|
230,000 |
|
|
|
60,947 |
|
|
|
100 |
% |
One Pacific Place Omaha, NE |
|
Shopping center |
|
February 6, 2007 |
|
|
1988 |
|
|
|
36,000,000 |
|
|
|
954,000 |
|
|
|
91,564 |
|
|
|
95.2 |
% |
Sack n Save/OReilly Auto
Garland, TX |
|
Shopping center |
|
February 6, 2007 |
|
|
1970 |
|
|
|
5,060,000 |
|
|
|
134,000 |
|
|
|
65,295 |
|
|
|
100 |
% |
Tractor Supply Ankeny, IA |
|
Specialty retail |
|
February 9, 2007 |
|
|
2006 |
|
|
|
3,000,000 |
|
|
|
60,000 |
|
|
|
19,097 |
|
|
|
100 |
% |
ABX Air Coventry, RI |
|
distribution center |
|
February 16, 2007 |
|
|
1998 |
|
|
|
4,090,000 |
|
|
|
107,000 |
|
|
|
33,000 |
|
|
|
100 |
% |
Office Depot Enterprise, AL |
|
office supply |
|
February 27, 2007 |
|
|
2006 |
|
|
|
2,776,357 |
|
|
|
75,000 |
|
|
|
20,000 |
|
|
|
100 |
% |
Northern Tool Blaine, MN |
|
Specialty retail |
|
February 28, 2007 |
|
|
2006 |
|
|
|
4,900,000 |
|
|
|
130,000 |
|
|
|
25,488 |
|
|
|
100 |
% |
Office Max Orangeburg, SC |
|
office supply |
|
February 28, 2007 |
|
|
1999 |
|
|
|
3,125,000 |
|
|
|
82,000 |
|
|
|
23,500 |
|
|
|
100 |
% |
Walgreens Cincinnati, OH |
|
drug store |
|
March 6, 2007 |
|
|
2000 |
|
|
|
5,140,000 |
|
|
|
136,000 |
|
|
|
15,120 |
|
|
|
100 |
% |
Walgreens Madeira, OH |
|
drug store |
|
March 6, 2007 |
|
|
1998 |
|
|
|
4,425,000 |
|
|
|
118,000 |
|
|
|
13,905 |
|
|
|
100 |
% |
Walgreens Sharonville, OH |
|
drug store |
|
March 6, 2007 |
|
|
1998 |
|
|
|
4,085,000 |
|
|
|
109,000 |
|
|
|
13,905 |
|
|
|
100 |
% |
AT&T Beaumont, TX |
|
office building |
|
March 19, 2007 |
|
|
1971 |
|
|
|
12,275,000 |
|
|
|
332,000 |
|
|
|
141,525 |
|
|
|
100 |
% |
Walgreens Shreveport, LA |
|
Drugstore |
|
March 23, 2007 |
|
|
1998 |
|
|
|
4,140,000 |
|
|
|
111,000 |
|
|
|
13,905 |
|
|
|
100 |
% |
Cost-U-Less St. Croix, USVI |
|
Warehouse Club |
|
March 26, 2007 |
|
|
2005 |
|
|
|
6,210,000 |
|
|
|
164,000 |
|
|
|
38,365 |
|
|
|
100 |
% |
Gallina Centro Collierville, TN |
|
Shopping center |
|
March 26, 2007 |
|
|
2000 |
|
|
|
17,750,000 |
|
|
|
497,000 |
|
|
|
142,727 |
|
|
|
100 |
% |
Apria Healthcare St. John, MO |
|
Healthcare |
|
March 28, 2007 |
|
|
1996 |
|
|
|
6,500,000 |
|
|
|
130,000 |
|
|
|
52,200 |
|
|
|
100 |
% |
Logans Roadhouse Fairfax, VA |
|
Restaurant |
|
March 28, 2007 |
|
|
1998 |
|
|
|
3,209,000 |
|
|
|
80,000 |
|
|
|
7,839 |
|
|
|
100 |
% |
Logans Roadhouse Johnson City, TN |
|
Restaurant |
|
March 28, 2007 |
|
|
1996 |
|
|
|
3,866,000 |
|
|
|
97,000 |
|
|
|
7,839 |
|
|
|
100 |
% |
Center at 7500 Cottonwood Jenison,
MI |
|
Shopping center |
|
March 30, 2007 |
|
|
1993 |
|
|
|
5,290,000 |
|
|
|
106,000 |
|
|
|
84,933 |
|
|
|
100 |
% |
Eckerd Lincolnton, NC |
|
Drugstore |
|
April 3, 2007 |
|
|
1998 |
|
|
|
2,262,000 |
|
|
|
61,000 |
|
|
|
10,908 |
|
|
|
100 |
% |
Tractor Supply Greenfield, MN |
|
Specialty retail |
|
April 2, 2007 |
|
|
2006 |
|
|
|
4,050,000 |
|
|
|
103,000 |
|
|
|
22,675 |
|
|
|
100 |
% |
Lincoln Place Fairview Heights, IL |
|
Shopping center |
|
April 5, 2007 |
|
|
1998 |
|
|
|
44,000,000 |
|
|
|
1,234,320 |
|
|
|
272,829 |
|
|
|
100 |
% |
Ashley Furniture Amarillo, TX |
|
Furniture retail |
|
April 6, 2007 |
|
|
1980 |
|
|
|
5,920,000 |
|
|
|
159,000 |
|
|
|
74,797 |
|
|
|
100 |
% |
Pocatello Square Pocatello, ID |
|
Shopping center |
|
April 6, 2007 |
|
|
2006 |
|
|
|
23,000,000 |
|
|
|
632,500 |
|
|
|
138,925 |
|
|
|
90 |
% |
Tractor Supply Paw Paw, MI |
|
Specialty retail |
|
April 9, 2007 |
|
|
2006 |
|
|
|
3,095,000 |
|
|
|
82,000 |
|
|
|
22,670 |
|
|
|
100 |
% |
Tractor Supply Marinette, WI |
|
Specialty retail |
|
April 9, 2007 |
|
|
2006 |
|
|
|
2,950,000 |
|
|
|
78,000 |
|
|
|
19,097 |
|
|
|
100 |
% |
Staples Greenville, SC |
|
Office supply |
|
April 11, 2007 |
|
|
2007 |
|
|
|
4,545,000 |
|
|
|
120,000 |
|
|
|
20,388 |
|
|
|
100 |
% |
Big 5 Center Aurora, CO |
|
Retail center |
|
April 11, 2007 |
|
|
2006 |
|
|
|
4,290,000 |
|
|
|
114,000 |
|
|
|
15,800 |
|
|
|
100 |
% |
Rite Aid Plains, PA |
|
Drugstore |
|
April 16, 2007 |
|
|
2006 |
|
|
|
5,200,000 |
|
|
|
137,800 |
|
|
|
14,564 |
|
|
|
100 |
% |
Tractor Supply Navasota, TX |
|
Specialty retail |
|
April 18, 2007 |
|
|
2006 |
|
|
|
3,015,000 |
|
|
|
80,800 |
|
|
|
22,670 |
|
|
|
100 |
% |
Sportsmans Warehouse De Pere, WI |
|
Specialty retail |
|
April 20, 2007 |
|
|
2004 |
|
|
|
6,010,000 |
|
|
|
159,625 |
|
|
|
48,453 |
|
|
|
100 |
% |
Eckerd Easton, PA |
|
Drugstore |
|
April 25, 2007 |
|
|
2005 |
|
|
|
5,970,000 |
|
|
|
160,000 |
|
|
|
13,813 |
|
|
|
100 |
% |
Applebees Portfolio Various |
|
Restaurant |
|
April 26, 2007(2) |
|
Various |
|
|
65,000,000 |
|
|
|
1,722,500 |
|
|
|
120,246 |
|
|
|
100 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
896,544,376 |
|
|
$ |
21,496,210 |
|
|
|
6,252,416 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Fees paid to sponsor include payments made to an affiliate of our advisor for acquisition
fees in connection with the property acquisition and payments to our advisor for finance
coordination fees for services in connection with the origination or assumption of debt
financing obtained to acquire the respective property. |
5
|
|
|
|
|
For more detailed information on fees
paid to affiliates of our sponsor, see the section captioned Management Compensation
beginning on page 59 of the prospectus. |
|
(2) |
|
The single-tenant restaurants that comprise the Applebees Portfolio were built in various
years, beginning in 1990 through 2006. |
The following table sets forth the principal provisions of the lease terms for the major
tenants at each property listed above.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
% of |
|
|
|
|
|
|
|
|
|
Base |
|
|
|
|
Number |
|
|
|
Total |
|
Total |
|
|
|
|
|
Current |
|
Rent per |
|
|
|
|
of |
|
|
|
Square |
|
Square |
|
|
|
|
|
Annual Base |
|
Square |
|
Lease Term |
Property |
|
Tenants |
|
Major Tenants* |
|
Feet Leased |
|
Feet |
|
Renewal Options** |
|
Rent |
|
Foot |
|
Beginning |
|
To |
Tractor Supply Parkersburg, WV |
|
1 |
|
Tractor Supply Company |
|
|
21,688 |
|
|
|
100 |
% |
|
4/5 yr. |
|
$ |
228,147 |
|
|
$ |
10.52 |
|
|
|
9/26/2005 |
|
|
|
7/31/2010 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
250,962 |
|
|
|
11.57 |
|
|
|
8/1/2010 |
|
|
|
7/31/2015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
276,058 |
|
|
|
12.73 |
|
|
|
8/1/2015 |
|
|
|
7/31/2020 |
|
Walgreens Brainerd, MN |
|
1 |
|
Walgreen Co. |
|
|
15,120 |
|
|
|
100 |
% |
|
8/5 yr. |
|
|
303,000 |
|
|
|
20.04 |
|
|
|
10/5/2005 |
|
|
|
6/30/2020 |
|
Rite Aid Alliance, OH |
|
1 |
|
Rite Aid of Ohio, Inc. |
|
|
11,348 |
|
|
|
100 |
% |
|
6/5 yr. |
|
|
189,023 |
|
|
|
16.66 |
|
|
|
10/20/2005 |
|
|
|
4/30/2017 |
|
La-Z-Boy Glendale, AZ |
|
1 |
|
EBCO, Inc. |
|
|
23,000 |
|
|
|
100 |
% |
|
3/5 yr. |
|
|
419,750 |
|
|
|
18.25 |
|
|
|
10/25/2005 |
|
|
|
10/31/2015 |
|
Walgreens Florissant, MO |
|
1 |
|
Walgreen Co. |
|
|
15,120 |
|
|
|
100 |
% |
|
8/5 yr. |
|
|
344,000 |
|
|
|
22.75 |
|
|
|
11/2/2005 |
|
|
|
2/28/2021 |
|
Walgreens Saint Louis, MO (Gravois) |
|
1 |
|
Walgreen Co. |
|
|
15,120 |
|
|
|
100 |
% |
|
8/5 yr. |
|
|
408,000 |
|
|
|
26.98 |
|
|
|
11/2/2005 |
|
|
|
10/31/2021 |
|
Walgreens Saint Louis, MO (Telegraph) |
|
1 |
|
Walgreen Co. |
|
|
15,120 |
|
|
|
100 |
% |
|
8/5 yr. |
|
|
335,500 |
|
|
|
22.19 |
|
|
|
11/2/2005 |
|
|
|
12/31/2021 |
|
Walgreens Columbia, MO |
|
1 |
|
Walgreen Co. |
|
|
13,973 |
|
|
|
100 |
% |
|
8/5 yr. |
|
|
427,300 |
|
|
|
30.58 |
|
|
|
11/22/2005 |
|
|
|
6/30/2022 |
|
Walgreens Olivette, MO |
|
1 |
|
Walgreen Co. |
|
|
15,030 |
|
|
|
100 |
% |
|
10/5 yr. |
|
|
528,000 |
|
|
|
35.13 |
|
|
|
11/22/2005 |
|
|
|
10/31/2026 |
|
CVS Alpharetta, GA |
|
1 |
|
Mayfield CVS, Inc., |
|
|
10,125 |
|
|
|
100 |
% |
|
3/5 yr. |
|
|
206,600 |
|
|
|
20.40 |
|
|
|
12/1/2005 |
|
|
|
5/31/2008 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
218,997 |
|
|
|
21.63 |
|
|
|
6/1/2008 |
|
|
|
5/31/2013 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
232,136 |
|
|
|
22.93 |
|
|
|
6/1/2013 |
|
|
|
1/31/2019 |
|
Lowes Enterprise, AL |
|
1 |
|
Lowes Home Centers, Inc |
|
|
95,173 |
|
|
|
100 |
% |
|
6/5 yr. |
|
|
500,000 |
|
|
|
5.25 |
|
|
|
12/1/2005 |
|
|
|
4/30/2015 |
|
CVS Richland Hills, TX |
|
1 |
|
CVS EGL Grapevine N Richland Hills Texas, LP |
|
|
10,908 |
|
|
|
100 |
% |
|
4/5 yr. |
|
|
265,249 |
|
|
|
24.32 |
|
|
|
12/8/2005 |
|
|
|
8/28/2007 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
270,849 |
|
|
|
24.83 |
|
|
|
8/29/2007 |
|
|
|
8/28/2012 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
276,449 |
|
|
|
25.34 |
|
|
|
8/29/2012 |
|
|
|
8/28/2017 |
|
FedEx Rockford, IL |
|
1 |
|
Fed Ex Ground Package System, Inc. |
|
|
67,925 |
|
|
|
100 |
% |
|
2/5 yr. |
|
|
445,632 |
|
|
|
6.56 |
|
|
|
12/9/2005 |
|
|
|
9/30/2015 |
|
Plastech Auburn Hills, MI |
|
1 |
|
LDM Technologies, Inc. |
|
|
111,881 |
|
|
|
100 |
% |
|
2/5 yr. |
|
|
1,790,100 |
|
|
|
16.00 |
|
|
|
12/15/2005 |
|
|
|
1/31/2021 |
(2) |
Academy Sports Macon, GA |
|
1 |
|
Academy, LTD |
|
|
74,532 |
|
|
|
100 |
% |
|
4/5 yr. |
|
|
408,804 |
|
|
|
5.48 |
|
|
|
1/6/2006 |
|
|
|
1/31/2011 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
421,064 |
|
|
|
5.65 |
|
|
|
2/1/2011 |
|
|
|
1/31/2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
433,695 |
|
|
|
5.82 |
|
|
|
2/1/2016 |
|
|
|
1/31/2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
446,706 |
|
|
|
5.99 |
|
|
|
2/1/2021 |
|
|
|
1/31/2026 |
|
Davids Bridal Lenexa, KS |
|
1 |
|
Davids Bridal, Inc. |
|
|
12,083 |
|
|
|
100 |
% |
|
2/5 yr. |
|
|
235,200 |
|
|
|
19.47 |
|
|
|
1/11/2006 |
|
|
|
12/31/2010 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
258,720 |
|
|
|
21.41 |
|
|
|
1/1/2011 |
|
|
|
12/31/2015 |
|
Rite Aid Enterprise, AL |
|
1 |
|
Harco, Inc. |
|
|
14,564 |
|
|
|
100 |
% |
|
6/5 yr. |
|
|
289,629 |
|
|
|
19.89 |
|
|
|
1/26/2006 |
|
|
|
1/31/2026 |
|
Rite Aid Wauseon, OH |
|
1 |
|
Rite Aid of Ohio, Inc. |
|
|
14,564 |
|
|
|
100 |
% |
|
6/5 yr. |
|
|
311,720 |
|
|
|
21.40 |
|
|
|
1/26/2006 |
|
|
|
1/31/2026 |
|
Staples Crossville, TN |
|
1 |
|
Staples the Office Superstore East, Inc |
|
|
23,942 |
|
|
|
100 |
% |
|
3/5 yr. |
|
|
221,463 |
|
|
|
9.25 |
|
|
|
1/26/2006 |
|
|
|
6/30/2016 |
|
Rite Aid Saco, ME |
|
1 |
|
Rite Aid of Maine, Inc. |
|
|
11,180 |
|
|
|
100 |
% |
|
4/5 yr. |
|
|
210,743 |
|
|
|
18.85 |
|
|
|
1/27/2006 |
|
|
|
2/28/2017 |
|
Wadsworth Boulevard Denver, CO |
|
2 |
|
Sams PW, Inc. |
|
|
108,224 |
|
|
|
55 |
% |
|
10/5 yr. |
|
|
820,245 |
|
|
|
7.58 |
|
|
|
2/8/2006 |
|
|
|
11/30/2016 |
|
|
|
|
|
Hob-Lob Limited Partnership |
|
|
90,253 |
|
|
|
45 |
% |
|
10/5 yr. |
|
|
585,000 |
|
|
|
6.48 |
|
|
|
2/8/2006 |
|
|
|
10/31/2016 |
|
Mountainside Fitness Chandler, AZ |
|
1 |
|
Hatten Holdings, Inc. |
|
|
31,063 |
|
|
|
100 |
% |
|
2/5 yr. |
|
|
469,051 |
|
|
|
15.10 |
|
|
|
2/10/2006 |
|
|
|
12/31/2006 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
523,101 |
|
|
|
16.84 |
|
|
|
1/1/2007 |
|
|
|
12/31/2011 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
583,363 |
|
|
|
18.78 |
|
|
|
1/1/2012 |
|
|
|
12/31/2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
651,391 |
|
|
|
20.97 |
|
|
|
1/1/2017 |
|
|
|
7/18/2022 |
|
Drexel Heritage Hickory, NC |
|
1 |
|
Drexel Heritage Furniture Industries, Inc. |
|
|
261,057 |
|
|
|
100 |
% |
|
3/5 yr. |
|
|
338,078 |
|
|
|
1.30 |
|
|
|
2/24/2006 |
|
|
|
9/8/2010 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
390,090 |
|
|
|
1.49 |
|
|
|
9/9/2010 |
|
|
|
9/8/2015 |
|
Rayford Square Spring, TX |
|
5 |
|
Academy Corp |
|
|
50,500 |
|
|
|
63 |
% |
|
2/5 yr. |
|
|
371,175 |
|
|
|
7.35 |
|
|
|
3/1/2006 |
|
|
|
10/31/2009 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
383,800 |
|
|
|
7.60 |
|
|
|
11/1/2009 |
|
|
|
10/31/2014 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
396,425 |
|
|
|
7.85 |
|
|
|
11/1/2014 |
|
|
|
10/31/2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
409,050 |
|
|
|
8.10 |
|
|
|
11/1/2019 |
|
|
|
10/31/2024 |
|
|
|
|
|
CB Jackson |
|
|
12,302 |
|
|
|
15 |
% |
|
None |
|
|
125,484 |
|
|
|
10.20 |
|
|
|
3/1/2006 |
|
|
|
12/31/2008 |
|
|
|
|
|
Hi-Lo Auto Supply, LP |
|
|
8,136 |
|
|
|
10 |
% |
|
1/5 yr. |
|
|
60,720 |
|
|
|
7.46 |
|
|
|
3/1/2006 |
|
|
|
3/31/2008 |
|
CVS Portsmouth OH (Scioto Trail) |
|
1 |
|
Revco Discount Drug Centers, inc. |
|
|
10,170 |
|
|
|
100 |
% |
|
4/5 yr. |
|
|
153,333 |
|
|
|
15.08 |
|
|
|
3/8/2006 |
|
|
|
7/31/2008 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
156,666 |
|
|
|
15.40 |
|
|
|
8/1/2008 |
|
|
|
7/31/2013 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
160,000 |
|
|
|
15.73 |
|
|
|
8/1/2013 |
|
|
|
7/31/2018 |
|
Wawa Hockessin, DE |
|
1 |
|
Wawa, Inc. |
|
|
5,160 |
|
|
|
100 |
% |
|
6/5 - 9 yrs. |
|
|
365,185 |
|
|
|
70.77 |
|
|
|
3/29/2006 |
|
|
|
12/31/2021 |
(3) |
Wawa Manahawkin, NJ |
|
1 |
|
Wawa, Inc. |
|
|
4,695 |
|
|
|
100 |
% |
|
6/5 - 9 yrs. |
|
|
332,276 |
|
|
|
70.77 |
|
|
|
3/29/2006 |
|
|
|
12/31/2021 |
(3) |
Wawa Narbeth, PA |
|
1 |
|
Wawa, Inc. |
|
|
4,461 |
|
|
|
100 |
% |
|
6/5 - 9 yrs. |
|
|
315,715 |
|
|
|
70.77 |
|
|
|
3/29/2006 |
|
|
|
12/31/2021 |
(3) |
6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
% of |
|
|
|
|
|
|
|
|
|
Base |
|
|
|
|
Number |
|
|
|
Total |
|
Total |
|
|
|
|
|
Current |
|
Rent per |
|
|
|
|
of |
|
|
|
Square |
|
Square |
|
|
|
|
|
Annual Base |
|
Square |
|
Lease Term |
Property |
|
Tenants |
|
Major Tenants* |
|
Feet Leased |
|
Feet |
|
Renewal Options** |
|
Rent |
|
Foot |
|
Beginning |
|
To |
CVS Lakewood, OH |
|
2 |
|
Revco Discount Drug Centers |
|
|
10,800 |
|
|
|
84 |
% |
|
2/5 yr. |
|
|
180,900 |
|
|
|
16.75 |
|
|
|
4/20/2006 |
|
|
|
9/30/2006 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
191,700 |
|
|
|
17.75 |
|
|
|
10/1/2006 |
|
|
|
9/30/2016 |
|
|
|
|
|
Charter One Bank, N.A |
|
|
2,000 |
|
|
|
16 |
% |
|
1/5yr |
|
|
30,992 |
|
|
|
15.50 |
|
|
|
4/20/2006 |
|
|
|
7/31/2006 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
33,898 |
|
|
|
16.95 |
|
|
|
8/1/2006 |
|
|
|
7/31/2011 |
|
Rite Aid Cleveland, OH |
|
1 |
|
Rite Aid of Ohio, Inc. |
|
|
11,325 |
|
|
|
100 |
% |
|
6/5 yr. |
|
|
220,470 |
|
|
|
19.47 |
|
|
|
4/27/2006 |
|
|
|
6/30/2018 |
|
Rite Aid Fremont, OH |
|
1 |
|
Rite Aid of Ohio, Inc. |
|
|
11,325 |
|
|
|
100 |
% |
|
6/5 yr. |
|
|
201,955 |
|
|
|
17.83 |
|
|
|
4/27/2006 |
|
|
|
2/28/2018 |
|
Walgreens Knoxville, TN |
|
1 |
|
Walgreen Co. |
|
|
15,120 |
|
|
|
100 |
% |
|
8/5 yr. |
|
|
350,000 |
|
|
|
23.15 |
|
|
|
5/8/2006 |
|
|
|
5/31/2020 |
|
CVS Madison, MS |
|
1 |
|
CVS EGL Highland Madison MS, Inc. |
|
|
13,824 |
|
|
|
100 |
% |
|
4/5 yr. |
|
|
302,484 |
|
|
|
21.88 |
|
|
|
5/26/2006 |
|
|
|
6/10/2024 |
|
Rite Aid Defiance, OH |
|
1 |
|
Rite Aid of Ohio, Inc. |
|
|
14,564 |
|
|
|
100 |
% |
|
6/5 yr. |
|
|
337,917 |
|
|
|
23.20 |
|
|
|
5/26/2006 |
|
|
|
1/31/2026 |
|
Conns San Antonio, TX |
|
1 |
|
CAI, LP |
|
|
25,230 |
|
|
|
100 |
% |
|
5/3 yr. |
|
|
338,000 |
|
|
|
13.40 |
|
|
|
5/26/2006 |
|
|
|
4/30/2008 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
351,520 |
|
|
|
13.93 |
|
|
|
5/1/2008 |
|
|
|
4/30/2011 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
365,581 |
|
|
|
14.49 |
|
|
|
5/1/2011 |
|
|
|
4/30/2014 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
380,204 |
|
|
|
15.07 |
|
|
|
5/1/2014 |
|
|
|
4/30/2017 |
|
Dollar General Crossville, TN |
|
1 |
|
Dolgencorp, Inc. |
|
|
24,341 |
|
|
|
100 |
% |
|
6/5 yr. |
|
|
217,852 |
|
|
|
8.95 |
|
|
|
6/2/2006 |
|
|
|
3/31/2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
239,637 |
|
|
|
9.84 |
|
|
|
4/1/2016 |
|
|
|
3/31/2021 |
|
Dollar General Ardmore, TN |
|
1 |
|
Dolgencorp, Inc. |
|
|
24,341 |
|
|
|
100 |
% |
|
6/5 yr. |
|
|
208,116 |
|
|
|
8.55 |
|
|
|
6/9/2006 |
|
|
|
11/30/2015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
228,928 |
|
|
|
9.41 |
|
|
|
12/1/2015 |
|
|
|
11/30/2020 |
|
Dollar General Livingston, TN |
|
1 |
|
Dolgencorp, Inc. |
|
|
24,341 |
|
|
|
100 |
% |
|
6/5 yr. |
|
|
214,200 |
|
|
|
8.80 |
|
|
|
6/12/2006 |
|
|
|
4/30/2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
235,620 |
|
|
|
9.68 |
|
|
|
5/1/2016 |
|
|
|
4/30/2021 |
|
Wehrenberg Theatre Arnold, MO |
|
1 |
|
Wehrenberg, Inc. |
|
|
50,000 |
|
|
|
100 |
% |
|
2/5 yr. |
|
|
784,453 |
|
|
|
15.69 |
|
|
|
6/14/2006 |
|
|
|
3/31/2009 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
836,094 |
|
|
|
16.72 |
|
|
|
4/1/2009 |
|
|
|
3/31/2014 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
897,572 |
|
|
|
17.95 |
|
|
|
4/1/2014 |
|
|
|
3/31/2019 |
|
Sportmans Warehouse Wichita, KS |
|
1 |
|
Sportsmans Warehouse, Inc., |
|
|
50,003 |
|
|
|
100 |
% |
|
5/5 yr. |
|
|
639,046 |
|
|
|
12.78 |
|
|
|
6/27/2006 |
|
|
|
4/30/2011 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
670,998 |
|
|
|
13.42 |
|
|
|
5/1/2011 |
|
|
|
4/30/2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
704,548 |
|
|
|
14.09 |
|
|
|
5/1/2016 |
|
|
|
4/30/2021 |
|
CVS Portsmouth OH (Chillicothe) |
|
1 |
|
Revco Discount Drug Centers, Inc. |
|
|
10,650 |
|
|
|
100 |
% |
|
4/5 yr. |
|
|
143,700 |
|
|
|
13.49 |
|
|
|
6/28/2006 |
|
|
|
11/30/2007 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
149,100 |
|
|
|
14.00 |
|
|
|
12/1/2007 |
|
|
|
11/30/2017 |
|
Advance Auto Greenfield, IN |
|
1 |
|
Advance Stores Company, Inc. |
|
|
7,000 |
|
|
|
100 |
% |
|
2/5 yr. |
|
|
110,040 |
|
|
|
15.72 |
|
|
|
6/29/2006 |
|
|
|
6/30/2013 |
|
Advance Auto Trenton, OH |
|
1 |
|
Advance Stores Company, Inc. |
|
|
7,000 |
|
|
|
100 |
% |
|
2/5 yr. |
|
|
84,782 |
|
|
|
12.11 |
|
|
|
6/29/2006 |
|
|
|
6/30/2013 |
|
Rite Aid Lansing, MI |
|
1 |
|
Rite Aid of Michigan, Inc. |
|
|
11,680 |
|
|
|
100 |
% |
|
4/5 yr. |
|
|
160,480 |
|
|
|
13.74 |
|
|
|
6/29/2006 |
|
|
|
12/31/2006 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
166,320 |
|
|
|
14.24 |
|
|
|
1/1/2007 |
|
|
|
12/31/2011 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
172,160 |
|
|
|
14.74 |
|
|
|
1/1/2012 |
|
|
|
12/31/2016 |
|
Advance Auto Columbia Heights, MN |
|
1 |
|
Advance Stores Company, Inc. |
|
|
7,000 |
|
|
|
100 |
% |
|
3/5 yr. |
|
|
131,524 |
|
|
|
18.79 |
|
|
|
7/6/2006 |
|
|
|
1/31/2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
138,100 |
|
|
|
19.73 |
|
|
|
2/1/2016 |
|
|
|
1/31/2021 |
|
Advance Auto Fergus Falls, MN |
|
1 |
|
Advance Stores Company, Inc. |
|
|
7,000 |
|
|
|
100 |
% |
|
3/5 yr. |
|
|
91,441 |
|
|
|
13.06 |
|
|
|
7/6/2006 |
|
|
|
11/30/2015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
96,013 |
|
|
|
13.72 |
|
|
|
12/1/2015 |
|
|
|
11/30/2020 |
|
CVS Okeechobee, FL |
|
1 |
|
Eckerd Corporation |
|
|
13,050 |
|
|
|
100 |
% |
|
5/5 yr. |
|
|
435,130 |
|
|
|
33.34 |
|
|
|
7/7/2006 |
|
|
|
7/5/2026 |
|
Office Depot Dayton, OH |
|
1 |
|
Office Depot, Inc. |
|
|
19,880 |
|
|
|
100 |
% |
|
4/5 yr. |
|
|
237,566 |
|
|
|
11.95 |
|
|
|
7/7/2006 |
|
|
|
12/31/2021 |
|
Advance Auto Holland, MI |
|
1 |
|
Advance Stores Company, Inc. |
|
|
7,000 |
|
|
|
100 |
% |
|
3/5 yr. |
|
|
149,063 |
|
|
|
21.29 |
|
|
|
7/12/2006 |
|
|
|
1/31/2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
163,969 |
|
|
|
23.42 |
|
|
|
2/1/2016 |
|
|
|
1/31/2021 |
|
Advance Auto Holland Township, MI |
|
1 |
|
Advance Stores Company, Inc. |
|
|
7,000 |
|
|
|
100 |
% |
|
3/5 yr. |
|
|
153,908 |
|
|
|
21.99 |
|
|
|
7/12/2006 |
|
|
|
1/31/2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
169,299 |
|
|
|
24.19 |
|
|
|
2/1/2016 |
|
|
|
1/31/2021 |
|
Advance Auto Zeeland, MI |
|
1 |
|
Advance Stores Company, Inc. |
|
|
7,000 |
|
|
|
100 |
% |
|
3/5 yr. |
|
|
132,089 |
|
|
|
18.87 |
|
|
|
7/12/2006 |
|
|
|
1/31/2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
145,298 |
|
|
|
20.76 |
|
|
|
2/1/2016 |
|
|
|
1/31/2026 |
|
CVS Orlando, FL |
|
1 |
|
CVS EGL Lake Pickett FL, LLC |
|
|
13,013 |
|
|
|
100 |
% |
|
4/5 yr. |
|
|
324,765 |
|
|
|
24.96 |
|
|
|
7/12/2006 |
|
|
|
11/1/2025 |
|
Office Depot Greenville, MS |
|
1 |
|
Office Depot, Inc. |
|
|
25,083 |
|
|
|
100 |
% |
|
3/5 yr. |
|
|
256,804 |
|
|
|
10.24 |
|
|
|
7/12/2006 |
|
|
|
9/30/2015 |
|
Office Depot Warrensburg, MO |
|
1 |
|
Office Depot, Inc. |
|
|
20,000 |
|
|
|
100 |
% |
|
4/5 yr. |
|
|
210,000 |
|
|
|
10.50 |
|
|
|
7/19/2006 |
|
|
|
8/31/2016 |
|
CVS Gulfport, MS |
|
1 |
|
CVS EGL East Pass Gulfport MS, Inc. |
|
|
11,359 |
|
|
|
100 |
% |
|
4/5 yr. |
|
|
281,136 |
|
|
|
24.75 |
|
|
|
8/10/2006 |
|
|
|
10/24/2025 |
|
Advance Auto Grand Forks, ND |
|
1 |
|
Advance Stores Company, Inc. |
|
|
7,000 |
|
|
|
100 |
% |
|
3/5 yr. |
|
|
106,375 |
|
|
|
15.20 |
|
|
|
8/15/2006 |
|
|
|
12/31/2015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
111,694 |
|
|
|
15.96 |
|
|
|
1/1/2016 |
|
|
|
12/31/2020 |
|
CVS Clinton, NY |
|
1 |
|
CVS BDI, Inc., |
|
|
10,055 |
|
|
|
100 |
% |
|
4/5 yr. |
|
|
222,661 |
|
|
|
22.14 |
|
|
|
8/24/2006 |
|
|
|
1/31/2032 |
|
Oxford Theatre Oxford, MS |
|
1 |
|
Oxford Theater Company, Inc. |
|
|
35,000 |
|
|
|
100 |
% |
|
|
N/A |
|
|
|
848,088 |
|
|
|
24.23 |
|
|
|
8/31/2006 |
|
|
|
7/31/2011 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
883,092 |
|
|
|
25.23 |
|
|
|
8/1/2011 |
|
|
|
7/31/2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
918,084 |
|
|
|
26.23 |
|
|
|
8/1/2016 |
|
|
|
7/31/2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
953,088 |
|
|
|
27.23 |
|
|
|
8/1/2021 |
|
|
|
7/31/2026 |
|
7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
% of |
|
|
|
|
|
|
|
|
|
Base |
|
|
|
|
Number |
|
|
|
Total |
|
Total |
|
|
|
|
|
Current |
|
Rent per |
|
|
|
|
of |
|
|
|
Square |
|
Square |
|
|
|
|
|
Annual Base |
|
Square |
|
Lease Term |
Property |
|
Tenants |
|
Major Tenants* |
|
Feet Leased |
|
Feet |
|
Renewal Options** |
|
Rent |
|
Foot |
|
Beginning |
|
To |
Advance Auto Duluth, MN |
|
1 |
|
Advance Stores Company, Inc. |
|
|
7,000 |
|
|
|
100 |
% |
|
3/5 yr. |
|
|
108,875 |
|
|
|
15.55 |
|
|
|
9/8/2006 |
|
|
|
2/28/2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
114,319 |
|
|
|
16.33 |
|
|
|
3/1/2016 |
|
|
|
2/28/2021 |
|
Walgreens Picayune, MS |
|
1 |
|
Walgreen Co. |
|
|
14,820 |
|
|
|
100 |
% |
|
10/5 yr. |
|
|
291,385 |
|
|
|
19.66 |
|
|
|
9/15/2006 |
|
|
|
3/31/2031 |
|
Kohls Wichita, KS |
|
1 |
|
Kohls Illinois, Inc. |
|
|
86,584 |
|
|
|
100 |
% |
|
6/5 yr. |
|
|
601,759 |
|
|
|
6.95 |
|
|
|
9/27/2006 |
|
|
|
1/28/2017 |
|
Lowes Lubbock, TX |
|
1 |
|
Lowes Home Centers, Inc. |
|
|
137,480 |
|
|
|
100 |
% |
|
6/5 yr. |
|
|
861,280 |
|
|
|
6.26 |
|
|
|
9/27/2006 |
|
|
|
4/30/2016 |
|
Lowes Midland, TX |
|
1 |
|
Lowes Home Centers, Inc. |
|
|
134,050 |
|
|
|
100 |
% |
|
6/5 yr. |
|
|
829,960 |
|
|
|
6.19 |
|
|
|
9/27/2006 |
|
|
|
4/30/2016 |
|
Advance Auto Grand Bay, AL |
|
1 |
|
Advance Stores Company, Inc. |
|
|
7,000 |
|
|
|
100 |
% |
|
3/5 yr. |
|
|
84,786 |
|
|
|
12.11 |
|
|
|
9/29/2006 |
|
|
|
8/31/2015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
93,265 |
|
|
|
13.32 |
|
|
|
9/1/2015 |
|
|
|
8/31/2020 |
|
Advance Auto Hurley, MS |
|
1 |
|
Advance Stores Company, Inc. |
|
|
7,000 |
|
|
|
100 |
% |
|
3/5 yr. |
|
|
82,324 |
|
|
|
11.76 |
|
|
|
9/29/2006 |
|
|
|
3/31/2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
90,556 |
|
|
|
12.94 |
|
|
|
4/1/2016 |
|
|
|
3/31/2021 |
|
Advance Auto Rainsville, AL |
|
1 |
|
Advance Stores Company, Inc. |
|
|
7,000 |
|
|
|
100 |
% |
|
3/5 yr. |
|
|
100,928 |
|
|
|
14.42 |
|
|
|
9/29/2006 |
|
|
|
12/31/2015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
111,021 |
|
|
|
15.86 |
|
|
|
1/1/2015 |
|
|
|
12/31/2020 |
|
Golds Gym OFallon, IL |
|
1 |
|
Golds St Louis, LLC |
|
|
38,000 |
|
|
|
100 |
% |
|
2/5 yr. |
|
|
588,000 |
|
|
|
15.47 |
|
|
|
9/29/2006 |
|
|
|
9/30/2015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
616,800 |
|
|
|
16.23 |
|
|
|
10/1/2015 |
|
|
|
9/30/2019 |
|
Rite Aid Glassport, PA |
|
1 |
|
Rite Aid of Pennsylvania, Inc. |
|
|
14,564 |
|
|
|
100 |
% |
|
6/5 yr. |
|
|
295,504 |
|
|
|
20.29 |
|
|
|
10/4/2006 |
|
|
|
7/31/2026 |
|
Davids Bridal/Radio Shack Topeka, KS |
|
2 |
|
Davids Bridal, Inc. |
|
|
7,750 |
|
|
|
76 |
% |
|
2/5 yr. |
|
|
166,625 |
|
|
|
21.50 |
|
|
|
10/13/2006 |
|
|
|
10/31/2011 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
183,288 |
|
|
|
23.65 |
|
|
|
11/1/2011 |
|
|
|
10/31/2016 |
|
|
|
|
|
Radio Shack Corporation |
|
|
2,400 |
|
|
|
24 |
% |
|
3/5 yr. |
|
|
60,000 |
|
|
|
25.00 |
|
|
|
10/13/2006 |
|
|
|
1/31/2012 |
|
Rite Aid Hanover, PA |
|
1 |
|
Rite Aid |
|
|
14,584 |
|
|
|
100 |
% |
|
4/5 yr. |
|
|
493,787 |
|
|
|
33.86 |
|
|
|
10/17/2006 |
|
|
|
10/31/2026 |
|
American TV & Appliance Peoria, IL |
|
1 |
|
American TV & Appliance of Madison, Inc. |
|
|
126,852 |
|
|
|
100 |
% |
|
8/5 yr. |
|
|
840,750 |
|
|
|
6.63 |
|
|
|
10/23/2006 |
|
|
|
9/23/2008 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
924,825 |
|
|
|
7.29 |
|
|
|
9/24/2008 |
|
|
|
9/23/2013 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,017,308 |
|
|
|
8.02 |
|
|
|
9/24/2013 |
|
|
|
9/23/2018 |
|
Tractor Supply La Grange, TX |
|
1 |
|
Tractor Supply Texas |
|
|
24,727 |
|
|
|
100 |
% |
|
4/5 yr. |
|
|
189,000 |
|
|
|
7.64 |
|
|
|
11/6/2006 |
|
|
|
5/31/2011 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
207,900 |
|
|
|
8.41 |
|
|
|
6/1/2011 |
|
|
|
5/31/2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
228,690 |
|
|
|
9.25 |
|
|
|
6/1/2016 |
|
|
|
5/31/2021 |
|
Staples Peru, IL |
|
1 |
|
Staples the Office Superstore East, Inc |
|
|
23,925 |
|
|
|
100 |
% |
|
3/5 yr. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
257,194 |
|
|
|
10.75 |
|
|
|
11/10/2006 |
|
|
|
6/30/2008 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
258,390 |
|
|
|
10.80 |
|
|
|
7/1/2008 |
|
|
|
6/30/2013 |
|
Fedex Council Bluffs, IA |
|
1 |
|
Fedex Freight East, Inc. |
|
|
23,510 |
|
|
|
100 |
% |
|
4/5 yr. |
|
|
252,054 |
|
|
|
10.72 |
|
|
|
11/15/2006 |
|
|
|
9/30/2021 |
|
Fedex Edwardsville, KS |
|
1 |
|
Fedex Freight East, Inc. |
|
|
155,965 |
|
|
|
100 |
% |
|
4/5 yr. |
|
|
1,486,123 |
|
|
|
9.53 |
|
|
|
11/15/2006 |
|
|
|
9/30/2021 |
|
CVS Glenville Scotia, NY |
|
1 |
|
CVS Mack Drug of New York, LLC |
|
|
12,900 |
|
|
|
100 |
% |
|
4/5 yr. |
|
|
371,912 |
|
|
|
28.83 |
|
|
|
11/16/2006 |
|
|
|
1/31/2032 |
|
Advance Auto Ashland, KY |
|
1 |
|
Advance Stores Company, Inc. |
|
|
7,000 |
|
|
|
100 |
% |
|
3/5 yr. |
|
|
126,948 |
|
|
|
18.14 |
|
|
|
11/17/2006 |
|
|
|
6/30/2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
139,643 |
|
|
|
19.95 |
|
|
|
7/1/2016 |
|
|
|
6/30/2021 |
|
Advance Auto Jackson, OH |
|
1 |
|
Advance Stores Company, Inc. |
|
|
7,000 |
|
|
|
100 |
% |
|
3/5 yr. |
|
|
102,100 |
|
|
|
14.59 |
|
|
|
11/17/2006 |
|
|
|
9/30/2015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
112,304 |
|
|
|
16.04 |
|
|
|
10/1/2015 |
|
|
|
9/30/2020 |
|
Advance Auto New Boston, OH |
|
1 |
|
Advance Stores Company, Inc. |
|
|
7,000 |
|
|
|
100 |
% |
|
3/5 yr. |
|
|
114,501 |
|
|
|
16.36 |
|
|
|
11/17/2006 |
|
|
|
6/30/2015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
125,951 |
|
|
|
17.99 |
|
|
|
7/1/2015 |
|
|
|
6/30/2020 |
|
Advance Auto Scottsburg, IN |
|
1 |
|
Advance Stores Company, Inc. |
|
|
7,000 |
|
|
|
100 |
% |
|
3/5 yr. |
|
|
96,008 |
|
|
|
13.72 |
|
|
|
11/17/2006 |
|
|
|
8/31/2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100,808 |
|
|
|
14.40 |
|
|
|
9/1/2016 |
|
|
|
8/31/2021 |
|
Tractor Supply Livingston, TN |
|
1 |
|
Tractor Supply Texas |
|
|
24,727 |
|
|
|
100 |
% |
|
4/5 yr. |
|
|
225,000 |
|
|
|
9.10 |
|
|
|
11/22/2006 |
|
|
|
11/13/2011 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
247,500 |
|
|
|
10.01 |
|
|
|
11/14/2011 |
|
|
|
11/13/2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
272,250 |
|
|
|
11.01 |
|
|
|
11/14/2016 |
|
|
|
11/13/2021 |
|
Tractor Supply New Braunfels, TX |
|
1 |
|
Tractor Supply Texas |
|
|
24,727 |
|
|
|
100 |
% |
|
4/5 yr. |
|
|
224,500 |
|
|
|
9.08 |
|
|
|
11/22/2006 |
|
|
|
2/28/2011 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
246,950 |
|
|
|
9.99 |
|
|
|
3/1/2011 |
|
|
|
2/28/2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
271,645 |
|
|
|
10.99 |
|
|
|
3/1/2016 |
|
|
|
2/28/2021 |
|
Office Depot Benton, AR |
|
1 |
|
Office Depot, Inc. |
|
|
20,515 |
|
|
|
100 |
% |
|
4/5 yr. |
|
|
246,180 |
|
|
|
12.00 |
|
|
|
11/21/2006 |
|
|
|
11/30/2011 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
251,309 |
|
|
|
12.25 |
|
|
|
12/1/2011 |
|
|
|
11/30/2016 |
|
Old Time Pottery Fairview Heights, IL |
|
1 |
|
Old Time Pottery, Inc. |
|
|
97,849 |
|
|
|
100 |
% |
|
3/5 yr. |
|
|
342,472 |
|
|
|
3.50 |
|
|
|
11/21/2006 |
|
|
|
12/31/2010 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
366,934 |
|
|
|
3.75 |
|
|
|
1/1/2011 |
|
|
|
12/30/2015 |
|
Infiniti Davie, FL |
|
1 |
|
Warren Henry Automobiles, Inc. |
|
|
20,927 |
|
|
|
100 |
% |
|
4/5 yr. |
|
|
707,395 |
|
|
|
33.80 |
|
|
|
11/30/2006 |
|
|
|
7/1/2021 |
(4) |
Office Depot Oxford, MS |
|
1 |
|
Office Depot, Inc. |
|
|
20,000 |
|
|
|
100 |
% |
|
3/5 yr. |
|
|
264,000 |
|
|
|
13.20 |
|
|
|
12/1/2006 |
|
|
|
10/31/2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
290,000 |
|
|
|
14.50 |
|
|
|
11/1/2016 |
|
|
|
10/31/2021 |
|
Tractor Supply Crockett, TX |
|
1 |
|
Tractor Supply Texas |
|
|
24,727 |
|
|
|
100 |
% |
|
4/5 yr. |
|
|
179,000 |
|
|
|
7.24 |
|
|
|
12/1/2006 |
|
|
|
10/23/2011 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
196,900 |
|
|
|
7.96 |
|
|
|
10/24/2011 |
|
|
|
10/23/2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
216,590 |
|
|
|
8.76 |
|
|
|
10/24/2016 |
|
|
|
10/23/2021 |
|
Mercedes Benz Atlanta, GA |
|
1 |
|
Atlanta Eurocars |
|
|
40,588 |
|
|
|
100 |
% |
|
4/5 yr. |
|
|
900,000 |
|
|
|
22.17 |
|
|
|
12/15/2006 |
|
|
|
12/31/2011 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
990,000 |
|
|
|
24.39 |
|
|
|
1/1/2012 |
|
|
|
12/31/2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,089,000 |
|
|
|
26.83 |
|
|
|
1/1/2017 |
|
|
|
12/31/2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,197,900 |
|
|
|
29.51 |
|
|
|
1/1/2022 |
|
|
|
12/31/2026 |
|
8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
% of |
|
|
|
|
|
|
|
|
|
Base |
|
|
|
|
Number |
|
|
|
Total |
|
Total |
|
|
|
|
|
Current |
|
Rent per |
|
|
|
|
of |
|
|
|
Square |
|
Square |
|
|
|
|
|
Annual Base |
|
Square |
|
Lease Term |
Property |
|
Tenants |
|
Major Tenants* |
|
Feet Leased |
|
Feet |
|
Renewal Options** |
|
Rent |
|
Foot |
|
Beginning |
|
To |
Dicks Sporting Goods Amherst, NY |
|
1 |
|
Dicks Sporting Goods |
|
|
55,745 |
|
|
|
100 |
% |
|
3/5 yr. |
|
|
762,592 |
|
|
|
13.68 |
|
|
|
12/20/2006 |
|
|
|
11/30/2010 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
790,464 |
|
|
|
14.18 |
|
|
|
12/1/2010 |
|
|
|
11/30/2015 |
|
Chilis Paris, TX |
|
1 |
|
Brinker Texas, L.P. |
|
|
6,698 |
|
|
|
100 |
% |
|
2/5 yr. |
|
|
200,913 |
|
|
|
30.00 |
|
|
|
12/28/2006 |
|
|
|
11/30/2025 |
|
Staples Clarksville, IN |
|
1 |
|
Staples the Office Superstore East, Inc. |
|
|
20,388 |
|
|
|
100 |
% |
|
3/5 yr. |
|
|
326,208 |
|
|
|
16.00 |
|
|
|
12/29/2006 |
|
|
|
10/31/2011 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
356,790 |
|
|
|
17.50 |
|
|
|
11/1/2011 |
|
|
|
10/31/2016 |
|
HOM Fargo, ND |
|
1 |
|
HOM Furniture, Inc. |
|
|
122,108 |
|
|
|
100 |
% |
|
4/5 yr. |
|
|
968,000 |
|
|
|
7.93 |
|
|
|
1/4/2007 |
|
|
|
12/31/2011 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,017,159 |
|
|
|
8.33 |
|
|
|
1/1/2012 |
|
|
|
12/31/2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,070,877 |
|
|
|
8.77 |
|
|
|
1/1/2017 |
|
|
|
1/31/2022 |
|
La-Z-Boy Newington, CT |
|
1 |
|
LZB Furniture Galleries of Paramus, Inc. |
|
|
20,701 |
|
|
|
100 |
% |
|
2/5 yr. |
|
|
496,824 |
|
|
|
24.00 |
|
|
|
1/5/2007 |
|
|
|
12/31/2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
558,297 |
|
|
|
27.00 |
|
|
|
1/1/2017 |
|
|
|
12/26/2021 |
|
Advance Auto Maryland Heights, MO |
|
1 |
|
Advance Stores Company, Inc. |
|
|
7,000 |
|
|
|
100 |
% |
|
3/5 yr. |
|
|
142,940 |
|
|
|
20.42 |
|
|
|
1/12/2007 |
|
|
|
2/28/2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
150,088 |
|
|
|
21.44 |
|
|
|
3/1/2016 |
|
|
|
2/28/2021 |
|
Victoria Crossing Victoria, TX |
|
3 |
|
Ross Dress for Less, Inc. |
|
|
30,187 |
|
|
|
35 |
% |
|
5/5 yr. |
|
|
279,230 |
|
|
|
9.25 |
|
|
|
1/12/2007 |
|
|
|
1/31/2012 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
286,777 |
|
|
|
9.50 |
|
|
|
2/1/2012 |
|
|
|
1/31/2017 |
|
|
|
|
|
Bed Bath & Beyond, Inc. |
|
|
23,000 |
|
|
|
26 |
% |
|
5/5 yr. |
|
|
172,500 |
|
|
|
7.50 |
|
|
|
1/12/2007 |
|
|
|
1/31/2017 |
|
|
|
|
|
Petsmart, Inc. |
|
|
20,087 |
|
|
|
23 |
% |
|
6/5 yr. |
|
|
270,959 |
|
|
|
13.50 |
|
|
|
1/12/2007 |
|
|
|
5/31/2016 |
|
Academy Sports Katy, TX |
|
1 |
|
Academy Ltd |
|
|
1,500,596 |
|
|
|
100 |
% |
|
8/5 yr. |
|
|
7,038,000 |
|
|
|
4.69 |
|
|
|
1/18/2007 |
|
|
|
1/31/2027 |
(5) |
Gordmans Peoria, IL |
|
1 |
|
Gordmans, Inc. |
|
|
60,947 |
|
|
|
100 |
% |
|
4/5 yr. |
|
|
684,000 |
|
|
|
11.22 |
|
|
|
1/18/2007 |
|
|
|
3/31/2011 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
714,000 |
|
|
|
11.72 |
|
|
|
4/1/2011 |
|
|
|
3/31/2016 |
|
One Pacific Place Omaha, NE |
|
24 |
|
No single tenant occupies greater than |
|
|
85,763 |
|
|
|
95 |
% |
|
|
Various |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.0% of the rentable square feet of this |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
property. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sack n Save/OReilly Auto Garland, TX |
|
2 |
|
Minyard Food Stores, Inc. |
|
|
58,695 |
|
|
|
90 |
% |
|
3/10 yr. |
|
|
375,648 |
|
|
|
6.40 |
|
|
|
2/6/2007 |
|
|
|
4/30/2010 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
396,191 |
|
|
|
6.75 |
|
|
|
5/1/2010 |
|
|
|
4/30/2020 |
|
|
|
|
|
Hi-Lo Auto Supply, LP |
|
|
6,600 |
|
|
|
10 |
% |
|
3/5 yr. |
|
|
25,920 |
|
|
|
3.93 |
|
|
|
2/6/2007 |
|
|
|
6/30/2011 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27,994 |
|
|
|
4.24 |
|
|
|
7/1/2011 |
|
|
|
6/30/2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30,233 |
|
|
|
4.58 |
|
|
|
7/1/2016 |
|
|
|
6/30/2021 |
|
Tractor Supply Ankeny, IA |
|
1 |
|
Tractor Supply Company |
|
|
19,097 |
|
|
|
100 |
% |
|
4/5 yr. |
|
|
213,252 |
|
|
|
11.17 |
|
|
|
2/9/2007 |
|
|
|
8/23/2011 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
234,576 |
|
|
|
12.28 |
|
|
|
8/24/2011 |
|
|
|
8/23/2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
258,036 |
|
|
|
13.51 |
|
|
|
8/24/2016 |
|
|
|
8/23/2021 |
|
ABX Air Coventry, RI |
|
1 |
|
ABX Air, Inc. |
|
|
33,000 |
|
|
|
100 |
% |
|
4/5 yr. |
|
|
316,990 |
|
|
|
9.61 |
|
|
|
2/14/2007 |
|
|
|
1/31/2014 |
(6) |
Office Depot Enterprise, AL |
|
1 |
|
Office Depot, Inc. |
|
|
20,000 |
|
|
|
100 |
% |
|
3/5 yr. |
|
|
215,129 |
|
|
|
10.76 |
|
|
|
2/27/2007 |
|
|
|
10/31/2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
225,135 |
|
|
|
11.26 |
|
|
|
11/1/2016 |
|
|
|
10/31/2021 |
|
Northern Tool Blaine, MN |
|
1 |
|
Northern Tool and Equipment, Inc. |
|
|
25,488 |
|
|
|
100 |
% |
|
3/5 yr. |
|
|
344,598 |
|
|
|
13.52 |
|
|
|
2/28/2007 |
|
|
|
11/30/2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
380,536 |
|
|
|
14.93 |
|
|
|
12/1/2016 |
|
|
|
11/30/2021 |
|
Office Max Orangeburg, SC |
|
1 |
|
OfficeMax, Inc. |
|
|
23,500 |
|
|
|
100 |
% |
|
4/5 yr. |
|
|
252,625 |
|
|
|
10.75 |
|
|
|
2/28/2007 |
|
|
|
6/30/2014 |
|
Walgreens Cincinnati, OH |
|
1 |
|
Walgreen Co. |
|
|
15,120 |
|
|
|
100 |
% |
|
8/5 yr. |
|
|
365,000 |
|
|
|
24.14 |
|
|
|
3/6/2007 |
|
|
|
3/31/2020 |
|
Walgreens Madeira, OH |
|
1 |
|
Walgreen Co. |
|
|
13,905 |
|
|
|
100 |
% |
|
8/5 yr. |
|
|
314,000 |
|
|
|
22.58 |
|
|
|
3/6/2007 |
|
|
|
8/31/2018 |
|
Walgreens Sharonville, OH |
|
1 |
|
Walgreen Co. |
|
|
13,905 |
|
|
|
100 |
% |
|
8/5 yr. |
|
|
290,000 |
|
|
|
20.86 |
|
|
|
3/6/2007 |
|
|
|
10/31/2023 |
|
AT&T Beaumont, TX |
|
1 |
|
AT&T Services, Inc. |
|
|
141,525 |
|
|
|
100 |
% |
|
2/5 yr. |
|
|
900,473 |
|
|
|
6.36 |
|
|
|
3/19/2007 |
|
|
|
3/18/2012 |
(7) |
Walgreens Shreveport, LA |
|
1 |
|
Walgreen Co. |
|
|
13,905 |
|
|
|
100 |
% |
|
8/5 yr. |
|
|
327,000 |
|
|
|
23.52 |
|
|
|
3/23/2007 |
|
|
|
9/30/2019 |
|
Cost-U-Less St. Croix, USVI |
|
1 |
|
CULUSVI, Inc. |
|
|
38,365 |
|
|
|
100 |
% |
|
2/5 yr. |
|
|
512,000 |
|
|
|
13.35 |
|
|
|
3/26/2007 |
|
|
|
3/31/2022 |
|
Gallina Centro Collierville, TN |
|
11 |
|
Stein Mart, Inc. |
|
|
36,000 |
|
|
|
34 |
% |
|
3/5 yr. |
|
|
234,000 |
|
|
|
6.50 |
|
|
|
3/28/2007 |
|
|
|
3/31/2011 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
252,000 |
|
|
|
7.00 |
|
|
|
4/1/2011 |
|
|
|
3/31/2016 |
|
|
|
|
|
Kroger Limited Partnership, I |
|
|
59,670 |
|
|
|
41 |
% |
|
11/5 yr. |
|
|
172,000 |
|
|
|
2.88 |
|
|
|
3/28/2007 |
|
|
|
3/31/2011 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
189,200 |
|
|
|
3.17 |
|
|
|
4/1/2011 |
|
|
|
3/31/2021 |
|
|
|
|
|
Walgreen Co. |
|
|
20,071 |
|
|
|
14 |
% |
|
8/5 yr. |
|
|
350,000 |
|
|
|
17.44 |
|
|
|
5/9/2006 |
|
|
|
5/31/2016 |
|
Apria Healthcare St. John, MO |
|
1 |
|
Apria Healthcare, Inc. |
|
|
52,200 |
|
|
|
100 |
% |
|
1/5 yr. |
|
|
514,464 |
|
|
|
9.86 |
|
|
|
3/28/2007 |
|
|
|
10/31/2013 |
|
Logans Roadhouse Fairfax, VA |
|
1 |
|
Logans Roadhouse, Inc. |
|
|
7,839 |
|
|
|
100 |
% |
|
5/5 yr. |
|
|
224,619 |
|
|
|
28.65 |
|
|
|
3/28/2007 |
|
|
|
11/29/2026 |
(8) |
Logans Roadhouse Johnson City, TN |
|
1 |
|
Logans Roadhouse, Inc. |
|
|
7,839 |
|
|
|
100 |
% |
|
5/5 yr. |
|
|
270,623 |
|
|
|
34.52 |
|
|
|
3/28/2007 |
|
|
|
11/29/2026 |
(9) |
Center at 7500 Cottonwood Jenison, MI |
|
4 |
|
Hob-Lob Limited Partnership |
|
|
54,533 |
|
|
|
64 |
% |
|
2/5 yr. |
|
|
259,032 |
|
|
|
4.75 |
|
|
|
3/30/2007 |
|
|
|
10/31/2009 |
|
|
|
|
|
Leppinks, Inc. |
|
|
16,000 |
|
|
|
19 |
% |
|
3/5 yr. |
|
|
97,104 |
|
|
|
6.07 |
|
|
|
3/30/2007 |
|
|
|
7/31/2007 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
99,046 |
|
|
|
6.19 |
|
|
|
8/1/2007 |
|
|
|
7/31/2008 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101,027 |
|
|
|
6.31 |
|
|
|
8/1/2008 |
|
|
|
7/31/2009 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
103,048 |
|
|
|
6.44 |
|
|
|
8/1/2009 |
|
|
|
7/31/2010 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
105,108 |
|
|
|
6.57 |
|
|
|
8/1/2010 |
|
|
|
7/31/2011 |
|
9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
% of |
|
|
|
|
|
|
|
|
|
Base |
|
|
|
|
Number |
|
|
|
Total |
|
Total |
|
|
|
|
|
Current |
|
Rent per |
|
|
|
|
of |
|
|
|
Square |
|
Square |
|
|
|
|
|
Annual Base |
|
Square |
|
Lease Term |
Property |
|
Tenants |
|
Major Tenants* |
|
Feet Leased |
|
Feet |
|
Renewal Options** |
|
Rent |
|
Foot |
|
Beginning |
|
To |
Eckerd Lincolnton, NC |
|
1 |
|
ECK-001, LLC |
|
|
10,908 |
|
|
|
100 |
% |
|
4/5 yr. |
|
|
169,648 |
|
|
|
15.55 |
|
|
|
4/30/2007 |
|
|
|
8/7/2007 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
175,100 |
|
|
|
16.05 |
|
|
|
8/8/2007 |
|
|
|
8/7/2012 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
180,552 |
|
|
|
16.55 |
|
|
|
8/8/2012 |
|
|
|
8/7/2017 |
|
Tractor Supply Greenfield, MN |
|
1 |
|
Tractor Supply Company |
|
|
22,675 |
|
|
|
100 |
% |
|
4/5 yr. |
|
|
289,228 |
|
|
|
12.76 |
|
|
|
4/2/2007 |
|
|
|
3/31/2011 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
318,150 |
|
|
|
14.03 |
|
|
|
4/1/2011 |
|
|
|
3/31/2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
349,965 |
|
|
|
15.43 |
|
|
|
4/1/2016 |
|
|
|
3/31/2021 |
|
Lincoln Place Fairview Heights, IL |
|
19 |
|
Kohls Department Stores, Inc. |
|
|
86,584 |
|
|
|
32 |
% |
|
5/5 yr. |
|
|
530,760 |
|
|
|
6.13 |
|
|
|
4/5/2007 |
|
|
|
2/1/2020 |
|
|
|
|
|
Ultimate Electronics, Inc. |
|
|
31,000 |
|
|
|
13 |
% |
|
2/5 yr. |
|
|
367,816 |
|
|
|
11.50 |
|
|
|
4/5/2007 |
|
|
|
2/28/2008 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
409,780 |
|
|
|
12.81 |
|
|
|
3/1/2008 |
|
|
|
2/28/2010 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
439,780 |
|
|
|
13.75 |
|
|
|
3/1/2010 |
|
|
|
2/28/2013 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
483,758 |
|
|
|
15.13 |
|
|
|
3/1/2013 |
|
|
|
2/28/2018 |
|
|
|
|
|
Marshalls of IL, LLC |
|
|
30,000 |
|
|
|
11 |
% |
|
3/5 yr. |
|
|
292,500 |
|
|
|
9.75 |
|
|
|
4/5/2007 |
|
|
|
8/31/2007 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
307,500 |
|
|
|
10.25 |
|
|
|
9/1/2007 |
|
|
|
8/31/2012 |
|
|
|
|
|
LNT, Inc. |
|
|
28,023 |
|
|
|
10 |
% |
|
|
|
|
|
|
308,000 |
|
|
|
10.99 |
|
|
|
4/5/2007 |
|
|
|
8/31/2007 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
322,000 |
|
|
|
11.49 |
|
|
|
9/1/2007 |
|
|
|
8/31/2012 |
|
Amarillo Furniture Ashley, TX |
|
1 |
|
Choice Furniture, Inc. |
|
|
74,797 |
|
|
|
100 |
% |
|
|
N/A |
|
|
|
463,741 |
|
|
|
6.20 |
|
|
|
4/6/2007 |
|
|
|
4/30/2011 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
493,660 |
|
|
|
6.60 |
|
|
|
5/1/2011 |
|
|
|
4/30/2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
523,579 |
|
|
|
7.00 |
|
|
|
5/1/2016 |
|
|
|
4/30/2021 |
|
Pocatello Square Pocatello, ID |
|
5 |
|
Sportsmans Warehouse, Inc |
|
|
47,979 |
|
|
|
35 |
% |
|
5/5 yr. |
|
|
428,705 |
|
|
|
8.94 |
|
|
|
4/6/2007 |
|
|
|
11/30/2007 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
476,605 |
|
|
|
9.93 |
|
|
|
12/1/2007 |
|
|
|
11/30/2008 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
493,370 |
|
|
|
10.28 |
|
|
|
12/1/2008 |
|
|
|
11/30/2009 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
514,925 |
|
|
|
10.73 |
|
|
|
12/1/2009 |
|
|
|
11/30/2010 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
535,522 |
|
|
|
11.16 |
|
|
|
12/1/2010 |
|
|
|
11/30/2011 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
562,346 |
|
|
|
11.72 |
|
|
|
12/1/2011 |
|
|
|
11/30/2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
590,607 |
|
|
|
12.31 |
|
|
|
12/1/2016 |
|
|
|
11/30/2021 |
|
|
|
|
|
Ross Dress for Less, Inc. |
|
|
30,187 |
|
|
|
22 |
% |
|
4/5 yr. |
|
|
530,760 |
|
|
|
17.58 |
|
|
|
4/6/2007 |
|
|
|
1/31/2017 |
|
|
|
|
|
Staples the Office Superstore, Inc. |
|
|
20,388 |
|
|
|
15 |
% |
|
2/5 yr. |
|
|
243,637 |
|
|
|
11.95 |
|
|
|
4/6/2007 |
|
|
|
9/30/2016 |
|
Tractor Supply Paw Paw, MI |
|
1 |
|
Tractor Supply Company |
|
|
22,670 |
|
|
|
100 |
% |
|
4/5 yr. |
|
|
277,840 |
|
|
|
10.05 |
|
|
|
4/9/2007 |
|
|
|
12/10/2011 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
250,624 |
|
|
|
11.06 |
|
|
|
12/11/2011 |
|
|
|
12/10/2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
275,686 |
|
|
|
12.16 |
|
|
|
12/11/2016 |
|
|
|
12/10/2021 |
|
Tractor Supply Marinette, WI |
|
|
|
Tractor Supply Company |
|
|
19,097 |
|
|
|
100 |
% |
|
4/5 yr. |
|
|
213,933 |
|
|
|
11.20 |
|
|
|
4/9/2007 |
|
|
|
12/15/2011 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
235,326 |
|
|
|
12.32 |
|
|
|
12/16/2011 |
|
|
|
12/15/2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
258,858 |
|
|
|
13.55 |
|
|
|
12/16/2016 |
|
|
|
12/15/2021 |
|
Staples Greenville, SC |
|
1 |
|
Staples the Office Superstore East, Inc. |
|
|
20,388 |
|
|
|
100 |
% |
|
4/5 yr. |
|
|
318,053 |
|
|
|
15.60 |
|
|
|
4/11/2007 |
|
|
|
3/31/2012 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
339,460 |
|
|
|
16.65 |
|
|
|
4/1/2012 |
|
|
|
3/31/2017 |
|
Big 5 Center Aurora, CO |
|
4 |
|
Big 5 Corporation |
|
|
10,000 |
|
|
|
63 |
% |
|
3/5 yr. |
|
|
150,000 |
|
|
|
15.00 |
|
|
|
4/11/2007 |
|
|
|
12/31/2011 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
162,000 |
|
|
|
16.20 |
|
|
|
1/1/2012 |
|
|
|
12/31/2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
178,200 |
|
|
|
17.82 |
|
|
|
1/1/2017 |
|
|
|
1/31/2022 |
|
|
|
|
|
M-Fast, Inc. |
|
|
3,500 |
|
|
|
22 |
% |
|
2/5 yr. |
|
|
87,500 |
|
|
|
25.00 |
|
|
|
4/11/2007 |
|
|
|
12/31/2007 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
88,900 |
|
|
|
25.40 |
|
|
|
1/1/2008 |
|
|
|
12/31/2008 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
90,300 |
|
|
|
25.80 |
|
|
|
1/1/2009 |
|
|
|
12/31/2009 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
91,700 |
|
|
|
26.20 |
|
|
|
1/1/2010 |
|
|
|
12/31/2010 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
93,100 |
|
|
|
26.60 |
|
|
|
1/1/2011 |
|
|
|
12/31/2011 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
94,500 |
|
|
|
27.00 |
|
|
|
1/1/2012 |
|
|
|
12/31/2012 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
95,900 |
|
|
|
27.40 |
|
|
|
1/1/2013 |
|
|
|
12/31/2013 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
97,300 |
|
|
|
27.80 |
|
|
|
1/1/2014 |
|
|
|
12/31/2014 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
98,700 |
|
|
|
28.20 |
|
|
|
1/1/2015 |
|
|
|
12/31/2015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100,100 |
|
|
|
28.60 |
|
|
|
1/1/2016 |
|
|
|
12/31/2016 |
|
Rite Aid
Plains, PA |
|
|
|
Rite Aid of Pennsylvania, Inc. |
|
|
14,564 |
|
|
|
100 |
% |
|
6/5 yr. |
|
|
390,173 |
|
|
|
26.79 |
|
|
|
4/16/2007 |
|
|
|
5/3/2026 |
|
Tractor Supply
Navasota, TX |
|
|
|
Tractor Supply Company of Texas, LP |
|
|
22,670 |
|
|
|
100 |
% |
|
4/5 yr. |
|
|
215,640 |
|
|
|
9.51 |
|
|
|
4/18/2007 |
|
|
|
9/26/2011 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
229,640 |
|
|
|
10.13 |
|
|
|
9/27/2011 |
|
|
|
9/26/2015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
244,584 |
|
|
|
10.79 |
|
|
|
9/27/2015 |
|
|
|
9/26/2021 |
|
Sportsmans
Warehouse
De Pere, WI |
|
|
|
Sportsmans Warehouse, Inc. |
|
|
48,453 |
|
|
|
100 |
% |
|
5/5 yr. |
|
|
474,839 |
|
|
|
9.80 |
|
|
|
4/20/2007 |
|
|
|
10/28/2009 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CPI |
|
CPI |
|
|
10/29/2009 |
|
|
|
10/28/2014 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CPI |
|
CPI |
|
|
10/29/2014 |
|
|
|
10/28/2019 |
|
Eckerd
Easton, PA |
|
|
|
|
|
|
13,813 |
|
|
|
100 |
% |
|
2/5 yr. |
|
|
464,379 |
|
|
|
33.62 |
|
|
|
4/25/2007 |
|
|
|
2/1/2026 |
|
Applebees
Portfolio
Master Lease I |
|
|
|
Restaurant Concepts II, LLC |
|
|
44,781 |
|
|
|
100 |
% |
|
|
N/A |
|
|
|
1,702,000 |
|
|
|
38.01 |
|
|
|
4/26/2007 |
|
|
|
4/30/2012 |
(10) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,838,160 |
|
|
|
41.05 |
|
|
|
5/1/2012 |
|
|
|
4/30/2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,003,594 |
|
|
|
44.74 |
|
|
|
5/1/2017 |
|
|
|
4/30/2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,203,954 |
|
|
|
49.22 |
|
|
|
5/1/2022 |
|
|
|
4/30/2027 |
|
Applebees
Portfolio
Master Lease II |
|
|
|
Restaurant Concepts II, LLC |
|
|
36,985 |
|
|
|
100 |
% |
|
|
N/A |
|
|
|
1,486,000 |
|
|
|
40.18 |
|
|
|
4/26/2007 |
|
|
|
4/30/2012 |
(11) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,604,880 |
|
|
|
43.39 |
|
|
|
5/1/2012 |
|
|
|
4/30/2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,749,319 |
|
|
|
47.30 |
|
|
|
5/1/2017 |
|
|
|
4/30/2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,924,251 |
|
|
|
52.03 |
|
|
|
5/1/2022 |
|
|
|
4/30/2027 |
|
Applebees
Portfolio
Master Lease III |
|
|
|
Restaurant Concepts II, LLC |
|
|
38,480 |
|
|
|
100 |
% |
|
|
N/A |
|
|
|
1,555,000 |
|
|
|
40.41 |
|
|
|
4/25/2007 |
|
|
|
4/30/2012 |
(12) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,679,400 |
|
|
|
43.64 |
|
|
|
5/1/2012 |
|
|
|
4/30/2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,830,546 |
|
|
|
47.57 |
|
|
|
5/1/2017 |
|
|
|
4/30/2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,013,601 |
|
|
|
52.33 |
|
|
|
5/1/2022 |
|
|
|
4/30/2027 |
|
10
|
|
|
* |
|
Major tenants include those tenants that occupy greater than 10.0% of the rentable square feet of their respective property. |
|
** |
|
Represents option renewal period / term of each option. |
|
(1) |
|
The initial annual rent of $419,750 as displayed in the table above is subject to rental escalations of 2% each year through the
remainder of the lease, which expires October 31, 2015. For the purposes of presentation the individual rental escalations were not
displayed in the table above. |
|
(2) |
|
The annual base rent of $1,790,100 as displayed in the table above is fixed through the first 13 months of the initial lease term, with
a 2.5% rental escalation beginning 14 months after the start of the initial lease term, and every 12 months thereafter for the remaining
term of the lease, which expires January 31, 2021. For the purposes of presentation the individual rental escalations were not displayed in
the table above. |
|
(3) |
|
The Wawa Properties are 100% leased to Wawa under a master lease agreement. The current aggregate annual base rent of $1,013,117 is fixed
through the initial lease term and was allocated based on the square feet of each property as a percentage of the total square feet for all
three properties. |
|
(4) |
|
The current aggregate annual base rent of $707,395 as displayed in the table above is fixed through July 1, 2007 with rental
escalations of 1.25% each year for the remainder of the initial lease term, which expires July 1, 2021. For the purposes of presentation
the individual rental escalations were not displayed in the table above. |
|
(5) |
|
The initial annual base rent under the lease is $7,038,000 as displayed in the table above increases each year, by 1.5% of the then
current annual base rent. The initial term of the lease expires January 31, 2027. For the purposes of presentation the individual rental
escalations were not displayed in the table above. |
|
(6) |
|
The current aggregate annual base rent of $316,990 as displayed in the table above is fixed through the first year of the initial lease
term and increases 3% each year through the remainder of the lease term, which expires January 31, 2014. For the purposes of presentation
the individual rental escalations were not displayed in the table above. |
|
(7) |
|
The current aggregate annual base rent of $900,473 is fixed through the first year of the initial lease, and increases 1.5% each year
through the initial lease term, which expires March 31, 2017. For the purposes of presentation the individual rental escalations were not
displayed in the table above. |
|
(8) |
|
The current aggregate annual base rent of $224,619 as displayed in the table above is fixed through November 29, 2007 with rental
escalations of 1.75% each year for the remainder of the initial lease term, which expires November 29, 2026. For the purposes of
presentation the individual rental escalations were not displayed in the table above. |
|
(9) |
|
The current aggregate annual base rent of $270,623 as displayed in the table above is fixed through November 29, 2007 with rental
escalations of 1.75% each year for the remainder of the initial lease term, which expires November 29, 2026. For the purposes of
presentation the individual rental escalations were not displayed in the table above. |
|
(10) |
|
The lease consists of eight single-tenant restaurants, which are subject to a master lease agreement. The properties are located in New
Mexico, Georgia, Oregon, Washington, and Colorado. |
|
(11) |
|
The lease consists of seven single-tenant restaurants, which are subject to a master lease agreement. The properties are located in New
Mexico, Georgia, Washington, and Colorado. |
|
(12) |
|
The lease consists of seven single-tenant restaurants, which are subject to a master lease agreement. The properties are located in New
Mexico, Georgia, Washington, and Colorado. |
Cole Realty Advisors has the sole and exclusive right to manage, operate, lease and
supervise the overall maintenance of the properties listed above and currently receives a property management
fee of 2.0% of the monthly gross revenues from our properties. We currently have no plan for any
renovations, improvements or development of the properties listed above and we believe that all are
adequately insured.
In connection with the property acquisitions noted above we incurred or assumed the following
fixed and variable rate mortgage notes:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed Rate Loan |
|
|
Interest |
|
|
Maturity |
|
|
Variable Rate |
|
|
Maturity |
|
|
Total Loan |
|
Property |
|
Amount |
|
|
Rate |
|
|
Date |
|
|
Loan Amount |
|
|
Date |
|
|
Outstanding |
|
Tractor Supply Parkersburg, WV |
|
$ |
1,793,000 |
|
|
|
5.57 |
% |
|
|
10/11/15 |
|
|
$ |
814,000 |
|
|
|
12/26/05 |
|
|
$ |
2,607,000 |
(7) |
Walgreens Brainerd, MN |
|
|
2,814,000 |
|
|
|
5.44 |
% |
|
|
10/11/15 |
|
|
|
649,000 |
|
|
|
1/4/06 |
|
|
|
3,463,000 |
(7) |
Rite Aid Alliance, OH |
|
|
|
|
|
|
N/A |
|
|
|
N/A |
|
|
|
|
|
|
|
N/A |
|
|
|
|
|
La-Z-Boy Glendale, AZ |
|
|
3,415,000 |
|
|
|
5.76 |
% |
|
|
11/11/10 |
|
|
|
1,138,000 |
|
|
|
1/25/06 |
|
|
|
4,553,000 |
(7) |
Walgreens Florissant, MO |
|
|
3,372,000 |
|
|
|
5.48 |
% |
|
|
11/11/15 |
|
|
|
778,000 |
|
|
|
2/2/06 |
|
|
|
4,150,000 |
(7) |
Walgreens Saint Louis, MO (Gravois) |
|
|
3,289,000 |
|
|
|
5.48 |
% |
|
|
11/11/15 |
|
|
|
759,000 |
|
|
|
2/2/06 |
|
|
|
4,048,000 |
(7) |
Walgreens Saint Louis, MO (Telegraph) |
|
|
3,999,000 |
|
|
|
5.48 |
% |
|
|
11/11/15 |
|
|
|
923,000 |
|
|
|
2/2/06 |
|
|
|
4,922,000 |
(7) |
Walgreens Columbia, MO |
|
|
4,645,369 |
|
|
|
5.15 |
% |
|
|
7/11/08 |
|
|
|
|
|
|
|
N/A |
|
|
|
4,487,895 |
(7) |
Walgreens Olivette, MO |
|
|
5,567,894 |
|
|
|
5.15 |
% |
|
|
7/11/08 |
|
|
|
|
|
|
|
N/A |
|
|
|
5,379,146 |
(7) |
CVS Alpharetta, GA |
|
|
2,015,000 |
|
|
|
5.52 |
% |
|
|
12/11/10 |
|
|
|
465,000 |
|
|
|
3/1/06 |
|
|
|
2,480,000 |
(7) |
Lowes Enterprise, AL |
|
|
4,859,000 |
|
|
|
5.52 |
% |
|
|
12/11/10 |
|
|
|
1,121,000 |
|
|
|
3/1/06 |
|
|
|
5,980,000 |
(7) |
CVS Richland Hills, TX |
|
|
2,379,000 |
|
|
|
5.52 |
% |
|
|
12/11/10 |
|
|
|
549,000 |
|
|
|
3/8/06 |
|
|
|
2,928,000 |
(7) |
FedEx Rockford, IL |
|
|
3,998,000 |
|
|
|
5.61 |
% |
|
|
12/11/10 |
|
|
|
922,000 |
|
|
|
3/10/06 |
|
|
|
4,920,000 |
(7) |
Plastech Auburn Hills, MI |
|
|
|
|
|
|
N/A |
|
|
|
N/A |
|
|
|
17,700,000 |
|
|
|
12/14/06 |
|
|
|
17,700,000 |
(7) |
Academy Sports Macon, GA |
|
|
3,478,000 |
|
|
|
5.69 |
% |
|
|
1/11/16 |
|
|
|
802,000 |
|
|
|
4/6/06 |
|
|
|
4,280,000 |
(7) |
Davids Bridal Lenexa, KS |
|
|
1,799,000 |
|
|
|
5.86 |
% |
|
|
1/11/11 |
|
|
|
817,000 |
|
|
|
4/11/06 |
|
|
|
2,616,000 |
(7) |
Rite Aid Enterprise, AL |
|
|
2,043,000 |
|
|
|
5.80 |
% |
|
|
2/11/16 |
|
|
|
928,000 |
|
|
|
4/26/06 |
|
|
|
2,971,000 |
(7) |
Rite Aid Wauseon, OH |
|
|
2,142,000 |
|
|
|
5.80 |
% |
|
|
2/11/16 |
|
|
|
973,000 |
|
|
|
4/26/06 |
|
|
|
3,115,000 |
(7) |
Staples Crossville, TN |
|
|
1,885,000 |
|
|
|
5.71 |
% |
|
|
2/11/11 |
|
|
|
435,000 |
|
|
|
4/26/06 |
|
|
|
2,320,000 |
(7) |
Rite Aid Saco, ME |
|
|
1,375,000 |
|
|
|
5.82 |
% |
|
|
2/11/11 |
|
|
|
625,000 |
|
|
|
4/27/06 |
|
|
|
2,000,000 |
(7) |
Wadsworth Boulevard Denver, CO |
|
|
12,025,000 |
|
|
|
5.57 |
% |
|
|
3/1/11 |
|
|
|
2,275,000 |
|
|
|
12/31/06 |
|
|
|
14,300,000 |
(7) |
Mountainside Fitness Chandler, AZ |
|
|
|
|
|
|
N/A |
|
|
|
N/A |
|
|
|
4,690,400 |
|
|
|
12/31/06 |
|
|
|
4,690,400 |
|
11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed Rate Loan |
|
|
Interest |
|
|
Maturity |
|
|
Variable Rate |
|
|
Maturity |
|
|
Total Loan |
|
Property |
|
Amount |
|
|
Rate |
|
|
Date |
|
|
Loan Amount |
|
|
Date |
|
|
Outstanding |
|
Drexel Heritage Hickory, NC |
|
|
2,763,000 |
|
|
|
5.80 |
% |
|
|
3/11/11 |
|
|
|
637,000 |
|
|
|
5/24/06 |
|
|
|
3,400,000 |
(7) |
Rayford Square Spring, TX |
|
|
5,940,000 |
|
|
|
5.64 |
% |
|
|
4/1/16 |
|
|
|
|
|
|
|
N/A |
|
|
|
5,940,000 |
(5) |
CVS Portsmouth, OH |
|
|
1,424,000 |
|
|
|
5.67 |
% |
|
|
3/11/11 |
|
|
|
329,000 |
|
|
|
6/8/06 |
|
|
|
1,753,000 |
(7) |
Wawa Hockessin, DE, Manahawkin, NJ,
Narberth, PA |
|
|
|
|
|
|
N/A |
|
|
|
N/A |
|
|
|
7,234,787 |
|
|
|
2/26/10 |
|
|
|
7,234,787 |
(7) |
CVS Lakewood, OH |
|
|
1,348,000 |
|
|
|
5.77 |
% |
|
|
5/11/11 |
|
|
|
612,000 |
|
|
|
7/20/06 |
|
|
|
1,960,000 |
(7) |
Rite Aid Cleveland, OH |
|
|
1,413,000 |
|
|
|
6.05 |
% |
|
|
5/11/11 |
|
|
|
642,000 |
|
|
|
7/27/06 |
|
|
|
2,055,000 |
(7) |
Rite Aid Fremont, OH |
|
|
1,388,000 |
|
|
|
6.05 |
% |
|
|
5/11/11 |
|
|
|
632,000 |
|
|
|
7/27/06 |
|
|
|
2,020,000 |
(7) |
Walgreens Knoxville, TN |
|
|
3,088,000 |
|
|
|
5.80 |
% |
|
|
5/11/11 |
|
|
|
712,000 |
|
|
|
8/8/06 |
|
|
|
3,800,000 |
(7) |
CVS Madison, MS |
|
|
2,809,000 |
|
|
|
5.60 |
% |
|
|
2/11/16 |
|
|
|
|
|
|
|
N/A |
|
|
|
2,809,000 |
(7) |
Rite Aid Defiance, OH |
|
|
2,321,000 |
|
|
|
5.76 |
% |
|
|
1/11/16 |
|
|
|
|
|
|
|
N/A |
|
|
|
2,321,000 |
(7) |
Conns San Antonio, TX |
|
|
2,461,000 |
|
|
|
5.86 |
% |
|
|
5/11/11 |
|
|
|
1,119,000 |
|
|
|
7/25/06 |
|
|
|
3,580,000 |
(7) |
Dollar General Crossville, TN |
|
|
1,950,000 |
|
|
|
5.75 |
% |
|
|
6/11/16 |
|
|
|
450,000 |
|
|
|
9/2/06 |
|
|
|
2,400,000 |
(7) |
Dollar General Ardmore, TN |
|
|
1,804,000 |
|
|
|
5.79 |
% |
|
|
6/11/16 |
|
|
|
416,000 |
|
|
|
9/9/06 |
|
|
|
2,220,000 |
(7) |
Dollar General Livingston, TN |
|
|
1,856,000 |
|
|
|
5.79 |
% |
|
|
7/11/16 |
|
|
|
429,000 |
|
|
|
10/12/06 |
|
|
|
2,285,000 |
(7) |
Wehrenberg Arnold, MO |
|
|
|
|
|
|
N/A |
|
|
|
N/A |
|
|
|
|
|
|
|
N/A |
|
|
|
|
|
Sportmans Warehouse Wichita, KS |
|
|
|
|
|
|
N/A |
|
|
|
N/A |
|
|
|
6,173,250 |
|
|
|
12/27/06 |
|
|
|
6,173,250 |
(7) |
CVS Portsmouth, OH |
|
|
|
|
|
|
N/A |
|
|
|
N/A |
|
|
|
|
|
|
|
N/A |
|
|
|
|
|
Advance Auto Greenfield, IN |
|
|
|
|
|
|
N/A |
|
|
|
N/A |
|
|
|
|
|
|
|
N/A |
|
|
|
|
|
Advance Auto Trenton, OH |
|
|
|
|
|
|
N/A |
|
|
|
N/A |
|
|
|
|
|
|
|
N/A |
|
|
|
|
|
Rite Aid Lansing, MI |
|
|
1,041,000 |
|
|
|
5.90 |
% |
|
|
7/1/16 |
|
|
|
|
|
|
|
N/A |
|
|
|
1,041,000 |
(5) |
Advance Auto Columbia Heights, MN |
|
|
1,038,000 |
|
|
|
5.83 |
% |
|
|
7/11/16 |
|
|
|
346,000 |
|
|
|
10/6/06 |
|
|
|
1,384,000 |
(7) |
Advance Auto Fergus Falls, MN |
|
|
722,000 |
|
|
|
5.83 |
% |
|
|
7/11/16 |
|
|
|
241,000 |
|
|
|
10/6/06 |
|
|
|
963,000 |
(7) |
CVS Okeechobee, FL |
|
|
4,076,000 |
|
|
|
5.60 |
% |
|
|
2/11/16 |
|
|
|
|
|
|
|
N/A |
|
|
|
4,076,000 |
(7) |
Office Depot Dayton, OH |
|
|
2,130,000 |
|
|
|
5.73 |
% |
|
|
2/11/16 |
|
|
|
|
|
|
|
N/A |
|
|
|
2,130,000 |
(7) |
Advance Auto Holland, MI |
|
|
1,193,000 |
|
|
|
5.83 |
% |
|
|
4/11/16 |
|
|
|
|
|
|
|
N/A |
|
|
|
1,193,000 |
(7) |
Advance Auto Holland Township, MI |
|
|
1,231,000 |
|
|
|
5.83 |
% |
|
|
4/11/16 |
|
|
|
|
|
|
|
N/A |
|
|
|
1,231,000 |
(7) |
Advance Auto Zeeland, MI |
|
|
1,057,000 |
|
|
|
5.83 |
% |
|
|
4/11/16 |
|
|
|
|
|
|
|
N/A |
|
|
|
1,057,000 |
(7) |
CVS Orlando, FL |
|
|
3,016,000 |
|
|
|
5.68 |
% |
|
|
4/11/16 |
|
|
|
|
|
|
|
N/A |
|
|
|
3,016,000 |
(7) |
Office Depot Greenville, MS |
|
|
2,192,000 |
|
|
|
5.76 |
% |
|
|
3/11/11 |
|
|
|
|
|
|
|
N/A |
|
|
|
2,192,000 |
(7) |
Office Depot Warrensburg, MO |
|
|
1,810,000 |
|
|
|
5.85 |
% |
|
|
4/11/11 |
|
|
|
|
|
|
|
N/A |
|
|
|
1,810,000 |
(7) |
CVS Gulfport, MS |
|
|
2,611,000 |
|
|
|
5.28 |
% |
|
|
4/11/16 |
|
|
|
|
|
|
|
N/A |
|
|
|
2,611,000 |
(7) |
Advance Auto Grand Forks, ND |
|
|
840,000 |
|
|
|
5.87 |
% |
|
|
9/11/16 |
|
|
|
280,000 |
|
|
|
11/15/06 |
|
|
|
1,120,000 |
(7) |
CVS Clinton, NY |
|
|
1,983,000 |
|
|
|
5.74 |
% |
|
|
9/11/16 |
|
|
|
457,000 |
|
|
|
12/24/06 |
|
|
|
2,440,000 |
(2)(7) |
Oxford Theatre Oxford, MS |
|
|
5,175,000 |
|
|
|
6.11 |
% |
|
|
9/1/16 |
|
|
|
|
|
|
|
N/A |
|
|
|
5,175,000 |
(1)(5) |
Advance Auto Duluth, MN |
|
|
860,000 |
|
|
|
5.87 |
% |
|
|
10/11/16 |
|
|
|
286,000 |
|
|
|
12/22/06 |
|
|
|
1,146,000 |
(7) |
Walgreens Picayune, MS |
|
|
2,766,000 |
|
|
|
5.53 |
% |
|
|
10/11/16 |
|
|
|
638,000 |
|
|
|
1/15/07 |
|
|
|
3,404,000 |
(2)(7) |
Kohls Wichita, KS |
|
|
5,200,000 |
|
|
|
6.11 |
% |
|
|
9/1/16 |
|
|
|
|
|
|
|
N/A |
|
|
|
5,200,000 |
(1)(5) |
Lowes Lubbock, TX |
|
|
7,150,000 |
|
|
|
6.11 |
% |
|
|
9/1/16 |
|
|
|
|
|
|
|
N/A |
|
|
|
7,150,000 |
(1)(5) |
Lowes Midland, TX |
|
|
7,475,000 |
|
|
|
6.11 |
% |
|
|
9/1/16 |
|
|
|
|
|
|
|
N/A |
|
|
|
7,475,000 |
(1)(5) |
Advance Auto Grand Bay, AL |
|
|
|
|
|
|
N/A |
|
|
|
N/A |
|
|
|
|
|
|
|
N/A |
|
|
|
|
|
Advance Auto Hurley, MS |
|
|
|
|
|
|
N/A |
|
|
|
N/A |
|
|
|
|
|
|
|
N/A |
|
|
|
|
|
Advance Auto Rainsville, AL |
|
|
|
|
|
|
N/A |
|
|
|
N/A |
|
|
|
|
|
|
|
N/A |
|
|
|
|
|
Golds Gym OFallon, IL |
|
|
3,650,000 |
|
|
|
5.83 |
% |
|
|
10/11/16 |
|
|
|
2,190,000 |
|
|
|
17/27/06 |
|
|
|
5,840,000 |
(2)(7) |
Rite Aid Glassport, PA |
|
|
2,325,000 |
|
|
|
6.10 |
% |
|
|
11/1/16 |
|
|
|
|
|
|
|
N/A |
|
|
|
2,325,000 |
(5) |
Davids Bridal/Radio Shack Topeka, KS |
|
|
2,000,000 |
|
|
|
5.77 |
% |
|
|
12/1/16 |
|
|
|
|
|
|
|
N/A |
|
|
|
2,000,000 |
(8) |
Rite Aid Hanover, PA |
|
|
4,115,000 |
|
|
|
6.11 |
% |
|
|
11/1/16 |
|
|
|
|
|
|
|
N/A |
|
|
|
4,115,000 |
(5) |
American TV & Appliance Peoria, IL |
|
|
7,358,971 |
|
|
|
6.00 |
% |
|
|
10/1/18 |
|
|
|
|
|
|
|
N/A |
|
|
|
7,358,971 |
(6) |
Tractor Supply La Grange, TX |
|
|
1,405,000 |
|
|
|
5.99 |
% |
|
|
12/1/16 |
|
|
|
|
|
|
|
N/A |
|
|
|
1,405,000 |
(3)(5) |
Staples Peru, IL |
|
|
1,930,000 |
|
|
|
5.66 |
% |
|
|
12/1/11 |
|
|
|
|
|
|
|
N/A |
|
|
|
1,930,000 |
(5) |
Fedex Council Bluffs, IA |
|
|
2,185,000 |
|
|
|
5.97 |
% |
|
|
12/1/16 |
|
|
|
|
|
|
|
N/A |
|
|
|
2,185,000 |
(5) |
Fedex Edwardsville, KS |
|
|
12,880,000 |
|
|
|
5.97 |
% |
|
|
12/1/16 |
|
|
|
|
|
|
|
N/A |
|
|
|
12,880,000 |
(5) |
CVS Glenville Scotia, NY |
|
|
3,413,000 |
|
|
|
5.74 |
% |
|
|
12/11/16 |
|
|
|
787,000 |
|
|
|
3/16/07 |
|
|
|
4,200,000 |
(7) |
Advance Auto Ashland, KY |
|
|
|
|
|
|
N/A |
|
|
|
N/A |
|
|
|
|
|
|
|
N/A |
|
|
|
|
|
Advance Auto Jackson, OH |
|
|
|
|
|
|
N/A |
|
|
|
N/A |
|
|
|
|
|
|
|
N/A |
|
|
|
|
|
Advance Auto New Boston, OH |
|
|
|
|
|
|
N/A |
|
|
|
N/A |
|
|
|
|
|
|
|
N/A |
|
|
|
|
|
Advance Auto Scottsburg, IN |
|
|
|
|
|
|
N/A |
|
|
|
N/A |
|
|
|
|
|
|
|
N/A |
|
|
|
|
|
Tractor Supply Livingston, TN |
|
|
1,725,000 |
|
|
|
5.99 |
% |
|
|
12/1/16 |
|
|
|
|
|
|
|
N/A |
|
|
|
1,725,000 |
(3)(5) |
Tractor Supply New Braunfels, TX |
|
|
1,750,000 |
|
|
|
5.99 |
% |
|
|
12/1/16 |
|
|
|
|
|
|
|
N/A |
|
|
|
1,750,000 |
(3)(5) |
Office Depot Benton, AR |
|
|
2,130,000 |
|
|
|
5.77 |
% |
|
|
12/1/16 |
|
|
|
|
|
|
|
N/A |
|
|
|
2,130,000 |
(8) |
Old Time Pottery Fairview Heights, IL |
|
|
2,140,000 |
|
|
|
6.31 |
% |
|
|
12/11/11 |
|
|
|
1,284,000 |
|
|
|
3/21/07 |
|
|
|
3,424,000 |
(7) |
Infiniti Davie, FL |
|
|
|
|
|
|
N/A |
|
|
|
N/A |
|
|
|
|
|
|
|
N/A |
|
|
|
|
|
Office Depot Oxford, MS |
|
|
2,295,000 |
|
|
|
6.17 |
% |
|
|
12/1/16 |
|
|
|
|
|
|
|
N/A |
|
|
|
2,295,000 |
(5) |
Tractor Supply Crockett, TX |
|
|
1,325,000 |
|
|
|
5.99 |
% |
|
|
12/1/16 |
|
|
|
|
|
|
|
N/A |
|
|
|
1,325,000 |
(3)(5) |
Mercedes Benz Atlanta, GA |
|
|
|
|
|
|
N/A |
|
|
|
N/A |
|
|
|
|
|
|
|
N/A |
|
|
|
|
|
Dicks Sporting Goods Amherst, NY |
|
|
6,321,000 |
|
|
|
5.62 |
% |
|
|
2/1/17 |
|
|
|
|
|
|
|
N/A |
|
|
|
6,321,000 |
(8) |
Chilis Paris, TX |
|
|
1,790,000 |
|
|
|
5.65 |
% |
|
|
1/1/17 |
|
|
|
|
|
|
|
N/A |
|
|
|
1,790,000 |
(5) |
Staples Clarksville, IN |
|
|
2,900,000 |
|
|
|
5.78 |
% |
|
|
1/1/17 |
|
|
|
|
|
|
|
N/A |
|
|
|
2,900,000 |
(8) |
HOM Fargo, ND |
|
|
4,800,000 |
|
|
|
5.56 |
% |
|
|
2/1/2017 |
|
|
|
|
|
|
|
N/A |
|
|
|
4,800,000 |
(5) |
La-Z-Boy Newington, CT |
|
|
4,140,000 |
|
|
|
5.66 |
% |
|
|
2/1/2017 |
|
|
|
|
|
|
|
N/A |
|
|
|
4,140,000 |
(5) |
Advance Auto Maryland Heights, MO |
|
|
|
|
|
|
N/A |
|
|
|
N/A |
|
|
|
|
|
|
|
N/A |
|
|
|
|
|
Victoria Crossing Victoria, TX |
|
|
8,288,000 |
|
|
|
5.71 |
% |
|
|
2/11/17 |
|
|
|
1,912,000 |
|
|
|
4/12/07 |
|
|
|
10,200,000 |
(7) |
Academy Sports Katy, TX |
|
|
68,250,000 |
|
|
|
5.61 |
% |
|
|
2/1/17 |
|
|
|
|
|
|
|
N/A |
|
|
|
68,250,000 |
(5) |
Gordmans Peoria, IL |
|
|
4,950,000 |
|
|
|
5.71 |
% |
|
|
2/1/17 |
|
|
|
|
|
|
|
N/A |
|
|
|
4,950,000 |
(8) |
One Pacific Place Omaha, NE |
|
|
23,400,000 |
|
|
|
5.53 |
% |
|
|
3/1/17 |
|
|
|
|
|
|
|
N/A |
|
|
|
23,400,000 |
(5) |
Sack n Save/OReilly Auto Garland, TX |
|
|
3,290,000 |
|
|
|
5.54 |
% |
|
|
3/1/17 |
|
|
|
|
|
|
|
N/A |
|
|
|
3,290,000 |
(5) |
Tractor Supply Ankeny, IA |
|
|
1,950,000 |
|
|
|
5.65 |
% |
|
|
5/1/17 |
|
|
|
|
|
|
|
N/A |
|
|
|
1,950,000 |
(5) |
ABX Air Coventry, RI |
|
|
2,454,000 |
|
|
|
5.70 |
% |
|
|
4/1/12 |
|
|
|
|
|
|
|
N/A |
|
|
|
2,454,000 |
(5) |
Office Depot Enterprise, AL |
|
|
1,850,000 |
|
|
|
6.29 |
% |
|
|
3/1/17 |
|
|
|
|
|
|
|
N/A |
|
|
|
1,850,000 |
(5) |
Northern Tool Blaine, MN |
|
|
3,185,000 |
|
|
|
6.00 |
% |
|
|
9/1/16 |
|
|
|
|
|
|
|
N/A |
|
|
|
3,185,000 |
(4)(5) |
Office Max Orangeburg, SC |
|
|
1,875,000 |
|
|
|
5.61 |
% |
|
|
4/1/12 |
|
|
|
|
|
|
|
N/A |
|
|
|
1,875,000 |
(5) |
Walgreens Cincinnati, OH |
|
|
3,341,000 |
|
|
|
6.00 |
% |
|
|
9/1/16 |
|
|
|
|
|
|
|
N/A |
|
|
|
3,341,000 |
(4)(5) |
Walgreens Madeira, OH |
|
|
2,876,000 |
|
|
|
5.70 |
% |
|
|
4/1/12 |
|
|
|
|
|
|
|
N/A |
|
|
|
2,876,000 |
(5) |
Walgreens Sharonville, OH |
|
|
2,655,000 |
|
|
|
5.62 |
% |
|
|
4/1/12 |
|
|
|
|
|
|
|
N/A |
|
|
|
2,655,000 |
(5) |
12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed Rate Loan |
|
|
Interest |
|
|
Maturity |
|
|
Variable Rate |
|
|
Maturity |
|
|
Total Loan |
|
Property |
|
Amount |
|
|
Rate |
|
|
Date |
|
|
Loan Amount |
|
|
Date |
|
|
Outstanding |
|
AT&T Beaumont, TX |
|
|
8,592,000 |
|
|
|
5.87 |
% |
|
|
4/1/17 |
|
|
|
|
|
|
|
N/A |
|
|
|
8,592,000 |
(8) |
Walgreens Shreveport, LA |
|
|
2,815,000 |
|
|
|
5.56 |
% |
|
|
4/11/17 |
|
|
|
497,000 |
|
|
|
6/23/07 |
|
|
|
3,312,000 |
(7) |
Cost-U-Less,- St. Croix, USVI |
|
|
4,035,000 |
|
|
|
5.76 |
% |
|
|
4/1/17 |
|
|
|
|
|
|
|
N/A |
|
|
|
4,035,000 |
(5) |
Gallina Centro Collierville, TN |
|
|
14,200,000 |
|
|
|
5.72 |
% |
|
|
4/11/17 |
|
|
|
|
|
|
|
N/A |
|
|
|
14,200,000 |
(7) |
Apria Healthcare St. John, MO |
|
|
|
|
|
|
N/A |
|
|
|
N/A |
|
|
|
|
|
|
|
N/A |
|
|
|
|
|
Logans Roadhouse Fairfax, VA |
|
|
1,605,000 |
|
|
|
6.00 |
% |
|
|
4/11/17 |
|
|
|
962,000 |
|
|
|
6/27/07 |
|
|
|
2,567,000 |
(7) |
Logans Roadhouse Johnson City, TN |
|
|
1,933,000 |
|
|
|
6.00 |
% |
|
|
4/11/17 |
|
|
|
1,160,000 |
|
|
|
6/27/07 |
|
|
|
3,093,000 |
(7) |
Center at 7500 Cottonwood Jenison, MI |
|
|
|
|
|
|
N/A |
|
|
|
N/A |
|
|
|
|
|
|
|
N/A |
|
|
|
|
|
Eckerd Lincolnton, NC |
|
|
1,538,000 |
|
|
|
5.80 |
% |
|
|
4/11/17 |
|
|
|
271,000 |
|
|
|
7/3/07 |
|
|
|
1,809,000 |
(7) |
Tractor Supply Greenfield, MN |
|
|
2,227,500 |
|
|
|
5.57 |
% |
|
|
7/1/17 |
|
|
|
|
|
|
|
N/A |
|
|
|
2,227,500 |
(5) |
Lincoln Place Fairview Heights, IL |
|
|
35,432,000 |
|
|
|
5.70 |
% |
|
|
5/1/17 |
|
|
|
|
|
|
|
N/A |
|
|
|
35,432,000 |
(8) |
Amarillo Furniture Ashley, TX |
|
|
4,026,000 |
|
|
|
5.59 |
% |
|
|
4/11/17 |
|
|
|
710,000 |
|
|
|
7/5/07 |
|
|
|
4,736,000 |
(7) |
Pocatello Square Pocatello, ID |
|
|
17,250,000 |
|
|
|
5.53 |
% |
|
|
4/11/17 |
|
|
|
1,150,000 |
|
|
|
8/6/07 |
|
|
|
18,400,000 |
(7) |
Tractor Supply Paw Paw, MI |
|
|
2,048,000 |
|
|
|
5.65 |
% |
|
|
5/1/17 |
|
|
|
|
|
|
|
N/A |
|
|
|
2,048,000 |
(7) |
Tractor Supply Marinette, WI |
|
|
1,918,000 |
|
|
|
5.65 |
% |
|
|
5/1/17 |
|
|
|
|
|
|
|
N/A |
|
|
|
1,918,000 |
(7) |
Staples Greenville, SC |
|
|
2,955,000 |
|
|
|
5.51 |
% |
|
|
6/11/17 |
|
|
|
|
|
|
|
N/A |
|
|
|
2,955,000 |
(5) |
Big 5 Center Aurora, CO |
|
|
2,804,000 |
|
|
|
5.57 |
% |
|
|
6/11/17 |
|
|
|
|
|
|
|
N/A |
|
|
|
2,804,000 |
(5) |
Rite Aid Plains, PA |
|
|
3,380,000 |
|
|
|
5.60 |
% |
|
|
5/17/17 |
|
|
|
|
|
|
|
N/A |
|
|
|
3,380,000 |
(5) |
Tractor Supply Navasota, TX |
|
|
2,050,000 |
|
|
|
5.80 |
% |
|
|
5/11/17 |
|
|
|
362,000 |
|
|
|
7/18/2007 |
|
|
|
2,412,000 |
(5) |
Sportsmans Warehouse De Pere, WI |
|
|
3,906,500 |
|
|
|
5.52 |
% |
|
|
5/1/17 |
|
|
|
|
|
|
|
N/A |
|
|
|
3,906,500 |
(5) |
Eckerd Easton, PA |
|
|
4,060,000 |
|
|
|
5.80 |
% |
|
|
4/11/17 |
|
|
|
716,000 |
|
|
|
7/4/2007 |
|
|
|
4,776,000 |
(7) |
Applebees Portfolio Master Loan I |
|
|
15,161,185 |
|
|
|
5.68 |
% |
|
|
5/11/17 |
|
|
|
|
|
|
|
N/A |
|
|
|
15,161,185 |
(5) (9) |
Applebees Portfolio Master Loan II |
|
|
13,237,086 |
|
|
|
5.68 |
% |
|
|
5/11/17 |
|
|
|
|
|
|
|
N/A |
|
|
|
13,327,086 |
(5) (10) |
Applebees Portfolio Master Loan III |
|
|
13,851,729 |
|
|
|
5.68 |
% |
|
|
5/11/17 |
|
|
|
|
|
|
|
N/A |
|
|
|
13,851,729 |
(5) (11) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
510,991,234 |
|
|
|
|
|
|
|
|
|
|
$ |
70,998,437 |
|
|
|
|
|
|
$ |
581,989,671 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
72,351,437 |
|
|
|
|
|
|
$ |
|
|
|
|
|
(1) |
|
Mortgage note is cross-collateralized and cross-secured with the LO Midland Property, LO Lubbock Property, KO Wichita Property and
OT Oxford Property. |
|
(2) |
|
Mortgage note is cross-collateralized and cross-secured with the CV Clinton Property, WG Picayune Property and GG OFallon Property. |
|
(3) |
|
Mortgage note is cross-collateralized and cross-secured with the TS La Grange Property, TS Crockett Property, TS Livingston
Property and TS New Braunfels Property. |
|
(4) |
|
Mortgage note is cross-collateralized and cross-secured with the NT Blaine Property and the WG Cincinnati Property. |
|
(5) |
|
Lender: Bear Stearns Commercial Mortgage. |
|
(6) |
|
Lender: GE Commercial Finance Business Property Corporation
|
|
(7) |
|
Lender: Wachovia Bank, N.A. |
|
(8) |
|
Lender: JP Morgan Chase Bank, N.A. |
|
(9) |
|
The loan was used to fund eight single-tenant restaurants, which are subject to a master loan agreement. The properties are located in
New Mexico, Georgia, Oregon, Washington, and Colorado. |
|
(10) |
|
The loan was used to fund seven single-tenant restaurants, which are subject to a master loan agreement. The properties are located in
New Mexico, Georgia, Washington, and Colorado. |
|
(11) |
|
The loan was used to fund seven single-tenant restaurants, which are subject to a master loan agreement. The properties are located in
New Mexico, Georgia, Washington, and Colorado. |
The fixed rate debt mortgage notes require monthly interest-only payments with the
principal balance due on various dates from July 2008 through October 2018. The variable rate debt
mortgage notes bear interest at the one-month LIBOR rate plus 200 basis points and require monthly
interest-only payments and generally mature within 90 days. Each of the mortgage notes are secured
by the respective property. The mortgage notes are generally non-recourse to the Company and Cole
Op II, but both are liable for customary non-recourse carveouts.
The fixed rate mortgage notes generally may not be prepaid, in whole or in part, except under
the following circumstances: (i) full prepayment may be made on any of the three (3) monthly
payment dates occurring immediately prior to the maturity date, and (ii) partial prepayments
resulting from the application of insurance or condemnation proceeds to reduce the outstanding
principal balance of the mortgage notes. Notwithstanding the prepayment limitations, the Company
may sell the properties to a buyer that assumes the respective mortgage loan. The transfer would be
subject to the conditions set forth in the individual propertys mortgage note document, including
without limitation, the lenders approval of the proposed buyer and the payment of the lenders
fees, costs and expenses associated with the sale of the property and the assumption of the loan.
In the event that a mortgage note is not paid off on the respective maturity date, each
mortgage note includes hyperamortization provisions. The interest rate during the hyperamortization
period shall be the fixed interest rate as stated on the respective mortgage note agreement plus
two percent (2.0%). The individual mortgage note maturity date, under the hyperamortization
provisions, will be extended by twenty (20) years. During such period, the lender will apply 100%
of the rents collected to (i) all payments for escrow or reserve accounts, (ii) payment of interest
at the original fixed interest rate, (iii) payments for the replacement reserve account, (iv) any
other amounts due in accordance with the mortgage note agreement other than any additional interest
expense, (v) any operating expenses of the property pursuant to an approved annual budget, (vi) any
extraordinary expenses, (vii) payments to be applied to the reduction of the principal balance of
the mortgage note, and (viii) any additional interest expense, which is not paid will be added to
the principal balance of the mortgage note.
13
For federal income tax purposes, the depreciable basis in the properties noted above is
approximately $902 million in total. When we calculate depreciation expense for tax purposes, we
will use the straight-line method. We depreciate buildings and improvements based upon estimated
useful lives of 40 years, respectively. The depreciable basis in the properties noted above are
detailed as follows:
|
|
|
|
|
|
|
Depreciable |
|
Property |
|
Tax Basis |
|
Tractor Supply Parkersburg, WV |
|
$ |
2,419,149 |
|
Walgreens Brainerd, MN |
|
|
3,455,534 |
|
Rite Aid Alliance, OH |
|
|
1,721,992 |
|
La-Z-Boy Glendale, AZ |
|
|
3,308,706 |
|
Walgreens Florissant, MO |
|
|
3,798,660 |
|
Walgreens Saint Louis, MO (Gravois) |
|
|
4,041,203 |
|
Walgreens Saint Louis, MO (Telegraph) |
|
|
3,405,433 |
|
Walgreens Columbia, MO |
|
|
4,066,885 |
|
Walgreens Olivette, MO |
|
|
4,920,452 |
|
CVS Alpharetta, GA |
|
|
1,974,033 |
|
Lowes Enterprise, AL |
|
|
6,620,785 |
|
CVS Richland Hills, TX |
|
|
2,617,497 |
|
FedEx Rockford, IL |
|
|
4,810,302 |
|
Plastech Auburn Hills, MI |
|
|
20,812,140 |
|
Academy Sports Macon, GA |
|
|
4,546,122 |
|
Davids Bridal Lenexa, KS |
|
|
2,588,991 |
|
Rite Aid Enterprise, AL |
|
|
2,892,211 |
|
Rite Aid Wauseon, OH |
|
|
2,920,310 |
|
Staples Crossville, TN |
|
|
2,421,793 |
|
Rite Aid Saco, ME |
|
|
2,188,010 |
|
Wadsworth Boulevard Denver, CO |
|
|
14,190,910 |
|
Mountainside Fitness Chandler, AZ |
|
|
4,818,016 |
|
Drexel Heritage Hickory, NC |
|
|
3,958,998 |
|
Rayford Square Spring, TX |
|
|
7,936,443 |
|
CVS Portsmouth, OH |
|
|
1,667,154 |
|
Wawa Hockessin, DE |
|
|
3,087,470 |
|
Wawa Manahawkin, NJ |
|
|
2,821,552 |
|
Wawa Narbeth, PA |
|
|
2,688,592 |
|
CVS Lakewood, OH |
|
|
1,973,647 |
|
Rite Aid Cleveland, OH |
|
|
2,070,669 |
|
Rite Aid Fremont, OH |
|
|
1,728,442 |
|
Walgreens Knoxville, TN |
|
|
3,068,515 |
|
CVS Madison, MS |
|
|
3,368,662 |
|
Rite Aid Defiance, OH |
|
|
3,126,556 |
|
Conns San Antonio, TX |
|
|
3,562,750 |
|
Dollar General Crossville, TN |
|
|
2,435,881 |
|
Dollar General Ardmore, TN |
|
|
2,114,108 |
|
Dollar General Livingston, TN |
|
|
2,033,053 |
|
Wehrenberg Arnold, MO |
|
|
5,698,096 |
|
Sportmans Warehouse Wichita, KS |
|
|
6,843,371 |
|
CVS Portsmouth, OH |
|
|
1,770,141 |
|
Advance Auto Greenfield, IN |
|
|
755,462 |
|
Advance Auto Trenton, OH |
|
|
772,177 |
|
Rite Aid Lansing, MI |
|
|
1,547,295 |
|
Advance Auto Columbia Heights, MN |
|
|
1,236,120 |
|
Advance Auto Fergus Falls, MN |
|
|
1,058,994 |
|
CVS Okeechobee, FL |
|
|
4,812,804 |
|
Office Depot Dayton, OH |
|
|
2,583,810 |
|
Advance Auto Holland, MI |
|
|
1,432,089 |
|
Advance Auto Holland Township, MI |
|
|
1,463,900 |
|
Advance Auto Zeeland, MI |
|
|
1,384,950 |
|
CVS Orlando, FL |
|
|
2,807,200 |
|
Office Depot Greenville, MS |
|
|
2,583,810 |
|
Office Depot Warrensburg, MO |
|
|
1,829,024 |
|
CVS Gulfport, MS |
|
|
3,032,978 |
|
Advance Auto Grand Forks, ND |
|
|
1,070,994 |
|
CVS Clinton, NY |
|
|
2,462,819 |
|
Oxford Theatre Oxford, MS |
|
|
9,636,227 |
|
Advance Auto Duluth, MN |
|
|
1,190,975 |
|
Walgreens Picayune, MS |
|
|
3,153,167 |
|
Kohls Wichita, KS |
|
|
6,289,365 |
|
Staples Greenville, SC |
|
|
4,545,000 |
|
Lowes Lubbock, TX |
|
|
7,247,827 |
|
Lowes Midland, TX |
|
|
7,883,933 |
|
Advance Auto Grand Bay, AL |
|
|
905,396 |
|
Advance Auto Hurley, MS |
|
|
952,326 |
|
Advance Auto Rainsville, AL |
|
|
991,239 |
|
14
|
|
|
|
|
|
|
|
|
|
Depreciable |
|
Property |
|
Tax Basis |
|
Golds Gym OFallon, IL |
|
|
6,060,922 |
|
Rite Aid Glassport, PA |
|
|
3,268,815 |
|
Davids Bridal/Radio Shack Topeka, KS |
|
|
2,535,491 |
|
Rite Aid Hanover, PA |
|
|
4,638,296 |
|
American TV & Appliance Peoria, IL |
|
|
9,573,469 |
|
Tractor Supply La Grange, TX |
|
|
2,402,825 |
|
Staples Peru, IL |
|
|
2,024,975 |
|
Fedex Council Bluffs, IA |
|
|
2,932,591 |
|
Fedex Edwardsville, KS |
|
|
18,589,934 |
|
CVS Glenville Scotia, NY |
|
|
3,796,109 |
|
Advance Auto Ashland, KY |
|
|
1,096,360 |
|
Advance Auto Jackson, OH |
|
|
952,219 |
|
Advance Auto New Boston, OH |
|
|
1,092,304 |
|
Advance Auto Scottsburg, IN |
|
|
1,054,818 |
|
Tractor Supply Livingston, TN |
|
|
2,761,104 |
|
Tractor Supply New Braunfels, TX |
|
|
2,733,111 |
|
Office Depot Benton, AR |
|
|
2,803,944 |
|
Old Time Pottery Fairview Heights, IL |
|
|
3,338,050 |
|
Infiniti Davie, FL |
|
|
6,661,739 |
|
Office Depot Oxford, MS |
|
|
2,666,293 |
|
Tractor Supply Crockett, TX |
|
|
2,236,043 |
|
Mercedes Benz Atlanta, GA |
|
|
9,401,653 |
|
Dicks Sporting Goods Amherst, NY |
|
|
6,873,019 |
|
Chilis Paris, TX |
|
|
2,234,337 |
|
Staples Clarksville, IN |
|
|
3,598,588 |
|
HOM Fargo, ND |
|
|
12,288,100 |
|
La-Z-Boy Newington, CT |
|
|
7,055,777 |
|
Advance Auto Maryland Heights, MO |
|
|
1,954,435 |
|
Victoria Crossing Victoria, TX |
|
|
12,900,521 |
|
Academy Sports Katy, TX |
|
|
104,953,899 |
|
Gordmans Peoria, IL |
|
|
9,192,935 |
|
One Pacific Place Omaha, NE |
|
|
36,779,512 |
|
Sack n Save/OReilly Auto Garland, TX |
|
|
5,257,530 |
|
Tractor Supply Ankeny, IA |
|
|
3,075,880 |
|
ABX Air Coventry, RI |
|
|
4,193,919 |
|
Office Depot Enterprise, AL |
|
|
2,859,725 |
|
Northern Tool Blaine, MN |
|
|
5,022,678 |
|
Office Max Orangeburg, SC |
|
|
3,216,571 |
|
Walgreens Cincinnati, OH |
|
|
5,140,000 |
|
Walgreens Madeira, OH |
|
|
4,425,000 |
|
Walgreens Sharonville, OH |
|
|
4,085,000 |
|
AT&T Beaumont, TX |
|
|
12,275,000 |
|
Walgreens Shreveport, LA |
|
|
4,140,000 |
|
Cost-U-Less, St. Croix, USVI |
|
|
6,210,000 |
|
Gallina Centro Collierville, TN |
|
|
17,750,000 |
|
Apria Healthcare St. John, MO |
|
|
6,500,000 |
|
Logans Roadhouse Fairfax, VA |
|
|
3,209,000 |
|
Logans Roadhouse Johnson City, TN |
|
|
3,866,000 |
|
Center at 7500 Cottonwood Jenison, MI |
|
|
5,390,000 |
|
Eckerd Lincolnton, NC |
|
|
2,262,000 |
|
Tractor Supply Greenfield, MN |
|
|
4,050,000 |
|
Lincoln Place Fairview Heights, IL |
|
|
44,000,000 |
|
Ashley Furniture Amarillo, TX |
|
|
5,920,000 |
|
Pocatello Square Pocatello, ID |
|
|
23,000,000 |
|
Tractor Supply Paw Paw, MI |
|
|
3,095,000 |
|
Tractor Supply Marinette, MI |
|
|
2,950,000 |
|
Big 5 Center Aurora, CO |
|
|
4,290,000 |
|
Rite Aid Plains, PA |
|
|
5,200,000 |
|
Tractor Supply Navasota, TX |
|
|
3,015,000 |
|
Sportsmans Warehouse De Pere, WI |
|
|
6,010,000 |
|
Eckerd Easton, PA |
|
|
5,970,000 |
|
Applebees Portfolio Various |
|
|
65,000,000 |
|
|
|
|
|
|
|
$ |
806,428,606 |
|
|
|
|
|
15
Tenant Lease Expirations
The following table sets forth, as of April 26, 2007, lease expirations of our portfolio
for each of the next ten years assuming no renewal options are exercised. For purposes of the
table, the total annual base rent column represents annualized base rent, based on rent in effect
on January 1 of the respective year, for each lease which expires during the respective year.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of |
|
|
Approx. Square |
|
|
Total Annual |
|
|
% of Total |
|
Year Ending December 31, |
|
Leases Expiring |
|
|
Feet Expiring |
|
|
Base Rent |
|
|
Annual Base Rent |
|
2007 |
|
|
1 |
|
|
|
2,000 |
|
|
$ |
37,500 |
|
|
|
0 |
% |
2008 |
|
|
8 |
|
|
|
43,210 |
|
|
|
644,731 |
|
|
|
1 |
% |
2009 |
|
|
9 |
|
|
|
80,143 |
|
|
|
724,364 |
|
|
|
1 |
% |
2010 |
|
|
6 |
|
|
|
20,968 |
|
|
|
400,235 |
|
|
|
1 |
% |
2011 |
|
|
7 |
|
|
|
34,703 |
|
|
|
409,463 |
|
|
|
1 |
% |
2012 |
|
|
9 |
|
|
|
90,077 |
|
|
|
891,923 |
|
|
|
1 |
% |
2013 |
|
|
11 |
|
|
|
138,594 |
|
|
|
1,536,981 |
|
|
|
3 |
% |
2014 |
|
|
5 |
|
|
|
74,699 |
|
|
|
527,374 |
|
|
|
1 |
% |
2015 |
|
|
9 |
|
|
|
649,513 |
|
|
|
3,544,096 |
|
|
|
6 |
% |
2016 |
|
|
18 |
|
|
|
720,817 |
|
|
|
6,073,290 |
|
|
|
10 |
% |
2017 |
|
|
13 |
|
|
|
487,150 |
|
|
|
4,424,017 |
|
|
|
7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
96 |
|
|
|
2,341,874 |
|
|
$ |
19,213,973 |
|
|
|
31 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Prior Performance
The following information replaces the first paragraph of the section of our prospectus
captioned Questions and Answers About This Offering What is the experience of your officers and
directors? on page 1 of the prospectus:
Christopher H. Cole, our chairman, chief executive officer and president, has been active in
the acquisition, financing, management and structuring of commercial real estate transactions for
over 26 years and has been engaged as a general partner in the structuring and management of real
estate limited partnerships since February 1979. He also is the chief executive officer of Cole
REIT Advisors II LLC, (Cole Advisors II), which is our advisor. Through Mr. Coles affiliated
entities, as of December 31, 2006, Mr. Cole has sponsored 70 private real estate programs with an
aggregate of over 6,500 investors since January 1, 1997.
The following information replaces the section of our prospectus captioned Prospectus Summary
Prior Offering Summary beginning on page 11 of the prospectus:
From January 1, 1997 to December 31, 2006, our chairman, chief executive officer and
president, Christopher H. Cole, through entities he directly or indirectly controls, has previously
sponsored 70 privately offered real estate programs, including 16 limited partnerships, four debt
offerings and 49 tenant-in-common programs, and Cole REIT I, a privately offered REIT. As of
December 31, 2006, such programs have raised an aggregate of approximately $576.2 million from over
6,500 investors, and have owned and operated a total of 204 commercial real estate properties.
Neither Mr. Cole, nor any of our other affiliates, has previously sponsored or organized a publicly
offered REIT. The Prior Performance Summary section of this prospectus contains a discussion of
the programs sponsored by Mr. Cole since January 1, 1997. Certain financial results and information
relating to such programs with investment objectives similar to ours is also provided in the Prior
Performance Tables included as Appendix A to this prospectus. The prior performance of the
programs previously sponsored by Mr. Cole is not necessarily indicative of the results that we will
achieve. Therefore, you should not assume that you will experience returns, if any, comparable to
those experienced by investors in such prior real estate programs.
16
The following information replaces the section of our prospectus captioned Prior Performance
Summary beginning on page 87 of the prospectus:
PRIOR PERFORMANCE SUMMARY
Prior Investment Programs
The information presented in this section represents the historical experience of certain real
estate programs managed over the last ten years by Cole Capital Advisors, Cole Capital Partners and
other affiliates of our advisor, including certain officers and directors of our advisor. Investors
should not assume that they will experience returns, if any, comparable to those experienced by
investors in such prior real estate programs.
During the period from January 1, 1997 to December 31, 2006, affiliates of our advisor have
sponsored 71 privately offered prior programs including 16 limited partnerships, a real estate
investment trust (Cole REIT I), five debt offerings and 49 tenant-in-common programs. As of
December 31, 2006, such prior programs have raised approximately
$581.2 million from approximately 6,700
investors. Each of the 16 limited partnerships, the real estate investment trust, four of the debt
offerings and the 49 tenant-in-common programs have investment objectives and policies similar to
that of this program. See Tables I and II of the Prior Performance Tables for more detailed
information about the experience of our affiliates in raising and investing funds for offerings
initiated over the last four years and compensation paid to the sponsors of these programs.
We intend to conduct this offering in conjunction with future offerings by one or more public
and private real estate entities sponsored by Cole Capital Advisors, Cole Capital Partners and
their affiliates. To the extent that such entities have the same or similar objectives as ours or
involve similar or nearby properties, such entities may be in competition with the properties
acquired by us. See the Conflicts of Interest section of this prospectus for additional
information.
The information in this section and in the Prior Performance Tables attached to this
prospectus as Appendix A provides relevant summary information concerning real estate programs
sponsored by our affiliates. The Prior Performance Tables set forth information as of the dates
indicated regarding certain of these prior programs as to (1) experience in raising and investing
funds (Table I); (2) compensation to the sponsor and its affiliates (Table II); (3) annual
operating results of prior real estate programs (Table III); (4) results of completed programs
(Table IV); and (5) results of sales or disposals of properties (Table V). Additionally, Table VI,
which is contained in Part II of the registration statement for this offering and which is not part
of the prospectus, contains certain additional information relating to properties acquired by the
prior real estate programs. We will furnish copies of such table to any prospective investor upon
request and without charge. The purpose of this prior performance information is to enable you to
evaluate accurately the experience of our advisor and its affiliates in sponsoring like programs.
The following discussion is intended to summarize briefly the objectives and performance of the
prior real estate programs and to disclose any material adverse business developments sustained by
them.
Summary Information
During the period from January 1, 1997 to December 31, 2006, affiliates of our advisor have
been general partners in 16 limited partnerships with similar objectives to our program, involving
the sale of limited partnership interests to 2,700 investors, raising approximately $119.9 million
of capital. The foregoing partnerships have purchased in the aggregate 39 properties for an
approximate acquisition cost of $238.5 million, of which
approximately 49.2% is attributable to 23
single-tenant commercial properties, 48.6% is attributable to 13 shopping centers, 1.2% is
attributable to one data center and 1.0% is attributable to two unimproved or partially-improved
land parcels intended for high-rise/data center development. Thirteen of the properties are located
in the Phoenix metropolitan area, one is located in northern Arizona and 25 are located in the
following states: three in Tennessee; three in Oklahoma; two in California; two in Florida; two in
Ohio; and one each in Alabama, Indiana, Iowa, Kentucky, Michigan, Mississippi, Nevada, New Mexico,
New York, South Carolina, Texas, Virginia and Washington. The properties have been purchased on
terms varying from all cash to market rate financing. To date, 15 of the properties have been sold.
Of the above, two real estate investment programs that acquired retail shopping centers and
two limited partnerships that acquired single-tenant commercial properties, have been sponsored
since January 1, 2002. Cole Capital Partners, through wholly owned subsidiaries, serves as the
general partner of Cole Credit Property Fund Limited Partnership (CCPF) and Cole Credit Property
Fund II Limited Partnership (CCPF II). As of December 31, 2006, CCPF had raised $25.0 million and
acquired 14 single-tenant commercial properties or an interest therein in 12 states across the U.S.
for an aggregate acquisition cost of approximately $56.1 million. As of December 31, 2006, CCPF II
had raised approximately $24.5 million and had acquired ten single-tenant commercial properties or
an interest therein (including one property co-owned with CCPF) in seven states for an aggregate
acquisition cost of approximately $61.3 million. All of the properties acquired by CCPF and CCPF
II were net leased to investment grade tenants, which are companies that have a debt rating by
Moodys of Baa3 or better or a credit rating by Standard & Poors of BBB- or better , or are
guaranteed by a company with such rating, at the time of acquisition. Subsequent to the
acquisition by CCPF, the tenants at two properties representing less than 7.5% of the funds
invested equity have been downgraded below investment grade, one of which has filed for Chapter 11
bankruptcy protection and CCPF wrote off its approximately $1.5 million investment in such
property.
17
In addition to the partnerships described above, as of December 31, 2006, affiliates of our
advisor had issued an aggregate of approximately $112.2 million in collateralized senior notes
through four debt offerings and had acquired an aggregate of 132 single-tenant retail properties in
34 states for an aggregate acquisition cost of approximately $786.5 million. As of December 31,
2006, 119 of the properties had been sold, of which 52 were sold as part of Cole Capital Partners
tenant-in-common program, eight were sold to Cole REIT I and 16 were sold to us. On April 28,
2006, an affiliate of our advisor redeemed at par all of the approximately $28.0 million in
collateralized senior notes issued under the first debt offering.
In addition, as of December 31, 2006, Cole REIT I, had raised approximately $101.0 million,
and had acquired 41 single-tenant retail properties in 19 states for an aggregate acquisition cost
of approximately $195.5 million.
In addition,
the Cole Exchange Entities offer properties to Section 1031 exchange investors in
the form of the sale of tenant-in-common ownership interests in such properties. As of December 31,
2006, aggregate ownership interests of $155.5 million had been
sold in 25 private offerings of
properties located in 14 states. In addition, the Cole Exchange Entities offer properties
through the DST Program whereby beneficial interests are offered in trusts that acquire real
property. As of December 31, 2006, aggregate ownership interests
of approximately $87.6 had been
sold in 24 private offerings of properties located in 12 states. See the Prior Performance
Tables attached to this memorandum as Appendix A for additional information regarding the foregoing
programs.
The following table shows a breakdown of the aggregate amount of the acquisition and
development costs of the properties purchased by the prior real estate programs of our affiliates
as of December 31, 2006:
|
|
|
|
|
|
|
|
|
|
|
|
|
Type of Property |
|
New |
|
Used |
|
Construction |
Retail |
|
|
7.2 |
% |
|
|
92.8 |
% |
|
|
|
|
Office buildings |
|
|
|
|
|
|
100 |
% |
|
|
|
|
Land |
|
|
|
|
|
|
100 |
% |
|
|
|
|
Data Center |
|
|
|
|
|
|
|
|
|
|
100 |
% |
These
programs have sold 111 of the total of 204 properties, or 54.4% of such properties. The
original purchase price of the properties that were sold was $486.2 million, and the aggregate
sales price of such properties was $552.0 million. See Tables III, IV and V of the Prior
Performance Tables for more detailed information as to the operating results of such programs whose
offerings
closed in the last five years, results of such programs that have completed their operations over
the last five years and the sales or other disposals of properties with investment objectives
similar to ours over the last three years.
An entity affiliated with the officers of Cole Partnerships, Inc. has raised $5 million in a
debt offering for general corporate purposes, including investments in joint ventures with
affiliates, which has been repaid.
The prior programs sponsored by our affiliates have occasionally been adversely affected by
the cyclical nature of the real estate market. They have experienced, and may in the future
experience, decreases in net income when economic conditions decline. For example, one of these
programs, Cole Santa Fe Investors, LP owns an approximately 263,000 square foot shopping center
property of which approximately 50,000 square feet (approximately 19% of the leasable space) is
vacant due to a tenant bankruptcy. Distributions to investors in that program have been suspended
indefinitely beginning with the quarter ended December 31, 2003. In addition, Cole Southwest
Opportunity Fund, LP completed development of a data facility in Phoenix, Arizona in August 2001
through a joint venture and was unable to lease the facility as a result of the severe downturn in
the telecommunications industry. On April 6, 2005, the Phoenix facility was sold for $16.3 million,
which along with the previous sale of vacant land parcels in Las Vegas, Nevada, formerly owned by a
wholly owned subsidiary of Cole Southwest Opportunity Fund, LP resulted in a return to investors of
approximately 83% of their original investment upon liquidation of the limited partnership. A
continued vacancy in the property owned by Santa Fe Investors, LP could adversely affect the
ultimate performance of this prior program. See Prior Performance Tables Table III.
The information beginning on page A-1 of this supplement, immediately following the Financial
Statements, replaces Appendix A of our prospectus captioned Prior Performance Tables beginning
on page A-1 of the prospectus.
18
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
|
|
|
|
|
Page |
|
Summary Financial Information of Properties Acquired |
|
|
|
|
|
|
|
|
|
Lincoln Place - Fairview Heights, Illinois (MT Fairview Heights Property) |
|
|
F-1 |
|
Overview |
|
|
F-1 |
|
Independent Auditorss Report |
|
|
F-2 |
|
Audited Financial Statements of Property Acquired |
|
|
F-3 |
|
Statement of Revenues and Certain Operating Expenses for the Year Ended December 31, 2006 |
|
|
F-3 |
|
Notes to the Statement of Revenues and Certain Operating Expenses |
|
|
F-4 |
|
Tractor
Supply Property |
|
|
|
|
|
|
|
F-6 |
|
Rite Aid Various Properties |
|
|
|
|
|
|
|
F-7 |
|
Unaudited Pro Forma Financial Statements Cole Credit Property Trust II, Inc. |
|
|
|
|
Aggregated Pro Forma Financial Statements (Unaudited) |
|
|
F-8 |
|
|
|
|
F-8 |
|
|
|
|
F-9 |
|
|
|
|
F-10 |
|
On April 5, 2007, we acquired an approximately
273,000 square foot multi-tenant retail shopping center on
an approximately 30.4 acre site located in Fairview
Heights, Illinois (the MT Fairview Heights
Property), which was constructed in phases in 1998 and
2002. The MT Fairview Heights Property is 100% leased to
19 tenants. Major tenants include Kohls Department
Stores, Inc., d/b/a Kohls, Ultimate Electronics, Inc.,
d/b/a Ultimate
Electronics, Marshalls of IL, LLC, d/b/a Marshalls and
LNT, Inc. d/b/a Marshalls. The MT Fairview Heights
Property is subject to 19 net leases (the MT Fairview
Heights Leases), pursuant to which each tenant is required
to pay substantially all operating expenses, capital
expenditures and a proportionate amount of common area
maintenance charges in addition to base rent.
The purchase price of the MT Fairview Heights Property was
approximately $44.0 million, exclusive of closing costs.
The acquisition was funded by net proceeds from our ongoing
public offering and an approximately $35.4 million loan
secured by the MT Fairview Heights Property.
After reasonable inquiry, we are not aware of any material
factors relating to the MT Fairview Heights Property, other than
those discussed above, that would cause the reported financial
information not to be necessarily indicative of future operating
results.
F-1
INDEPENDENT
AUDITORS REPORT
To the Board of Directors and Stockholders of
Cole Credit Property Trust II, Inc.
Phoenix, AZ
We have audited the accompanying statement of revenues and
certain operating expenses (the Historical Summary)
of the MT Fairview Heights Property (the Property)
for the year ended December 31, 2006. This Historical
Summary is the responsibility of Cole Credit Property
Trust II, Inc. management. Our responsibility is to express
an opinion on the Historical Summary based on our audit.
We conducted our audit in accordance with auditing standards
generally accepted in the United States of America. Those
standards require that we plan and perform the audit to obtain
reasonable assurance about whether the Historical Summary is
free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in
the Historical Summary. An audit also includes assessing the
accounting principles used and significant estimates made by
management, as well as evaluating the overall presentation of
the Historical Summary. We believe that our audit provides a
reasonable basis for our opinion.
The accompanying Historical Summary was prepared for the purpose
of complying with the rules and regulations of the Securities
and Exchange Commission as described in Note 1 to the
Historical Summary and is not intended to be a complete
presentation of the Propertys revenues and expenses.
In our opinion, such Historical Summary presents fairly, in all
material respects, the revenue and certain operating expenses
described in Note 1 to the Historical Summary of the MT
Fairview Heights Property for the year ended December 31,
2006, in conformity with accounting principles generally
accepted in the United States of America.
/s/ DELOITTE &
TOUCHE, LLP
Phoenix, Arizona
April 10, 2007
F-2
MT
FAIRVIEW HEIGHTS PROPERTY
|
|
|
|
|
Revenues:
|
|
|
|
|
Rental revenue
|
|
$
|
3,236,104
|
|
Tenant reimbursement and other
|
|
|
505,823
|
|
|
|
|
|
|
Total revenues
|
|
|
3,741,927
|
|
|
|
|
|
|
Certain Operating
Expenses:
|
|
|
|
|
Operations and maintenance
|
|
|
10,475
|
|
Parking and security
|
|
|
121,156
|
|
Insurance
|
|
|
20,125
|
|
Taxes
|
|
|
364,228
|
|
|
|
|
|
|
Total certain operating expenses
|
|
|
515,984
|
|
|
|
|
|
|
Revenues in excess of certain
operating expenses
|
|
$
|
3,225,943
|
|
|
|
|
|
|
See accompanying notes to statement of revenues and certain
operating expenses.
F-3
MT
FAIRVIEW HEIGHTS PROPERTY
For the
Year Ended December 31, 2006
On April 5, 2007, Cole Credit Property Trust II, Inc.
(the Company) acquired a multi-tenant commercial
retail shopping center containing approximately
273,000 square feet of rentable space located on an
approximately 30.4 acre site in Fairview Heights, Illinois
(the MT Fairview Heights Property). The
MT Fairview Heights Property is approximately 100% leased
to 19 tenants, pursuant to net leases.
The statement of revenues and certain operating expenses (the
Historical Summary) has been prepared for the
purpose of complying with the provisions of
Article 3-14
of
Regulation S-X
promulgated by the Securities and Exchange Commission (the
SEC), which requires certain information with
respect to real estate operations to be included with certain
filings with the SEC. These Historical Summaries include the
historical revenues and certain operating expenses of the
MT Fairview Heights Property, exclusive of items which may
not be comparable to the proposed future operations of the
MT Fairview Heights Property. Material amounts that would
not be directly attributable to future operating results of the
MT Fairview Heights Property are excluded, and the
financial statements are not intended to be a complete
presentation of the MT Fairview Heights Propertys
revenues and expenses. Items excluded consist of management
fees, broker fees, depreciation, amortization, miscellaneous
fees, and accretion of below market leases.
|
|
2.
|
Significant
Accounting Policies
|
Revenue
Recognition
The leases are accounted for as operating leases and minimum
rental income is recognized on a straight-line basis over the
remaining term of each lease. Tenant reimbursement revenue is
recognized in the same periods in which the related expenses are
incurred. Tenant reimbursement revenue includes payments from
tenants as reimbursements for property taxes, utilities, and
other property operating expenses.
Repairs
and Maintenance
Expenditures for repairs and maintenance are expensed as
incurred.
Use of
Estimates
The preparation of historical summaries in conformity with
generally accepted accounting principles requires the
Companys management to make estimates and assumptions that
affect the reported amounts of revenues and certain operating
expenses during the reporting period. Actual results could
differ from those estimates.
The aggregate annual minimum future rental payments on the
non-cancelable operating leases in effect as of
December 31, 2006 are as follows:
|
|
|
|
|
Year ending December 31:
|
|
|
|
|
2007
|
|
$
|
3,093,165
|
|
2008
|
|
|
3,059,464
|
|
2009
|
|
|
3,004,160
|
|
2010
|
|
|
2,915,047
|
|
2011
|
|
|
2,750,544
|
|
Thereafter
|
|
|
10,202,109
|
|
|
|
|
|
|
Total
|
|
$
|
25,024,488
|
|
|
|
|
|
|
F-4
MT
FAIRVIEW HEIGHTS PROPERTY
NOTES TO
THE STATEMENT OF REVENUES AND CERTAIN OPERATING
EXPENSES (Continued)
For the
Year Ended December 31, 2006
The minimum future rental income represents the base rent
required to be paid under the terms of the lease exclusive of
charges for contingent rents, electrical services, real estate
taxes, and operating cost escalations.
For the year ended December 31, 2006, the following tenants
accounted for 10% or more of the annual rental income for the MT
Fairview Heights Property.
|
|
|
|
|
|
|
|
|
|
|
Aggregate Annual
|
|
|
% Aggregate Annual
|
|
Tenant Name
|
|
Rental Income
|
|
|
Rental Income
|
|
|
Ultimate Electronics, Inc.
|
|
$
|
424,639
|
|
|
|
13%
|
|
Kohls Illinois, Inc.
|
|
|
530,760
|
|
|
|
16%
|
|
LNT, Inc.
|
|
|
318,667
|
|
|
|
10%
|
|
If these tenants were to default on their leases, future revenue
of the MT Fairview Heights Property would be materially and
adversely impacted.
|
|
5.
|
Commitments
and Contingencies
|
Litigation
The MT Fairview Heights Property may be subject to legal claims
in the ordinary course of business as a property owner. The
Company believes that the ultimate settlement of any potential
claims will not have a material impact on the MT Fairview
Heights Propertys results of operations.
Environmental
Matters
In connection with the ownership and operation of real estate,
the MT Fairview Heights Property may be potentially liable for
costs and damages related to environmental matters. The MT
Fairview Heights Property has not been notified by any
governmental authority of any non-compliance, liability or other
claim, and the Company is not aware of any other environmental
condition that they believe will have a material adverse effect
on the MT Fairview Heights Propertys results of operations.
F-5
SUMMARY FINANCIAL DATA
TRACTOR SUPPLY COMPANY
During
the period from April 18, 2007 through April 26, 2007, we
acquired the following property leased to, or guaranteed
by, Tractor Supply Company (Tractor Supply):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property Location |
|
Date Acquired |
|
|
Purchase Price |
|
|
Square Feet |
|
|
Year Built |
|
Navasota, Texas |
|
|
4/18/2007 |
|
|
|
3,015,000 |
|
|
|
22,670 |
|
|
|
2006 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
|
|
|
$ |
3,015,000 |
|
|
|
22,670 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tractor Supply currently operates more than 550 retail stores in 34 states, employs more
than 7,800 and is headquartered in Brentwood, Tennessee. Tractor Supplys common stock is traded on
The Nasdaq Global Select Market under the symbol TSCO.
In evaluating the
Tractor Supply property as potential acquisition and determining
the appropriate amount of consideration to be paid for our interests therein, a variety of factors
were considered, including our consideration of property condition reports; unit-level store
performance; property location, visibility and access; age of the property, physical condition and
curb appeal; neighboring property uses; local market conditions, including vacancy rates; area
demographics, including trade area population and average household income; neighborhood growth
patterns and economic conditions; and the presence of demand generators. After reasonable inquiry,
we are not aware of any material factors relating to the Tractor
Supply property, other
than those discussed above, that would cause the reported financial information not to be
necessarily indicative of future operating results.
Because
the Tractor Supply property is 100% leased to a single tenant on a
long-term basis under a net lease that transfers substantially all of the operating costs to the
tenant, we believe that the financial condition and results of operations of the tenant, Tractor
Supply, are more relevant to investors than the financial statements of the individual property
acquired in order to enable investors to evaluate the credit-worthiness of the lessee.
Additionally, because the properties are subject to a net lease, the historical property financial
statements provide limited information other than rental income, which is disclosed in the section
captioned Investment Objectives and Policies Real Property Investments beginning on page 83 of
the prospectus. As a result, pursuant to the guidance provided by the SEC, we have not provided
audited statements of the property acquired.
Tractor Supply currently files its financial statements in reports filed with the
Securities and Exchange Commission, and the following summary financial data regarding Tractor
Supply are taken from its previously filed public reports:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Fiscal Year Ended |
|
|
12/31/2006 |
|
12/31/2005 |
|
12/31/2004 |
|
|
(In thousands) |
Consolidated Statements of Operations |
|
|
|
|
|
|
|
|
|
|
|
|
Revenues |
|
$ |
2,369,612 |
|
|
$ |
2,067,979 |
|
|
$ |
1,738,843 |
|
Operating Income |
|
|
148,020 |
|
|
|
136,444 |
|
|
|
101,546 |
|
Net Income |
|
|
91,008 |
|
|
|
85,669 |
|
|
|
64,069 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of the Fiscal Year Ended |
|
|
12/31/2006 |
|
12/31/2005 |
|
12/31/2004 |
|
|
(In thousands) |
Consolidated Balance Sheets |
|
|
|
|
|
|
|
|
|
|
|
|
Total Assets |
|
$ |
1,007,992 |
|
|
$ |
814,795 |
|
|
$ |
678,485 |
|
Long-term Debt |
|
|
2,808 |
|
|
|
10,739 |
|
|
|
34,744 |
|
Stockholders Equity |
|
|
598,904 |
|
|
|
477,698 |
|
|
|
370,584 |
|
For more detailed financial information regarding Tractor Supply, please refer to its
financial statements, which are publicly available with the Securities and Exchange Commission
at http://www.sec.gov.
F-6
SUMMARY FINANCIAL DATA
RITE AID CORPORATION
During
the period from April 18, 2007 through April 26, 2007, we acquired the following properties leased to, or guaranteed
by, Rite Aid Corporation (Rite Aid):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property Location |
|
Date Acquired |
|
|
Purchase Price |
|
|
Square Feet |
|
|
Year Built |
|
Plains, Pennsylvania |
|
|
4/16/2007 |
|
|
|
5,200,000 |
|
|
|
14,564 |
|
|
|
2006 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
|
|
|
$ |
5,200,000 |
|
|
|
14,564 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rite Aid has operates over 3,300 stores in 28 states and Washington, DC. Rite Aid has a
Standard and Poors credit rating of B+ and its stock is publicly traded on the New York Stock
Exchange under the ticker symbol RAD.
In evaluating the Rite Aid
property as a potential acquisition and determining the
appropriate amount of consideration to be paid for our interests therein, a variety of factors were
considered, including our consideration of property condition reports; unit-level store
performance; property location, visibility and access; age of the property, physical condition and
curb appeal; neighboring property uses; local market conditions, including vacancy rates; area
demographics, including trade area population and average household income; neighborhood growth
patterns and economic conditions; and the presence of demand generators. After reasonable inquiry,
we are not aware of any material factors relating to the Rite Aid properties, other than those
discussed above, that would cause the reported financial information not to be necessarily
indicative of future operating results.
Because the Rite Aid
property is leased to a single tenant on a long-term basis under
a net lease that transfers substantially all of the operating costs to the tenant, we believe that
the financial condition and results of operations of the lease guarantor, Rite Aid, are more
relevant to investors than the financial statements of the property acquired in order to enable
investors to evaluate the credit-worthiness of the lessee. Additionally, because the properties are
subject to a net lease, the historical property financial statements provide limited information
other than rental income, which is disclosed in the section captioned Investment Objectives and
Policies Real Property Investments beginning on page 83 of the prospectus. As a result, pursuant
to guidance provided by the Securities and Exchange Commission, we have not provided audited
financial statements of the properties acquired.
Rite Aid currently files its financial statements in reports filed with the Securities
and Exchange Commission, and the following summary financial data regarding Rite Aid has been taken
from its previously filed public reports:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Nine |
|
|
|
|
Months Ended |
|
For the Fiscal Year Ended |
|
|
12/2/2006 |
|
3/4/2006 |
|
2/26/2005 |
|
2/28/2004 |
|
|
(In thousands) |
Consolidated Statements of Operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues |
|
$ |
12,945,650 |
|
|
$ |
17,270,968 |
|
|
$ |
16,816,439 |
|
|
$ |
16,600,449 |
|
Operating Income |
|
|
13,417 |
|
|
|
43,254 |
|
|
|
134,007 |
|
|
|
34,584 |
|
Net Income |
|
|
11,729 |
|
|
|
1,273,006 |
|
|
|
302,478 |
|
|
|
83,379 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of |
|
As of the Fiscal Year Ended |
|
|
12/2/2006 |
|
3/4/2006 |
|
2/26/2005 |
|
2/28/2004 |
|
|
(In thousands) |
Consolidated Balance Sheets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Assets |
|
$ |
7,132,217 |
|
|
$ |
6,988,371 |
|
|
$ |
5,932,583 |
|
|
$ |
6,245,634 |
|
Long-term Debt |
|
|
2,784,954 |
|
|
|
2,298,706 |
|
|
|
2,680,998 |
|
|
|
3,451,352 |
|
Stockholders Equity |
|
|
1,625,275 |
|
|
|
1,606,921 |
|
|
|
322,934 |
|
|
|
(8,277 |
) |
For more detailed financial information regarding Rite Aid, please refer to its financial
statements, which are publicly available with the Securities and Exchange Commission at
http://www.sec.gov.
F-7
Cole Credit Property Trust II, Inc.
Pro Forma Consolidated Balance Sheet
As of December 31, 2006
(Unaudited)
The following unaudited Pro Forma Consolidated Balance Sheet is presented as if the
Company had acquired the properties described in Note B to the Pro Forma Consolidated Balance Sheet
on December 31, 2006. Pursuant to a Registration Statement on Form S-11 under the Securities Act of
1933, as amended, the Company is offering for sale to the public, on
a best efforts basis a minimum of 250,000 and a maximum of
45,000,000 shares of its common stock at a price of $10 per
share, subject to volume and other discounts (the
offering). On November 6, 2006, we filed a registration
statement with the SEC with respect to a proposed secondary public
offering of up to
150,000,000 shares of common stock. The offering includes up to 125,000,000 shares to be offered
for sale at $10.00 per share in the primary offering and up to 25,000,000 shares to be offered for
sale pursuant to our DRIP.
This Pro Forma Consolidated Balance Sheet should be read in conjunction with the
historical financial statements and notes thereto for the year ended December 31, 2006 as included
elsewhere in this document. The Pro Forma Consolidated Balance Sheet is unaudited and is not
necessarily indicative of what the actual financial position would have been had the Company
completed the above transactions on December 31, 2006, nor does it purport to represent its future
financial position. This Pro Forma Consolidated Balance sheet only includes the significant
acquisitions pursuant to SEC Rule 3-14 of Regulation S-X.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, |
|
|
Acquisition |
|
|
Pro Forma |
|
|
|
2006, |
|
|
Pro Forma |
|
|
December 31, |
|
|
|
As Reported |
|
|
Adjustments |
|
|
2006 |
|
|
|
(a) |
|
|
(b) |
|
|
|
|
|
ASSETS
|
Real estate assets, at cost: |
|
|
|
|
|
|
|
|
|
|
|
|
Land |
|
$ |
109,506,269 |
|
|
$ |
21,680,974 |
|
|
$ |
131,187,243 |
|
Buildings and improvements, less accumulated
depreciation on 4,547,932 at December 31, 2006 |
|
|
282,468,749 |
|
|
|
200,932,731 |
|
|
|
483,401,480 |
|
Acquired intangible lease assets, less accumulated
amortization of $2,251,172 at December 31, 2006 |
|
|
54,569,023 |
|
|
|
19,046,872 |
|
|
|
73,615,895 |
|
|
|
|
|
|
|
|
|
|
|
Total real estate assets |
|
|
446,544,041 |
|
|
|
241,660,577 |
|
|
|
688,204,618 |
|
Cash and cash equivalents |
|
|
37,566,490 |
|
|
|
(37,566,490 |
) |
|
|
|
|
Restricted cash |
|
|
5,839,733 |
|
|
|
|
|
|
|
5,839,733 |
|
Rents and tenant receivables, net |
|
|
2,432,536 |
|
|
|
|
|
|
|
2,432,536 |
|
Prepaid expenses, mortgage loan deposits and other assets |
|
|
4,248,973 |
|
|
|
|
|
|
|
4,248,973 |
|
Deferred financing costs, less accumulated amortization
of $565,946 at December 31, 2006 |
|
|
3,789,019 |
|
|
|
1,592,102 |
|
|
|
5,381,121 |
|
|
|
|
|
|
|
|
|
|
|
Total assets |
|
$ |
500,420,792 |
|
|
$ |
205,686,189 |
|
|
$ |
706,106,981 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS EQUITY
|
Mortgage notes payable |
|
$ |
218,265,916 |
|
|
$ |
156,067,700 |
|
|
$ |
374,333,616 |
|
Accounts payable and accrued expenses |
|
|
2,016,343 |
|
|
|
|
|
|
|
2,016,343 |
|
Escrowed investor proceeds |
|
|
5,710,730 |
|
|
|
|
|
|
|
5,710,730 |
|
Due to affiliates |
|
|
67,608 |
|
|
|
|
|
|
|
67,608 |
|
Acquired below market lease intangibles, less
accumulated amortization of $96,484 at December 31, 2006 |
|
|
2,649,374 |
|
|
|
|
|
|
|
2,649,374 |
|
Distributions payable |
|
|
1,612,094 |
|
|
|
|
|
|
|
1,612,094 |
|
Deferred rent and other liabilities |
|
|
340,974 |
|
|
|
|
|
|
|
340,974 |
|
|
|
|
|
|
|
|
|
|
|
Total liabilities |
|
|
230,663,039 |
|
|
|
156,067,700 |
|
|
|
386,730,739 |
|
|
|
|
|
|
|
|
|
|
|
Redeemable common stock |
|
|
3,521,256 |
|
|
|
|
|
|
|
3,521,256 |
|
|
|
|
|
|
|
|
|
|
|
Preferred stock, $0.01 par value; 10,000,000 shares
authorized, none issued and outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
Common stock, $.01 par value; 240,000,000 shares
authorized, 30,691,204 shares issued and outstanding at
December 31, 2006 |
|
|
306,912 |
|
|
|
55,131 |
|
|
|
362,043 |
|
Capital in excess of par value |
|
|
273,385,603 |
|
|
|
49,563,358 |
|
|
|
322,948,961 |
|
Accumulated distributions in excess of earnings |
|
|
(7,456,018 |
) |
|
|
|
|
|
|
(7,456,018 |
) |
|
|
|
|
|
|
|
|
|
|
Total stockholders equity |
|
|
266,236,497 |
|
|
|
49,618,489 |
|
|
|
315,854,986 |
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders equity |
|
$ |
500,420,792 |
|
|
$ |
205,686,189 |
|
|
$ |
706,106,981 |
|
|
|
|
|
|
|
|
|
|
|
F-8
Cole Credit Property Trust II, Inc.
Pro Forma Consolidated Statement of Operations
For the Year Ended December 31, 2006
(Unaudited)
The following unaudited Pro Forma Consolidated Statement of Operations is presented as
if the Company had acquired the properties described in Note C to the Pro Forma Consolidated
Statements of Operations on January 1, 2006 or the date significant operations commenced.
This Pro Forma Consolidated Statement of Operations should be read in conjunction with
the historical financial statements and notes thereto for the year ended December 31, 2006 as
included elsewhere in this document. The Pro Forma Consolidated Statement of Operations is
unaudited and is not necessarily indicative of what the actual results of operations would have
been had the Company completed the above transactions on the later of January 1, 2006 or
commencement of operations, nor does it purport to represent its future operations. This Pro Forma
Consolidated Statement of Operations only includes the significant acquisitions pursuant to
Regulation S-X rule 3-14.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the |
|
|
|
|
|
|
Pro Forma for the |
|
|
|
Year Ended |
|
|
Acquisition |
|
|
Year Ended |
|
|
|
December 31, 2006, |
|
|
Pro Forma |
|
|
December 31, |
|
|
|
As Reported |
|
|
Adjustments |
|
|
2006 |
|
|
|
(a) |
|
|
(c) |
|
|
|
|
|
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
Rental income |
|
$ |
18,357,174 |
|
|
$ |
22,385,849 |
(d) |
|
$ |
40,743,023 |
|
Tenant reimbursement income |
|
|
1,162,333 |
|
|
|
1,494,178 |
|
|
|
2,656,511 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
19,519,507 |
|
|
|
23,880,027 |
|
|
|
43,399,534 |
|
|
|
|
|
|
|
|
|
|
|
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative |
|
|
952,789 |
|
|
|
40,384 |
|
|
|
993,173 |
|
Property operating expenses |
|
|
1,416,745 |
|
|
|
1,713,579 |
|
|
|
3,130,324 |
|
Property and asset management fees |
|
|
936,977 |
|
|
|
1,458,195 |
(e)(f) |
|
|
2,395,172 |
|
Depreciation |
|
|
4,396,460 |
|
|
|
6,608,521 |
(g) |
|
|
11,004,981 |
|
Amortization |
|
|
2,072,906 |
|
|
|
1,783,554 |
(g) |
|
|
3,856,460 |
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses |
|
|
9,775,877 |
|
|
|
11,604,233 |
|
|
|
21,380,110 |
|
|
|
|
|
|
|
|
|
|
|
Real estate operating income |
|
|
9,743,630 |
|
|
|
12,275,794 |
|
|
|
22,019,424 |
|
|
|
|
|
|
|
|
|
|
|
Other income (expense) Interest income |
|
|
503,479 |
|
|
|
|
|
|
|
503,479 |
|
Interest expense |
|
|
(8,901,113 |
) |
|
|
(11,815,649 |
) (h) |
|
|
(20,716,762 |
) |
|
|
|
|
|
|
|
|
|
|
Total other income (expense) |
|
|
(8,397,634 |
) |
|
|
(11,815,649 |
) |
|
|
(20,213,283 |
) |
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
1,345,996 |
|
|
$ |
460,145 |
|
|
$ |
1,806,141 |
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of common
shares outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted |
|
|
13,275,635 |
|
|
|
17,093,398 |
(i) |
|
|
30,369,033 |
|
Net income per common share |
|
$ |
0.10 |
|
|
|
|
|
|
$ |
0.06 |
|
F-9
Cole Credit Property Trust II, Inc.
Notes to Pro Forma Consolidated Financial Statements
December 31, 2006
(Unaudited)
a. |
|
Reflects the Companys historical balance sheet
as of December 31, 2006 and the Companys historical
results of operations for the year ended December 31,
2006. |
|
b. |
|
Reflects preliminary purchase price allocations related to the following 2007 acquisitions: |
Completed Acquisitions
The AA Maryland Heights Property, the AS Katy Property, the MT
Omaha Property, the OD Enterprise Property, the OM Orangeburg
Property, the WG Cincinnati Property, the WG Madeira Property, the WG
Sharonville Property, the TS Ankeny Property, the TS Paw Paw
Property, the TS Marinette Property, the TS Greenfield Property, the
AH St. John Property, the WG Shreveport Property, MT Fairview Heights
Property, RA Plains Property, and the TS Navasota Property as described, beginning on page 83 of the
prospectus.
c. |
|
Reflects the pro forma results of operations for
the year ended December 31, 2006 for the following
acquisitions, the RA Enterprise Property, the RA
Wauseon Property, the RA Saco Property, the CV Scioto
Trail Property, the WW II Properties, the MT Lakewood
Property, the RA Cleveland Property, the RA Fremont
Property, the WG Knoxville Property, the CO San Antonio
Property, the CV Madison Property, the RA Defiance
Property, the CV Portsmouth Property, the AA Greenfield
Property, the AA Trenton Property, the RA Lansing
Property, the AA Columbia Heights Property, the AA
Fergus Falls Property, the CV Okeechobee Property, the
OD Dayton Property, the AA Holland Property, the AA
Holland Township Property, the AA Zeeland Property, the
CV Orlando Property, the OD Greenville Property, the OD
Warrensburg Property, the CV Gulfport Property, the AA
Grand Forks Property, the CV Clinton Property, the AA
Duluth Property, the WG Picayune Property, the AA Grand
Bay Property, the AA Rainsville Property, the AA Hurley
Property, the RA Glassport Property, the RA Hanover
Property, the TS La Grange Property, the FE Council
Bluffs Property, the FE Edwardsville Property, the CV
Glenville Scotia Property, the AA Ashland Property, the
AA Jackson Property, the AA New Boston Property, the AA
Scottsburg Property, the TS Livingston Property, the TS
New Braunfels Property, the OD Benton Property, the OD
Oxford Property, the TS Crockett Property, the AA
Maryland Heights Property, the AS Katy Property, the MT
Omaha Property, the TS Ankeny Property, the OD
Enterprise Property, the OM Orangeburg Property, the WG
Cincinnati Property, the WG Madeira Property, the WG
Sharonville Property, the TS Paw Paw Property, the TS
Marinette Property, the TS Greenfield Property, the AH
St. John Property, the WG Shreveport Property, the
MT Fairview Heights Property, the RA Plains Property, and the TS Navasota
Property, collectively the Pro
Forma Properties. |
|
d. |
|
Represents the straight line rental revenues for
the Pro Forma Properties in accordance with their
respective lease agreements. |
|
e. |
|
Reflects the annualized asset management fee of
0.25% (a monthly rate of 0.02083%) of the aggregate
asset value of the Pro Forma Properties which is
payable to our Advisor. |
|
f. |
|
Reflects the property management fee equal to 2%
of gross revenues of the Pro Forma Properties which is
payable to an affiliate of our Advisor. |
|
g. |
|
Represents depreciation and amortization expense
for the Pro Forma Properties. Depreciation and
amortization expense are based on the Companys
preliminary purchase price allocation. All assets are
depreciated on a straight line basis. The estimated
useful lives of our assets by class are generally as
follows: |
|
|
|
Building
|
|
40 years |
Tenant improvements
|
|
Lesser of useful life or lease term |
Intangible lease assets
|
|
Lesser of useful life or lease term |
F-10
Cole Credit Property Trust II, Inc.
Notes to Pro Forma Consolidated Financial Statements (Continued)
December 31, 2006
(Unaudited)
h. |
|
Represents interest expense associated with the
debt incurred to finance the acquisitions of the Pro
Forma Properties. The variable rate mortgage debt has a
90 day repayment term. As such, the interest expense
for the year ended December 31, 2006 includes 90 days
of interest expense relating to the variable rate
tranches as they are scheduled to be paid down 90 days
after the acquisition of the Pro Forma Properties. |
The following table provides certain information about each of the loans:
Fixed Rate Tranches
|
|
|
|
|
|
|
|
|
|
|
|
|
Property |
|
Loan Amount |
|
Interest Rate |
|
Maturity |
RA Enterprise |
|
|
2,043,000 |
|
|
|
5.80 |
% |
|
February 11, 2016 |
RA Wauseon |
|
|
2,142,000 |
|
|
|
5.80 |
% |
|
February 11, 2016 |
RA Saco |
|
|
1,375,000 |
|
|
|
5.82 |
% |
|
February 11, 2011 |
CV Scioto |
|
|
1,424,000 |
|
|
|
5.67 |
% |
|
March 11, 2011 |
MT Lakewood |
|
|
1,348,000 |
|
|
|
5.77 |
% |
|
May 11, 2011 |
RA Cleveland |
|
|
1,413,000 |
|
|
|
6.05 |
% |
|
May 11, 2011 |
RA Fremont |
|
|
1,388,000 |
|
|
|
6.05 |
% |
|
May 11, 2011 |
WG Knoxville |
|
|
3,088,000 |
|
|
|
5.80 |
% |
|
May 11, 2011 |
CO San Antonio |
|
|
2,461,000 |
|
|
|
5.86 |
% |
|
May 11, 2011 |
RA Defiance |
|
|
2,321,000 |
|
|
|
5.76 |
% |
|
January 11, 2016 |
CV Madison |
|
|
2,809,000 |
|
|
|
5.60 |
% |
|
February 11, 2016 |
RA Lansing |
|
|
1,041,000 |
|
|
|
5.90 |
% |
|
July 1, 2016 |
AA Columbia Heights |
|
|
1,038,000 |
|
|
|
5.83 |
% |
|
July 11, 2016 |
AA Fergus Falls |
|
|
722,000 |
|
|
|
5.83 |
% |
|
July 11, 2016 |
CV Okeechobee |
|
|
4,076,000 |
|
|
|
5.60 |
% |
|
February 11, 2016 |
OD Dayton |
|
|
2,130,000 |
|
|
|
5.73 |
% |
|
January 11, 2016 |
AA Holland |
|
|
1,193,000 |
|
|
|
5.83 |
% |
|
April 11, 2016 |
AA Holland Township |
|
|
1,231,000 |
|
|
|
5.83 |
% |
|
April 11, 2016 |
AA Zeeland |
|
|
1,057,000 |
|
|
|
5.83 |
% |
|
April 11, 2016 |
CV Orlando |
|
|
3,016,000 |
|
|
|
5.68 |
% |
|
April 11, 2016 |
OD Greenville |
|
|
2,192,000 |
|
|
|
5.76 |
% |
|
March 11, 2011 |
OD Warrensburg |
|
|
1,810,000 |
|
|
|
5.85 |
% |
|
April 11, 2011 |
CV Gulfport |
|
|
2,611,000 |
|
|
|
5.28 |
% |
|
April 11, 2016 |
AA Grand Forks |
|
|
840,000 |
|
|
|
5.87 |
% |
|
September 11, 2016 |
CV Clinton |
|
|
1,983,000 |
|
|
|
5.74 |
% |
|
September 11, 2016 |
WG Picayune |
|
|
2,766,000 |
|
|
|
5.53 |
% |
|
October 11, 2016 |
AA Duluth |
|
|
860,000 |
|
|
|
5.87 |
% |
|
October 11, 2016 |
RA Glassport |
|
|
2,325,000 |
|
|
|
6.10 |
% |
|
November 1, 2016 |
RA Hanover |
|
|
4,115,000 |
|
|
|
6.11 |
% |
|
November 1, 2016 |
TS La Grange |
|
|
1,405,000 |
|
|
|
5.99 |
% |
|
December 1, 2016 |
FE Council Bluffs |
|
|
2,185,000 |
|
|
|
5.97 |
% |
|
December 1, 2016 |
FE Edwardsville |
|
|
12,880,000 |
|
|
|
5.97 |
% |
|
December 1, 2016 |
CV Glenville Scotia |
|
|
3,413,000 |
|
|
|
5.74 |
% |
|
December 11, 2016 |
F-11
Cole Credit Property Trust II, Inc.
Notes to Pro Forma Consolidated Financial Statements (Continued)
December 31, 2006
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
Property |
|
Loan Amount |
|
Interest Rate |
|
Maturity |
TS Livingston |
|
|
1,725,000 |
|
|
|
5.99 |
% |
|
December 1, 2016 |
TS New Braunfels |
|
|
1,750,000 |
|
|
|
5.99 |
% |
|
December 1, 2016 |
AS Katy |
|
|
68,250,000 |
|
|
|
5.61 |
% |
|
February 1, 2017 |
OD Enterprise |
|
|
1,850,000 |
|
|
|
6.29 |
% |
|
March 1, 2017 |
MT Omaha |
|
|
23,400,000 |
|
|
|
5.53 |
% |
|
March 1, 2017 |
OM Orangeburg |
|
|
1,875,000 |
|
|
|
5.61 |
% |
|
April 1, 2012 |
WG Cincinnati |
|
|
3,341,000 |
|
|
|
6.00 |
% |
|
September 1, 2016 |
WG Madeira |
|
|
2,876,000 |
|
|
|
5.70 |
% |
|
April 1, 2012 |
WG Sharonville |
|
|
2,655,000 |
|
|
|
5.62 |
% |
|
April 1, 2012 |
WG Shreveport |
|
|
2,815,000 |
|
|
|
5.56 |
% |
|
April 1, 2017 |
TS Greenfield |
|
|
2,227,500 |
|
|
|
5.57 |
% |
|
July 1, 2017 |
TS Marinette |
|
|
1,918,000 |
|
|
|
5.65 |
% |
|
May 1, 2017 |
TS Paw Paw |
|
|
2,048,000 |
|
|
|
5.65 |
% |
|
May 1, 2017 |
TS Ankeny |
|
|
1,950,000 |
|
|
|
5.65 |
% |
|
May 1, 2017 |
RA Plains |
|
|
3,380,000 |
|
|
|
5.68 |
% |
|
May 17, 2017 |
TS Navasota |
|
|
2,050,200 |
|
|
|
5.80 |
% |
|
May 11, 2017 |
Variable Rate Tranches
|
|
|
|
|
|
|
|
|
|
|
|
|
Property |
|
Loan Amount |
|
Interest Rate |
|
Maturity |
RA Enterprise |
|
|
928,000 |
|
|
Libor plus 2% |
|
April 26, 2006 |
RA Wauseon |
|
|
973,000 |
|
|
Libor plus 2% |
|
April 26, 2006 |
RA Saco |
|
|
625,000 |
|
|
Libor plus 2% |
|
April 27, 2006 |
CV Scioto |
|
|
329,000 |
|
|
Libor plus 2% |
|
June 8, 2006 |
Wawa Portfolio |
|
|
7,234,787 |
|
|
Libor plus 2.2% |
|
February 26, 2010 |
MT Lakewood |
|
|
612,000 |
|
|
Libor plus 2% |
|
July 20, 2006 |
RA Cleveland |
|
|
642,000 |
|
|
Libor plus 2% |
|
July 27, 2006 |
RA Fremont |
|
|
632,000 |
|
|
Libor plus 2% |
|
July 27, 2006 |
WG Knoxville |
|
|
712,000 |
|
|
Libor plus 2% |
|
August 8, 2006 |
CO San Antonio |
|
|
1,119,000 |
|
|
Libor plus 2% |
|
July 25, 2006 |
AA Columbia Heights |
|
|
346,000 |
|
|
Libor plus 2% |
|
October 6, 2006 |
AA Fergus Falls |
|
|
241,000 |
|
|
Libor plus 2% |
|
October 6, 2006 |
AA Grand Forks |
|
|
280,000 |
|
|
Libor plus 2% |
|
November 15, 2006 |
CV Clinton |
|
|
457,000 |
|
|
Libor plus 2% |
|
December 24, 2006 |
WG Picayune |
|
|
638,000 |
|
|
Libor plus 2% |
|
January 12, 2007 |
AA Duluth |
|
|
286,000 |
|
|
Libor plus 2% |
|
December 22, 2006 |
CV Glenville Scotia |
|
|
787,000 |
|
|
Libor plus 2% |
|
March 16, 2007 |
TS Navasota |
|
|
362,000 |
|
|
Libor plus 2% |
|
July 18, 2007 |
I. |
|
Represents a pro forma adjustment to the weighted
average common shares outstanding to reflect all shares
outstanding on December 31, 2006 as though they were
issued on January 1, 2006. As the Company had
insufficient capital at January 1, 2006 to acquire the
respective properties which are included in the pro
forma results of operations, it is necessary to assume
all of the shares outstanding as of December 31, 2006
were outstanding on January 1, 2006. |
F-12
APPENDIX A
PRIOR PERFORMANCE TABLES
The prior performance tables that follow present certain information regarding private real
estate programs previously sponsored by related entities. Twenty-four related partnerships formed
from January 1, 1997 to December 31, 2006 have or had similar investment objectives to ours and
purchased an aggregate of 13 retail centers, with an aggregate of approximately 1,531,000 rentable
square feet, one data center building with an aggregate of approximately 135,000 rentable square
feet and 23 single-tenant retail properties with an aggregate of approximately 544,000 rentable
square feet. One partnership purchased two land parcels for development with an aggregate of
approximately 452,000 square feet. The prior performance tables also include the activity of Cole
Credit Property Trust, Inc. (CCPT), Cole Collateralized Senior Notes, LLC, Cole
Collateralized Senior Notes II, LLC, Cole Collateralized Senior Notes III, LLC,
Cole Collateralized Senior Notes IV, and the various offerings related to Cole
Capital Partners Tenants in Common and Delaware Statutory Trust (DST) programs.
As of December 31, 2005, CCPT had raised approximately $101.0 million and had acquired 41
single-tenant commercial properties, with an aggregate of
approximately 1.0 million square feet.
As of December 31, 2006, affiliates of our advisor had issued an aggregate of approximately
$112.2 million in collateralized senior notes through four debt offerings and had acquired an
aggregate of 132 single-tenant retail properties in 34 states for an aggregate acquisition cost of
approximately $786.5 million. As of December 31, 2006, 119 of the properties had been sold, of
which 52 were sold as part of Cole Capital Partners tenant-in-common program, eight were sold to
Cole REIT I and 16 were sold to us. On April 28, 2006, an affiliate of our advisor redeemed at par
all of the approximately $28.0 million in collateralized senior notes issued under the first debt
offering.
Cole Partnerships,
Inc., an entity affiliated with the officers of Cole Capital Advisors, has
raised $5 million in a debt offering for general corporate purposes, including investments in joint
ventures with affiliates, which has been repaid. This program is not considered to have similar
investment objectives to this offering.
In addition,
the Cole Exchange Entities offer properties to Section 1031 exchange investors in
the form of the sale of tenant-in-common ownership interests in such properties. As of December 31,
2006, aggregate ownership interests of $155.5 million had been
sold in 25 private offerings of
properties located in 14 states. In addition, the Cole Exchange Entities offer properties
through the DST Program whereby beneficial interests are offered in trusts that acquire real
property. As of December 31, 2006, aggregate ownership interests
of approximately $87.6 had been
sold in 24 private offerings of properties located in 12 states.
The investment objectives of previous private real estate programs formed from 1979 through
1992 are not similar to the investment objectives of the above programs due to the fact that those
properties have been held for capital appreciation in the value of the underlying property.
These tables contain information that may aid a potential investor in evaluating the program
presented. However, the information contained in these tables does not relate to the properties
held or to be held by us, and the purchase of shares will not create any ownership interest in the
programs included in these tables.
These tables are presented on a tax basis rather than on a GAAP basis. Tax basis accounting
does not take certain income or expense accruals into consideration at the end of each fiscal year.
Income may be understated in the tables, as GAAP accounting would require certain amortization or
leveling of rental revenue, the amount of which is undetermined at this time. Expenses may be
understated by monthly operating expenses, which typically are paid in arrears.
Past performance is not necessarily indicative of future results.
A-1
TABLE I
EXPERIENCE IN RAISING AND INVESTING FUNDS (UNAUDITED)
This table provides a summary of the experience of the sponsors of
Prior Real Estate Programs for which offerings have been initiated
since January 1, 2004. Information is provided with regard to the
manner in which the proceeds of the offerings have been applied.
Also set forth below is information pertaining to the timing and
length of these offerings and the time period over which the
proceeds have been invested in the properties. All figures are as
of December 31, 2006.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cole |
|
|
Cole |
|
|
|
Cole Credit |
|
|
Collateralized Senior |
|
|
Collateralized Senior |
|
|
|
Property Fund II LP |
|
|
Notes, LLC (6) |
|
|
Notes II, LLC (6) |
|
Dollar amount offered |
|
$ |
25,000,000 |
|
|
$ |
28,750,000 |
(1) |
|
$ |
28,750,000 |
(1) |
Dollar amount raised |
|
|
24,494,500 |
|
|
|
28,038,500 |
|
|
|
28,750,000 |
|
Less offering expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
Selling commissions and
discounts
retained by affiliates |
|
|
1,961,560 |
|
|
|
1,401,925 |
|
|
|
1,437,500 |
|
Organizational expenses (4) |
|
|
449,873 |
|
|
|
660,585 |
|
|
|
645,882 |
|
Other |
|
|
|
|
|
|
|
|
|
|
|
|
Reserves |
|
|
451,175 |
|
|
|
5,668,960 |
|
|
|
3,784,574 |
|
Percent available for investment |
|
|
90 |
% |
|
|
93 |
% |
|
|
93 |
% |
Acquisition costs: |
|
|
|
|
|
|
|
|
|
|
|
|
Prepaid items and fees related
to purchase of property |
|
|
213,578 |
|
|
|
537,738 |
|
|
|
501,369 |
|
Cash down payment |
|
|
20,273,063 |
|
|
|
22,306,921 |
|
|
|
19,485,354 |
|
Acquisition fees (5) |
|
|
1,137,801 |
|
|
|
1,317,486 |
|
|
|
1,716,968 |
|
Other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total acquisition cost |
|
$ |
21,624,442 |
|
|
$ |
24,162,145 |
|
|
$ |
21,703,691 |
|
Percent leverage |
|
|
65 |
% |
|
|
65 |
% |
|
|
50 |
% |
Date offering began |
|
|
07/01/03 |
|
|
|
09/15/03 |
|
|
|
02/01/04 |
|
Length of offering (in months) |
|
|
9 |
|
|
|
9 |
|
|
|
12 |
|
Months to invest 90% of amount
available for investment |
|
|
15 |
|
|
|
5 |
|
|
|
7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cole |
|
|
Cole |
|
|
|
|
|
|
Collateralized Senior |
|
|
Collateralized Senior |
|
|
Cole Credit |
|
|
|
Notes III, LLC (6) |
|
|
Notes IV, LLC (6) |
|
|
Property Trust, Inc. |
|
Dollar amount offered |
|
$ |
28,750,000 |
(1) |
|
$ |
28,750,000 |
(1) |
|
$ |
110,000,000 |
(8) |
Dollar amount raised |
|
|
28,658,500 |
|
|
|
28,724,110 |
|
|
|
100,972,510 |
|
Less offering expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
Selling commissions and discounts
retained by affiliates |
|
|
1,432,925 |
|
|
|
1,508,081 |
|
|
|
6,402,966 |
|
Organizational expenses (4) |
|
|
600,234 |
|
|
|
589,638 |
|
|
|
3,309,792 |
|
Other |
|
|
|
|
|
|
|
|
|
|
|
|
Reserves |
|
|
7,781,946 |
|
|
|
8,967,274 |
|
|
|
1,063,092 |
|
Percent available for investment |
|
|
93 |
% |
|
|
93 |
% |
|
|
90 |
% |
Acquisition costs: |
|
|
|
|
|
|
|
|
|
|
|
|
Prepaid items and fees related
to purchase of property |
|
|
495,855 |
|
|
|
12,120 |
|
|
|
1,274,741 |
|
Cash down payment |
|
|
14,706,851 |
|
|
|
4,475,000 |
|
|
|
82,198,983 |
|
Acquisition fees (5) |
|
|
1,574,807 |
|
|
|
89,500 |
|
|
|
4,437,000 |
|
Other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total acquisition cost |
|
$ |
16,777,513 |
|
|
$ |
4,576,620 |
|
|
$ |
87,910,724 |
|
Percent leverage |
|
|
68 |
% |
|
|
0 |
% |
|
|
58 |
% |
Date offering began |
|
|
01/03/05 |
|
|
|
05/20/05 |
|
|
|
04/06/04 |
|
Length of offering (in months) |
|
|
7 |
|
|
|
8 |
|
|
|
17 |
|
Months to invest 90% of amount
available for investment |
|
|
7 |
|
|
|
7 |
|
|
|
18 |
|
Past performance is not necessarily indicative of future results.
A-2
TABLE I
EXPERIENCE IN RAISING AND INVESTING FUNDS (UNAUDITED) (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cole Credit |
|
|
Staples in |
|
|
Mimis Café in |
|
|
|
Property Trust II, Inc. |
|
|
Tulsa, OK (2) (3) |
|
|
Lone Tree, CO (2) (3) |
|
Dollar amount offered |
|
$ |
500,000,000 |
(8) |
|
$ |
4,136,000 |
|
|
$ |
2,446,000 |
|
Dollar amount raised |
|
|
306,340,928 |
|
|
|
4,136,000 |
|
|
|
2,446,000 |
|
Less offering expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
Selling commissions and discounts
retained by affiliates |
|
|
21,082,793 |
|
|
|
248,160 |
|
|
|
146,760 |
|
Organizational expenses (4) |
|
|
8,298,207 |
|
|
|
41,360 |
|
|
|
24,460 |
|
Other |
|
|
|
|
|
|
|
|
|
|
|
|
Reserves |
|
|
37,566,490 |
|
|
|
26,957 |
|
|
|
14,698 |
|
Percent available for investment |
|
|
90 |
% |
|
|
93 |
% |
|
|
93 |
% |
Acquisition costs: |
|
|
|
|
|
|
|
|
|
|
|
|
Prepaid
items and fees related to purchase of property |
|
|
288,085 |
|
|
|
30,000 |
|
|
|
60,280 |
|
Cash down payment |
|
|
232,515,672 |
|
|
|
3,760,640 |
|
|
|
2,150,000 |
|
Acquisition fees (5) |
|
|
1,681,002 |
|
|
|
55,840 |
|
|
|
64,500 |
|
Other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total acquisition cost |
|
$ |
234,484,759 |
|
|
$ |
3,846,480 |
|
|
$ |
2,274,780 |
|
Percent leverage |
|
|
48 |
% |
|
|
0 |
% |
|
|
0 |
% |
Date offering began |
|
|
06/27/05 |
|
|
|
02/13/04 |
|
|
|
04/20/04 |
|
Length of offering (in months) |
|
Ongoing |
|
|
|
7 |
|
|
|
4 |
|
Months to invest 90% of amount
available for investment |
|
|
N/A |
|
|
|
4 |
|
|
|
3 |
|
|
|
|
Walgreens in |
|
|
Walgreens in |
|
|
Walgreens in |
|
|
|
Windsor, CO (2) (3) |
|
|
Goldsboro, NC (2) (3) |
|
|
Hamilton, OH (2) (3) |
|
Dollar amount offered |
|
$ |
2,669,000 |
|
|
$ |
2,570,000 |
|
|
$ |
2,966,000 |
|
Dollar amount raised |
|
|
2,669,000 |
|
|
|
2,570,000 |
|
|
|
2,966,000 |
|
Less offering expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
Selling commissions and discounts
retained by affiliates |
|
|
160,140 |
|
|
|
154,200 |
|
|
|
177,960 |
|
Organizational expenses (4) |
|
|
26,690 |
|
|
|
25,700 |
|
|
|
29,660 |
|
Other |
|
|
|
|
|
|
|
|
|
|
|
|
Reserves |
|
|
40,667 |
|
|
|
18,589 |
|
|
|
29,573 |
|
Percent available for investment |
|
|
93 |
% |
|
|
93 |
% |
|
|
93 |
% |
Acquisition costs: |
|
|
|
|
|
|
|
|
|
|
|
|
Prepaid items and fees related
to purchase of property |
|
|
60,000 |
|
|
|
60,000 |
|
|
|
60,000 |
|
Cash down payment |
|
|
2,393,460 |
|
|
|
2,303,985 |
|
|
|
2,668,047 |
|
Acquisition fees (5) |
|
|
|
|
|
|
|
|
|
|
|
|
Other |
|
|
28,710 |
|
|
|
26,115 |
|
|
|
30,333 |
|
|
|
|
|
|
|
|
|
|
|
Total acquisition cost |
|
$ |
2,482,170 |
|
|
$ |
2,390,100 |
|
|
$ |
2,758,380 |
|
Percent leverage |
|
|
52 |
% |
|
|
50 |
% |
|
|
51 |
% |
Date offering began |
|
|
06/03/04 |
|
|
|
06/30/04 |
|
|
|
07/01/04 |
|
Length of offering (in months) |
|
|
3 |
|
|
|
3 |
|
|
|
4 |
|
Months to invest 90% of amount
available for investment |
|
|
3 |
|
|
|
3 |
|
|
|
3 |
|
Past performance is not necessarily indicative of future results.
A-3
TABLE I
EXPERIENCE IN RAISING AND INVESTING FUNDS (UNAUDITED) (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Walgreens in |
|
|
Walgreens in |
|
|
Walgreens in |
|
|
|
Carlsbad, NM (2) (3) |
|
|
Willimantic, CT (2) (3) |
|
|
Edgewood, NM (2) (3) |
|
Dollar amount offered |
|
$ |
2,289,739 |
|
|
$ |
2,746,000 |
|
|
$ |
2,134,000 |
|
Dollar amount raised |
|
|
2,289,739 |
|
|
|
2,746,000 |
|
|
|
2,134,000 |
|
Less offering expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
Selling commissions and discounts
retained by affiliates |
|
|
137,384 |
|
|
|
164,760 |
|
|
|
128,040 |
|
Organizational expenses (4) |
|
|
22,898 |
|
|
|
27,460 |
|
|
|
21,340 |
|
Other |
|
|
|
|
|
|
|
|
|
|
|
|
Reserves |
|
|
24,005 |
|
|
|
37,601 |
|
|
|
19,940 |
|
Percent available for investment |
|
|
93 |
% |
|
|
93 |
% |
|
|
93 |
% |
Acquisition costs: |
|
|
|
|
|
|
|
|
|
|
|
|
Prepaid items and fees related
to purchase of property |
|
|
60,000 |
|
|
|
60,000 |
|
|
|
60,000 |
|
Cash down payment |
|
|
2,046,107 |
|
|
|
2,466,690 |
|
|
|
1,903,340 |
|
Acquisition fees (5) |
|
|
|
|
|
|
|
|
|
|
|
|
Other |
|
|
23,350 |
|
|
|
27,090 |
|
|
|
21,280 |
|
|
|
|
|
|
|
|
|
|
|
Total acquisition cost |
|
$ |
2,129,457 |
|
|
$ |
2,553,780 |
|
|
$ |
1,984,620 |
|
Percent leverage |
|
|
50 |
% |
|
|
50 |
% |
|
|
50 |
% |
Date offering began |
|
|
07/13/04 |
|
|
|
09/15/04 |
|
|
|
09/15/04 |
|
Length of offering (in months) |
|
|
5 |
|
|
|
2 |
|
|
|
4 |
|
Months to invest 90% of amount
available for investment |
|
|
3 |
|
|
|
2 |
|
|
|
3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Walgreens in |
|
|
Walgreens in |
|
|
Walgreens in |
|
|
|
Fairborn, OH (2) (3) |
|
|
Slidell, LA (2) (3) |
|
|
Westhiemer, TX (2) (3) |
|
Dollar amount offered |
|
$ |
2,644,000 |
|
|
$ |
2,212,000 |
|
|
$ |
3,900,000 |
|
Dollar amount raised |
|
|
2,644,000 |
|
|
|
2,212,000 |
|
|
|
3,900,000 |
|
Less offering expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
Selling commissions and discounts
retained by affiliates |
|
|
158,640 |
|
|
|
132,720 |
|
|
|
234,000 |
|
Organizational expenses (4) |
|
|
26,440 |
|
|
|
22,120 |
|
|
|
39,000 |
|
Other |
|
|
|
|
|
|
|
|
|
|
|
|
Reserves |
|
|
26,668 |
|
|
|
19,900 |
|
|
|
34,827 |
|
Percent available for investment |
|
|
93 |
% |
|
|
93 |
% |
|
|
93 |
% |
Acquisition costs: |
|
|
|
|
|
|
|
|
|
|
|
|
Prepaid items and fees related
to purchase of property |
|
|
60,000 |
|
|
|
60,000 |
|
|
|
60,000 |
|
Cash down payment |
|
|
2,372,750 |
|
|
|
1,975,240 |
|
|
|
3,526,680 |
|
Acquisition fees (5) |
|
|
|
|
|
|
|
|
|
|
|
|
Other |
|
|
26,170 |
|
|
|
21,920 |
|
|
|
40,320 |
|
|
|
|
|
|
|
|
|
|
|
Total acquisition cost |
|
$ |
2,458,920 |
|
|
$ |
2,057,160 |
|
|
$ |
3,627,000 |
|
Percent leverage |
|
|
50 |
% |
|
|
50 |
% |
|
|
51 |
% |
Date offering began |
|
|
09/30/04 |
|
|
|
11/02/04 |
|
|
|
10/15/04 |
|
Length of offering (in months) |
|
|
2 |
|
|
|
8 |
|
|
|
3 |
|
Months to invest 90% of amount
available for investment |
|
|
2 |
|
|
|
7 |
|
|
|
2 |
|
Past
performance is not necessarily indicative of future results.
A-4
TABLE I
EXPERIENCE IN RAISING AND INVESTING FUNDS (UNAUDITED) (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Walgreens in |
|
|
Home Depot in |
|
|
Walgreens in |
|
|
|
Richmond, OH (2) (3) |
|
|
Spokane, WA (2) (3) |
|
|
Covington, TN (2) (3) |
|
Dollar amount offered |
|
$ |
3,388,000 |
|
|
$ |
11,532,000 |
|
|
$ |
2,141,000 |
|
Dollar amount raised |
|
|
3,388,000 |
|
|
|
11,532,000 |
|
|
|
2,141,000 |
|
Less offering expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
Selling commissions and discounts
retained by affiliates |
|
|
203,280 |
|
|
|
691,920 |
|
|
|
128,460 |
|
Organizational expenses (4) |
|
|
33,880 |
|
|
|
115,320 |
|
|
|
21,410 |
|
Other |
|
|
|
|
|
|
|
|
|
|
|
|
Reserves |
|
|
28,405 |
|
|
|
91,832 |
|
|
|
23,283 |
|
Percent available for investment |
|
|
93 |
% |
|
|
93 |
% |
|
|
93 |
% |
Acquisition costs: |
|
|
|
|
|
|
|
|
|
|
|
|
Prepaid items and fees related
to purchase of property |
|
|
60,000 |
|
|
|
430,050 |
|
|
|
60,000 |
|
Cash down payment |
|
|
3,056,970 |
|
|
|
10,283,250 |
|
|
|
1,910,170 |
|
Acquisition fees (5) |
|
|
|
|
|
|
|
|
|
|
|
|
Other |
|
|
33,870 |
|
|
|
11,460 |
|
|
|
20,960 |
|
|
|
|
|
|
|
|
|
|
|
Total acquisition cost |
|
$ |
3,150,840 |
|
|
$ |
10,724,760 |
|
|
$ |
1,991,130 |
|
Percent leverage |
|
|
50 |
% |
|
|
50 |
% |
|
|
50 |
% |
Date offering began |
|
|
10/26/04 |
|
|
|
11/09/04 |
|
|
|
11/19/04 |
|
Length of offering (in months) |
|
|
11 |
|
|
|
7 |
|
|
|
6 |
|
Months to invest 90% of amount
available for investment |
|
|
2 |
|
|
|
6 |
|
|
|
6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Walgreens in |
|
|
Walgreens in |
|
|
Walgreens in |
|
|
|
Orlando, FL (2) (3) |
|
|
Glen Burnie, MD (2) (3) |
|
|
Garfield Heights, OH (2) (3) |
|
Dollar amount offered |
|
$ |
2,486,000 |
|
|
$ |
3,485,000 |
|
|
$ |
2,930,000 |
|
Dollar amount raised |
|
|
2,486,000 |
|
|
|
3,485,000 |
|
|
|
2,930,000 |
|
Less offering expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
Selling commissions and discounts
retained by affiliates |
|
|
149,160 |
|
|
|
209,100 |
|
|
|
175,800 |
|
Organizational expenses (4) |
|
|
24,860 |
|
|
|
34,850 |
|
|
|
29,300 |
|
Other |
|
|
|
|
|
|
|
|
|
|
|
|
Reserves |
|
|
20,555 |
|
|
|
28,974 |
|
|
|
36,623 |
|
Percent available for investment |
|
|
93 |
% |
|
|
93 |
% |
|
|
93 |
% |
Acquisition costs: |
|
|
|
|
|
|
|
|
|
|
|
|
Prepaid items and fees related
to purchase of property |
|
|
92,000 |
|
|
|
200,685 |
|
|
|
60,000 |
|
Cash down payment |
|
|
2,195,810 |
|
|
|
3,006,675 |
|
|
|
2,664,900 |
|
Acquisition fees (5) |
|
|
|
|
|
|
|
|
|
|
|
|
Other |
|
|
24,170 |
|
|
|
33,690 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total acquisition cost |
|
$ |
2,311,980 |
|
|
$ |
3,241,050 |
|
|
$ |
2,724,900 |
|
Percent leverage |
|
|
50 |
% |
|
|
50 |
% |
|
|
52 |
% |
Date offering began |
|
|
11/30/04 |
|
|
|
12/01/04 |
|
|
|
12/09/04 |
|
Length of offering (in months) |
|
|
6 |
|
|
|
9 |
|
|
|
8 |
|
Months to invest 90% of amount
available for investment |
|
|
6 |
|
|
|
6 |
|
|
|
8 |
|
Past performance is not necessarily indicative of future results.
A-5
TABLE I
EXPERIENCE IN RAISING AND INVESTING FUNDS (UNAUDITED) (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Walgreens in |
|
|
Home Depot in |
|
|
Walgreens in |
|
|
|
Ponca City, OK (2) (3) |
|
|
Tacoma, WA (2) (3) |
|
|
Pineville, LA (3) (7) |
|
Dollar amount offered |
|
$ |
2,327,000 |
|
|
$ |
12,175,000 |
|
|
$ |
2,092,000 |
|
Dollar amount raised |
|
|
2,327,000 |
|
|
|
12,175,000 |
|
|
|
2,092,000 |
|
Less offering expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
Selling commissions and discounts
retained by affiliates |
|
|
116,350 |
|
|
|
730,521 |
|
|
|
125,520 |
|
Organizational expenses (4) |
|
|
23,270 |
|
|
|
121,754 |
|
|
|
20,920 |
|
Other |
|
|
|
|
|
|
|
|
|
|
|
|
Reserves |
|
|
29,641 |
|
|
|
56,380 |
|
|
|
|
|
Percent available for investment |
|
|
94 |
% |
|
|
93 |
% |
|
|
93 |
% |
Acquisition costs: |
|
|
|
|
|
|
|
|
|
|
|
|
Prepaid items and fees related
to purchase of property |
|
|
30,000 |
|
|
|
585,000 |
|
|
|
45,000 |
|
Cash down payment |
|
|
2,132,950 |
|
|
|
10,564,495 |
|
|
|
1,871,330 |
|
Acquisition fees (5) |
|
|
|
|
|
|
|
|
|
|
|
|
Other |
|
|
24,430 |
|
|
|
173,230 |
|
|
|
29,230 |
|
|
|
|
|
|
|
|
|
|
|
Total acquisition cost |
|
$ |
2,187,380 |
|
|
$ |
11,322,725 |
|
|
$ |
1,945,560 |
|
Percent leverage |
|
|
51 |
% |
|
|
59 |
% |
|
|
58 |
% |
Date offering began |
|
|
12/10/04 |
|
|
|
02/08/05 |
|
|
|
04/27/05 |
|
Length of offering (in months) |
|
|
8 |
|
|
|
4 |
|
|
|
2 |
|
Months to invest 90% of amount
available for investment |
|
|
8 |
|
|
|
4 |
|
|
|
2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Walgreens in |
|
|
Walgreens in |
|
|
Walgreens in |
|
|
|
Bartlett, TN (3) (7) |
|
|
Sidney, OH (3) (7) |
|
|
Wichita Falls, TX (3) (7) |
|
Dollar amount offered |
|
$ |
2,022,000 |
|
|
$ |
1,975,000 |
|
|
$ |
2,020,000 |
|
Dollar amount raised |
|
|
2,022,000 |
|
|
|
1,975,000 |
|
|
|
2,020,000 |
|
Less offering expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
Selling commissions and discounts
retained by affiliates |
|
|
121,320 |
|
|
|
118,500 |
|
|
|
121,200 |
|
Organizational expenses (4) |
|
|
20,220 |
|
|
|
19,750 |
|
|
|
20,200 |
|
Other |
|
|
|
|
|
|
|
|
|
|
|
|
Reserves |
|
|
|
|
|
|
18,245 |
|
|
|
18,827 |
|
Percent available for investment |
|
|
93 |
% |
|
|
93 |
% |
|
|
93 |
% |
Acquisition costs: |
|
|
|
|
|
|
|
|
|
|
|
|
Prepaid items and fees related
to purchase of property |
|
|
45,000 |
|
|
|
53,920 |
|
|
|
55,000 |
|
Cash down payment |
|
|
1,805,960 |
|
|
|
1,619,749 |
|
|
|
1,794,010 |
|
Acquisition fees (5) |
|
|
|
|
|
|
|
|
|
|
|
|
Other |
|
|
29,500 |
|
|
|
28,990 |
|
|
|
29,590 |
|
|
|
|
|
|
|
|
|
|
|
Total acquisition cost |
|
$ |
1,880,460 |
|
|
$ |
1,702,659 |
|
|
$ |
1,878,600 |
|
Percent leverage |
|
|
59 |
% |
|
|
59 |
% |
|
|
59 |
% |
Date offering began |
|
|
04/20/05 |
|
|
|
04/29/05 |
|
|
|
05/05/05 |
|
Length of offering (in months) |
|
|
2 |
|
|
|
4 |
|
|
|
3 |
|
Months to invest 90% of amount
available for investment |
|
|
2 |
|
|
|
3 |
|
|
|
3 |
|
Past performance is not necessarily indicative of future results.
A-6
TABLE I
EXPERIENCE IN RAISING AND INVESTING FUNDS (UNAUDITED) (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Walgreens in |
|
|
Walgreens in |
|
|
Walgreens in |
|
|
|
Chicago, IL (3) (7) |
|
|
Southington, CT (3) (7) |
|
|
Nashville, TN (3) (7) |
|
Dollar amount offered |
|
$ |
3,235,000 |
|
|
$ |
2,836,000 |
|
|
$ |
2,544,000 |
|
Dollar amount raised |
|
|
3,235,000 |
|
|
|
2,836,000 |
|
|
|
2,544,000 |
|
Less offering expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
Selling commissions and discounts
retained by affiliates |
|
|
194,100 |
|
|
|
170,160 |
|
|
|
152,640 |
|
Organizational expenses (4) |
|
|
32,350 |
|
|
|
28,360 |
|
|
|
25,440 |
|
Other |
|
|
|
|
|
|
|
|
|
|
|
|
Reserves |
|
|
30,140 |
|
|
|
25,823 |
|
|
|
23,787 |
|
Percent available for investment |
|
|
93 |
% |
|
|
93 |
% |
|
|
93 |
% |
Acquisition costs: |
|
|
|
|
|
|
|
|
|
|
|
|
Prepaid items and fees related
to purchase of property |
|
|
116,000 |
|
|
|
147,063 |
|
|
|
45,000 |
|
Cash down payment |
|
|
2,846,300 |
|
|
|
2,450,608 |
|
|
|
2,284,000 |
|
Acquisition fees (5) |
|
|
|
|
|
|
|
|
|
|
|
|
Other |
|
|
46,250 |
|
|
|
39,810 |
|
|
|
36,920 |
|
|
|
|
|
|
|
|
|
|
|
Total acquisition cost |
|
$ |
3,008,550 |
|
|
$ |
2,637,481 |
|
|
$ |
2,365,920 |
|
Percent leverage |
|
|
59 |
% |
|
|
58 |
% |
|
|
59 |
% |
Date offering began |
|
|
05/27/05 |
|
|
|
06/01/05 |
|
|
|
06/09/05 |
|
Length of offering (in months) |
|
|
3 |
|
|
|
4 |
|
|
|
3 |
|
Months to invest 90% of amount
available for investment |
|
|
3 |
|
|
|
3 |
|
|
|
3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Walgreens in |
|
|
Gander Mountain in Spring, |
|
|
Walgreens in |
|
|
|
Derby, KS (3) (7) |
|
|
TX (2) (3) |
|
|
Blue Springs, MO (3) (7) |
|
Dollar amount offered |
|
$ |
2,341,000 |
|
|
$ |
13,150,000 |
|
|
$ |
1,891,000 |
|
Dollar amount raised |
|
|
2,341,000 |
|
|
|
13,150,000 |
|
|
|
1,891,000 |
|
Less offering expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
Selling commissions and discounts
retained by affiliates |
|
|
140,460 |
|
|
|
789,000 |
|
|
|
113,460 |
|
Organizational expenses (4) |
|
|
23,410 |
|
|
|
131,500 |
|
|
|
18,910 |
|
Other |
|
|
|
|
|
|
|
|
|
|
|
|
Reserves |
|
|
23,122 |
|
|
|
83,019 |
|
|
|
15,758 |
|
Percent available for investment |
|
|
93 |
% |
|
|
93 |
% |
|
|
93 |
% |
Acquisition costs: |
|
|
|
|
|
|
|
|
|
|
|
|
Prepaid items and fees related
to purchase of property |
|
|
45,000 |
|
|
|
60,000 |
|
|
|
45,000 |
|
Cash down payment |
|
|
2,098,910 |
|
|
|
12,169,500 |
|
|
|
1,686,830 |
|
Acquisition fees (5) |
|
|
|
|
|
|
|
|
|
|
|
|
Other |
|
|
33,220 |
|
|
|
|
|
|
|
26,800 |
|
|
|
|
|
|
|
|
|
|
|
Total acquisition cost |
|
$ |
2,177,130 |
|
|
$ |
12,229,500 |
|
|
$ |
1,758,630 |
|
Percent leverage |
|
|
59 |
% |
|
|
0 |
% |
|
|
59 |
% |
Date offering began |
|
|
06/13/05 |
|
|
|
06/15/05 |
|
|
|
06/15/05 |
|
Length of offering (in months) |
|
|
4 |
|
|
|
3 |
|
|
|
4 |
|
Months to invest 90% of amount
available for investment |
|
|
4 |
|
|
|
3 |
|
|
|
4 |
|
Past performance is not necessarily indicative of future results.
A-7
TABLE I
EXPERIENCE IN RAISING AND INVESTING FUNDS (UNAUDITED) (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Walgreens in |
|
|
|
|
|
|
Walgreens in |
|
|
Pittsburg, KS |
|
|
Walgreens in |
|
|
|
Garden City, KS (3) (7) |
|
|
(3) (7) |
|
|
Gladstone, MO (3) (7) |
|
Dollar amount offered |
|
$ |
2,259,000 |
|
|
$ |
2,016,000 |
|
|
$ |
2,530,000 |
|
Dollar amount raised |
|
|
2,259,000 |
|
|
|
2,016,000 |
|
|
|
2,530,000 |
|
Less offering expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
Selling commissions and discounts
retained by affiliates |
|
|
135,540 |
|
|
|
120,960 |
|
|
|
151,800 |
|
Organizational expenses (4) |
|
|
22,590 |
|
|
|
20,160 |
|
|
|
23,500 |
|
Other |
|
|
|
|
|
|
|
|
|
|
|
|
Reserves |
|
|
20,396 |
|
|
|
30,006 |
|
|
|
35,544 |
|
Percent available for investment |
|
|
93 |
% |
|
|
93 |
% |
|
|
93 |
% |
Acquisition costs: |
|
|
|
|
|
|
|
|
|
|
|
|
Prepaid items and fees related
to purchase of property |
|
|
45,000 |
|
|
|
45,000 |
|
|
|
45,000 |
|
Cash down payment |
|
|
2,023,760 |
|
|
|
1,801,540 |
|
|
|
2,269,960 |
|
Acquisition fees (5) |
|
|
|
|
|
|
|
|
|
|
|
|
Other |
|
|
32,110 |
|
|
|
28,340 |
|
|
|
37,940 |
|
|
|
|
|
|
|
|
|
|
|
Total acquisition cost |
|
$ |
2,100,870 |
|
|
$ |
1,874,880 |
|
|
$ |
2,352,900 |
|
Percent leverage |
|
|
59 |
% |
|
|
58 |
% |
|
|
60 |
% |
Date offering began |
|
|
06/17/05 |
|
|
|
06/20/05 |
|
|
|
06/21/05 |
|
Length of offering (in months) |
|
|
3 |
|
|
|
3 |
|
|
|
4 |
|
Months to invest 90% of amount
available for investment |
|
|
3 |
|
|
|
3 |
|
|
|
4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Walgreens in |
|
|
Walgreens in |
|
|
Walgreens in |
|
|
|
Salt Lake City, UT (3) (7) |
|
|
Sandy, UT (3) (7) |
|
|
Midvale, UT (3) (7) |
|
Dollar amount offered |
|
$ |
3,207,000 |
|
|
$ |
3,203,000 |
|
|
$ |
2,325,000 |
|
Dollar amount raised |
|
|
3,207,000 |
|
|
|
3,203,000 |
|
|
|
2,325,000 |
|
Less offering expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
Selling commissions and discounts
retained by affiliates |
|
|
192,420 |
|
|
|
192,180 |
|
|
|
139,500 |
|
Organizational expenses (4) |
|
|
32,070 |
|
|
|
32,030 |
|
|
|
23,250 |
|
Other |
|
|
|
|
|
|
|
|
|
|
|
|
Reserves |
|
|
13,831 |
|
|
|
11,071 |
|
|
|
7,637 |
|
Percent available for investment |
|
|
93 |
% |
|
|
93 |
% |
|
|
93 |
% |
Acquisition costs: |
|
|
|
|
|
|
|
|
|
|
|
|
Prepaid items and fees related
to purchase of property |
|
|
45,000 |
|
|
|
45,000 |
|
|
|
45,000 |
|
Cash down payment |
|
|
2,889,420 |
|
|
|
2,886,440 |
|
|
|
2,083,520 |
|
Acquisition fees (5) |
|
|
|
|
|
|
|
|
|
|
|
|
Other |
|
|
48,090 |
|
|
|
47,350 |
|
|
|
33,730 |
|
|
|
|
|
|
|
|
|
|
|
Total acquisition cost |
|
$ |
2,982,510 |
|
|
$ |
2,978,790 |
|
|
$ |
2,162,250 |
|
Percent leverage |
|
|
60 |
% |
|
|
60 |
% |
|
|
59 |
% |
Date offering began |
|
|
07/22/05 |
|
|
|
07/28/05 |
|
|
|
08/03/05 |
|
Length of offering (in months) |
|
|
3 |
|
|
|
3 |
|
|
|
5 |
|
Months to invest 90% of amount
available for investment |
|
|
3 |
|
|
|
3 |
|
|
|
3 |
|
Past performance is not necessarily indicative of future results.
A-8
TABLE I
EXPERIENCE IN RAISING AND INVESTING FUNDS (UNAUDITED) (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Walgreens in |
|
|
Wal-Mart in |
|
|
Gander Mountain in |
|
|
|
Metairie, LA (3) (7) |
|
|
Hazard, KY (3) (7) |
|
|
Hermantown, MN (2)(3) |
|
Dollar amount offered |
|
$ |
3,694,000 |
|
|
$ |
12,649,000 |
|
|
$ |
11,723,000 |
|
Dollar amount raised |
|
|
3,694,000 |
|
|
|
12,649,000 |
|
|
|
11,723,000 |
|
Less offering expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
Selling commissions and discounts
retained by affiliates |
|
|
221,640 |
|
|
|
758,940 |
|
|
|
703,380 |
|
Organizational expenses (4) |
|
|
36,940 |
|
|
|
126,490 |
|
|
|
117,230 |
|
Other |
|
|
|
|
|
|
|
|
|
|
|
|
Reserves |
|
|
35,763 |
|
|
|
278,219 |
|
|
|
79,550 |
|
Percent available for investment |
|
|
93 |
% |
|
|
93 |
% |
|
|
93 |
% |
Acquisition costs: |
|
|
|
|
|
|
|
|
|
|
|
|
Prepaid items and fees related
to purchase of property |
|
|
45,000 |
|
|
|
55,000 |
|
|
|
83,670 |
|
Cash down payment |
|
|
3,336,420 |
|
|
|
11,511,420 |
|
|
|
10,818,720 |
|
Acquisition fees (5) |
|
|
|
|
|
|
|
|
|
|
|
|
Other |
|
|
54,000 |
|
|
|
197,150 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total acquisition cost |
|
$ |
3,435,420 |
|
|
$ |
11,763,570 |
|
|
$ |
10,902,390 |
|
Percent leverage |
|
|
59 |
% |
|
|
61 |
% |
|
|
0 |
% |
Date offering began |
|
|
08/09/05 |
|
|
|
09/15/05 |
|
|
|
09/22/05 |
|
Length of offering (in months) |
|
|
6 |
|
|
|
3 |
|
|
|
4 |
|
Months to invest 90% of amount
available for investment |
|
|
6 |
|
|
|
3 |
|
|
|
2 |
|
|
|
|
Best Buy in |
|
|
Walgreens in |
|
|
Kohls in |
|
|
|
Baytown, TX (2) (3) |
|
|
Natchitoches, LA (3) (7) |
|
|
Lakewood, CO (3) (7) |
|
Dollar amount offered |
|
$ |
8,323,000 |
|
|
$ |
1,763,000 |
|
|
$ |
7,461,000 |
|
Dollar amount raised |
|
|
8,323,000 |
|
|
|
1,763,000 |
|
|
|
7,461,000 |
|
Less offering expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
Selling commissions and discounts
retained by affiliates |
|
|
499,380 |
|
|
|
105,780 |
|
|
|
447,660 |
|
Organizational expenses (4) |
|
|
83,230 |
|
|
|
17,630 |
|
|
|
74,610 |
|
Other |
|
|
|
|
|
|
|
|
|
|
|
|
Reserves |
|
|
41,012 |
|
|
|
22,323 |
|
|
|
70,098 |
|
Percent available for investment |
|
|
93 |
% |
|
|
93 |
% |
|
|
93 |
% |
Acquisition costs: |
|
|
|
|
|
|
|
|
|
|
|
|
Prepaid items and fees related
to purchase of property |
|
|
45,000 |
|
|
|
45,000 |
|
|
|
45,000 |
|
Cash down payment |
|
|
7,695,390 |
|
|
|
1,569,480 |
|
|
|
6,865,130 |
|
Acquisition fees (5) |
|
|
|
|
|
|
|
|
|
|
|
|
Other |
|
|
|
|
|
|
25,110 |
|
|
|
28,600 |
|
|
|
|
|
|
|
|
|
|
|
Total acquisition cost |
|
$ |
7,740,390 |
|
|
$ |
1,639,590 |
|
|
$ |
6,938,730 |
|
Percent leverage |
|
|
0 |
% |
|
|
59 |
% |
|
|
61 |
% |
Date offering began |
|
|
10/27/05 |
|
|
|
11/18/05 |
|
|
|
11/30/05 |
|
Length of offering (in months) |
|
|
6 |
|
|
|
3 |
|
|
|
3 |
|
Months to invest 90% of amount
available for investment |
|
|
5 |
|
|
|
3 |
|
|
|
3 |
|
Past performance is not necessarily indicative of future results.
A-9
TABLE I
EXPERIENCE IN RAISING AND INVESTING FUNDS (UNAUDITED) (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Shoppes at North
Village in St. Joseph, MO (2) (3) |
|
|
Walgreens in Sumter, SC
(3) (7) |
|
|
Kohls in St. Joseph, MO
(3) (7) |
|
|
|
|
|
|
|
|
|
|
|
Dollar amount offered |
|
$ |
20,430,000 |
|
|
$ |
2,152,000 |
|
|
$ |
4,117,000 |
|
Dollar amount raised |
|
|
20,430,000 |
|
|
|
2,152,000 |
|
|
|
4,117,000 |
|
Less offering expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
Selling commissions and discounts
retained by affiliates |
|
|
1,225,800 |
|
|
|
129,120 |
|
|
|
247,020 |
|
Organizational expenses (4) |
|
|
204,300 |
|
|
|
21,520 |
|
|
|
41,170 |
|
Other |
|
|
|
|
|
|
|
|
|
|
|
|
Reserves |
|
|
454,851 |
|
|
|
47,994 |
|
|
|
32,826 |
|
Percent available for investment |
|
|
93 |
% |
|
|
93 |
% |
|
|
93 |
% |
Acquisition costs: |
|
|
|
|
|
|
|
|
|
|
|
|
Prepaid items and fees related
to purchase of property |
|
|
195,000 |
|
|
|
45,000 |
|
|
|
45,000 |
|
Cash down payment |
|
|
18,716,330 |
|
|
|
1,924,830 |
|
|
|
3,721,860 |
|
Acquisition fees (5) |
|
|
|
|
|
|
|
|
|
|
|
|
Other |
|
|
88,570 |
|
|
|
31,530 |
|
|
|
61,950 |
|
|
|
|
|
|
|
|
|
|
|
Total acquisition cost |
|
$ |
18,999,900 |
|
|
$ |
2,001,360 |
|
|
$ |
3,828,810 |
|
Percent leverage |
|
|
0 |
% |
|
|
59 |
% |
|
|
60 |
% |
Date offering began |
|
|
12/22/05 |
|
|
|
01/06/06 |
|
|
|
02/01/06 |
|
Length of offering (in months) |
|
|
7 |
|
|
|
3 |
|
|
|
6 |
|
Months to invest 90% of amount
available for investment |
|
|
7 |
|
|
|
3 |
|
|
|
6 |
|
|
|
Home Depot in Bellingham, WA (2) (3) |
|
|
Cole Net Lease Portfolio
I (3) (7) |
|
|
Cole Net Lease Portfolio
II (3) (7) |
|
|
|
|
|
|
|
|
|
|
|
Dollar amount offered |
|
$ |
24,706,000 |
|
|
$ |
9,592,000 |
|
|
$ |
10,011,000 |
|
Dollar amount raised |
|
|
24,696,680 |
|
|
|
9,592,000 |
|
|
|
10,011,000 |
|
Less offering expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
Selling commissions and discounts
retained by affiliates |
|
|
1,481,801 |
|
|
|
575,520 |
|
|
|
600,660 |
|
Organizational expenses (4) |
|
|
246,966 |
|
|
|
95,920 |
|
|
|
100,110 |
|
Other |
|
|
|
|
|
|
|
|
|
|
|
|
Reserves |
|
|
130,404 |
|
|
|
77,529 |
|
|
|
98,215 |
|
Percent available for investment |
|
|
93 |
% |
|
|
93 |
% |
|
|
93 |
% |
Acquisition costs: |
|
|
|
|
|
|
|
|
|
|
|
|
Prepaid items and fees related
to purchase of property |
|
|
134,949 |
|
|
|
180,000 |
|
|
|
180,000 |
|
Cash down payment |
|
|
24,696,680 |
|
|
|
8,601,750 |
|
|
|
8,984,830 |
|
Acquisition fees (5) |
|
|
|
|
|
|
|
|
|
|
|
|
Other |
|
|
378,997 |
|
|
|
138,810 |
|
|
|
145,400 |
|
|
|
|
|
|
|
|
|
|
|
Total acquisition cost |
|
$ |
25,210,626 |
|
|
$ |
8,920,560 |
|
|
$ |
9,310,230 |
|
Percent leverage |
|
|
|
|
|
|
59 |
% |
|
|
59 |
% |
Date offering began |
|
|
04/12/06 |
|
|
|
05/31/06 |
|
|
|
06/23/06 |
|
Length of offering (in months) |
|
Ongoing |
|
|
|
6 |
|
|
|
5 |
|
Months to invest 90% of amount
available for investment |
|
|
6 |
|
|
|
5 |
|
|
|
5 |
|
Past performance is not necessarily indicative of future results.
A-10
TABLE I
EXPERIENCE IN RAISING AND INVESTING FUNDS (UNAUDITED) (Continued)
|
|
|
|
|
|
|
|
|
|
|
Barrywoods Crossing
in Kansas City, MO (2) |
|
|
Cole Net Lease Portfolio III (3) (7) |
|
|
|
|
|
|
|
|
Dollar amount offered |
|
$ |
20,400,000 |
|
|
$ |
15,449,000 |
|
Dollar amount raised |
|
|
13,759,800 |
|
|
|
1,911,814 |
|
Less offering expenses: |
|
|
|
|
|
|
|
|
Selling commissions and discounts
retained by affiliates |
|
|
963,186 |
|
|
|
114,709 |
|
Organizational expenses (4) |
|
|
137,598 |
|
|
|
19,118 |
|
Other |
|
|
|
|
|
|
|
|
Reserves |
|
|
198,987 |
|
|
|
|
|
Percent available for investment |
|
|
92 |
% |
|
|
93 |
% |
Acquisition costs: |
|
|
|
|
|
|
|
|
Prepaid items and fees related
to purchase of property |
|
|
348,719 |
|
|
|
22,275 |
|
Cash down payment |
|
|
12,119,583 |
|
|
|
1,704,818 |
|
Acquisition fees (5) |
|
|
|
|
|
|
|
|
Other |
|
|
190,715 |
|
|
|
28,914 |
|
|
|
|
|
|
|
|
Total acquisition cost |
|
$ |
12,659,017 |
|
|
$ |
1,756,007 |
|
Percent leverage |
|
|
58 |
% |
|
|
60 |
% |
Date offering began |
|
|
07/19/06 |
|
|
|
11/07/06 |
|
Length of offering (in months) |
|
Ongoing |
|
|
Ongoing |
|
Months to invest 90% of amount
available for investment |
|
|
N/A |
|
|
|
N/A |
|
Past performance is not necessarily indicative of future results.
A-11
|
|
|
NOTES TO TABLE I |
|
(1) |
|
Amount includes an over allotment of $3,750,000 available under the offering. |
|
(2) |
|
The Offering is a Tenant-in-Common Program sponsored by Cole Capital Partners which consists of the sale of tenant-in-common
interests in properties owned by subsidiaries of Cole Collateralized Senior Notes, LLC, Cole Collateralized Senior Notes II, LLC, Cole
Collateralized Notes III, LLC, or Cole Collateralized Senior Notes IV, LLC. |
|
(3) |
|
Acquisition cost amounts represent the costs paid by the tenant-in-common or Delaware statutory trust investors to acquire interest
in the properties. |
|
(4) |
|
Organizational expenses include legal, accounting, printing, escrow, filing, recording and other related expenses associated with
the formation and original organization of the Program and also includes fees paid to the sponsor and to affiliates. |
|
(5) |
|
Acquisition fees include fee paid to the sponsor or affiliates based upon the terms of the memorandum. |
|
(6) |
|
Amounts herein relate to initial investments of capital raised and do not include any properties acquired through reinvested amounts. |
|
(7) |
|
The Offering is a Delaware Statutory Trust program sponsored by Cole Capital Partners which consists of the sale of Delaware
statutory trust interests in properties owned by subsidiaries of Cole Collateralized Senior Notes, LLC, Cole Collateralized Senior Notes II,
LLC, Cole Collateralized Notes III, LLC, or Cole Collateralized Senior Notes IV, LLC. |
|
(8) |
|
The amount includes an over allotment of $10,000,000 available under the offering. |
A-12
TABLE II
COMPENSATION TO SPONSOR AND AFFILIATES (UNAUDITED)
This table sets forth the compensation paid to the sponsor and its affiliates during the three
years ended December 31, 2006. Prior Real Estate programs whose offerings have closed since
January 1, 2004 are shown separately and all other programs have been aggregated. The table
includes compensation paid out of the offering proceeds and compensation paid in connection with
the ongoing operations of Prior Real Estate Programs. Each of the Prior Real Estate Programs for
which information is presented below has similar or identical investment objectives to this
program. All amounts are as of December 31, 2006.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cole Credit |
|
Cole Collateralized |
|
Cole Collateralized |
|
|
Property Fund II, LP |
|
Senior Notes, LLC |
|
Senior Notes II, LLC |
Date offering commenced |
|
|
07/01/03 |
|
|
|
09/15/03 |
|
|
|
02/01/04 |
|
Dollar amount raised |
|
$ |
24,494,500 |
|
|
$ |
28,038,500 |
|
|
$ |
28,750,000 |
|
Amount paid to sponsor from proceeds of offering: |
|
|
|
|
|
|
|
|
|
|
|
|
Underwriting fees |
|
|
163,043 |
|
|
|
858,483 |
|
|
|
877,866 |
|
Acquisition fees (1) |
|
|
|
|
|
|
|
|
|
|
|
|
Real estate commissions |
|
|
1,137,801 |
|
|
|
6,774,651 |
|
|
|
6,546,278 |
|
Advisory fees |
|
|
|
|
|
|
|
|
|
|
|
|
Other (2) |
|
|
|
|
|
|
|
|
|
|
|
|
Dollar
amount of cash generated from operations before deducting payments to sponsor |
|
|
7,262,345 |
|
|
|
69,777 |
|
|
|
(2,175,966 |
) |
Amount paid to sponsor from operations: |
|
|
|
|
|
|
|
|
|
|
|
|
Property management fees |
|
|
202,556 |
|
|
|
391,689 |
|
|
|
296,052 |
|
Partnership management fees |
|
|
|
|
|
|
|
|
|
|
|
|
Reimbursements |
|
|
207 |
|
|
|
|
|
|
|
|
|
Leasing commissions |
|
|
|
|
|
|
|
|
|
|
|
|
Other (3) |
|
|
|
|
|
|
|
|
|
|
|
|
Dollar amount of property sales and refinancing before
deducting payments to sponsor |
|
|
|
|
|
|
|
|
|
|
|
|
Cash |
|
|
|
|
|
|
|
|
|
|
|
|
Notes |
|
|
|
|
|
|
|
|
|
|
|
|
Amount paid to sponsor from property sales and
refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
Incentive fees |
|
|
|
|
|
|
|
|
|
|
|
|
Real estate commissions |
|
|
|
|
|
|
|
|
|
|
|
|
Other (4) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cole Collateralized |
|
Cole Collateralized |
|
Cole Credit |
|
|
Senior Notes III, LLC |
|
Senior Notes IV, LLC |
|
Property Trust, Inc. |
Date offering commenced |
|
|
01/03/05 |
|
|
|
05/20/05 |
|
|
|
04/06/04 |
|
Dollar amount raised |
|
$ |
28,658,500 |
|
|
$ |
28,724,110 |
|
|
$ |
100,972,510 |
|
Amount paid to sponsor from proceeds of offering: |
|
|
|
|
|
|
|
|
|
|
|
|
Underwriting fees |
|
|
384,075 |
|
|
|
255,465 |
|
|
|
1,927,311 |
|
Acquisition fees (1)
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate commissions |
|
|
3,140,656 |
|
|
|
584,000 |
|
|
|
4,730,912 |
|
Advisory fees |
|
|
|
|
|
|
|
|
|
|
|
|
Other (2) |
|
|
|
|
|
|
|
|
|
|
1,654,463 |
|
Dollar amount of cash generated from operations
before deducting payments to sponsor |
|
|
(1,183,357 |
) |
|
|
(2,376,264 |
) |
|
|
13,627,830 |
|
Amount paid to sponsor from operations: |
|
|
|
|
|
|
|
|
|
|
|
|
Property management fees |
|
|
167,713 |
|
|
|
48,049 |
|
|
|
786,889 |
|
Partnership management fees |
|
|
|
|
|
|
|
|
|
|
995,034 |
|
Reimbursements |
|
|
|
|
|
|
|
|
|
|
|
|
Leasing commissions |
|
|
|
|
|
|
|
|
|
|
|
|
Other (3) |
|
|
|
|
|
|
|
|
|
|
|
|
Dollar amount of property sales and refinancing before
deducting payments to sponsor |
|
|
|
|
|
|
|
|
|
|
|
|
Cash |
|
|
|
|
|
|
|
|
|
|
|
|
Notes |
|
|
|
|
|
|
|
|
|
|
|
|
Amount paid to sponsor from property sales and
refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
Incentive fees |
|
|
|
|
|
|
|
|
|
|
|
|
Real estate commissions |
|
|
|
|
|
|
|
|
|
|
|
|
Other (4) |
|
|
|
|
|
|
|
|
|
|
|
|
Past performance is not necessarily indicative of future results
A-13
TABLE II
COMPENSATION TO SPONSOR AND AFFILIATES (UNAUDITED) (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cole Credit |
|
Staples in |
|
Mimis in |
|
|
Property Trust II, Inc. |
|
Tulsa, OK |
|
Lone Tree, CO |
Date offering commenced |
|
|
06/27/05 |
|
|
|
02/13/04 |
|
|
|
04/20/04 |
|
Dollar amount raised |
|
$ |
306,340,928 |
|
|
$ |
4,136,000 |
|
|
$ |
2,446,000 |
|
Amount paid to sponsor from proceeds of offering: |
|
|
|
|
|
|
|
|
|
|
|
|
Underwriting fees |
|
|
4,541,549 |
|
|
|
41,360 |
|
|
|
24,460 |
|
Acquisition fees (1) |
|
|
|
|
|
|
|
|
|
|
|
|
Real estate commissions |
|
|
7,496,569 |
|
|
|
55,840 |
|
|
|
64,500 |
|
Advisory fees
|
|
|
|
|
|
|
|
|
|
|
|
|
Other (2)
|
|
|
2,145,882 |
|
|
|
|
|
|
|
|
|
Dollar amount of cash generated from operations
before deducting payments to sponsor |
|
|
8,893,943 |
|
|
|
788,078 |
|
|
|
459,076 |
|
Amount paid to sponsor from operations: |
|
|
|
|
|
|
|
|
|
|
|
|
Property management fees |
|
|
362,886 |
|
|
|
|
|
|
|
|
|
Partnership management fees |
|
|
608,875 |
|
|
|
6,579 |
|
|
|
9,100 |
|
Reimbursements |
|
|
|
|
|
|
|
|
|
|
|
|
Leasing commissions |
|
|
|
|
|
|
|
|
|
|
|
|
Other (3)
|
|
|
|
|
|
|
|
|
|
|
|
|
Dollar amount of property sales and refinancing before
deducting payments to sponsor |
|
|
|
|
|
|
|
|
|
|
|
|
Cash
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount paid to sponsor from property sales and
refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
Incentive fees |
|
|
|
|
|
|
|
|
|
|
|
|
Real estate commissions |
|
|
|
|
|
|
|
|
|
|
|
|
Other (4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Walgreens in |
|
Walgreens in |
|
Walgreens in |
|
|
Windsor, CO |
|
Goldsboro, NC |
|
Hamilton, OH |
Date offering commenced |
|
|
06/03/04 |
|
|
|
06/30/04 |
|
|
|
07/01/04 |
|
Dollar amount raised |
|
$ |
2,669,000 |
|
|
$ |
2,570,000 |
|
|
$ |
2,966,000 |
|
Amount paid to sponsor from proceeds of offering: |
|
|
|
|
|
|
|
|
|
|
|
|
Underwriting fees |
|
|
26,690 |
|
|
|
25,700 |
|
|
|
29,660 |
|
Acquisition fees (1) |
|
|
|
|
|
|
|
|
|
|
|
|
Real estate commissions |
|
|
|
|
|
|
|
|
|
|
|
|
Advisory fees |
|
|
|
|
|
|
|
|
|
|
|
|
Other (2)
|
|
|
28,710 |
|
|
|
26,115 |
|
|
|
30,333 |
|
Dollar amount of cash generated from operations
before deducting payments to sponsor |
|
|
461,865 |
|
|
|
430,052 |
|
|
|
510,421 |
|
Amount paid to sponsor from operations: |
|
|
|
|
|
|
|
|
|
|
|
|
Property management fees |
|
|
|
|
|
|
|
|
|
|
|
|
Partnership management fees |
|
|
8,584 |
|
|
|
8,310 |
|
|
|
19,204 |
|
Reimbursements |
|
|
|
|
|
|
|
|
|
|
|
|
Leasing commissions |
|
|
|
|
|
|
|
|
|
|
|
|
Other (3) |
|
|
|
|
|
|
|
|
|
|
|
|
Dollar amount of property sales and refinancing before
deducting payments to sponsor |
|
|
|
|
|
|
|
|
|
|
|
|
Cash |
|
|
|
|
|
|
|
|
|
|
|
|
Notes |
|
|
|
|
|
|
|
|
|
|
|
|
Amount paid to sponsor from property sales and
refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
Incentive fees |
|
|
|
|
|
|
|
|
|
|
|
|
Real estate commissions |
|
|
|
|
|
|
|
|
|
|
|
|
Other (4) |
|
|
|
|
|
|
|
|
|
|
|
|
Past performance is not necessarily indicative of future results
A-14
TABLE II
COMPENSATION TO SPONSOR AND AFFILIATES (UNAUDITED) (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Walgreens in |
|
Walgreens in |
|
Walgreens in |
|
|
Carlsbad, NM |
|
Willimantic, CT |
|
Edgewood, NM |
Date offering commenced |
|
|
07/13/04 |
|
|
|
09/15/04 |
|
|
|
09/15/04 |
|
Dollar amount raised |
|
$ |
2,289,739 |
|
|
$ |
2,746,000 |
|
|
$ |
2,134,000 |
|
Amount paid to sponsor from proceeds of offering: |
|
|
|
|
|
|
|
|
|
|
|
|
Underwriting fees |
|
|
22,898 |
|
|
|
27,460 |
|
|
|
21,340 |
|
Acquisition fees (1) |
|
|
|
|
|
|
|
|
|
|
|
|
Real estate commissions |
|
|
|
|
|
|
|
|
|
|
|
|
Advisory fees
|
|
|
|
|
|
|
|
|
|
|
|
|
Other (2)
|
|
|
23,350 |
|
|
|
27,090 |
|
|
|
21,280 |
|
Dollar amount of cash generated from operations
before deducting payments to sponsor |
|
|
374,367 |
|
|
|
443,280 |
|
|
|
333,266 |
|
Amount paid to sponsor from operations: |
|
|
|
|
|
|
|
|
|
|
|
|
Property management fees |
|
|
|
|
|
|
|
|
|
|
|
|
Partnership management fees |
|
|
20,812 |
|
|
|
34,920 |
|
|
|
25,233 |
|
Reimbursements |
|
|
|
|
|
|
|
|
|
|
|
|
Leasing commissions |
|
|
|
|
|
|
|
|
|
|
|
|
Other (3) |
|
|
|
|
|
|
|
|
|
|
|
|
Dollar amount of property sales and refinancing before
deducting payments to sponsor |
|
|
|
|
|
|
|
|
|
|
|
|
Cash
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount paid to sponsor from property sales and
refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
Incentive fees
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate commissions |
|
|
|
|
|
|
|
|
|
|
|
|
Other (4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Walgreens in |
|
Walgreens in |
|
Walgreens in |
|
|
Fairborn, OH |
|
Slidell, LA |
|
Westheimer, TX |
Date offering commenced |
|
|
09/30/04 |
|
|
|
11/02/04 |
|
|
|
10/15/04 |
|
Dollar amount raised |
|
$ |
2,644,000 |
|
|
$ |
2,212,000 |
|
|
$ |
3,900,000 |
|
Amount paid to sponsor from proceeds of offering: |
|
|
|
|
|
|
|
|
|
|
|
|
Underwriting fees |
|
|
26,440 |
|
|
|
22,120 |
|
|
|
39,000 |
|
Acquisition fees (1) |
|
|
|
|
|
|
|
|
|
|
|
|
Real estate commissions |
|
|
|
|
|
|
|
|
|
|
|
|
Advisory fees
|
|
|
|
|
|
|
|
|
|
|
|
|
Other (2)
|
|
|
26,170 |
|
|
|
21,920 |
|
|
|
40,320 |
|
Dollar amount of cash generated from operations
before deducting payments to sponsor |
|
|
416,950 |
|
|
|
297,464 |
|
|
|
565,059 |
|
Amount paid to sponsor from operations: |
|
|
|
|
|
|
|
|
|
|
|
|
Property management fees |
|
|
|
|
|
|
|
|
|
|
|
|
Partnership management fees |
|
|
37,850 |
|
|
|
19,435 |
|
|
|
37,953 |
|
Reimbursements |
|
|
|
|
|
|
|
|
|
|
|
|
Leasing commissions |
|
|
|
|
|
|
|
|
|
|
|
|
Other (3) |
|
|
|
|
|
|
|
|
|
|
|
|
Dollar amount of property sales and refinancing before
deducting payments to sponsor |
|
|
|
|
|
|
|
|
|
|
|
|
Cash
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount paid to sponsor from property sales and
refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
Incentive fees
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate commissions |
|
|
|
|
|
|
|
|
|
|
|
|
Other (4)
|
|
|
|
|
|
|
|
|
|
|
|
|
Past performance is not necessarily indicative of future results
A-15
TABLE II
COMPENSATION TO SPONSOR AND AFFILIATES (UNAUDITED) (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Walgreens in |
|
Home Depot in |
|
Walgreens in |
|
|
Richmond, OH |
|
Spokane, WA |
|
Covington, TN |
Date offering commenced |
|
|
10/26/04 |
|
|
|
11/09/04 |
|
|
|
11/19/04 |
|
Dollar amount raised |
|
$ |
3,388,000 |
|
|
$ |
11,532,000 |
|
|
$ |
2,141,000 |
|
Amount paid to sponsor from proceeds of offering: |
|
|
|
|
|
|
|
|
|
|
|
|
Underwriting fees |
|
|
33,880 |
|
|
|
115,320 |
|
|
|
21,410 |
|
Acquisition fees (1) |
|
|
|
|
|
|
|
|
|
|
|
|
Real estate commissions |
|
|
|
|
|
|
|
|
|
|
|
|
Advisory fees
|
|
|
|
|
|
|
|
|
|
|
|
|
Other (2)
|
|
|
33,870 |
|
|
|
11,460 |
|
|
|
20,960 |
|
Dollar amount of cash generated from operations
before deducting payments to sponsor |
|
|
484,843 |
|
|
|
1,376,681 |
|
|
|
291,740 |
|
Amount paid to sponsor from operations: |
|
|
|
|
|
|
|
|
|
|
|
|
Property management fees |
|
|
|
|
|
|
|
|
|
|
|
|
Partnership management fees |
|
|
31,928 |
|
|
|
10,629 |
|
|
|
18,725 |
|
Reimbursements |
|
|
|
|
|
|
|
|
|
|
|
|
Leasing commissions |
|
|
|
|
|
|
|
|
|
|
|
|
Other (3) |
|
|
|
|
|
|
|
|
|
|
|
|
Dollar amount of property sales and refinancing before
deducting payments to sponsor |
|
|
|
|
|
|
|
|
|
|
|
|
Cash
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount paid to sponsor from property sales and
refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
Incentive fees
.. |
|
|
|
|
|
|
|
|
|
|
|
|
Real estate commissions |
|
|
|
|
|
|
|
|
|
|
|
|
Other (4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Walgreens in |
|
Walgreens in |
|
Walgreens in |
|
|
Orlando, FL |
|
Glen Burnie, MD |
|
Garfield Heights, OH |
Date offering commenced |
|
|
11/30/04 |
|
|
|
12/01/04 |
|
|
|
12/09/04 |
|
Dollar amount raised |
|
$ |
2,486,000 |
|
|
$ |
3,485,000 |
|
|
$ |
2,930,000 |
|
Amount paid to sponsor from proceeds of offering: |
|
|
|
|
|
|
|
|
|
|
|
|
Underwriting fees |
|
|
24,860 |
|
|
|
34,850 |
|
|
|
175,800 |
|
Acquisition fees (1) |
|
|
|
|
|
|
|
|
|
|
|
|
Real estate commissions |
|
|
|
|
|
|
|
|
|
|
|
|
Advisory fees
|
|
|
|
|
|
|
|
|
|
|
|
|
Other (2)
|
|
|
24,170 |
|
|
|
33,690 |
|
|
|
|
|
Dollar amount of cash generated from operations
before deducting payments to sponsor |
|
|
313,756 |
|
|
|
436,271 |
|
|
|
304,250 |
|
Amount paid to sponsor from operations: |
|
|
|
|
|
|
|
|
|
|
|
|
Property management fees |
|
|
|
|
|
|
|
|
|
|
3,999 |
|
Partnership management fees |
|
|
20,048 |
|
|
|
27,342 |
|
|
|
|
|
Reimbursements |
|
|
|
|
|
|
|
|
|
|
|
|
Leasing commissions |
|
|
|
|
|
|
|
|
|
|
|
|
Other (3)
|
|
|
|
|
|
|
|
|
|
|
|
|
Dollar amount of property sales and refinancing before
deducting payments to sponsor |
|
|
|
|
|
|
|
|
|
|
|
|
Cash
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount paid to sponsor from property sales and
refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
Incentive fees
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate commissions |
|
|
|
|
|
|
|
|
|
|
|
|
Other (4)
|
|
|
|
|
|
|
|
|
|
|
|
|
Past performance is not necessarily indicative of future results
A-16
TABLE II
COMPENSATION TO SPONSOR AND AFFILIATES (UNAUDITED) (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Walgreens in |
|
Home Depot in |
|
Walgreens in |
|
|
Ponca City, OK |
|
Tacoma, WA |
|
Pineville, LA |
Date offering commenced |
|
|
12/10/04 |
|
|
|
02/08/05 |
|
|
|
04/27/05 |
|
Dollar amount raised |
|
$ |
2,327,000 |
|
|
$ |
12,175,000 |
|
|
$ |
2,092,000 |
|
Amount paid to sponsor from proceeds of offering: |
|
|
|
|
|
|
|
|
|
|
|
|
Underwriting fees |
|
|
116,350 |
|
|
|
121,754 |
|
|
|
20,920 |
|
Acquisition fees (1) |
|
|
|
|
|
|
|
|
|
|
|
|
Real estate commissions |
|
|
|
|
|
|
|
|
|
|
|
|
Advisory fees
|
|
|
|
|
|
|
|
|
|
|
|
|
Other (2)
|
|
|
24,430 |
|
|
|
173,230 |
|
|
|
29,230 |
|
Dollar amount of cash generated from operations
before deducting payments to sponsor |
|
|
245,687 |
|
|
|
1,451,224 |
|
|
|
244,033 |
|
Amount paid to sponsor from operations: |
|
|
|
|
|
|
|
|
|
|
|
|
Property management fees |
|
|
3,166 |
|
|
|
|
|
|
|
6,951 |
|
Partnership management fees |
|
|
|
|
|
|
43,579 |
|
|
|
|
|
Reimbursements |
|
|
|
|
|
|
|
|
|
|
|
|
Leasing commissions |
|
|
|
|
|
|
|
|
|
|
|
|
Other (3) |
|
|
|
|
|
|
|
|
|
|
|
|
Dollar amount of property sales and refinancing before
deducting payments to sponsor |
|
|
|
|
|
|
|
|
|
|
|
|
Cash
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount paid to sponsor from property sales and
refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
Incentive fees |
|
|
|
|
|
|
|
|
|
|
|
|
Real estate commissions |
|
|
|
|
|
|
|
|
|
|
|
|
Other (4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Walgreens in |
|
Walgreens in |
|
Walgreens in |
|
|
Bartlett, TN |
|
Sidney, OH |
|
Wichita Falls, TX |
Date offering commenced |
|
|
04/20/05 |
|
|
|
04/29/05 |
|
|
|
05/05/05 |
|
Dollar amount raised |
|
$ |
2,022,000 |
|
|
$ |
1,975,000 |
|
|
$ |
2,020,000 |
|
Amount paid to sponsor from proceeds of offering: |
|
|
|
|
|
|
|
|
|
|
|
|
Underwriting fees |
|
|
20,220 |
|
|
|
19,750 |
|
|
|
20,200 |
|
Acquisition fees (1) |
|
|
|
|
|
|
|
|
|
|
|
|
Real estate commissions |
|
|
|
|
|
|
|
|
|
|
|
|
Advisory fees
|
|
|
|
|
|
|
|
|
|
|
|
|
Other (2)
|
|
|
29,500 |
|
|
|
28,990 |
|
|
|
29,590 |
|
Dollar amount of cash generated from operations
before deducting payments to sponsor |
|
|
232,456 |
|
|
|
232,301 |
|
|
|
237,642 |
|
Amount paid to sponsor from operations: |
|
|
|
|
|
|
|
|
|
|
|
|
Property management fees |
|
|
4,208 |
|
|
|
|
|
|
|
|
|
Partnership management fees |
|
|
|
|
|
|
6,800 |
|
|
|
6,951 |
|
Reimbursements |
|
|
|
|
|
|
|
|
|
|
|
|
Leasing commissions |
|
|
|
|
|
|
|
|
|
|
|
|
Other (3) |
|
|
|
|
|
|
|
|
|
|
|
|
Dollar amount of property sales and refinancing before
deducting payments to sponsor |
|
|
|
|
|
|
|
|
|
|
|
|
Cash
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount paid to sponsor from property sales and
refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
Incentive fees |
|
|
|
|
|
|
|
|
|
|
|
|
Real estate commissions |
|
|
|
|
|
|
|
|
|
|
|
|
Other (4)
|
|
|
|
|
|
|
|
|
|
|
|
|
Past performance is not necessarily indicative of future results
A-17
TABLE II
COMPENSATION TO SPONSOR AND AFFILIATES (UNAUDITED) (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Walgreens in |
|
Walgreens in |
|
Walgreens in |
|
|
Chicago, IL |
|
Southington, CT |
|
Nashville, TN |
Date offering commenced |
|
|
05/27/05 |
|
|
|
06/01/05 |
|
|
|
06/09/05 |
|
Dollar amount raised |
|
$ |
3,235,000 |
|
|
$ |
2,836,000 |
|
|
$ |
2,544,000 |
|
Amount paid to sponsor from proceeds of offering: |
|
|
|
|
|
|
|
|
|
|
|
|
Underwriting fees |
|
|
32,350 |
|
|
|
28,360 |
|
|
|
25,440 |
|
Acquisition fees (1) |
|
|
|
|
|
|
|
|
|
|
|
|
Real estate commissions |
|
|
|
|
|
|
|
|
|
|
|
|
Advisory fees
|
|
|
|
|
|
|
|
|
|
|
|
|
Other (2)
|
|
|
46,250 |
|
|
|
39,810 |
|
|
|
36,920 |
|
Dollar amount of cash generated from operations
before deducting payments to sponsor |
|
|
370,764 |
|
|
|
324,796 |
|
|
|
280,717 |
|
Amount paid to sponsor from operations: |
|
|
|
|
|
|
|
|
|
|
|
|
Property management fees |
|
|
|
|
|
|
|
|
|
|
|
|
Partnership management fees |
|
|
10,813 |
|
|
|
9,183 |
|
|
|
8,217 |
|
Reimbursements |
|
|
|
|
|
|
|
|
|
|
|
|
Leasing commissions |
|
|
|
|
|
|
|
|
|
|
|
|
Other (3)
|
|
|
|
|
|
|
|
|
|
|
|
|
Dollar amount of property sales and refinancing before
deducting payments to sponsor |
|
|
|
|
|
|
|
|
|
|
|
|
Cash
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount paid to sponsor from property sales and
refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
Incentive fees
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate commissions |
|
|
|
|
|
|
|
|
|
|
|
|
Other (4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Walgreens in |
|
Gander Mountain |
|
Walgreens in |
|
|
Derby, KS |
|
in Spring, TX |
|
Blue Springs, MO |
Date offering commenced |
|
|
06/13/05 |
|
|
|
06/15/05 |
|
|
|
06/15/05 |
|
Dollar amount raised |
|
$ |
2,341,000 |
|
|
$ |
13,150,000 |
|
|
$ |
1,891,000 |
|
Amount paid to sponsor from proceeds of offering: |
|
|
|
|
|
|
|
|
|
|
|
|
Underwriting fees |
|
|
23,410 |
|
|
|
131,500 |
|
|
|
18,910 |
|
Acquisition fees (1) |
|
|
|
|
|
|
|
|
|
|
|
|
Real estate commissions |
|
|
|
|
|
|
|
|
|
|
|
|
Advisory fees
|
|
|
|
|
|
|
|
|
|
|
|
|
Other (2)
|
|
|
33,220 |
|
|
|
|
|
|
|
26,800 |
|
Dollar amount of cash generated from operations
before deducting payments to sponsor |
|
|
249,529 |
|
|
|
1,342,380 |
|
|
|
200,594 |
|
Amount paid to sponsor from operations: |
|
|
|
|
|
|
|
|
|
|
|
|
Property management fees |
|
|
|
|
|
|
|
|
|
|
|
|
Partnership management fees |
|
|
14,593 |
|
|
|
11,223 |
|
|
|
11,630 |
|
Reimbursements |
|
|
|
|
|
|
|
|
|
|
|
|
Leasing commissions |
|
|
|
|
|
|
|
|
|
|
|
|
Other (3) |
|
|
|
|
|
|
|
|
|
|
|
|
Dollar amount of property sales and refinancing before
deducting payments to sponsor |
|
|
|
|
|
|
|
|
|
|
|
|
Cash
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount paid to sponsor from property sales and
refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
Incentive fees |
|
|
|
|
|
|
|
|
|
|
|
|
Real estate commissions |
|
|
|
|
|
|
|
|
|
|
|
|
Other (4)
|
|
|
|
|
|
|
|
|
|
|
|
|
Past performance is not necessarily indicative of future results
A-18
TABLE II
COMPENSATION TO SPONSOR AND AFFILIATES (UNAUDITED) (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Walgreens in |
|
Walgreens in |
|
Walgreens in |
|
|
Garden City, KS |
|
Pittsburg, KS |
|
Gladstone, MO |
Date offering commenced |
|
|
06/17/05 |
|
|
|
06/20/05 |
|
|
|
06/21/05 |
|
Dollar amount raised |
|
$ |
2,259,000 |
|
|
$ |
2,016,000 |
|
|
$ |
2,530,000 |
|
Amount paid to sponsor from proceeds of offering: |
|
|
|
|
|
|
|
|
|
|
|
|
Underwriting fees |
|
|
22,590 |
|
|
|
20,160 |
|
|
|
25,300 |
|
Acquisition fees (1) |
|
|
|
|
|
|
|
|
|
|
|
|
Real estate commissions |
|
|
|
|
|
|
|
|
|
|
|
|
Advisory fees
|
|
|
|
|
|
|
|
|
|
|
|
|
Other (2)
|
|
|
32,110 |
|
|
|
28,340 |
|
|
|
37,940 |
|
Dollar amount of cash generated from operations
before deducting payments to sponsor |
|
|
240,528 |
|
|
|
214,641 |
|
|
|
272,162 |
|
Amount paid to sponsor from operations: |
|
|
|
|
|
|
|
|
|
|
|
|
Property management fees |
|
|
|
|
|
|
|
|
|
|
|
|
Partnership management fees |
|
|
14,148 |
|
|
|
12,145 |
|
|
|
20,308 |
|
Reimbursements |
|
|
|
|
|
|
|
|
|
|
|
|
Leasing commissions |
|
|
|
|
|
|
|
|
|
|
|
|
Other (3)
|
|
|
|
|
|
|
|
|
|
|
|
|
Dollar amount of property sales and refinancing before
deducting payments to sponsor |
|
|
|
|
|
|
|
|
|
|
|
|
Cash
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount paid to sponsor from property sales and
refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
Incentive fees
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate commissions |
|
|
|
|
|
|
|
|
|
|
|
|
Other (4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Walgreens in |
|
Walgreens in |
|
Walgreens in |
|
|
Salt Lake City, UT |
|
Sandy, UT |
|
Midvale, UT |
Date offering commenced |
|
|
07/22/05 |
|
|
|
07/28/05 |
|
|
|
08/03/05 |
|
Dollar amount raised |
|
$ |
3,207,000 |
|
|
$ |
3,203,000 |
|
|
$ |
2,325,000 |
|
Amount paid to sponsor from proceeds of offering: |
|
|
|
|
|
|
|
|
|
|
|
|
Underwriting fees |
|
|
32,070 |
|
|
|
32,030 |
|
|
|
23,250 |
|
Acquisition fees (1) |
|
|
|
|
|
|
|
|
|
|
|
|
Real estate commissions |
|
|
|
|
|
|
|
|
|
|
|
|
Advisory fees
|
|
|
|
|
|
|
|
|
|
|
|
|
Other (2)
|
|
|
48,090 |
|
|
|
47,350 |
|
|
|
33,730 |
|
Dollar amount of cash generated from operations
before deducting payments to sponsor |
|
|
317,955 |
|
|
|
310,179 |
|
|
|
227,373 |
|
Amount paid to sponsor from operations: |
|
|
|
|
|
|
|
|
|
|
|
|
Property management fees |
|
|
|
|
|
|
|
|
|
|
|
|
Partnership management fees |
|
|
19,338 |
|
|
|
19,083 |
|
|
|
13,613 |
|
Reimbursements |
|
|
|
|
|
|
|
|
|
|
|
|
Leasing commissions |
|
|
|
|
|
|
|
|
|
|
|
|
Other (3)
|
|
|
|
|
|
|
|
|
|
|
|
|
Dollar amount of property sales and refinancing before
deducting payments to sponsor |
|
|
|
|
|
|
|
|
|
|
|
|
Cash
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount paid to sponsor from property sales and
refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
Incentive fees
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate commissions |
|
|
|
|
|
|
|
|
|
|
|
|
Other (4)
|
|
|
|
|
|
|
|
|
|
|
|
|
Past performance is not necessarily indicative of future results
A-19
TABLE II
COMPENSATION TO SPONSOR AND AFFILIATES (UNAUDITED) (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Walgreens in |
|
Wal-Mart in |
|
Gander Mountain in |
|
|
Metairie, LA |
|
Hazard, KY |
|
Hermantown, MN |
Date offering commenced |
|
|
08/09/05 |
|
|
|
09/15/05 |
|
|
|
09/22/05 |
|
Dollar amount raised |
|
$ |
3,694,000 |
|
|
$ |
12,649,000 |
|
|
$ |
11,723,000 |
|
Amount paid to sponsor from proceeds of offering: |
|
|
|
|
|
|
|
|
|
|
|
|
Underwriting fees |
|
|
36,940 |
|
|
|
126,490 |
|
|
|
117,230 |
|
Acquisition fees (1) |
|
|
|
|
|
|
|
|
|
|
|
|
Real estate commissions |
|
|
|
|
|
|
|
|
|
|
|
|
Advisory fees
|
|
|
|
|
|
|
|
|
|
|
|
|
Other (2)
|
|
|
54,000 |
|
|
|
197,150 |
|
|
|
|
|
Dollar amount of cash generated from operations
before deducting payments to sponsor |
|
|
281,642 |
|
|
|
1,001,952 |
|
|
|
979,756 |
|
Amount paid to sponsor from operations: |
|
|
|
|
|
|
|
|
|
|
|
|
Property management fees |
|
|
|
|
|
|
|
|
|
|
|
|
Partnership management fees |
|
|
10,786 |
|
|
|
36,133 |
|
|
|
29,665 |
|
Reimbursements |
|
|
|
|
|
|
|
|
|
|
|
|
Leasing commissions |
|
|
|
|
|
|
|
|
|
|
|
|
Other (3)
|
|
|
|
|
|
|
|
|
|
|
|
|
Dollar amount of property sales and refinancing before
deducting payments to sponsor |
|
|
|
|
|
|
|
|
|
|
|
|
Cash
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount paid to sponsor from property sales and
refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
Incentive fees
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate commissions |
|
|
|
|
|
|
|
|
|
|
|
|
Other (4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Best Buy in |
|
Walgreens in |
|
Kohls in |
|
|
Baytown, TX |
|
Natchitoches, FL |
|
Lakewood, CO |
Date offering commenced |
|
|
10/27/05 |
|
|
|
11/18/05 |
|
|
|
11/30/05 |
|
Dollar amount raised |
|
$ |
8,323,000 |
|
|
$ |
1,763,000 |
|
|
$ |
7,461,000 |
|
Amount paid to sponsor from proceeds of offering: |
|
|
|
|
|
|
|
|
|
|
|
|
Underwriting fees |
|
|
83,230 |
|
|
|
17,630 |
|
|
|
74,610 |
|
Acquisition fees (1) |
|
|
|
|
|
|
|
|
|
|
|
|
Real estate commissions |
|
|
|
|
|
|
|
|
|
|
|
|
Advisory fees |
|
|
|
|
|
|
|
|
|
|
|
|
Other (2) |
|
|
|
|
|
|
25,110 |
|
|
|
28,600 |
|
Dollar amount of cash generated from operations
before deducting payments to sponsor |
|
|
594,108 |
|
|
|
121,266 |
|
|
|
474,428 |
|
Amount paid to sponsor from operations: |
|
|
|
|
|
|
|
|
|
|
|
|
Property management fees |
|
|
|
|
|
|
|
|
|
|
|
|
Partnership management fees |
|
|
4,256 |
|
|
|
5,694 |
|
|
|
16,986 |
|
Reimbursements |
|
|
|
|
|
|
|
|
|
|
|
|
Leasing commissions |
|
|
|
|
|
|
|
|
|
|
|
|
Other (3) |
|
|
|
|
|
|
|
|
|
|
|
|
Dollar amount of property sales and refinancing before
deducting payments to sponsor |
|
|
|
|
|
|
|
|
|
|
|
|
Cash |
|
|
|
|
|
|
|
|
|
|
|
|
Notes |
|
|
|
|
|
|
|
|
|
|
|
|
Amount paid to sponsor from property sales and
refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
Incentive fees |
|
|
|
|
|
|
|
|
|
|
|
|
Real estate commissions |
|
|
|
|
|
|
|
|
|
|
|
|
Other (4) |
|
|
|
|
|
|
|
|
|
|
|
|
Past performance is not necessarily indicative of future results
A-20
TABLE II
COMPENSATION TO SPONSOR AND AFFILIATES (UNAUDITED) (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Shoppes at North |
|
Walgreens in |
|
Kohls in |
|
|
Village |
|
Sumter, SC |
|
St. Joseph, MO |
Date offering commenced |
|
|
12/22/05 |
|
|
|
01/06/06 |
|
|
|
02/01/06 |
|
Dollar amount raised |
|
$ |
20,430,000 |
|
|
$ |
2,152,000 |
|
|
$ |
4,117,000 |
|
Amount paid to sponsor from proceeds of offering: |
|
|
|
|
|
|
|
|
|
|
|
|
Underwriting fees |
|
|
204,300 |
|
|
|
21,520 |
|
|
|
41,170 |
|
Acquisition fees (1) |
|
|
|
|
|
|
|
|
|
|
|
|
Real estate commissions |
|
|
|
|
|
|
|
|
|
|
|
|
Advisory fees
|
|
|
|
|
|
|
|
|
|
|
|
|
Other (2)
|
|
|
88,570 |
|
|
|
31,530 |
|
|
|
61,950 |
|
Dollar amount of cash generated from operations
before deducting payments to sponsor |
|
|
1,019,010 |
|
|
|
151,722 |
|
|
|
223,446 |
|
Amount paid to sponsor from operations: |
|
|
|
|
|
|
|
|
|
|
|
|
Property management fees |
|
|
|
|
|
|
|
|
|
|
|
|
Partnership management fees |
|
|
161,292 |
|
|
|
9,489 |
|
|
|
9,027 |
|
Reimbursements |
|
|
|
|
|
|
|
|
|
|
|
|
Leasing commissions |
|
|
|
|
|
|
|
|
|
|
|
|
Other (3)
|
|
|
|
|
|
|
|
|
|
|
|
|
Dollar amount of property sales and refinancing before
deducting payments to sponsor |
|
|
|
|
|
|
|
|
|
|
|
|
Cash
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount paid to sponsor from property sales and
refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
Incentive fees
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate commissions |
|
|
|
|
|
|
|
|
|
|
|
|
Other (4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Home Depot in |
|
Cole Net Lease |
|
Cole Net Lease |
|
|
Bellingham, WA |
|
Portfolio I |
|
Portfolio II |
Date offering commenced |
|
|
04/12/06 |
|
|
|
05/31/06 |
|
|
|
06/23/06 |
|
Dollar amount raised |
|
$ |
24,696,680 |
|
|
$ |
9,592,000 |
|
|
$ |
10,011,000 |
|
Amount paid to sponsor from proceeds of offering: |
|
|
|
|
|
|
|
|
|
|
|
|
Underwriting fees |
|
|
246,966 |
|
|
|
95,920 |
|
|
|
100,110 |
|
Acquisition fees (1) |
|
|
|
|
|
|
|
|
|
|
|
|
Real estate commissions |
|
|
|
|
|
|
|
|
|
|
|
|
Advisory fees
|
|
|
|
|
|
|
|
|
|
|
|
|
Other (2)
|
|
|
378,997 |
|
|
|
138,810 |
|
|
|
145,400 |
|
Dollar amount of cash generated from operations
before deducting payments to sponsor |
|
|
602,776 |
|
|
|
300,304 |
|
|
|
180,012 |
|
Amount paid to sponsor from operations: |
|
|
|
|
|
|
|
|
|
|
|
|
Property management fees |
|
|
|
|
|
|
|
|
|
|
|
|
Partnership management fees |
|
|
8,713 |
|
|
|
8,989 |
|
|
|
4,731 |
|
Reimbursements |
|
|
|
|
|
|
|
|
|
|
|
|
Leasing commissions |
|
|
|
|
|
|
|
|
|
|
|
|
Other (3)
|
|
|
|
|
|
|
|
|
|
|
|
|
Dollar amount of property sales and refinancing before
deducting payments to sponsor |
|
|
|
|
|
|
|
|
|
|
|
|
Cash
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount paid to sponsor from property sales and
refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
Incentive fees
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate commissions |
|
|
|
|
|
|
|
|
|
|
|
|
Other (4)
|
|
|
|
|
|
|
|
|
|
|
|
|
Past performance is not necessarily indicative of future results
A-21
TABLE II
COMPENSATION TO SPONSOR AND AFFILIATES (UNAUDITED) (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Barrywoods Crossing in |
|
Cole Net Lease |
|
11 Other |
|
|
Kansas City, MO (2) |
|
Portfolio III |
|
Programs (5) |
Date offering commenced |
|
|
07/19/06 |
|
|
|
12/07/06 |
|
|
|
|
|
Dollar amount raised |
|
$ |
13,759,800 |
|
|
$ |
1,911,814 |
|
|
$ |
|
|
Amount paid to sponsor from proceeds of offering: |
|
|
|
|
|
|
|
|
|
|
|
|
Underwriting fees |
|
|
137,598 |
|
|
|
19,118 |
|
|
|
|
|
Acquisition fees (1) |
|
|
|
|
|
|
|
|
|
|
|
|
Real estate commissions |
|
|
|
|
|
|
|
|
|
|
3,509 |
|
Advisory fees
|
|
|
|
|
|
|
|
|
|
|
|
|
Other (2)
|
|
|
190,715 |
|
|
|
28,914 |
|
|
|
|
|
Dollar amount of cash generated from operations
before deducting payments to sponsor |
|
|
225,617 |
|
|
|
|
|
|
|
946,068 |
|
Amount paid to sponsor from operations: |
|
|
|
|
|
|
|
|
|
|
|
|
Property management fees |
|
|
|
|
|
|
|
|
|
|
291,417 |
|
Partnership management fees |
|
|
24,583 |
|
|
|
|
|
|
|
815,979 |
|
Reimbursements |
|
|
|
|
|
|
|
|
|
|
76,312 |
|
Leasing commissions |
|
|
|
|
|
|
|
|
|
|
24,516 |
|
Other (3) |
|
|
|
|
|
|
|
|
|
|
90,394 |
|
Dollar amount of property sales and refinancing before
deducting payments to sponsor |
|
|
|
|
|
|
|
|
|
|
|
|
Cash
|
|
|
|
|
|
|
|
|
|
|
35,997,640 |
|
Notes
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount paid to sponsor from property sales and
refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
Incentive fees
.. |
|
|
|
|
|
|
|
|
|
|
|
|
Real estate commissions |
|
|
|
|
|
|
|
|
|
|
1,554,700 |
|
Other (4)
|
|
|
|
|
|
|
|
|
|
|
|
|
Past performance is not necessarily indicative of future results
A-22
|
|
|
NOTES TO TABLE II |
|
(1) |
|
Properties are acquired with a combination of funds from offering proceeds and debt. The
acquisition and development fees and the leasing commissions reported in this table include the
total amount of fees paid to the sponsor or its affiliates regardless of the funding source for
these costs. |
|
(2) |
|
Amounts primarily relate to loan coordination fees, a development fee, and reimbursement of
certain offering costs paid by the sponsor. |
|
(3) |
|
Amounts primarily relate to construction management fees. |
|
(4) |
|
Amounts primarily relate to asset management fees. |
|
(5) |
|
The offerings of the prior programs aggregated herein were not closed within the past three
years and therefore do not include any amounts raised or underwriting fees. The programs have
similar investment objectives to this program. |
Past performance is not necessarily indicative of future results
A-23
TABLE III
ANNUAL OPERATING RESULTS OF PRIOR REAL ESTATE PROGRAMS (UNAUDITED)
The following sets forth the unaudited operating results of Prior Real Estate Programs
sponsored by affiliates of the sponsor of this program, the offerings of which have been closed
since January 1, 2002. The information relates only to programs with investment objectives similar
to this program. All amounts are as of December 31 of the year indicated, except as noted.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cole Blvd. Sq. Investors LP - (Sold) |
|
|
|
May 2002 |
|
|
|
2002 |
|
|
2003 |
|
|
2004 |
|
|
2005 |
|
|
2006 |
|
Gross revenues |
|
$ |
1,885,886 |
|
|
$ |
4,404,802 |
|
|
$ |
3,444,830 |
|
|
$ |
165,124 |
|
|
$ |
129,679 |
|
Profit (loss) on sale of properties |
|
|
|
|
|
|
|
|
|
|
8,521,296 |
|
|
|
|
|
|
|
|
|
Less: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses (4) |
|
|
686,067 |
|
|
|
1,511,374 |
|
|
|
1,204,787 |
|
|
|
34,079 |
|
|
|
19,746 |
|
Interest expense |
|
|
912,735 |
|
|
|
2,028,457 |
|
|
|
1,390,517 |
|
|
|
|
|
|
|
|
|
Depreciation and amortization (3) |
|
|
486,358 |
|
|
|
1,354,613 |
|
|
|
1,236,383 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) Tax basis (6) |
|
$ |
(199,274 |
) |
|
$ |
(489,642 |
) |
|
$ |
8,134,439 |
|
|
$ |
131,045 |
|
|
$ |
109,933 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxable income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operations |
|
$ |
(199,274 |
) |
|
$ |
(489,642 |
) |
|
$ |
(386,857 |
) |
|
$ |
131,045 |
|
|
$ |
109,933 |
|
from gain on sale |
|
|
|
|
|
|
|
|
|
|
8,521,296 |
|
|
|
|
|
|
|
|
|
Cash generated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operations (5) |
|
|
287,084 |
|
|
|
864,971 |
|
|
|
849,526 |
|
|
|
131,045 |
|
|
|
109,933 |
|
from sales |
|
|
|
|
|
|
|
|
|
|
14,423,979 |
|
|
|
|
|
|
|
|
|
from refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated from operations, sales
and refinancing |
|
|
287,084 |
|
|
|
864,971 |
|
|
|
15,273,505 |
|
|
|
131,045 |
|
|
|
109,933 |
|
Less: Cash distributions to investors |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operating cash flow |
|
|
102,209 |
|
|
|
844,489 |
|
|
|
850,000 |
|
|
|
|
|
|
|
|
|
from sales and refinancing |
|
|
|
|
|
|
|
|
|
|
12,837,500 |
|
|
|
420,000 |
|
|
|
111,000 |
|
from other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated (deficiency) after cash
distributions |
|
|
184,875 |
|
|
|
20,482 |
|
|
|
1,586,005 |
|
|
|
(288,955 |
) |
|
|
(1,067 |
) |
Less: Special items (not including
sales and refinancing) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated (deficiency) after cash
distributions and special items |
|
$ |
184,875 |
|
|
$ |
20,482 |
|
|
$ |
1,586,005 |
|
|
$ |
(288,955 |
) |
|
$ |
109,933 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax and Distribution Data Per $1,000
Invested |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal income tax results: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary income (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operations |
|
$ |
(19.93 |
) |
|
$ |
(48.96 |
) |
|
$ |
(38.69 |
) |
|
$ |
13.10 |
|
|
$ |
10.99 |
|
from recapture |
|
|
|
|
|
|
|
|
|
|
246.21 |
|
|
|
|
|
|
|
|
|
Capital gain (loss) |
|
|
|
|
|
|
|
|
|
|
605.92 |
|
|
|
|
|
|
|
|
|
Cash distributions to investors: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Source (on a tax basis) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
investment income |
|
|
10.22 |
|
|
|
84.45 |
|
|
|
85.00 |
|
|
|
|
|
|
|
|
|
return of capital |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Source (on a cash basis) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
sales |
|
|
|
|
|
|
|
|
|
|
1,283.75 |
|
|
|
42.00 |
|
|
|
11.10 |
|
refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
operations |
|
|
10.22 |
|
|
|
84.45 |
|
|
|
85.00 |
|
|
|
|
|
|
|
|
|
other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount (in percentage terms)
remaining invested in program
properties at the end of last year
reported in the table |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0 |
% |
|
|
0 |
% |
Past
performance is not necessarily indicative of future results.
A-24
TABLE III
ANNUAL OPERATING RESULTS OF PRIOR REAL ESTATE PROGRAMS (UNAUDITED) (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cole Santa Fe Investors LP |
|
|
|
September 2002 |
|
|
|
2002 |
|
|
2003 |
|
|
2004 |
|
|
2005 |
|
|
2006 |
|
Gross revenues |
|
$ |
1,293,152 |
|
|
$ |
2,545,914 |
|
|
$ |
2,252,104 |
|
|
$ |
2,380,191 |
|
|
$ |
1,888,819 |
|
Profit (loss) on sale of properties |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses (4) |
|
|
431,161 |
|
|
|
883,118 |
|
|
|
839,177 |
|
|
|
939,120 |
|
|
|
890,625 |
|
Interest expense |
|
|
581,968 |
|
|
|
1,144,762 |
|
|
|
1,142,336 |
|
|
|
1,123,891 |
|
|
|
1,111,509 |
|
Depreciation and amortization (3) |
|
|
247,530 |
|
|
|
895,291 |
|
|
|
758,595 |
|
|
|
475,149 |
|
|
|
634,960 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) Tax basis (6) |
|
$ |
32,493 |
|
|
$ |
(377,257 |
) |
|
$ |
(488,004 |
) |
|
$ |
(157,969 |
) |
|
$ |
(748,275) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxable income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operations |
|
$ |
32,493 |
|
|
$ |
(377,257 |
) |
|
$ |
(488,004 |
) |
|
$ |
(157,969 |
) |
|
$ |
(748,275) |
|
from gain on sale |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operations (5) |
|
|
280,023 |
|
|
|
518,034 |
|
|
|
270,591 |
|
|
|
317,180 |
|
|
|
(113,315) |
|
from sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated from operations, sales
and refinancing |
|
|
280,023 |
|
|
|
518,034 |
|
|
|
270,591 |
|
|
|
317,180 |
|
|
|
(113,315) |
|
Less: Cash distributions to investors |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operating cash flow |
|
|
6,253 |
|
|
|
568,574 |
|
|
|
|
|
|
|
|
|
|
|
|
|
from sales and refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated (deficiency) after cash
distributions |
|
|
273,770 |
|
|
|
(50,540 |
) |
|
|
270,591 |
|
|
|
317,180 |
|
|
|
(113,315) |
|
Less: Special items (not including
sales and refinancing) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated (deficiency) after cash
distributions and special items |
|
$ |
273,770 |
|
|
$ |
(50,540 |
) |
|
$ |
270,591 |
|
|
$ |
317,180 |
|
|
$ |
(113,315) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax and Distribution Data Per $1,000
Invested |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal income tax results: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary income (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operations |
|
$ |
5.26 |
|
|
$ |
(61.04 |
) |
|
$ |
(78.97 |
) |
|
$ |
(25.56 |
) |
|
$ |
(121.08) |
|
from recapture |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital gain (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash distributions to investors: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Source (on a tax basis) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
investment income |
|
|
1.01 |
|
|
|
92.00 |
|
|
|
|
|
|
|
|
|
|
|
|
|
return of capital |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Source (on a cash basis) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
operations |
|
|
1.01 |
|
|
|
92.00 |
|
|
|
|
|
|
|
|
|
|
|
|
|
other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount (in percentage terms)
remaining invested in program
properties at the end of last year
reported in the table |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100 |
% |
Past
performance is not necessarily indicative of future results.
A-25
TABLE III
ANNUAL OPERATING RESULTS OF PRIOR REAL ESTATE PROGRAMS (UNAUDITED) (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cole Credit Property Fund LP |
|
|
|
November 2002 |
|
|
|
2002 |
|
|
2003 |
|
|
2004 |
|
|
2005 |
|
|
2006 |
|
Gross revenues |
|
$ |
|
|
|
$ |
3,360,284 |
|
|
$ |
4,457,358 |
|
|
$ |
5,127,208 |
|
|
$ |
3,983,240 |
|
Profit (loss) on sale of properties |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses (4) |
|
|
762 |
|
|
|
222,734 |
|
|
|
289,925 |
|
|
|
214,973 |
|
|
|
2,305,251 |
|
Interest expense |
|
|
|
|
|
|
849,115 |
|
|
|
1,470,906 |
|
|
|
1,554,842 |
|
|
|
1,355,239 |
|
Depreciation and amortization (3) |
|
|
|
|
|
|
1,351,646 |
|
|
|
1,805,318 |
|
|
|
1,503,075 |
|
|
|
1,165,025 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) Tax basis (6) |
|
$ |
(762 |
) |
|
$ |
936,789 |
|
|
$ |
891,209 |
|
|
$ |
1,854,318 |
|
|
$ |
(842,275) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxable income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operations |
|
$ |
(762 |
) |
|
$ |
936,789 |
|
|
$ |
891,209 |
|
|
$ |
1,854,318 |
|
|
$ |
(842,275) |
|
from gain on sale |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operations (5) |
|
|
(762 |
) |
|
|
2,288,435 |
|
|
|
2,696,527 |
|
|
|
3,357,393 |
|
|
|
322,750 |
|
from sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated from operations, sales
and refinancing |
|
|
(762 |
) |
|
|
2,288,435 |
|
|
|
2,696,527 |
|
|
|
3,357,393 |
|
|
|
322,750 |
|
Less: Cash distributions to investors |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operating cash flow |
|
|
|
|
|
|
1,400,125 |
|
|
|
2,187,497 |
|
|
|
2,124,998 |
|
|
|
2,000,012 |
|
from sales and refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated (deficiency) after cash
distributions |
|
|
(762 |
) |
|
|
888,310 |
|
|
|
509,030 |
|
|
|
1,232,395 |
|
|
|
(1,677,262) |
|
Less: Special items (not including
sales and refinancing) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated (deficiency) after cash
distributions and special items |
|
$ |
(762 |
) |
|
$ |
888,310 |
|
|
$ |
509,030 |
|
|
$ |
1,232,395 |
|
|
$ |
(1,677,262) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax and Distribution Data Per $1,000
Invested |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal income tax results: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary income (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operations |
|
$ |
(0.47 |
) |
|
$ |
37.47 |
|
|
$ |
35.65 |
|
|
$ |
74.17 |
|
|
$ |
(33.69) |
|
from recapture |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital gain (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash distributions to investors: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Source (on a tax basis) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
investment income |
|
|
|
|
|
|
56.01 |
|
|
|
87.50 |
|
|
|
85.00 |
|
|
|
80.00 |
|
return of capital |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Source (on a cash basis) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
operations |
|
|
|
|
|
|
56.01 |
|
|
|
87.50 |
|
|
|
85.00 |
|
|
|
80.00 |
|
other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount (in percentage terms)
remaining invested in program
properties at the end of last year
reported in the table |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100 |
% |
Past
performance is not necessarily indicative of future results.
A-26
TABLE III
ANNUAL OPERATING RESULTS OF PRIOR REAL ESTATE PROGRAMS (UNAUDITED) (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cole Credit Property Fund II LP |
|
|
|
July 2003 |
|
|
|
2003 |
|
|
2004 |
|
|
2005 |
|
|
2006 |
|
Gross revenues |
|
$ |
128,655 |
|
|
$ |
3,758,639 |
|
|
$ |
5,073,379 |
|
|
$ |
5,152,330 |
|
Profit (loss) on sale of properties |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses (4) |
|
|
8,574 |
|
|
|
165,315 |
|
|
|
346,715 |
|
|
|
412,563 |
|
Interest expense |
|
|
6,438 |
|
|
|
1,345,798 |
|
|
|
1,908,834 |
|
|
|
1,938,864 |
|
Depreciation and amortization (3) |
|
|
21,234 |
|
|
|
1,667,189 |
|
|
|
1,527,717 |
|
|
|
1,369,651 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) Tax basis (6) |
|
$ |
92,409 |
|
|
$ |
580,337 |
|
|
$ |
1,290,113 |
|
|
$ |
1,431,252 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxable income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operations |
|
$ |
92,409 |
|
|
$ |
580,337 |
|
|
$ |
1,290,113 |
|
|
$ |
1,431,252 |
|
from gain on sale |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operations (5) |
|
|
113,643 |
|
|
|
2,247,526 |
|
|
|
2,817,830 |
|
|
|
2,800,903 |
|
from sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated from operations, sales
and refinancing |
|
|
113,643 |
|
|
|
2,247,526 |
|
|
|
2,817,830 |
|
|
|
2,800,903 |
|
Less: Cash distributions to investors |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operating cash flow |
|
|
18,795 |
|
|
|
1,567,247 |
|
|
|
2,398,417 |
|
|
|
2,082,029 |
|
from sales and refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated (deficiency) after cash
distributions |
|
|
94,848 |
|
|
|
680,279 |
|
|
|
419,413 |
|
|
|
718,874 |
|
Less: Special items (not including
sales and refinancing) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated (deficiency) after cash
distributions and special items |
|
$ |
94,848 |
|
|
$ |
680,279 |
|
|
$ |
419,413 |
|
|
$ |
718,874 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax and Distribution Data Per $1,000
Invested |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal income tax results: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary income (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operations |
|
$ |
6.56 |
|
|
$ |
23.69 |
|
|
$ |
52.67 |
|
|
$ |
58,43 |
|
from recapture |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital gain (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash distributions to investors: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Source (on a tax basis) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
investment income |
|
|
1.33 |
|
|
|
63.98 |
|
|
|
97.92 |
|
|
|
85.00 |
|
return of capital |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Source (on a cash basis) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
operations |
|
|
1.33 |
|
|
|
63.98 |
|
|
|
97.92 |
|
|
|
85.00 |
|
other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount (in percentage terms)
remaining invested in program
properties at the end of last year
reported in the table |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100 |
% |
Past
performance is not necessarily indicative of future results.
A-27
TABLE III
ANNUAL OPERATING RESULTS OF PRIOR REAL ESTATE PROGRAMS (UNAUDITED) (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cole Collateralized Senior Notes, LLC |
|
|
|
September 2003 |
|
|
|
2003 |
|
|
2004 |
|
|
2005 |
|
|
2006 |
|
Gross revenues |
|
$ |
162,409 |
|
|
$ |
5,087,274 |
|
|
$ |
3,784,381 |
|
|
$ |
1,341,850 |
|
Profit (loss) on sale of properties |
|
|
|
|
|
|
6,332,735 |
|
|
|
1,768,269 |
|
|
|
1,547,193 |
|
Less: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses (4) |
|
|
7,327 |
|
|
|
304,377 |
|
|
|
438,007 |
|
|
|
57,254 |
|
Interest expense |
|
|
248,806 |
|
|
|
4,128,321 |
|
|
|
4,275,923 |
|
|
|
1,426,798 |
|
Depreciation and amortization (3) |
|
|
52,656 |
|
|
|
1,574,516 |
|
|
|
1,092,368 |
|
|
|
(131,509 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) Tax basis (6) |
|
$ |
(146,380 |
) |
|
$ |
5,412,795 |
|
|
$ |
(253,648 |
) |
|
$ |
1,536,500 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxable income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operations |
|
$ |
(146,380 |
) |
|
$ |
(919,940 |
) |
|
$ |
(2,021,917 |
) |
|
$ |
(10,693 |
) |
from gain on sale |
|
|
|
|
|
|
6,332,735 |
|
|
|
1,768,268 |
|
|
|
1,547,193 |
|
Cash generated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operations (5) |
|
|
(93,724 |
) |
|
|
654,576 |
|
|
|
(929,549 |
) |
|
|
(142,202 |
) |
from sales |
|
|
|
|
|
|
25,913,341 |
|
|
|
52,237,261 |
|
|
|
9,413,734 |
|
from refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated from operations, sales
and refinancing |
|
|
(93,724 |
) |
|
|
26,567,917 |
|
|
|
51,307,712 |
|
|
|
9,271,532 |
|
Less: Cash distributions to investors |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operating cash flow |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2) |
from sales and refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated (deficiency) after cash
distributions |
|
|
(93,724 |
) |
|
|
26,567,917 |
|
|
|
51,307,712 |
|
|
|
9,271,532 |
|
Less: Special items (not including
sales and refinancing) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated (deficiency) after cash
distributions and special items |
|
$ |
(93,724 |
) |
|
$ |
26,567,917 |
|
|
$ |
51,307,712 |
|
|
$ |
9,271,532 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax and Distribution Data Per $1,000
Invested |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal income tax results: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary income (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operations |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
(2) |
from recapture |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital gain (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash distributions to investors: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Source (on a tax basis) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
investment income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2) |
return of capital |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Source (on a cash basis) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount (in percentage terms)
remaining invested in program
properties at the end of last year
reported in the table |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100 |
% |
Past performance is not
necessarily indicative of future results.
A-28
TABLE III
ANNUAL OPERATING RESULTS OF PRIOR REAL ESTATE PROGRAMS (UNAUDITED) (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cole Collateralized |
|
|
Cole Collateralized |
|
|
|
Senior Notes II, LLC |
|
|
Senior Notes III, LLC |
|
|
|
February 2004 |
|
|
January 2005 |
|
|
|
2004 |
|
|
2005 |
|
|
2006 |
|
|
2005 |
|
|
2006 |
|
Gross revenues |
|
$ |
1,822,545 |
|
|
$ |
3,323,749 |
|
|
$ |
2,957,169 |
|
|
$ |
1,810,020 |
|
|
$ |
3,300,297 |
|
Profit (loss) on sale of properties |
|
|
|
|
|
|
1,433,092 |
|
|
|
186,386 |
|
|
|
289,643 |
|
|
|
3,124,045 |
|
Less: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses (4) |
|
|
98,921 |
|
|
|
238,585 |
|
|
|
121,582 |
|
|
|
120,231 |
|
|
|
169,907 |
|
Interest expense |
|
|
2,095,747 |
|
|
|
4,407,598 |
|
|
|
3,613,049 |
|
|
|
2,568,620 |
|
|
|
3,606,300 |
|
Depreciation and amortization (3) |
|
|
379,572 |
|
|
|
932,584 |
|
|
|
718,486 |
|
|
|
410,037 |
|
|
|
1,693,225 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) Tax basis (6) |
|
$ |
(751,695 |
) |
|
$ |
(821,926 |
) |
|
$ |
(1,309,561 |
) |
|
$ |
(999,224 |
) |
|
$ |
954,910 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxable income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operations |
|
$ |
(751,695 |
) |
|
$ |
(2,255,018 |
) |
|
$ |
(1,495,947 |
) |
|
$ |
(1,228,867 |
) |
|
$ |
(2,169,135 |
) |
from gain on sale |
|
|
|
|
|
|
1,433,092 |
|
|
|
186,386 |
|
|
|
289,643 |
|
|
|
3,124,045 |
|
Cash generated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operations (5) |
|
|
(372,123 |
) |
|
|
(1,322,434 |
) |
|
|
(777,461 |
) |
|
|
(875,830 |
) |
|
|
(475,910 |
) |
from sales |
|
|
16,927,937 |
|
|
|
47,905,072 |
|
|
|
24,378,796 |
|
|
|
17,740,380 |
|
|
|
19,046,303 |
|
from refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated from operations, sales
and refinancing |
|
|
16,555,814 |
|
|
|
46,582,638 |
|
|
|
23,601,335 |
|
|
|
16,861,550 |
|
|
|
18,570,393 |
|
Less: Cash distributions to investors |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operating cash flow |
|
|
|
|
|
|
|
(2) |
|
|
|
|
|
|
|
(2) |
|
|
|
|
from sales and refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated (deficiency) after cash
distributions |
|
|
16,555,814 |
|
|
|
46,582,638 |
|
|
|
23,601,335 |
|
|
|
16,861,550 |
|
|
|
18,570,393 |
|
Less: Special items (not including
sales and refinancing) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated (deficiency) after cash
distributions and special items |
|
$ |
16,555,814 |
|
|
$ |
46,582,638 |
|
|
$ |
23,601,335 |
|
|
$ |
16,861,550 |
|
|
$ |
18,570,393 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax and Distribution Data Per $1,000
Invested |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal income tax results: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary income (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operations |
|
$ |
|
|
|
$ |
|
(2) |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
(2) |
from recapture |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital gain (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash distributions to investors: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Source (on a tax basis) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
investment income |
|
|
|
|
|
|
|
(2) |
|
|
|
|
|
|
|
|
|
|
|
(2) |
return of capital |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Source (on a cash basis) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount (in percentage terms)
remaining invested in program
properties at the end of last year
reported in the table |
|
|
|
|
|
|
100 |
% |
|
|
|
|
|
|
|
|
|
|
100 |
% |
Past performance is not necessarily indicative of future results.
A-29
TABLE III
ANNUAL OPERATING RESULTS OF PRIOR REAL ESTATE PROGRAMS (UNAUDITED) (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cole Collateralized |
|
|
|
|
|
|
Senior Notes IV, LLC |
|
|
|
|
|
|
May 2005 |
|
|
Cole Credit Property Trust, Inc. April 2004 |
|
|
|
2005 |
|
|
2006 |
|
|
2004 |
|
|
2005 |
|
|
2006 |
|
Gross revenues |
|
$ |
91,908 |
|
|
$ |
2,070,894 |
|
|
$ |
951,220 |
|
|
$ |
10,987,553 |
|
|
$ |
16,149,526 |
|
Profit (loss) on sale of properties |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses (4) |
|
|
88,074 |
|
|
|
1,131,745 |
|
|
|
169,619 |
|
|
|
1,357,842 |
|
|
|
2,030,411 |
|
Interest expense |
|
|
538,378 |
|
|
|
2,908,292 |
|
|
|
322,238 |
|
|
|
4,664,223 |
|
|
|
7,698,059 |
|
Depreciation and amortization (3) |
|
|
79,634 |
|
|
|
426,629 |
|
|
|
296,514 |
|
|
|
3,638,794 |
|
|
|
5,394,072 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) Tax basis (6) |
|
$ |
(614,178 |
) |
|
$ |
(2,395,772 |
) |
|
$ |
162,849 |
|
|
$ |
1,326,694 |
(1) |
|
$ |
1,026,984 |
(1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxable income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operations |
|
$ |
(614,178 |
) |
|
$ |
(2,395,772 |
) |
|
$ |
162,849 |
|
|
$ |
1,326,694 |
|
|
$ |
1,026,984 |
|
from gain on sale |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operations (5) |
|
|
(534,544 |
) |
|
|
(1,969,143 |
) |
|
|
459,363 |
|
|
|
4,965,488 |
|
|
|
6,421,056 |
|
from sales |
|
|
1,975,851 |
|
|
|
61,566,541 |
|
|
|
|
|
|
|
|
|
|
|
|
|
from refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated from operations, sales
and refinancing |
|
|
1,441,307 |
|
|
|
59,597,398 |
|
|
|
459,363 |
|
|
|
4,965,488 |
|
|
|
6,421,056 |
|
Less: Cash distributions to investors |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operating cash flow |
|
|
|
(2) |
|
|
|
|
|
|
132,344 |
|
|
|
4,751,612 |
|
|
|
7,070,390 |
|
from sales and refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated (deficiency) after cash
distributions |
|
|
1,441,307 |
|
|
|
59,597,398 |
|
|
|
327,019 |
|
|
|
213,876 |
|
|
|
(649,334 |
) |
Less: Special items (not including
sales and refinancing) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated (deficiency) after cash
distributions and special items |
|
$ |
1,441,307 |
|
|
$ |
59,597,398 |
|
|
$ |
327,019 |
|
|
$ |
213,876 |
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax and Distribution Data Per $1,000
Invested |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal income tax results: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary income (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operations |
|
$ |
|
|
|
$ |
|
(2) |
|
$ |
5.73 |
|
|
$ |
13.14 |
|
|
$ |
10.17 |
|
from recapture |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital gain (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash distributions to investors: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Source (on a tax basis) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
investment income |
|
|
|
|
|
|
|
(2) |
|
|
4.66 |
|
|
|
47.06 |
|
|
|
70.02 |
|
return of capital |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Source (on a cash basis) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
operations |
|
|
|
|
|
|
|
|
|
|
4.66 |
|
|
|
47.06 |
|
|
|
70.02 |
|
other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount (in percentage terms)
remaining invested in program
properties at the end of last year
reported in the table |
|
|
|
|
|
|
100 |
% |
|
|
|
|
|
|
|
|
|
|
100 |
% |
Past
performance is not necessarily indicative of future results.
A-30
TABLE III
ANNUAL OPERATING RESULTS OF PRIOR REAL ESTATE PROGRAMS (UNAUDITED) (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cole Credit Property |
|
|
Staples- |
|
|
|
Trust II, Inc. |
|
|
Tulsa, OK |
|
|
|
June 2005 |
|
|
February 2004 |
|
|
|
2005 |
|
|
2006 |
|
|
2004 |
|
|
2005 |
|
|
2006 |
|
Gross revenues |
|
$ |
741,669 |
|
|
$ |
20,022,986 |
|
|
$ |
189,058 |
|
|
$ |
324,241 |
|
|
$ |
275,709 |
|
Profit (loss) on sale of properties |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses (4) |
|
|
195,020 |
|
|
|
3,306,511 |
|
|
|
1,579 |
|
|
|
3,080 |
|
|
|
2,850 |
|
Interest expense |
|
|
439,829 |
|
|
|
8,901,113 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization (3) |
|
|
221,411 |
|
|
|
6,469,366 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) Tax basis (6) |
|
$ |
(114,591 |
) (1) |
|
$ |
1,345,996 |
(1) |
|
$ |
187,479 |
|
|
$ |
321,161 |
|
|
$ |
272,859 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxable income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operations |
|
$ |
(114,591 |
) |
|
$ |
1,345,996 |
|
|
$ |
187,479 |
|
|
$ |
321,161 |
|
|
$ |
272,859 |
|
from gain on sale |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operations (5) |
|
|
106,820 |
|
|
|
7,815,362 |
|
|
|
187,479 |
|
|
|
321,161 |
|
|
|
272,859 |
|
from sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated from operations, sales
and refinancing |
|
|
106,820 |
|
|
|
7,815,362 |
|
|
|
187,479 |
|
|
|
321,161 |
|
|
|
272,859 |
|
Less: Cash distributions to investors |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operating cash flow |
|
|
|
|
|
|
3,554,073 |
|
|
|
158,709 |
|
|
|
289,515 |
|
|
|
289,512 |
|
from sales and refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated (deficiency) after cash
distributions |
|
|
106,820 |
|
|
|
4,261,289 |
|
|
|
28,770 |
|
|
|
31,646 |
|
|
|
(16,653 |
) |
Less: Special items (not including
sales and refinancing) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated (deficiency) after cash
distributions and special items |
|
$ |
106,820 |
|
|
$ |
4,261,289 |
|
|
$ |
28,770 |
|
|
$ |
31,646 |
|
|
$ |
(16,653 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax and Distribution Data Per $1,000
Invested |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal income tax results: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary income (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operations |
|
$ |
(4.08 |
) |
|
$ |
4.39 |
|
|
$ |
45.33 |
|
|
$ |
77.65 |
|
|
$ |
65.97 |
|
from recapture |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital gain (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash distributions to investors: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Source (on a tax basis) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
investment income |
|
|
|
|
|
|
11.60 |
|
|
|
38.37 |
|
|
|
70.00 |
|
|
|
70.00 |
|
return of capital |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Source (on a cash basis) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
operations |
|
|
|
|
|
|
11.60 |
|
|
|
38.37 |
|
|
|
70.00 |
|
|
|
70.00 |
|
other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount (in percentage terms)
remaining invested in program
properties at the end of last year
reported in the table |
|
|
|
|
|
|
100 |
% |
|
|
|
|
|
|
|
|
|
|
100 |
% |
Past performance is not necessarily indicative of future results.
A-31
TABLE III
ANNUAL OPERATING RESULTS OF PRIOR REAL ESTATE PROGRAMS (UNAUDITED) (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mimis Café- |
|
|
Walgreens- |
|
|
|
Lone Tree, CO |
|
|
Windsor, CO |
|
|
|
April 2004 |
|
|
June 2004 |
|
|
|
2004 |
|
|
2005 |
|
|
2006 |
|
|
2004 |
|
|
2005 |
|
|
2006 |
|
Gross revenues |
|
$ |
92,614 |
|
|
$ |
185,632 |
|
|
$ |
181,170 |
|
|
$ |
135,696 |
|
|
$ |
353,024 |
|
|
$ |
354,194 |
|
Profit (loss) on sale of properties |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses (4) |
|
|
1,900 |
|
|
|
3,654 |
|
|
|
3,886 |
|
|
|
1,684 |
|
|
|
6,339 |
|
|
|
5,389 |
|
Interest expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
53,114 |
|
|
|
161,554 |
|
|
|
161,554 |
|
Depreciation and amortization (3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) Tax basis (6) |
|
$ |
90,714 |
|
|
$ |
181,978 |
|
|
$ |
177,284 |
|
|
$ |
80,898 |
|
|
$ |
185,131 |
|
|
$ |
187,252 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxable income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operations |
|
$ |
90,714 |
|
|
$ |
181,978 |
|
|
$ |
177,284 |
|
|
$ |
80,898 |
|
|
$ |
185,131 |
|
|
$ |
187,252 |
|
from gain on sale |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operations (5) |
|
|
90,714 |
|
|
|
181,978 |
|
|
|
177,284 |
|
|
|
80,898 |
|
|
|
185,131 |
|
|
|
187,252 |
|
from sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated from operations, sales
and refinancing |
|
|
90,714 |
|
|
|
181,978 |
|
|
|
177,284 |
|
|
|
80,898 |
|
|
|
185,131 |
|
|
|
187,252 |
|
Less: Cash distributions to investors |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operating cash flow |
|
|
76,045 |
|
|
|
171,252 |
|
|
|
171,252 |
|
|
|
56,436 |
|
|
|
186,840 |
|
|
|
186,840 |
|
from sales and refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated (deficiency) after cash
distributions |
|
|
14,669 |
|
|
|
10,726 |
|
|
|
6,032 |
|
|
|
24,462 |
|
|
|
(1,709 |
) |
|
|
412 |
|
Less: Special items (not including
sales and refinancing) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated (deficiency) after cash
distributions and special items |
|
$ |
14,669 |
|
|
$ |
10,726 |
|
|
$ |
6,032 |
|
|
$ |
24,462 |
|
|
$ |
(1,709 |
) |
|
$ |
412 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax and Distribution Data Per $1,000
Invested |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal income tax results: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary income (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operations |
|
$ |
37.09 |
|
|
$ |
74.40 |
|
|
$ |
72.48 |
|
|
$ |
30.31 |
|
|
$ |
69.36 |
|
|
$ |
70.16 |
|
from recapture |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital gain (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash distributions to investors: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Source (on a tax basis) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
investment income |
|
|
31.09 |
|
|
|
70.01 |
|
|
|
70.01 |
|
|
|
21.14 |
|
|
|
70.00 |
|
|
|
70.00 |
|
return of capital |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Source (on a cash basis) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
operations |
|
|
31.09 |
|
|
|
70.01 |
|
|
|
70.01 |
|
|
|
21.14 |
|
|
|
70.00 |
|
|
|
70.00 |
|
other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount (in percentage terms)
remaining invested in program
properties at the end of last year
reported in the table |
|
|
|
|
|
|
|
|
|
|
100 |
% |
|
|
|
|
|
|
|
|
|
|
100 |
% |
Past performance is not necessarily indicative of future results.
A-32
TABLE III
ANNUAL OPERATING RESULTS OF PRIOR REAL ESTATE PROGRAMS (UNAUDITED) (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Walgreens- |
|
|
Walgreens- |
|
|
|
Goldsboro, NC |
|
|
Hamilton, OH |
|
|
|
June 2004 |
|
|
July 2004 |
|
|
|
2004 |
|
|
2005 |
|
|
2006 |
|
|
2004 |
|
|
2005 |
|
|
2006 |
|
Gross revenues |
|
$ |
101,750 |
|
|
$ |
330,000 |
|
|
$ |
330,613 |
|
|
$ |
126,522 |
|
|
$ |
386,000 |
|
|
$ |
386,836 |
|
Profit (loss) on sale of properties |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses (4) |
|
|
1,416 |
|
|
|
5,920 |
|
|
|
5,323 |
|
|
|
3,060 |
|
|
|
10,773 |
|
|
|
10,139 |
|
Interest expense |
|
|
36,706 |
|
|
|
145,628 |
|
|
|
145,628 |
|
|
|
45,878 |
|
|
|
169,146 |
|
|
|
169,146 |
|
Depreciation and amortization (3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) Tax basis (6) |
|
$ |
63,628 |
|
|
$ |
178,452 |
|
|
$ |
179,662 |
|
|
$ |
77,584 |
|
|
$ |
206,081 |
|
|
$ |
207,552 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxable income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operations |
|
$ |
63,628 |
|
|
$ |
178,452 |
|
|
$ |
179,662 |
|
|
$ |
77,584 |
|
|
$ |
206,081 |
|
|
$ |
207,552 |
|
from gain on sale |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operations (5) |
|
|
63,628 |
|
|
|
178,452 |
|
|
|
179,662 |
|
|
|
77,584 |
|
|
|
206,081 |
|
|
|
207,552 |
|
from sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated from operations, sales
and refinancing |
|
|
63,628 |
|
|
|
178,452 |
|
|
|
179,662 |
|
|
|
77,584 |
|
|
|
206,081 |
|
|
|
207,552 |
|
Less: Cash distributions to investors |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operating cash flow |
|
|
40,334 |
|
|
|
179,892 |
|
|
|
179,892 |
|
|
|
34,958 |
|
|
|
207,624 |
|
|
|
207,624 |
|
from sales and refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated (deficiency) after cash
distributions |
|
|
23,294 |
|
|
|
(1,440 |
) |
|
|
(230 |
) |
|
|
42,626 |
|
|
|
(1,543 |
) |
|
|
(72 |
) |
Less: Special items (not including
sales and refinancing) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated (deficiency) after cash
distributions and special items |
|
$ |
23,294 |
|
|
$ |
(1,440 |
) |
|
$ |
(230 |
) |
|
$ |
42,626 |
|
|
$ |
(1,543 |
) |
|
$ |
(72 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax and Distribution Data Per $1,000
Invested |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal income tax results: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary income (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operations |
|
$ |
24.76 |
|
|
$ |
69.44 |
|
|
$ |
69.91 |
|
|
$ |
26.16 |
|
|
$ |
69.48 |
|
|
$ |
69.98 |
|
from recapture |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital gain (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash distributions to investors: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Source (on a tax basis) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
investment income |
|
|
15.69 |
|
|
|
70.00 |
|
|
|
70.00 |
|
|
|
11.79 |
|
|
|
70.00 |
|
|
|
70.00 |
|
return of capital |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Source (on a cash basis) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
operations |
|
|
15.69 |
|
|
|
70.00 |
|
|
|
70.00 |
|
|
|
11.79 |
|
|
|
70.00 |
|
|
|
70.00 |
|
other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount (in percentage terms)
remaining invested in program
properties at the end of last year
reported in the table |
|
|
|
|
|
|
|
|
|
|
100 |
% |
|
|
|
|
|
|
|
|
|
|
100 |
% |
Past performance is not necessarily indicative of future results.
A-33
TABLE III
ANNUAL OPERATING RESULTS OF PRIOR REAL ESTATE PROGRAMS (UNAUDITED) (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Walgreens- |
|
|
Walgreens- |
|
|
|
Carlsbad, NM |
|
|
Willimantic, CT |
|
|
|
July 2004 |
|
|
September 2004 |
|
|
|
2004 |
|
|
2005 |
|
|
2006 |
|
|
2004 |
|
|
2005 |
|
|
2006 |
|
Gross revenues |
|
$ |
73,750 |
|
|
$ |
295,000 |
|
|
$ |
295,645 |
|
|
$ |
55,160 |
|
|
$ |
354,600 |
|
|
$ |
355,245 |
|
Profit (loss) on sale of properties |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses (4) |
|
|
2,537 |
|
|
|
11,550 |
|
|
|
11,007 |
|
|
|
2,660 |
|
|
|
19,487 |
|
|
|
17,470 |
|
Interest expense |
|
|
25,328 |
|
|
|
130,209 |
|
|
|
130,209 |
|
|
|
14,900 |
|
|
|
151,064 |
|
|
|
151,064 |
|
Depreciation and amortization (3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) Tax basis (6) |
|
$ |
45,885 |
|
|
$ |
153,241 |
|
|
$ |
154,429 |
|
|
$ |
37,600 |
|
|
$ |
184,049 |
|
|
$ |
186,711 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxable income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operations |
|
$ |
45,885 |
|
|
$ |
153,241 |
|
|
$ |
154,429 |
|
|
$ |
37,600 |
|
|
$ |
184,049 |
|
|
$ |
186,711 |
|
from gain on sale |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operations (5) |
|
|
45,885 |
|
|
|
153,241 |
|
|
|
154,429 |
|
|
|
37,600 |
|
|
|
184,049 |
|
|
|
186,711 |
|
from sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated from operations, sales
and refinancing |
|
|
45,885 |
|
|
|
153,241 |
|
|
|
154,429 |
|
|
|
37,600 |
|
|
|
184,049 |
|
|
|
186,711 |
|
Less: Cash distributions to investors |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operating cash flow |
|
|
26,006 |
|
|
|
154,559 |
|
|
|
154,560 |
|
|
|
|
|
|
|
185,376 |
|
|
|
185,376 |
|
from sales and refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated (deficiency) after cash
distributions |
|
|
19,879 |
|
|
|
(1,318 |
) |
|
|
(131 |
) |
|
|
37,600 |
|
|
|
(1,327 |
) |
|
|
1,335 |
|
Less: Special items (not including
sales and refinancing) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated (deficiency) after cash
distributions and special items |
|
$ |
19,879 |
|
|
$ |
(1,318 |
) |
|
$ |
(131 |
) |
|
$ |
37,600 |
|
|
$ |
(1,327 |
) |
|
$ |
1,335 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax and Distribution Data Per $1,000
Invested |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal income tax results: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary income (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operations |
|
$ |
20.04 |
|
|
$ |
66.93 |
|
|
$ |
67.44 |
|
|
$ |
13.69 |
|
|
$ |
67.02 |
|
|
$ |
67.99 |
|
from recapture |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital gain (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash distributions to investors: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Source (on a tax basis) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
investment income |
|
|
11.36 |
|
|
|
67.50 |
|
|
|
67.50 |
|
|
|
|
|
|
|
67.51 |
|
|
|
67.51 |
|
return of capital |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Source (on a cash basis) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
operations |
|
|
11.36 |
|
|
|
67.50 |
|
|
|
67.50 |
|
|
|
|
|
|
|
67.51 |
|
|
|
67.51 |
|
other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount (in percentage terms)
remaining invested in program
properties at the end of last year
reported in the table |
|
|
|
|
|
|
|
|
|
|
100 |
% |
|
|
|
|
|
|
|
|
|
|
100 |
% |
Past performance is not necessarily indicative of future results.
A-34
TABLE III
ANNUAL OPERATING RESULTS OF PRIOR REAL ESTATE PROGRAMS (UNAUDITED) (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Walgreens- |
|
|
Walgreens- |
|
|
|
Edgewood, NM |
|
|
Fairborn, OH |
|
|
|
September 2004 |
|
|
September 2004 |
|
|
|
2004 |
|
|
2005 |
|
|
2006 |
|
|
2004 |
|
|
2005 |
|
|
2006 |
|
Gross revenues |
|
$ |
28,330 |
|
|
$ |
275,640 |
|
|
$ |
276,137 |
|
|
$ |
30,209 |
|
|
$ |
344,500 |
|
|
$ |
345,145 |
|
Profit (loss) on sale of properties |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses (4) |
|
|
1,326 |
|
|
|
14,191 |
|
|
|
13,699 |
|
|
|
1,943 |
|
|
|
20,365 |
|
|
|
19,781 |
|
Interest expense |
|
|
5,527 |
|
|
|
118,666 |
|
|
|
118,666 |
|
|
|
6,797 |
|
|
|
145,934 |
|
|
|
145,934 |
|
Depreciation and amortization (3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) Tax basis (6) |
|
$ |
21,477 |
|
|
$ |
142,783 |
|
|
$ |
143,773 |
|
|
$ |
21,469 |
|
|
$ |
178,201 |
|
|
$ |
179,430 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxable income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operations |
|
$ |
21,477 |
|
|
$ |
142,783 |
|
|
$ |
143,773 |
|
|
$ |
21,469 |
|
|
$ |
178,201 |
|
|
$ |
179,430 |
|
from gain on sale |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operations (5) |
|
|
21,477 |
|
|
|
142,783 |
|
|
|
143,773 |
|
|
|
21,469 |
|
|
|
178,201 |
|
|
|
179,430 |
|
from sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated from operations, sales
and refinancing |
|
|
21,477 |
|
|
|
142,783 |
|
|
|
143,773 |
|
|
|
21,469 |
|
|
|
178,201 |
|
|
|
179,430 |
|
Less: Cash distributions to investors |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operating cash flow |
|
|
|
|
|
|
144,070 |
|
|
|
144,072 |
|
|
|
|
|
|
|
178,488 |
|
|
|
178,488 |
|
from sales and refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated (deficiency) after cash
distributions |
|
|
21,477 |
|
|
|
(1,287 |
) |
|
|
(299 |
) |
|
|
21,469 |
|
|
|
(287 |
) |
|
|
942 |
|
Less: Special items (not including
sales and refinancing) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated (deficiency) after cash
distributions and special items |
|
$ |
21,477 |
|
|
$ |
(1,287 |
) |
|
$ |
(299 |
) |
|
$ |
21,469 |
|
|
$ |
(287 |
) |
|
$ |
942 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax and Distribution Data Per $1,000
Invested |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal income tax results: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary income (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operations |
|
$ |
11.64 |
|
|
$ |
66.91 |
|
|
$ |
67.37 |
|
|
$ |
8.12 |
|
|
$ |
67.40 |
|
|
$ |
67.86 |
|
from recapture |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital gain (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash distributions to investors: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Source (on a tax basis) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
investment income |
|
|
|
|
|
|
67.51 |
|
|
|
67.51 |
|
|
|
|
|
|
|
67.51 |
|
|
|
67.51 |
|
return of capital |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Source (on a cash basis) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
operations |
|
|
|
|
|
|
67.51 |
|
|
|
67.51 |
|
|
|
|
|
|
|
67.51 |
|
|
|
67.51 |
|
other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount (in percentage terms)
remaining invested in program
properties at the end of last year
reported in the table |
|
|
|
|
|
|
|
|
|
|
100 |
% |
|
|
|
|
|
|
|
|
|
|
100 |
% |
Past performance is not necessarily indicative of future results.
A-35
TABLE III
ANNUAL OPERATING RESULTS OF PRIOR REAL ESTATE PROGRAMS (UNAUDITED) (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Walgreens- |
|
|
Walgreens- |
|
|
|
Slidell, LA |
|
|
Westheimer, TX |
|
|
|
November 2004 |
|
|
October 2004 |
|
|
|
2004 |
|
|
2005 |
|
|
2006 |
|
|
2004 |
|
|
2005 |
|
|
2006 |
|
Gross revenues |
|
$ |
|
|
|
$ |
243,899 |
|
|
$ |
275,516 |
|
|
$ |
14,637 |
|
|
$ |
495,000 |
|
|
$ |
495,990 |
|
Profit (loss) on sale of properties |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses (4) |
|
|
|
|
|
|
11,336 |
|
|
|
12,445 |
|
|
|
580 |
|
|
|
21,003 |
|
|
|
21,476 |
|
Interest expense |
|
|
|
|
|
|
98,704 |
|
|
|
118,901 |
|
|
|
|
|
|
|
214,710 |
|
|
|
220,752 |
|
Depreciation and amortization (3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) Tax basis (6) |
|
$ |
|
|
|
|
133,859 |
|
|
|
144,170 |
|
|
$ |
14,057 |
|
|
$ |
259,287 |
|
|
$ |
253,762 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxable income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operations |
|
$ |
|
|
|
$ |
133,859 |
|
|
$ |
144,170 |
|
|
$ |
14,057 |
|
|
$ |
259,287 |
|
|
$ |
253,762 |
|
from gain on sale |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operations (5) |
|
|
|
|
|
|
133,859 |
|
|
|
144,170 |
|
|
|
14,057 |
|
|
|
259,287 |
|
|
|
253,762 |
|
from sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated from operations, sales
and refinancing |
|
|
|
|
|
|
133,859 |
|
|
|
144,170 |
|
|
|
14,057 |
|
|
|
259,287 |
|
|
|
253,762 |
|
Less: Cash distributions to investors |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operating cash flow |
|
|
|
|
|
|
114,918 |
|
|
|
143,772 |
|
|
|
|
|
|
|
240,014 |
|
|
|
253,500 |
|
from sales and refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated (deficiency) after cash
distributions |
|
|
|
|
|
|
18,941 |
|
|
|
398 |
|
|
|
14,057 |
|
|
|
19,273 |
|
|
|
262 |
|
Less: Special items (not including
sales and refinancing) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated (deficiency) after cash
distributions and special items |
|
$ |
|
|
|
$ |
18,941 |
|
|
$ |
398 |
|
|
$ |
14,057 |
|
|
$ |
19,273 |
|
|
$ |
262 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax and Distribution Data Per $1,000
Invested |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal income tax results: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary income (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operations |
|
$ |
|
|
|
$ |
60.51 |
|
|
$ |
65.18 |
|
|
$ |
4.11 |
|
|
$ |
66.48 |
|
|
$ |
65.07 |
|
from recapture |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital gain (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash distributions to investors: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Source (on a tax basis) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
investment income |
|
|
|
|
|
|
51.95 |
|
|
|
65.00 |
|
|
|
|
|
|
|
61.54 |
|
|
|
65.00 |
|
return of capital |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Source (on a cash basis) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
operations |
|
|
|
|
|
|
51.95 |
|
|
|
65.00 |
|
|
|
|
|
|
|
61.54 |
|
|
|
65.00 |
|
other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount (in percentage terms)
remaining invested in program
properties at the end of last year
reported in the table |
|
|
|
|
|
|
|
|
|
|
100 |
% |
|
|
|
|
|
|
|
|
|
|
100 |
% |
Past performance is not necessarily indicative of future results.
A-36
TABLE III
ANNUAL OPERATING RESULTS OF PRIOR REAL ESTATE PROGRAMS (UNAUDITED) (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Walgreens- |
|
|
Home Depot- |
|
|
|
Richmond Heights, OH |
|
|
Spokane, WA |
|
|
|
October 2004 |
|
|
November 2004 |
|
|
|
2004 |
|
|
2005 |
|
|
2006 |
|
|
2004 |
|
|
2005 |
|
|
2006 |
|
Gross revenues |
|
$ |
|
|
|
$ |
423,387 |
|
|
$ |
420,807 |
|
|
$ |
|
|
|
$ |
1,014,839 |
|
|
$ |
1,323,040 |
|
Profit (loss) on sale of properties |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses (4) |
|
|
|
|
|
|
18,416 |
|
|
|
17,830 |
|
|
|
|
|
|
|
12,592 |
|
|
|
12,670 |
|
Interest expense |
|
|
|
|
|
|
173,029 |
|
|
|
182,004 |
|
|
|
|
|
|
|
394,654 |
|
|
|
551,910 |
|
Depreciation and amortization (3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) Tax basis (6) |
|
$ |
|
|
|
$ |
231,942 |
|
|
$ |
220,973 |
|
|
$ |
|
|
|
$ |
607,593 |
|
|
$ |
758,459 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxable income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operations |
|
$ |
|
|
|
$ |
231,942 |
|
|
$ |
220,973 |
|
|
$ |
|
|
|
$ |
607,593 |
|
|
$ |
758,459 |
|
from gain on sale |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operations (5) |
|
|
|
|
|
|
231,942 |
|
|
|
220,973 |
|
|
|
|
|
|
|
607,593 |
|
|
|
758,459 |
|
from sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated from operations, sales
and refinancing |
|
|
|
|
|
|
231,942 |
|
|
|
220,973 |
|
|
|
|
|
|
|
607,593 |
|
|
|
758,459 |
|
Less: Cash distributions to investors |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operating cash flow |
|
|
|
|
|
|
203,676 |
|
|
|
220,220 |
|
|
|
|
|
|
|
514,099 |
|
|
|
749,580 |
|
from sales and refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated (deficiency) after cash
distributions |
|
|
|
|
|
|
28,266 |
|
|
|
753 |
|
|
|
|
|
|
|
93,494 |
|
|
|
8,879 |
|
Less: Special items (not including
sales and refinancing) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated (deficiency) after cash
distributions and special items |
|
$ |
|
|
|
$ |
28,266 |
|
|
$ |
753 |
|
|
$ |
|
|
|
$ |
93,494 |
|
|
$ |
8,879 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax and Distribution Data Per $1,000
Invested |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal income tax results: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary income (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operations |
|
$ |
|
|
|
$ |
68.46 |
|
|
$ |
65.22 |
|
|
$ |
|
|
|
$ |
52.69 |
|
|
$ |
65.77 |
|
from recapture |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital gain (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash distributions to investors: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Source (on a tax basis) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
investment income |
|
|
|
|
|
|
60.12 |
|
|
|
65.00 |
|
|
|
|
|
|
|
44.58 |
|
|
|
65.00 |
|
return of capital |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Source (on a cash basis) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
operations |
|
|
|
|
|
|
60.12 |
|
|
|
65.00 |
|
|
|
|
|
|
|
44.58 |
|
|
|
65.00 |
|
other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount (in percentage terms)
remaining invested in program
properties at the end of last year
reported in the table |
|
|
|
|
|
|
|
|
|
|
100 |
% |
|
|
|
|
|
|
|
|
|
|
100 |
% |
Past performance is not necessarily indicative of future results.
A-37
TABLE III
ANNUAL OPERATING RESULTS OF PRIOR REAL ESTATE PROGRAMS (UNAUDITED) (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Walgreens- |
|
|
Walgreens- |
|
|
|
Orlando, FL |
|
|
Glen Burnie, MD |
|
|
|
November 2004 |
|
|
November 2004 |
|
|
|
2004 |
|
|
2005 |
|
|
2006 |
|
|
2004 |
|
|
2005 |
|
|
2006 |
|
Gross revenues |
|
$ |
|
|
|
$ |
232,208 |
|
|
$ |
300,483 |
|
|
$ |
|
|
|
$ |
312,387 |
|
|
$ |
416,142 |
|
Profit (loss) on sale of properties |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses (4) |
|
|
|
|
|
|
10,463 |
|
|
|
13,562 |
|
|
|
|
|
|
|
13,428 |
|
|
|
17,695 |
|
Interest expense |
|
|
|
|
|
|
90,054 |
|
|
|
124,904 |
|
|
|
|
|
|
|
119,319 |
|
|
|
169,158 |
|
Depreciation and amortization (3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) Tax basis (6) |
|
$ |
|
|
|
$ |
131,691 |
|
|
$ |
162,017 |
|
|
$ |
|
|
|
$ |
179,640 |
|
|
$ |
229,289 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxable income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operations |
|
$ |
|
|
|
$ |
131,691 |
|
|
$ |
162,017 |
|
|
$ |
|
|
|
$ |
179,640 |
|
|
$ |
229,289 |
|
from gain on sale |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operations (5) |
|
|
|
|
|
|
131,691 |
|
|
|
162,017 |
|
|
|
|
|
|
|
179,640 |
|
|
|
229,289 |
|
from sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated from operations, sales
and refinancing |
|
|
|
|
|
|
131,691 |
|
|
|
162,017 |
|
|
|
|
|
|
|
179,640 |
|
|
|
229,289 |
|
Less: Cash distributions to investors |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operating cash flow |
|
|
|
|
|
|
111,711 |
|
|
|
161,592 |
|
|
|
|
|
|
|
151,637 |
|
|
|
226,524 |
|
from sales and refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated (deficiency) after cash
distributions |
|
|
|
|
|
|
19,980 |
|
|
|
425 |
|
|
|
|
|
|
|
28,003 |
|
|
|
2,765 |
|
Less: Special items (not including
sales and refinancing) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated (deficiency) after cash
distributions and special items |
|
$ |
|
|
|
$ |
19,980 |
|
|
$ |
425 |
|
|
$ |
|
|
|
$ |
28,003 |
|
|
$ |
2,765 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax and Distribution Data Per $1,000
Invested |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal income tax results: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary income (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operations |
|
$ |
|
|
|
$ |
52.97 |
|
|
$ |
65.17 |
|
|
$ |
|
|
|
$ |
51.55 |
|
|
$ |
65.79 |
|
from recapture |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital gain (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash distributions to investors: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Source (on a tax basis) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
investment income |
|
|
|
|
|
|
44.94 |
|
|
|
65.00 |
|
|
|
|
|
|
|
43.51 |
|
|
|
65.00 |
|
return of capital |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Source (on a cash basis) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
operations |
|
|
|
|
|
|
44.94 |
|
|
|
65.00 |
|
|
|
|
|
|
|
43.51 |
|
|
|
65.00 |
|
other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount (in percentage terms)
remaining invested in program
properties at the end of last year
reported in the table |
|
|
|
|
|
|
|
|
|
|
100 |
% |
|
|
|
|
|
|
|
|
|
|
100 |
% |
Past performance is not necessarily indicative of future results.
A-38
TABLE III
ANNUAL OPERATING RESULTS OF PRIOR REAL ESTATE PROGRAMS (UNAUDITED) (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Walgreens- |
|
|
Walgreens- |
|
|
|
Covington, TN |
|
|
Garfield Heights, OH |
|
|
|
December 2004 |
|
|
December 2004 |
|
|
|
2004 |
|
|
2005 |
|
|
2006 |
|
|
2004 |
|
|
2005 |
|
|
2006 |
|
Gross revenues |
|
$ |
|
|
|
$ |
237,696 |
|
|
$ |
261,606 |
|
|
$ |
|
|
|
$ |
145,569 |
|
|
$ |
385,036 |
|
Profit (loss) on sale of properties |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses (4) |
|
|
|
|
|
|
10,629 |
|
|
|
11,782 |
|
|
|
|
|
|
|
1,893 |
|
|
|
3,936 |
|
Interest expense |
|
|
|
|
|
|
93,795 |
|
|
|
110,081 |
|
|
|
|
|
|
|
54,853 |
|
|
|
169,672 |
|
Depreciation and amortization (3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) Tax basis (6) |
|
$ |
|
|
|
$ |
133,272 |
|
|
$ |
139,743 |
|
|
$ |
|
|
|
$ |
88,823 |
|
|
$ |
211,428 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxable income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operations |
|
$ |
|
|
|
|
133,272 |
|
|
|
139,743 |
|
|
$ |
|
|
|
$ |
88,823 |
|
|
$ |
211,428 |
|
from gain on sale |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operations (5) |
|
|
|
|
|
|
133,272 |
|
|
|
139,743 |
|
|
|
|
|
|
|
88,823 |
|
|
|
211,428 |
|
from sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated from operations, sales
and refinancing |
|
|
|
|
|
|
133,272 |
|
|
|
139,743 |
|
|
|
|
|
|
|
88,823 |
|
|
|
211,428 |
|
Less: Cash distributions to investors |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operating cash flow |
|
|
|
|
|
|
114,287 |
|
|
|
139,165 |
|
|
|
|
|
|
|
62,999 |
|
|
|
212,424 |
|
from sales and refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated (deficiency) after cash
distributions |
|
|
|
|
|
|
18,985 |
|
|
|
578 |
|
|
|
|
|
|
|
25,824 |
|
|
|
(996 |
) |
Less: Special items (not including
sales and refinancing) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated (deficiency) after cash
distributions and special items |
|
$ |
|
|
|
$ |
18,985 |
|
|
$ |
578 |
|
|
$ |
|
|
|
$ |
25,824 |
|
|
$ |
(996 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax and Distribution Data Per $1,000
Invested |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal income tax results: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary income (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operations |
|
$ |
|
|
|
$ |
62.25 |
|
|
$ |
65.27 |
|
|
$ |
|
|
|
$ |
30.32 |
|
|
$ |
72.16 |
|
from recapture |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital gain (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash distributions to investors: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Source (on a tax basis) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
investment income |
|
|
|
|
|
|
53.38 |
|
|
|
65.00 |
|
|
|
|
|
|
|
21.50 |
|
|
|
72.50 |
|
return of capital |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Source (on a cash basis) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
operations |
|
|
|
|
|
|
53.38 |
|
|
|
65.00 |
|
|
|
|
|
|
|
21.50 |
|
|
|
72.50 |
|
other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount (in percentage terms)
remaining invested in program
properties at the end of last year
reported in the table |
|
|
|
|
|
|
|
|
|
|
100 |
% |
|
|
|
|
|
|
|
|
|
|
100 |
% |
Past performance is not necessarily indicative of future results.
A-39
TABLE III
ANNUAL OPERATING RESULTS OF PRIOR REAL ESTATE PROGRAMS (UNAUDITED) (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Walgreens- |
|
|
Home Depot- |
|
|
|
Ponca City, OK |
|
|
Tacoma, WA |
|
|
|
December 2004 |
|
|
February 2005 |
|
|
|
2004 |
|
|
2005 |
|
|
2006 |
|
|
2005 |
|
|
2006 |
|
Gross revenues |
|
$ |
|
|
|
$ |
118,085 |
|
|
$ |
312,409 |
|
|
$ |
1,051,101 |
|
|
$ |
1,750,475 |
|
Profit (loss) on sale of properties |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses (4) |
|
|
|
|
|
|
1,477 |
|
|
|
3,272 |
|
|
|
35,286 |
|
|
|
53,645 |
|
Interest expense |
|
|
|
|
|
|
44,763 |
|
|
|
138,460 |
|
|
|
461,947 |
|
|
|
843,053 |
|
Depreciation and amortization (3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) Tax basis (6) |
|
$ |
|
|
|
$ |
71,845 |
|
|
$ |
170,676 |
|
|
$ |
553,868 |
|
|
$ |
853,777 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxable income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operations |
|
$ |
|
|
|
$ |
71,845 |
|
|
$ |
170,676 |
|
|
$ |
553,868 |
|
|
$ |
853,777 |
|
from gain on sale |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operations (5) |
|
|
|
|
|
|
71,845 |
|
|
|
170,676 |
|
|
|
553,868 |
|
|
|
853,777 |
|
from sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated from operations, sales
and refinancing |
|
|
|
|
|
|
71,845 |
|
|
|
170,676 |
|
|
|
553,868 |
|
|
|
853,777 |
|
Less: Cash distributions to investors |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operating cash flow |
|
|
|
|
|
|
50,034 |
|
|
|
168,708 |
|
|
|
426,665 |
|
|
|
821,808 |
|
from sales and refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated (deficiency) after cash
distributions |
|
|
|
|
|
|
21,811 |
|
|
|
1,968 |
|
|
|
127,203 |
|
|
|
31,969 |
|
Less: Special items (not including
sales and refinancing) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated (deficiency) after cash
distributions and special items |
|
$ |
|
|
|
$ |
21,811 |
|
|
$ |
1,968 |
|
|
$ |
127,203 |
|
|
$ |
31,969 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax and Distribution Data Per $1,000
Invested |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal income tax results: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary income (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operations |
|
$ |
|
|
|
$ |
30.87 |
|
|
$ |
73.35 |
|
|
$ |
45.49 |
|
|
$ |
70.13 |
|
from recapture |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital gain (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash distributions to investors: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Source (on a tax basis) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
investment income |
|
|
|
|
|
|
21.50 |
|
|
|
72.50 |
|
|
|
35.04 |
|
|
|
67.50 |
|
return of capital |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Source (on a cash basis) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
operations |
|
|
|
|
|
|
21.50 |
|
|
|
72.50 |
|
|
|
35.04 |
|
|
|
67.50 |
|
other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount (in percentage terms)
remaining invested in program
properties at the end of last year
reported in the table |
|
|
|
|
|
|
|
|
|
|
100 |
% |
|
|
|
|
|
|
100 |
% |
Past performance is not necessarily indicative of future results
A-40
TABLE III
ANNUAL OPERATING RESULTS OF PRIOR REAL ESTATE PROGRAMS (UNAUDITED) (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Walgreens- |
|
|
Walgreens- |
|
|
Walgreens- |
|
|
|
Pineville, LA |
|
|
Bartlett, TN |
|
|
Sidney, OH |
|
|
|
April 2005 |
|
|
April 2005 |
|
|
April 2005 |
|
|
|
2005 |
|
|
2006 |
|
|
2005 |
|
|
2006 |
|
|
2005 |
|
|
2006 |
|
Gross revenues |
|
$ |
155,136 |
|
|
$ |
304,247 |
|
|
$ |
148,334 |
|
|
$ |
295,747 |
|
|
$ |
150,793 |
|
|
$ |
295,791 |
|
Profit (loss) on sale of properties |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses (4) |
|
|
5,636 |
|
|
|
7,168 |
|
|
|
4,352 |
|
|
|
5,575 |
|
|
|
4,562 |
|
|
|
7,030 |
|
Interest expense |
|
|
65,763 |
|
|
|
143,734 |
|
|
|
63,835 |
|
|
|
142,071 |
|
|
|
65,761 |
|
|
|
143,730 |
|
Depreciation and amortization (3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) Tax basis (6) |
|
$ |
83,737 |
|
|
$ |
153,345 |
|
|
$ |
80,147 |
|
|
$ |
148,101 |
|
|
$ |
80,470 |
|
|
$ |
145,031 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxable income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operations |
|
$ |
83,737 |
|
|
$ |
153,345 |
|
|
$ |
80,147 |
|
|
$ |
148,101 |
|
|
$ |
80,470 |
|
|
$ |
145,031 |
|
from gain on sale |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operations (5) |
|
|
83,737 |
|
|
|
153,345 |
|
|
|
80,147 |
|
|
|
148,101 |
|
|
|
80,470 |
|
|
|
145,031 |
|
from sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated from operations, sales
and refinancing |
|
|
83,737 |
|
|
|
153,345 |
|
|
|
80,147 |
|
|
|
148,101 |
|
|
|
80,470 |
|
|
|
145,031 |
|
Less: Cash distributions to investors |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operating cash flow |
|
|
64,858 |
|
|
|
151,670 |
|
|
|
61,482 |
|
|
|
146,592 |
|
|
|
61,230 |
|
|
|
143,184 |
|
from sales and refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated (deficiency) after cash
distributions |
|
|
18,879 |
|
|
|
1,675 |
|
|
|
18,665 |
|
|
|
1,509 |
|
|
|
19,240 |
|
|
|
1,847 |
|
Less: Special items (not including
sales and refinancing) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated (deficiency) after cash
distributions and special items |
|
$ |
18,879 |
|
|
$ |
1,675 |
|
|
$ |
18,665 |
|
|
$ |
1,509 |
|
|
$ |
19,240 |
|
|
$ |
1,847 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax and Distribution Data Per $1,000
Invested |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal income tax results: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary income (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operations |
|
$ |
40.03 |
|
|
$ |
73.30 |
|
|
$ |
39.64 |
|
|
$ |
73.24 |
|
|
$ |
40.74 |
|
|
$ |
73.43 |
|
from recapture |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital gain (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash distributions to investors: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Source (on a tax basis) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
investment income |
|
|
31.00 |
|
|
|
72.50 |
|
|
|
30.41 |
|
|
|
72.50 |
|
|
|
31.00 |
|
|
|
72.50 |
|
return of capital |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Source (on a cash basis) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
operations |
|
|
31.00 |
|
|
|
72.50 |
|
|
|
30.41 |
|
|
|
72.50 |
|
|
|
31.00 |
|
|
|
72.50 |
|
other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount (in percentage terms)
remaining invested in program
properties at the end of last year
reported in the table |
|
|
|
|
|
|
100 |
% |
|
|
|
|
|
|
100 |
% |
|
|
|
|
|
|
100 |
% |
Past performance is not necessarily indicative of future results.
A-41
TABLE III
ANNUAL OPERATING RESULTS OF PRIOR REAL ESTATE PROGRAMS (UNAUDITED) (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Walgreens - |
|
|
Walgreens - |
|
|
Walgreens - |
|
|
|
Wichita Falls, TX |
|
|
Chicago, IL |
|
|
Southington, CT |
|
|
|
May 2005 |
|
|
May 2005 |
|
|
June 2005 |
|
|
|
2005 |
|
|
2006 |
|
|
2005 |
|
|
2006 |
|
|
2005 |
|
|
2006 |
|
Gross revenues |
|
$ |
153,348 |
|
|
$ |
300,722 |
|
|
$ |
228,585 |
|
|
$ |
476,231 |
|
|
$ |
198,989 |
|
|
$ |
414,555 |
|
Profit (loss) on sale of properties |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses (4) |
|
|
4,352 |
|
|
|
6,949 |
|
|
|
7,058 |
|
|
|
9,830 |
|
|
|
6,140 |
|
|
|
8,643 |
|
Interest expense |
|
|
66,573 |
|
|
|
145,505 |
|
|
|
98,204 |
|
|
|
229,773 |
|
|
|
84,966 |
|
|
|
198,182 |
|
Depreciation and amortization (3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) Tax basis (6) |
|
$ |
82,423 |
|
|
$ |
148,268 |
|
|
$ |
123,323 |
|
|
$ |
236,628 |
|
|
$ |
107,883 |
|
|
$ |
207,730 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxable income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operations |
|
$ |
82,423 |
|
|
$ |
148,268 |
|
|
$ |
123,323 |
|
|
$ |
236,628 |
|
|
$ |
107,883 |
|
|
$ |
207,730 |
|
from gain on sale |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operations (5) |
|
|
82,423 |
|
|
|
148,268 |
|
|
|
123,323 |
|
|
|
236,628 |
|
|
|
107,883 |
|
|
|
207,730 |
|
from sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated from operations, sales
and refinancing |
|
|
82,423 |
|
|
|
148,268 |
|
|
|
123,323 |
|
|
|
236,628 |
|
|
|
107,883 |
|
|
|
207,730 |
|
Less: Cash distributions to investors |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operating cash flow |
|
|
62,626 |
|
|
|
146,448 |
|
|
|
93,600 |
|
|
|
234,540 |
|
|
|
82,056 |
|
|
|
205,608 |
|
from sales and refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated (deficiency) after cash
distributions |
|
|
19,797 |
|
|
|
1,820 |
|
|
|
29,723 |
|
|
|
2,088 |
|
|
|
25,827 |
|
|
|
2,122 |
|
Less: Special items (not including
sales and refinancing) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated (deficiency) after cash
distributions and special items |
|
$ |
19,797 |
|
|
$ |
1,820 |
|
|
$ |
29,723 |
|
|
$ |
2,088 |
|
|
$ |
25,827 |
|
|
$ |
2,122 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax and Distribution Data Per $1,000
Invested |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal income tax results: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary income (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operations |
|
$ |
40.80 |
|
|
$ |
73.40 |
|
|
$ |
38.12 |
|
|
$ |
73.15 |
|
|
$ |
38.04 |
|
|
$ |
73.25 |
|
from recapture |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital gain (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash distributions to investors: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Source (on a tax basis) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
investment income |
|
|
31.00 |
|
|
|
72.50 |
|
|
|
28.93 |
|
|
|
72.50 |
|
|
|
28.93 |
|
|
|
72.50 |
|
return of capital |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Source (on a cash basis) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
operations |
|
|
31.00 |
|
|
|
72.50 |
|
|
|
28.93 |
|
|
|
72.50 |
|
|
|
28.93 |
|
|
|
72.50 |
|
other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount (in percentage terms)
remaining invested in program
properties at the end of last year
reported in the table |
|
|
|
|
|
|
100 |
% |
|
|
|
|
|
|
100 |
% |
|
|
|
|
|
|
100 |
% |
Past performance is not necessarily indicative of future results.
A-42
TABLE III
ANNUAL OPERATING RESULTS OF PRIOR REAL ESTATE PROGRAMS (UNAUDITED) (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Walgreens - |
|
|
Walgreens - |
|
|
Gander Mountain - |
|
|
|
Nashville, TN |
|
|
Derby, KS |
|
|
Spring, TX |
|
|
|
June 2005 |
|
|
June 2005 |
|
|
June 2005 |
|
|
|
2005 |
|
|
2006 |
|
|
2005 |
|
|
2006 |
|
|
2005 |
|
|
2006 |
|
Gross revenues |
|
$ |
158,605 |
|
|
$ |
381,569 |
|
|
$ |
134,493 |
|
|
$ |
345,824 |
|
|
$ |
335,027 |
|
|
$ |
1,008,049 |
|
Profit (loss) on sale of properties |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses (4) |
|
|
5,122 |
|
|
|
8,211 |
|
|
|
6,648 |
|
|
|
15,835 |
|
|
|
3,429 |
|
|
|
8,490 |
|
Interest expense |
|
|
67,551 |
|
|
|
186,790 |
|
|
|
55,839 |
|
|
|
167,060 |
|
|
|
|
|
|
|
|
|
Depreciation and amortization (3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) Tax basis (6) |
|
$ |
85,932 |
|
|
$ |
186,568 |
|
|
$ |
72,006 |
|
|
$ |
162,930 |
|
|
$ |
331,598 |
|
|
$ |
999,559 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxable income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operations |
|
$ |
85,932 |
|
|
$ |
186,568 |
|
|
$ |
72,006 |
|
|
$ |
162,930 |
|
|
$ |
331,598 |
|
|
$ |
999,559 |
|
from gain on sale |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operations (5) |
|
|
85,932 |
|
|
|
186,568 |
|
|
|
72,006 |
|
|
|
162,930 |
|
|
|
331,598 |
|
|
|
999,559 |
|
from sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated from operations, sales
and refinancing |
|
|
85,932 |
|
|
|
186,568 |
|
|
|
72,006 |
|
|
|
162,930 |
|
|
|
331,598 |
|
|
|
999,559 |
|
Less: Cash distributions to investors |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operating cash flow |
|
|
61,775 |
|
|
|
184,440 |
|
|
|
50,396 |
|
|
|
163,872 |
|
|
|
249,273 |
|
|
|
986,268 |
|
from sales and refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated (deficiency) after cash
distributions |
|
|
24,157 |
|
|
|
2,128 |
|
|
|
21,610 |
|
|
|
(942 |
) |
|
|
82,325 |
|
|
|
13,291 |
|
Less: Special items (not including
sales and refinancing) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated (deficiency) after cash
distributions and special items |
|
$ |
24,157 |
|
|
$ |
2,128 |
|
|
$ |
21,610 |
|
|
$ |
(942 |
) |
|
$ |
82,325 |
|
|
$ |
13,291 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax and Distribution Data Per $1,000
Invested |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal income tax results: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary income (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operations |
|
$ |
33.78 |
|
|
$ |
73.34 |
|
|
$ |
30.76 |
|
|
$ |
69.60 |
|
|
$ |
25.22 |
|
|
$ |
76.01 |
|
from recapture |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital gain (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash distributions to investors: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Source (on a tax basis) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
investment income |
|
|
24.28 |
|
|
|
72.50 |
|
|
|
21.53 |
|
|
|
70.00 |
|
|
|
18.96 |
|
|
|
75.00 |
|
return of capital |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Source (on a cash basis) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
operations |
|
|
24.28 |
|
|
|
72.50 |
|
|
|
21.53 |
|
|
|
70.00 |
|
|
|
18.96 |
|
|
|
75.00 |
|
other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount (in percentage terms)
remaining invested in program
properties at the end of last year
reported in the table |
|
|
|
|
|
|
100 |
% |
|
|
|
|
|
|
100 |
% |
|
|
|
|
|
|
100 |
% |
Past
performance is not necessarily indicative of future results.
A-43
TABLE III
ANNUAL OPERATING RESULTS OF PRIOR REAL ESTATE PROGRAMS (UNAUDITED) (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Walgreens - |
|
|
Walgreens - |
|
|
Walgreens - |
|
|
|
Blue Springs, MO |
|
|
Garden City, KS |
|
|
Pittsburg, KS |
|
|
|
June 2005 |
|
|
June 2005 |
|
|
June 2005 |
|
|
|
2005 |
|
|
2006 |
|
|
2005 |
|
|
2006 |
|
|
2005 |
|
|
2006 |
|
Gross revenues |
|
$ |
102,520 |
|
|
$ |
278,833 |
|
|
$ |
129,075 |
|
|
$ |
334,224 |
|
|
$ |
102,883 |
|
|
$ |
295,304 |
|
Profit (loss) on sale of properties |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses (4) |
|
|
5,767 |
|
|
|
10,823 |
|
|
|
6,489 |
|
|
|
15,421 |
|
|
|
5,512 |
|
|
|
13,895 |
|
Interest expense |
|
|
46,108 |
|
|
|
129,690 |
|
|
|
53,531 |
|
|
|
161,478 |
|
|
|
35,488 |
|
|
|
140,795 |
|
Depreciation and amortization (3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) Tax basis (6) |
|
$ |
50,645 |
|
|
$ |
138,319 |
|
|
$ |
69,055 |
|
|
$ |
157,325 |
|
|
$ |
61,883 |
|
|
$ |
140,613 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxable income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operations |
|
$ |
50,645 |
|
|
$ |
138,319 |
|
|
$ |
69,055 |
|
|
$ |
157,325 |
|
|
$ |
61,883 |
|
|
$ |
140,613 |
|
from gain on sale |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operations (5) |
|
|
50,645 |
|
|
|
138,319 |
|
|
|
69,055 |
|
|
|
157,325 |
|
|
|
61,883 |
|
|
|
140,613 |
|
from sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated from operations, sales
and refinancing |
|
|
50,645 |
|
|
|
138,319 |
|
|
|
69,055 |
|
|
|
157,325 |
|
|
|
61,883 |
|
|
|
140,613 |
|
Less: Cash distributions to investors |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operating cash flow |
|
|
37,809 |
|
|
|
132,384 |
|
|
|
48,197 |
|
|
|
158,136 |
|
|
|
37,600 |
|
|
|
141,120 |
|
from sales and refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated (deficiency) after cash
distributions |
|
|
12,836 |
|
|
|
5,935 |
|
|
|
20,858 |
|
|
|
(811 |
) |
|
|
24,283 |
|
|
|
(507 |
) |
Less: Special items (not including
sales and refinancing) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated (deficiency) after cash
distributions and special items |
|
$ |
12,836 |
|
|
$ |
5,935 |
|
|
$ |
20,858 |
|
|
$ |
(811 |
) |
|
$ |
24,283 |
|
|
$ |
(507 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax and Distribution Data Per $1,000
Invested |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal income tax results: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary income (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operations |
|
$ |
26.78 |
|
|
$ |
73.15 |
|
|
$ |
30.57 |
|
|
$ |
69.64 |
|
|
$ |
30.70 |
|
|
$ |
69.75 |
|
from recapture |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital gain (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash distributions to investors: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Source (on a tax basis) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
investment income |
|
|
19.99 |
|
|
|
70.01 |
|
|
|
21.34 |
|
|
|
70.00 |
|
|
|
18.65 |
|
|
|
70.00 |
|
return of capital |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Source (on a cash basis) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
operations |
|
|
19.99 |
|
|
|
70.01 |
|
|
|
21.34 |
|
|
|
70.00 |
|
|
|
18.65 |
|
|
|
70.00 |
|
other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount (in percentage terms)
remaining invested in program
properties at the end of last year
reported in the table |
|
|
|
|
|
|
100 |
% |
|
|
|
|
|
|
100 |
% |
|
|
|
|
|
|
100 |
% |
Past
performance is not necessarily indicative of future results.
A-44
TABLE III
ANNUAL OPERATING RESULTS OF PRIOR REAL ESTATE PROGRAMS (UNAUDITED) (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Walgreens - |
|
|
Walgreens - |
|
|
Walgreens - |
|
|
|
Gladstone, MO |
|
|
Salt Lake City, UT |
|
|
Sandy, UT |
|
|
|
June 2005 |
|
|
July 2005 |
|
|
July 2005 |
|
|
|
2005 |
|
|
2006 |
|
|
2005 |
|
|
2006 |
|
|
2005 |
|
|
2006 |
|
Gross revenues |
|
$ |
132,411 |
|
|
$ |
395,426 |
|
|
$ |
124,866 |
|
|
$ |
511,918 |
|
|
$ |
122,931 |
|
|
$ |
503,524 |
|
Profit (loss) on sale of properties |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses (4) |
|
|
7,731 |
|
|
|
17,633 |
|
|
|
7,013 |
|
|
|
17,712 |
|
|
|
7,049 |
|
|
|
17,501 |
|
Interest expense |
|
|
45,975 |
|
|
|
204,644 |
|
|
|
63,197 |
|
|
|
250,246 |
|
|
|
64,034 |
|
|
|
246,775 |
|
Depreciation and amortization (3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) Tax basis (6) |
|
$ |
78,705 |
|
|
$ |
173,149 |
|
|
$ |
54,656 |
|
|
$ |
243,961 |
|
|
$ |
51,848 |
|
|
$ |
239,248 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxable income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operations |
|
$ |
78,705 |
|
|
$ |
173,149 |
|
|
$ |
54,656 |
|
|
$ |
243,961 |
|
|
$ |
51,848 |
|
|
$ |
239,248 |
|
from gain on sale |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operations (5) |
|
|
78,705 |
|
|
|
173,149 |
|
|
|
54,656 |
|
|
|
243,961 |
|
|
|
51,848 |
|
|
|
239,248 |
|
from sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated from operations, sales
and refinancing |
|
|
78,705 |
|
|
|
173,149 |
|
|
|
54,656 |
|
|
|
243,961 |
|
|
|
51,848 |
|
|
|
239,248 |
|
Less: Cash distributions to investors |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operating cash flow |
|
|
55,486 |
|
|
|
158,450 |
|
|
|
40,825 |
|
|
|
216,492 |
|
|
|
40,776 |
|
|
|
216,228 |
|
from sales and refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated (deficiency) after cash
distributions |
|
|
23,219 |
|
|
|
14,699 |
|
|
|
13,831 |
|
|
|
27,469 |
|
|
|
11,072 |
|
|
|
23,020 |
|
Less: Special items (not including
sales and refinancing) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated (deficiency) after cash
distributions and special items |
|
$ |
23,219 |
|
|
$ |
14,699 |
|
|
$ |
13,831 |
|
|
$ |
27,469 |
|
|
$ |
11,072 |
|
|
$ |
23,020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax and Distribution Data Per $1,000
Invested |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal income tax results: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary income (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operations |
|
$ |
31.11 |
|
|
$ |
68.44 |
|
|
$ |
17.04 |
|
|
$ |
76.07 |
|
|
$ |
16.19 |
|
|
$ |
74.70 |
|
from recapture |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital gain (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash distributions to investors: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Source (on a tax basis) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
investment income |
|
|
21.93 |
|
|
|
62.63 |
|
|
|
12.73 |
|
|
|
67.51 |
|
|
|
12.73 |
|
|
|
67.51 |
|
return of capital |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Source (on a cash basis) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
operations |
|
|
21.93 |
|
|
|
62.63 |
|
|
|
12.73 |
|
|
|
67.51 |
|
|
|
12.73 |
|
|
|
67.51 |
|
other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount (in percentage terms)
remaining invested in program
properties at the end of last year
reported in the table |
|
|
|
|
|
|
100 |
% |
|
|
|
|
|
|
100 |
% |
|
|
|
|
|
|
100 |
% |
Past
performance is not necessarily indicative of future results.
A-45
TABLE III
ANNUAL OPERATING RESULTS OF PRIOR REAL ESTATE PROGRAMS (UNAUDITED) (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Walgreens - |
|
|
Walgreens - |
|
|
Wal-Mart - |
|
|
|
Midvale, UT |
|
|
Metairie, LA |
|
|
Hazard, KY |
|
|
|
August 2005 |
|
|
August 2005 |
|
|
September 2005 |
|
|
|
2005 |
|
|
2006 |
|
|
2005 |
|
|
2006 |
|
|
2005 |
|
|
2006 |
|
Gross revenues |
|
$ |
87,586 |
|
|
$ |
359,001 |
|
|
$ |
4,355 |
|
|
$ |
541,345 |
|
|
$ |
319,334 |
|
|
$ |
1,891,356 |
|
Profit (loss) on sale of properties |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses (4) |
|
|
5,676 |
|
|
|
13,095 |
|
|
|
|
|
|
|
16,665 |
|
|
|
11,436 |
|
|
|
41,686 |
|
Interest expense |
|
|
44,677 |
|
|
|
169,379 |
|
|
|
|
|
|
|
258,179 |
|
|
|
120,349 |
|
|
|
1,071,401 |
|
Depreciation and amortization (3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) Tax basis (6) |
|
$ |
37,233 |
|
|
$ |
176,527 |
|
|
$ |
4,355 |
|
|
$ |
266,501 |
|
|
$ |
187,549 |
|
|
$ |
778,270 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxable income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operations |
|
$ |
37,233 |
|
|
$ |
176,527 |
|
|
$ |
4,355 |
|
|
$ |
266,501 |
|
|
$ |
187,549 |
|
|
$ |
778,270 |
|
from gain on sale |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operations (5) |
|
|
37,233 |
|
|
|
176,527 |
|
|
|
4,355 |
|
|
|
266,501 |
|
|
|
187,549 |
|
|
|
778,270 |
|
from sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated from operations, sales
and refinancing |
|
|
37,233 |
|
|
|
176,527 |
|
|
|
4,355 |
|
|
|
266,501 |
|
|
|
187,549 |
|
|
|
778,270 |
|
Less: Cash distributions to investors |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operating cash flow |
|
|
29,597 |
|
|
|
156,937 |
|
|
|
|
|
|
|
230,617 |
|
|
|
66,413 |
|
|
|
771,588 |
|
from sales and refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated (deficiency) after cash
distributions |
|
|
7,636 |
|
|
|
19,590 |
|
|
|
4,355 |
|
|
|
35,884 |
|
|
|
121,136 |
|
|
|
6,682 |
|
Less: Special items (not including
sales and refinancing) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated (deficiency) after cash
distributions and special items |
|
$ |
7,636 |
|
|
$ |
19,590 |
|
|
$ |
4,355 |
|
|
$ |
35,884 |
|
|
$ |
121,136 |
|
|
$ |
6,682 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax and Distribution Data Per $1,000
Invested |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal income tax results: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary income (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operations |
|
$ |
16.24 |
|
|
$ |
75.93 |
|
|
$ |
3.02 |
|
|
$ |
73.03 |
|
|
$ |
14.83 |
|
|
$ |
61.53 |
|
from recapture |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital gain (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash distributions to investors: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Source (on a tax basis) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
investment income |
|
|
12.91 |
|
|
|
67.50 |
|
|
|
|
|
|
|
63.20 |
|
|
|
5.25 |
|
|
|
61.00 |
|
return of capital |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Source (on a cash basis) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
operations |
|
|
12.91 |
|
|
|
67.50 |
|
|
|
|
|
|
|
63.20 |
|
|
|
5.25 |
|
|
|
61.00 |
|
other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount (in percentage terms)
remaining invested in program
properties at the end of last year
reported in the table |
|
|
|
|
|
|
100 |
% |
|
|
|
|
|
|
100 |
% |
|
|
|
|
|
|
100 |
% |
Past
performance is not necessarily indicative of future results.
A-46
TABLE III
ANNUAL OPERATING RESULTS OF PRIOR REAL ESTATE PROGRAMS (UNAUDITED) (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Walgreens |
|
|
Kohl's |
|
|
|
Gander Mountain - Hermantown, MN |
|
|
Best Buy - Baytown, TX |
|
|
Natchitoches, LA |
|
|
Lakewood, CO |
|
|
|
September 2005 |
|
|
October 2005 |
|
|
November 2005 |
|
|
November 2005 |
|
|
|
2005 |
|
|
2006 |
|
|
2005 |
|
|
2006 |
|
|
2006 |
|
|
2006 |
|
Gross revenues |
|
$ |
94,643 |
|
|
$ |
885,140 |
|
|
$ |
109,094 |
|
|
$ |
489,624 |
|
|
$ |
242,647 |
|
|
$ |
1,009,577 |
|
Profit (loss) on sale of properties |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses (4) |
|
|
2,765 |
|
|
|
26,926 |
|
|
|
1,021 |
|
|
|
7,846 |
|
|
|
10,747 |
|
|
|
27,941 |
|
Interest expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
116,328 |
|
|
|
524,194 |
|
Depreciation and amortization (3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) Tax basis (6) |
|
$ |
91,878 |
|
|
$ |
858,213 |
|
|
$ |
108,073 |
|
|
$ |
481,779 |
|
|
$ |
115,573 |
|
|
$ |
457,443 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxable income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operations |
|
$ |
91,878 |
|
|
$ |
858,213 |
|
|
$ |
108,073 |
|
|
$ |
481,779 |
|
|
$ |
115,573 |
|
|
$ |
457,443 |
|
from gain on sale |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operations (5) |
|
|
91,878 |
|
|
|
858,213 |
|
|
|
108,073 |
|
|
|
481,779 |
|
|
|
115,573 |
|
|
|
457,443 |
|
from sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated from operations, sales
and refinancing |
|
|
91,878 |
|
|
|
858,213 |
|
|
|
108,073 |
|
|
|
481,779 |
|
|
|
115,573 |
|
|
|
457,443 |
|
Less: Cash distributions to investors |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operating cash flow |
|
|
18,885 |
|
|
|
861,636 |
|
|
|
|
|
|
|
445,785 |
|
|
|
99,268 |
|
|
|
387,805 |
|
from sales and refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated (deficiency) after cash
distributions |
|
|
72,993 |
|
|
|
(3,423 |
) |
|
|
108,073 |
|
|
|
35,993 |
|
|
|
16,305 |
|
|
|
69,638 |
|
Less: Special items (not including
sales and refinancing) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated (deficiency) after cash
distributions and special items |
|
$ |
72,993 |
|
|
$ |
(3,423 |
) |
|
$ |
108,073 |
|
|
$ |
35,993 |
|
|
$ |
16,305 |
|
|
$ |
69,638 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax and Distribution Data Per $1,000
Invested |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal income tax results: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary income (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operations |
|
$ |
8.23 |
|
|
$ |
73.21 |
|
|
$ |
94.06 |
|
|
$ |
57.89 |
|
|
$ |
65.55 |
|
|
$ |
61.31 |
|
from recapture |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital gain (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash distributions to investors: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Source (on a tax basis) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
investment income |
|
|
1.69 |
|
|
|
73.50 |
|
|
|
|
|
|
|
53.56 |
|
|
|
56.31 |
|
|
|
51.98 |
|
return of capital |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Source (on a cash basis) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
operations |
|
|
1.69 |
|
|
|
73.50 |
|
|
|
|
|
|
|
53.56 |
|
|
|
56.31 |
|
|
|
51.98 |
|
other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount (in percentage terms)
remaining invested in program
properties at the end of last year
reported in the table |
|
|
|
|
|
|
100 |
% |
|
|
|
|
|
|
100 |
% |
|
|
|
|
|
|
100 |
% |
Past
performance is not necessarily indicative of future results.
A-47
TABLE III
ANNUAL OPERATING RESULTS OF PRIOR REAL ESTATE PROGRAMS (UNAUDITED) (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Shoppes at |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
North Village - St. |
|
|
Walgreens |
|
|
Kohls |
|
|
Home Depot - |
|
|
Cole Net Lease |
|
|
Cole Net Lease |
|
|
|
Joseph, MO |
|
|
Sumter, SC |
|
|
St. Joseph, MO |
|
|
Bellingham, WA |
|
|
Portfolio I |
|
|
Portfolio II |
|
|
|
December 2005 |
|
|
January 2006 |
|
|
February 2006 |
|
|
April 2006 |
|
|
May 2006 |
|
|
June 2006 |
|
|
|
2006 |
|
|
2006 |
|
|
2006 |
|
|
2006 |
|
|
2006 |
|
|
2006 |
|
Gross revenues |
|
$ |
2,824,347 |
|
|
$ |
314,624 |
|
|
$ |
564,619 |
|
|
$ |
608,739 |
|
|
$ |
583,357 |
|
|
$ |
313,447 |
|
Profit (loss) on sale of properties |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses (4) |
|
|
871,927 |
|
|
|
14,066 |
|
|
|
159,442 |
|
|
|
14,676 |
|
|
|
26,130 |
|
|
|
4,849 |
|
Interest expense |
|
|
1,094,702 |
|
|
|
158,325 |
|
|
|
190,758 |
|
|
|
|
|
|
|
265,912 |
|
|
|
133,317 |
|
Depreciation and amortization (3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) Tax basis (6) |
|
$ |
857,718 |
|
|
$ |
142,232 |
|
|
$ |
214,419 |
|
|
$ |
594,063 |
|
|
$ |
291,315 |
|
|
$ |
175,281 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxable income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operations |
|
$ |
857,718 |
|
|
$ |
142,232 |
|
|
$ |
214,419 |
|
|
$ |
594,063 |
|
|
$ |
291,315 |
|
|
$ |
175,281 |
|
from gain on sale |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operations (5) |
|
|
857,718 |
|
|
|
142,232 |
|
|
|
214,419 |
|
|
|
594,063 |
|
|
|
291,315 |
|
|
|
175,281 |
|
from sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated from operations, sales
and refinancing |
|
|
857,718 |
|
|
|
142,232 |
|
|
|
214,419 |
|
|
|
594,063 |
|
|
|
291,315 |
|
|
|
175,281 |
|
Less: Cash distributions to investors |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operating cash flow |
|
|
808,917 |
|
|
|
121,169 |
|
|
|
132,308 |
|
|
|
463,771 |
|
|
|
203,698 |
|
|
|
77,402 |
|
from sales and refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated (deficiency) after cash
distributions |
|
|
48,801 |
|
|
|
21,063 |
|
|
|
82,111 |
|
|
|
130,292 |
|
|
|
87,617 |
|
|
|
97,879 |
|
Less: Special items (not including
sales and refinancing) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated (deficiency) after cash
distributions and special items |
|
$ |
48,801 |
|
|
$ |
21,063 |
|
|
$ |
82,111 |
|
|
$ |
130,292 |
|
|
$ |
87,617 |
|
|
$ |
97,879 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax and Distribution Data Per $1,000
Invested |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal income tax results: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary income (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operations |
|
$ |
41.98 |
|
|
$ |
66.09 |
|
|
$ |
52.08 |
|
|
$ |
24.05 |
|
|
$ |
30.37 |
|
|
$ |
17.51 |
|
from recapture |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital gain (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash distributions to investors: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Source (on a tax basis) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
investment income |
|
|
39.59 |
|
|
|
56.31 |
|
|
|
32.14 |
|
|
|
18.78 |
|
|
|
21.24 |
|
|
|
7.73 |
|
return of capital |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Source (on a cash basis) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
operations |
|
|
39.59 |
|
|
|
56.31 |
|
|
|
32.14 |
|
|
|
18.78 |
|
|
|
21.24 |
|
|
|
7.73 |
|
other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount (in percentage terms)
remaining invested in program
properties at the end of last year
reported in the table |
|
|
100 |
% |
|
|
100 |
% |
|
|
100 |
% |
|
|
100 |
% |
|
|
100 |
% |
|
|
100 |
% |
Past
performance is not necessarily indicative of future results.
A-48
TABLE III
ANNUAL OPERATING RESULTS OF PRIOR REAL ESTATE PROGRAMS (UNAUDITED) (Continued)
|
|
|
|
|
|
|
|
|
|
|
Barrywoods |
|
|
|
|
|
|
Crossing |
|
|
|
|
|
|
Kansas City, |
|
|
Cole Net Lease |
|
|
|
MO |
|
|
Portfolio III |
|
|
|
July 2006 |
|
|
December 2006 |
|
|
|
2006 |
|
|
2006 |
|
Gross revenues |
|
$ |
969,929 |
|
|
$ |
|
|
Profit (loss) on sale of properties |
|
|
|
|
|
|
|
|
Less: |
|
|
|
|
|
|
|
|
Operating expenses (4) |
|
|
642,129 |
|
|
|
|
|
Interest expense |
|
|
126,766 |
|
|
|
|
|
Depreciation and amortization (3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) Tax basis (6) |
|
$ |
201,034 |
|
|
$ |
|
|
|
|
|
|
|
|
|
Taxable income |
|
|
|
|
|
|
|
|
from operations |
|
$ |
201,034 |
|
|
$ |
|
|
from gain on sale |
|
|
|
|
|
|
|
|
Cash generated |
|
|
|
|
|
|
|
|
from operations (5) |
|
|
201,034 |
|
|
|
|
|
from sales |
|
|
|
|
|
|
|
|
from refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated from operations, sales
and refinancing |
|
|
201,034 |
|
|
|
|
|
Less: Cash distributions to investors |
|
|
|
|
|
|
|
|
from operating cash flow |
|
|
58,685 |
|
|
|
|
|
from sales and refinancing |
|
|
|
|
|
|
|
|
from other |
|
|
|
|
|
|
|
|
Cash generated (deficiency) after cash
distributions |
|
|
142,349 |
|
|
|
|
|
Less: Special items (not including
sales and refinancing) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated (deficiency) after cash
distributions and special items |
|
$ |
142,349 |
|
|
$ |
|
|
|
|
|
|
|
|
|
Tax and Distribution Data Per $1,000
Invested |
|
|
|
|
|
|
|
|
Federal income tax results: |
|
|
|
|
|
|
|
|
Ordinary income (loss) |
|
|
|
|
|
|
|
|
from operations |
|
$ |
14.61 |
|
|
$ |
|
|
from recapture |
|
|
|
|
|
|
|
|
Capital gain (loss) |
|
|
|
|
|
|
|
|
Cash distributions to investors: |
|
|
|
|
|
|
|
|
Source (on a tax basis) |
|
|
|
|
|
|
|
|
investment income |
|
|
4.26 |
|
|
|
|
|
return of capital |
|
|
|
|
|
|
|
|
Source (on a cash basis) |
|
|
|
|
|
|
|
|
sales |
|
|
|
|
|
|
|
|
refinancing |
|
|
|
|
|
|
|
|
operations |
|
|
4.26 |
|
|
|
|
|
other |
|
|
|
|
|
|
|
|
Amount (in percentage terms)
remaining invested in program
properties at the end of last year
reported in the table |
|
|
100 |
% |
|
|
100 |
% |
Past
performance is not necessarily indicative of future results.
A-49
|
|
|
NOTES TO TABLE III |
|
(1) |
|
Cole Credit Property Trust, Inc. and Cole Credit Property Trust II, Inc. maintain their books
on a GAAP basis of accounting rather than a tax basis. |
|
(2) |
|
Investors in this program receive interest at a specified rate per annum, which is included in
interest expense. Therefore, tax and cash distribution data per $1,000 invested is not applicable. |
|
(3) |
|
Amortization of organizational costs is computed over a period of 60 months. Depreciation of
commercial real property is determined on the straight-line method over an estimated useful life of
39 years. Leasehold interest are amortized over the life of the lease. |
|
(4) |
|
Operating expenses include management fees paid to affiliates for such services as accounting,
property supervision, etc. |
|
(5) |
|
Cash generated from operations generally includes net income plus depreciation and amortization
plus any decreases in accounts receivable and accrued rental income or increases in accounts
payable minus any increases in accounts receivable and accrued rental income or decreases in
accounts payable. In addition, cash generated from operations is reduced for any property costs
related to development projects and is increased by proceeds when the project is sold (usually in
less than twelve months). |
|
(6) |
|
The partnerships maintain their books on a tax basis of accounting rather than a GAAP basis.
There are several potential differences in tax and GAAP basis, including, among others; (a) tax
basis accounting does not take certain income or expense accruals into consideration at the end of
each fiscal year, (b) rental income is recorded on a tax basis, as it is received where it is
accrued on a straight-line basis over the life of the lease for GAAP, and (c) all properties are
recorded at cost and depreciated over their estimated useful life on a tax basis even if they
qualify as a direct financing lease for GAAP purposes. These differences generally result in timing
differences between fiscal years but total operating income over the life of the partnership will
not be significantly different between the two basis of accounting. |
A-50
TABLE IV
RESULTS OF COMPLETED PROGRAMS (UNAUDITED)
The following table presents summary information on the results of Prior Real Estate Programs
that completed operations since January 1, 2002 and that had similar or identical investment
objectives to those of this program. All amounts are from the inception of the program to the date
the program was completed.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
McCormick |
|
|
|
|
Alta Mesa |
|
Thunderbird |
|
McRay |
|
|
|
|
|
Ranch Office |
|
Cole Arizona |
|
|
Retail Income |
|
Plaza Value |
|
Plaza |
|
Fiesta Palms |
|
Income |
|
Retail Income |
Program Name |
|
Investors LP |
|
Enhancement LP |
|
Investors LP |
|
Investors LP |
|
Investors LP |
|
Investors LP |
Dollar amount raised |
|
$ |
2,575,000 |
|
|
$ |
3,025,000 |
|
|
$ |
2,275,000 |
|
|
$ |
700,000 |
|
|
$ |
735,000 |
|
|
$ |
3,200,000 |
|
Number of properties
purchased |
|
|
1 |
|
|
|
1 |
|
|
|
1 |
|
|
|
1 |
|
|
|
1 |
|
|
|
2 |
|
Date of closing of offering |
|
|
02/25/97 |
|
|
|
11/24/97 |
|
|
|
03/13/96 |
|
|
|
01/05/95 |
|
|
|
12/16/94 |
|
|
|
09/02/97 |
|
Date of first sale of property |
|
|
02/06/01 |
|
|
|
03/28/01 |
|
|
|
04/11/01 |
|
|
|
06/12/01 |
|
|
|
06/29/01 |
|
|
|
03/23/01 |
|
Date of final sale of property |
|
|
02/06/01 |
|
|
|
03/28/01 |
|
|
|
04/11/01 |
|
|
|
06/12/01 |
|
|
|
06/29/01 |
|
|
|
07/11/01 |
|
Tax and Distribution Data Per
$1,000 Investment Through
12/31/06 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal income tax results: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary income (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operations |
|
|
301 |
|
|
|
193 |
|
|
|
496 |
|
|
|
(229 |
) |
|
|
337 |
|
|
|
261 |
|
from recapture |
|
|
68 |
|
|
|
132 |
|
|
|
237 |
|
|
|
347 |
|
|
|
279 |
|
|
|
63 |
|
Capital gain (loss) |
|
|
233 |
|
|
|
478 |
|
|
|
438 |
|
|
|
782 |
|
|
|
1,981 |
|
|
|
493 |
|
Deferred gain |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash distributions to investors: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Source (on Tax Basis) (1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment income |
|
|
1,223,459 |
|
|
|
1,927,417 |
|
|
|
2,140,048 |
|
|
|
660,604 |
|
|
|
1,464,634 |
|
|
|
1,973,564 |
|
Return of capital |
|
|
2,575,000 |
|
|
|
3,025,000 |
|
|
|
2,275,000 |
|
|
|
700,000 |
|
|
|
735,000 |
|
|
|
3,200,000 |
|
Source (on cash basis) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales |
|
|
2,720,301 |
|
|
|
2,817,910 |
|
|
|
3,074,119 |
|
|
|
856,030 |
|
|
|
1,636,551 |
|
|
|
4,014,352 |
|
Refinancing |
|
|
|
|
|
|
1,650,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operations |
|
|
1,078,158 |
|
|
|
484,507 |
|
|
|
1,340,929 |
|
|
|
504,574 |
|
|
|
563,083 |
|
|
|
1,159,212 |
|
Other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Receivable on net purchase
money financing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Past
performance is not necessarily indicative of future results.
A-51
TABLE IV
RESULTS OF COMPLETED PROGRAMS (UNAUDITED) (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sun City |
|
|
|
|
|
|
|
|
|
Regal Square |
|
|
|
|
|
|
Grand Retail |
|
3001 East |
|
Mesa Retail |
|
Value |
|
Scottsdale |
|
Santa Fe |
|
|
Income |
|
Camelback |
|
Income |
|
Enhancement |
|
Retail Income |
|
Square |
Program Name |
|
Investors LP |
|
Investors LP |
|
Investors LP |
|
Investors LP |
|
Investors LP |
|
Investors LP |
Dollar amount raised |
|
$ |
2,750,000 |
|
|
$ |
600,000 |
|
|
$ |
1,100,000 |
|
|
$ |
2,300,000 |
|
|
$ |
6,500,000 |
|
|
$ |
10,800,000 |
|
Number of properties
purchased |
|
|
1 |
|
|
|
1 |
|
|
|
1 |
|
|
|
1 |
|
|
|
1 |
|
|
|
1 |
|
Date of closing of offering |
|
|
01/15/98 |
|
|
|
11/04/94 |
|
|
|
04/26/96 |
|
|
|
05/19/97 |
|
|
|
01/07/97 |
|
|
|
06/14/00 |
|
Date of first sale of property |
|
|
01/29/02 |
|
|
|
02/05/02 |
|
|
|
05/31/02 |
|
|
|
06/19/02 |
|
|
|
07/12/02 |
|
|
|
02/14/02 |
|
Date of final sale of property |
|
|
01/29/02 |
|
|
|
02/05/02 |
|
|
|
05/31/02 |
|
|
|
06/19/02 |
|
|
|
07/12/02 |
|
|
|
09/26/02 |
|
Tax and Distribution Data Per
$1,000 Investment Through
12/31/06 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal income tax results: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary income (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operations |
|
|
325 |
|
|
|
(162 |
) |
|
|
366 |
|
|
|
419 |
|
|
|
379 |
|
|
|
230 |
|
from recapture |
|
|
71 |
|
|
|
420 |
|
|
|
102 |
|
|
|
90 |
|
|
|
105 |
|
|
|
69 |
|
Capital gain (loss) |
|
|
309 |
|
|
|
1,284 |
|
|
|
504 |
|
|
|
485 |
|
|
|
221 |
|
|
|
445 |
|
Deferred gain |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash distributions to investors: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Source (on Tax Basis) (1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment income |
|
|
1,495,964 |
|
|
|
786,060 |
|
|
|
874,280 |
|
|
|
1,788,779 |
|
|
|
3,868,802 |
|
|
|
5,363,615 |
|
Return of capital |
|
|
2,750,000 |
|
|
|
600,000 |
|
|
|
1,100,000 |
|
|
|
2,300,000 |
|
|
|
6,500,000 |
|
|
|
10,800,000 |
|
Source (on cash basis) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales |
|
|
3,164,836 |
|
|
|
1,021,266 |
|
|
|
1,246,616 |
|
|
|
2,873,330 |
|
|
|
6,500,000 |
|
|
|
13,502,268 |
|
Refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operations |
|
|
1,081,128 |
|
|
|
364,794 |
|
|
|
727,664 |
|
|
|
1,215,449 |
|
|
|
3,868,802 |
|
|
|
2,661,347 |
|
Other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Receivable on net purchase
money financing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Past
performance is not necessarily indicative of future results.
A-52
TABLE IV
RESULTS OF COMPLETED PROGRAMS (UNAUDITED) (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sun Valley |
|
|
|
|
|
Grand |
|
North Phoenix |
|
Arden Square |
|
|
|
|
Value |
|
Dobson |
|
Canyon |
|
Value |
|
Value |
|
Cole Desert |
|
|
Enhancement |
|
Square |
|
Office |
|
Enhancement |
|
Enhancement |
|
Palms Power |
Program Name |
|
Investors LP |
|
Investors LP |
|
Investors LP |
|
Investors LP |
|
Investors LP |
|
Center LP |
Dollar amount raised |
|
$ |
2,500,000 |
|
|
$ |
1,800,000 |
|
|
$ |
1,070,000 |
|
|
$ |
2,050,000 |
|
|
$ |
2,000,000 |
|
|
$ |
7,500,000 |
|
Number of properties
purchased |
|
|
1 |
|
|
|
1 |
|
|
|
1 |
|
|
|
1 |
|
|
|
1 |
|
|
|
1 |
|
Date of closing of offering |
|
|
01/11/99 |
|
|
|
09/25/95 |
|
|
|
10/12/95 |
|
|
|
02/28/97 |
|
|
|
08/25/97 |
|
|
|
12/31/01 |
|
Date of first sale of property |
|
|
10/25/02 |
|
|
|
12/24/02 |
|
|
|
04/28/03 |
|
|
|
04/30/03 |
|
|
|
12/16/02 |
|
|
|
12/30/03 |
|
Date of final sale of property |
|
|
12/30/02 |
|
|
|
12/24/02 |
|
|
|
04/28/03 |
|
|
|
04/30/03 |
|
|
|
12/16/02 |
|
|
|
12/30/03 |
|
Tax and Distribution Data Per
$1,000 Investment Through
12/31/06 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal income tax results: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary income (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operations |
|
|
136 |
|
|
|
781 |
|
|
|
161 |
|
|
|
617 |
|
|
|
272 |
|
|
|
(64 |
) |
from recapture |
|
|
59 |
|
|
|
136 |
|
|
|
338 |
|
|
|
103 |
|
|
|
106 |
|
|
|
216 |
|
Capital gain (loss) |
|
|
480 |
|
|
|
851 |
|
|
|
1,454 |
|
|
|
381 |
|
|
|
370 |
|
|
|
414 |
|
Deferred gain |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash distributions to investors: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Source (on Tax Basis) (1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment income |
|
|
1,186,350 |
|
|
|
2,261,340 |
|
|
|
1,682,452 |
|
|
|
1,900,289 |
|
|
|
1,222,229 |
|
|
|
2,448,137 |
|
Return of capital |
|
|
2,500,000 |
|
|
|
1,800,000 |
|
|
|
1,070,000 |
|
|
|
2,050,000 |
|
|
|
2,000,000 |
|
|
|
7,000,000 |
|
Source (on cash basis) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales |
|
|
3,167,600 |
|
|
|
2,592,864 |
|
|
|
2,088,640 |
|
|
|
2,409,980 |
|
|
|
2,189,600 |
|
|
|
8,082,375 |
|
Refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operations |
|
|
518,750 |
|
|
|
1,468,476 |
|
|
|
663,812 |
|
|
|
1,540,309 |
|
|
|
1,032,629 |
|
|
|
1,365,762 |
|
Other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Receivable on net purchase
money financing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Past
performance is not necessarily indicative of future results.
A-53
TABLE IV
RESULTS OF COMPLETED PROGRAMS (UNAUDITED) (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cole |
|
Cole |
|
Cole |
|
|
Siete Square |
|
Boulevard |
|
Southwest |
|
Collateralized |
|
|
Retail Income |
|
Square |
|
Opportunity |
|
Senior |
Program Name |
|
Investors LP |
|
Investors LP |
|
Fund LP |
|
Notes, LLC |
Dollar amount raised |
|
$ |
1,875,000 |
|
|
$ |
10,000,000 |
|
|
$ |
13,905,850 |
|
|
$ |
28,038,500 |
|
Number of properties
purchased |
|
|
1 |
|
|
|
1 |
|
|
|
2 |
|
|
|
45 |
|
Date of closing of offering |
|
|
09/14/98 |
|
|
|
11/25/02 |
|
|
|
08/12/01 |
|
|
|
06/03/04 |
|
Date of first sale of property |
|
|
02/20/04 |
|
|
|
09/10/04 |
|
|
|
06/01/02 |
|
|
|
11/06/03 |
Date of final sale of property |
|
|
02/20/04 |
|
|
|
09/10/04 |
|
|
|
04/06/05 |
|
|
|
04/26/06 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax and Distribution Data Per
$1,000 Investment Through
12/31/06 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal income tax results: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary income (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operations |
|
|
(154 |
) |
|
|
(108 |
) |
|
|
(344 |
) |
|
|
|
(2) |
from recapture |
|
|
1,313 |
|
|
|
246 |
|
|
|
247 |
|
|
|
|
(2) |
Capital gain (loss) |
|
|
(578 |
) |
|
|
606 |
|
|
|
80 |
|
|
|
|
(2) |
Deferred gain |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash distributions to investors: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Source (on Tax Basis) (1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment income |
|
|
837,544 |
|
|
|
5,054,198 |
|
|
|
|
|
|
|
|
(2) |
Return of capital |
|
|
1,875,000 |
|
|
|
10,000,000 |
|
|
|
11,886,633 |
|
|
|
28,038,500 |
|
Source (on cash basis) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales |
|
|
1,899,975 |
|
|
|
13,257,500 |
|
|
|
11,870,035 |
|
|
|
87,564,336 |
(3) |
Refinancing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operations |
|
|
812,569 |
|
|
|
1,796,698 |
|
|
|
16,598 |
|
|
|
(510,899 |
) |
Other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Receivable on net purchase
money financing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Past
performance is not necessarily indicative of future results.
A-54
|
|
|
NOTES TO TABLE IV |
|
(1) |
|
The partnerships maintain their books on a tax basis of accounting rather than on a GAAP
basis. There are potential differences in accounting for cash distributions on a tax basis and
GAAP basis, the most significant of which is that partnership syndication costs, which includes
securities commissions and other costs, would be recorded as a reduction of capital for GAAP
purposes, which would result in lower return of capital and higher investment income amounts on a
GAAP basis than on a tax basis. |
|
(2) |
|
Investors in this program receive interest at a specified
rate per annum, which is included in interest expense. Therefore, tax
and cash distribution data per $1,000 invested is not applicable. |
|
(3) |
|
Over the course of the program, certain properties acquired
with the initial note proceeds were sold and the sales proceeds were
reinvested in replacement properties. Certain replacement properties
were subsequently sold and the sales proceeds were reinvested in new
replacement properties, this process may have occurred multiple times
over the life of the program on certain properties. This amount
represents the accumulated proceeds from sale and reinvestment of the
sales proceeds in replacement properties. |
A-55
TABLE V
RESULTS OF SALES OR DISPOSALS OF PROPERTIES (UNAUDITED)
This table provides summary information on the results of sales or disposals of
properties since January 1, 2004 by Prior Real Estate Programs having similar
investment objectives to those of this program. All amounts are through
December 31, 2006.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling Price, Net of Closing Costs and GAAP Adjustments |
|
|
|
|
|
|
|
|
|
|
|
Cash |
|
|
|
|
|
|
|
|
|
|
Adjustments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Received Net |
|
|
Mortgage |
|
|
Purchase Money |
|
|
Resulting from |
|
|
|
|
|
|
Date |
|
|
Date |
|
|
of Closing |
|
|
Balance at |
|
|
Mortgage Taken |
|
|
Application of |
|
|
|
|
Property |
|
Acquired |
|
|
of Sale |
|
|
Costs |
|
|
Time of Sale |
|
|
Back by Program |
|
|
GAAP (4) |
|
|
Total (4) |
|
Cole Southwest Opportunity
Fund LP Las Vegas
Telecom Land Sale |
|
|
11/00 |
|
|
|
1/04 |
|
|
$ |
702,856 |
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
702,856 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Seite Square Retail Income
Investors LP |
|
|
7/98 |
|
|
|
2/04 |
|
|
|
2,825,034 |
|
|
|
1,632,235 |
|
|
|
|
|
|
|
|
|
|
|
4,457,269 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cole Boulevard Square Investors LP |
|
|
7/02 |
|
|
|
9/04 |
|
|
|
14,423,979 |
|
|
|
27,205,776 |
|
|
|
|
|
|
|
|
|
|
|
41,629,755 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cole Southwest Opportunity
Fund LP Las Vegas
Telecom Land Sale |
|
|
11/00 |
|
|
|
10/04 |
|
|
|
508,690 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
508,690 |
(5) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cole Southwest Opportunity
Fund LP Phoenix
Switch X |
|
|
8/00 |
|
|
|
4/05 |
|
|
|
10,880,860 |
|
|
|
1,500,000 |
|
|
|
|
|
|
|
|
|
|
|
12,380,860 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Walgreens Marion, IL |
|
|
2/05 |
|
|
|
6/05 |
|
|
|
1,743,425 |
|
|
|
2,665,000 |
|
|
|
|
|
|
|
|
|
|
|
4,408,425 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Walgreens Columbus, OH |
|
|
12/04 |
|
|
|
6/05 |
|
|
|
2,665,670 |
|
|
|
2,868,000 |
|
|
|
|
|
|
|
|
|
|
|
5,533,670 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Walgreens Jacksonville, AR |
|
|
11/04 |
|
|
|
8/05 |
|
|
|
2,277,370 |
|
|
|
2,431,000 |
|
|
|
|
|
|
|
|
|
|
|
4,708,370 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Walgreens Spring, TX |
|
|
12/04 |
|
|
|
8/05 |
|
|
|
1,817,910 |
|
|
|
1,973,000 |
|
|
|
|
|
|
|
|
|
|
|
3,790,910 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wendys Hardeeville, SC |
|
|
7/04 |
|
|
|
9/05 |
|
|
|
1,248,825 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,248,825 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Walgreens Warrensburg, MO |
|
|
4/05 |
|
|
|
8/05 |
|
|
|
1,975,851 |
|
|
|
2,870,000 |
|
|
|
|
|
|
|
|
|
|
|
4,845,851 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Walgreens St. Joseph, MO |
|
|
7/05 |
|
|
|
11/05 |
|
|
|
2,172,972 |
|
|
|
3,350,000 |
|
|
|
|
|
|
|
|
|
|
|
5,522,792 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CVS Winterhaven, FL |
|
|
8/05 |
|
|
|
12/05 |
|
|
|
2,319,149 |
|
|
|
3,424,000 |
|
|
|
|
|
|
|
|
|
|
|
5,743,149 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
La-Z-Boy Flagstaff, AZ |
|
|
10/05 |
|
|
|
12/05 |
|
|
|
1,617,097 |
|
|
|
2,561,178 |
|
|
|
|
|
|
|
|
|
|
|
4,178,275 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Walgreens Twin Oaks, MO |
|
|
12/05 |
|
|
|
4/06 |
|
|
|
2,548,604 |
|
|
|
3,742,000 |
|
|
|
|
|
|
|
|
|
|
|
6,290,604 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Walgreens East Ridge, TN |
|
|
11/05 |
|
|
|
7/06 |
|
|
|
1,949,062 |
|
|
|
2,937,000 |
|
|
|
|
|
|
|
|
|
|
|
4,886,062 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Walgreens Asheboro, NC |
|
|
2/06 |
|
|
|
10/06 |
|
|
|
2,202,129 |
|
|
|
3,350,000 |
|
|
|
|
|
|
|
|
|
|
|
5,552,129 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cingular Wireless Perinton, NY |
|
|
11/03 |
|
|
|
6/06 |
|
|
|
1,508,494 |
|
|
|
3,207,400 |
|
|
|
|
|
|
|
|
|
|
|
4,715,894 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BJs Wholesale Homestead, FL |
|
|
12/05 |
|
|
|
9/06 |
|
|
|
7,896,280 |
|
|
|
12,362,000 |
|
|
|
|
|
|
|
|
|
|
|
20,258,280 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CVS Mobile,
AL (12) |
|
|
5/06 |
|
|
|
11/06 |
|
|
|
2,761,361 |
|
|
|
4,277,000 |
|
|
|
|
|
|
|
|
|
|
|
7,038,361 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Walgreens Great Bend, KS |
|
|
4/05 |
|
|
|
03/06 |
|
|
|
1,963,552 |
|
|
|
2,773,000 |
|
|
|
|
|
|
|
|
|
|
|
4,736,552 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Walgreens Aldine, TX |
|
|
4/05 |
|
|
|
04/06 |
|
|
|
1,497,899 |
|
|
|
2,055,000 |
|
|
|
|
|
|
|
|
|
|
|
3,552,899 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Walgreens Lees Summit, MO |
|
|
09/06 |
|
|
|
12/06 |
|
|
|
1,155,602 |
|
|
|
3,536,000 |
|
|
|
|
|
|
|
|
|
|
|
4,691,602 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CVS
Chandler, AZ (12) |
|
|
6/06 |
|
|
|
11/06 |
|
|
|
2,160,893 |
|
|
|
3,206,000 |
|
|
|
|
|
|
|
|
|
|
|
5,366,893 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Walgreens
Penn Hills, PA (12) |
|
|
7/06 |
|
|
|
9/06 |
|
|
|
1,474,566 |
|
|
|
4,267,000 |
|
|
|
|
|
|
|
|
|
|
|
5,741,566 |
|
Past performance is not necessarily indicative of future results.
A-56
TABLE V
RESULTS OF SALES OR DISPOSALS OF PROPERTIES (UNAUDITED) (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost
of Properties Including Closing and Soft Costs |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Excess (Deficiency) of |
|
|
|
Original |
|
|
Total Acquisition
Cost, |
|
|
|
|
|
|
Property Operating Cash |
|
|
|
Mortgage |
|
|
Capital Improvements, |
|
|
|
|
|
|
Receipts Over Cash |
|
Property |
|
Financing |
|
|
Closing
and Soft Costs (5) |
|
|
Total |
|
|
Expenditures |
|
Cole Southwest Opportunity
Fund LP Las Vegas
Telecom Land Sale |
|
$ |
|
|
|
$ |
554,072 |
|
|
$ |
554,072 |
|
|
$ |
(11,742 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Seite Square Retail Income
Investors LP |
|
|
1,800,000 |
|
|
|
1,659,816 |
|
|
|
3,459,816 |
|
|
|
410,455 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cole Boulevard Square
Investors LP |
|
|
27,720,000 |
|
|
|
7,984,871 |
|
|
|
35,704,871 |
|
|
|
2,001,581 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cole Southwest Opportunity
Fund LP Las Vegas
Telecom Land Sale |
|
|
|
|
|
|
400,973 |
|
|
|
400,973 |
|
|
|
7,668 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cole Southwest Opportunity
Fund LP Phoenix
Switch X |
|
|
|
|
|
|
14,307,533 |
|
|
|
14,307,533 |
|
|
|
(1,338,079 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Walgreens Marion, IL |
|
|
3,690,000 |
|
|
|
676,256 |
|
|
|
4,366,256 |
|
|
|
104,923 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Walgreens Columbus, OH |
|
|
4,135,018 |
|
|
|
1,245,096 |
|
|
|
5,380,114 |
|
|
|
265,670 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Walgreens Jacksonville, AR |
|
|
3,600,000 |
|
|
|
1,005,294 |
|
|
|
4,605,294 |
|
|
|
219,970 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Walgreens Spring, TX |
|
|
2,880,000 |
|
|
|
851,174 |
|
|
|
3,731,174 |
|
|
|
152,146 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wendys Hardeeville, SC |
|
|
|
|
|
|
1,107,562 |
|
|
|
1,107,562 |
|
|
|
21,524 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Walgreens Warrensburg, MO |
|
|
3,973,000 |
|
|
|
719,004 |
|
|
|
4,692,004 |
|
|
|
199,382 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Walgreens St. Joseph, MO |
|
|
4,123,000 |
|
|
|
1,308,345 |
|
|
|
5,431,345 |
|
|
|
46,272 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CVS Winterhaven, FL |
|
|
4,214,000 |
|
|
|
1,294,321 |
|
|
|
5,508,321 |
|
|
|
24,412 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
La-Z-Boy Flagstaff, AZ |
|
|
2,540,510 |
|
|
|
1,525,880 |
|
|
|
4,066,390 |
|
|
|
17,356 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Walgreens Twin Oaks, MO |
|
|
4,606,000 |
|
|
|
1,470,505 |
|
|
|
6,076,505 |
|
|
|
50,950 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Walgreens East Ridge, TN |
|
|
3,614,000 |
|
|
|
1,173,112 |
|
|
|
4,787,112 |
|
|
|
88,519 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Walgreens Asheboro, NC |
|
|
4,123,000 |
|
|
|
1,313,929 |
|
|
|
5,436,929 |
|
|
|
82,097 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cingular Wireless Perinton, NY |
|
|
|
|
|
|
4,036,029 |
|
|
|
4,036,029 |
|
|
|
(903,910 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BJs Wholesale Homestead, FL |
|
|
15,215,000 |
|
|
|
4,779,678 |
|
|
|
19,994,678 |
|
|
|
427,516 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CVS Mobile,
AL (12) |
|
|
5,264,000 |
|
|
|
1,614,647 |
|
|
|
6,878,647 |
|
|
|
103,749 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Walgreens Great Bend, KS |
|
|
3,840,000 |
|
|
|
698,169 |
|
|
|
4,538,169 |
|
|
|
113,126 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Walgreens Aldine, TX |
|
|
2,846,000 |
|
|
|
529,210 |
|
|
|
3,375,210 |
|
|
|
97,959 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Walgreens Lees Summit, MO |
|
|
3,536,000 |
|
|
|
1,014,365 |
|
|
|
4,550,365 |
|
|
|
10,562 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CVS
Chandler, AZ (12) |
|
|
3,946,000 |
|
|
|
1,230,390 |
|
|
|
5,176,390 |
|
|
|
48,424 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Walgreens
Penn Hills, PA (12) |
|
|
4,267,000 |
|
|
|
1,339,286 |
|
|
|
5,606,286 |
|
|
|
25,780 |
|
Past performance is not necessarily indicative of future results.
A-57
TABLE V
RESULTS OF SALES OR DISPOSALS OF PROPERTIES (UNAUDITED) (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling
Price, Net of Closing Costs and GAAP Adjustments |
|
|
|
|
|
|
|
|
|
|
|
Cash |
|
|
|
|
|
|
Purchase Money |
|
|
Adjustments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Received Net |
|
|
Mortgage |
|
|
Mortgage Taken |
|
|
Resulting from |
|
|
|
|
|
|
Date |
|
|
Date |
|
|
of Closing |
|
|
Balance at |
|
|
Back by |
|
|
Application of |
|
|
|
|
Property |
|
Acquired |
|
|
of Sale |
|
|
Costs |
|
|
Time of Sale |
|
|
Program |
|
|
GAAP (7) |
|
|
Total (4) |
|
Cole Collateralized Senior
Notes, LLC |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restaurant sales (3) |
|
|
12/03 |
|
|
|
6/04 - 6/05 |
|
|
$ |
28,111,983 |
|
|
$ |
11,600,067 |
|
|
$ |
|
|
|
$ |
|
|
|
$ |
39,712,050 |
(6) |
TIC interests in Staples in
Tulsa, OK |
|
|
12/03 |
|
|
|
6/04 |
|
|
|
773,335 |
|
|
|
2,800,000 |
|
|
|
|
|
|
|
|
|
|
|
3,573,335 |
(7) |
TIC interests in Mimis Café
Lone Tree, CO |
|
|
12/03 |
|
|
|
6/04 |
|
|
|
278,141 |
|
|
|
1,361,168 |
|
|
|
|
|
|
|
|
|
|
|
1,639,309 |
(7) |
TIC interests in Walgreens
Westheimer, TX |
|
|
10/04 |
|
|
|
12/04 |
|
|
|
3,526,680 |
|
|
|
4,032,000 |
|
|
|
|
|
|
|
|
|
|
|
7,558,680 |
(7) |
TIC interests in Walgreens
Slidell, LA
|
|
|
10/04 |
|
|
|
5/05 |
|
|
|
1,975,240 |
|
|
|
2,192,000 |
|
|
|
|
|
|
|
|
|
|
|
4,167,240 |
(7) |
TIC interests in Home Depot
Spokane, WA
|
|
|
10/04 |
|
|
|
5/05 |
|
|
|
10,283,250 |
|
|
|
11,460,000 |
|
|
|
|
|
|
|
|
|
|
|
21,743,250 |
(7) |
TIC interests in Walgreens
Covington, TN |
|
|
10/04 |
|
|
|
5/05 |
|
|
|
1,910,170 |
|
|
|
2,096,000 |
|
|
|
|
|
|
|
|
|
|
|
4,006,170 |
(7) |
TIC interests in Walgreens
Glen Burnie, MD |
|
|
11/04 |
|
|
|
5/05 |
|
|
|
3,006,675 |
|
|
|
3,369,000 |
|
|
|
|
|
|
|
|
|
|
|
6,375,675 |
(7) |
TIC interests in Walgreens
Ponca City, OK |
|
|
11/04 |
|
|
|
8/05 |
|
|
|
2,132,950 |
|
|
|
2,443,000 |
|
|
|
|
|
|
|
|
|
|
|
4,575,950 |
(7) |
DST interests in Walgreens
Chicago, IL |
|
|
3/05 |
|
|
|
7/05 |
|
|
|
2,846,300 |
|
|
|
4,625,000 |
|
|
|
|
|
|
|
|
|
|
|
7,471,300 |
(11) |
DST interests in Walgreens
Southington, CT |
|
|
4/05 |
|
|
|
7/05 |
|
|
|
2,450,608 |
|
|
|
3,981,000 |
|
|
|
|
|
|
|
|
|
|
|
6,431,608 |
(11) |
TIC interests in Gander Mountain
Spring, TX |
|
|
5/05 |
|
|
|
8/05 |
|
|
|
12,169,500 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,169,500 |
(7) |
TIC interests in Gander Mountain
Hermantown, MN |
|
|
8/05 |
|
|
|
11/05 |
|
|
|
10,818,720 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,818,720 |
(7) |
DST interests in Kohls
Lakewood, CO |
|
|
10/05 |
|
|
|
3/06 |
|
|
|
6,865,130 |
|
|
|
11,440,000 |
|
|
|
|
|
|
|
|
|
|
|
18,305,130 |
|
Cole Collateralized Senior
Notes II, LLC |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TIC interests in Walgreens
Windsor, CO |
|
|
6/04 |
|
|
|
9/04 |
|
|
|
2,393,460 |
|
|
|
2,871,000 |
|
|
|
|
|
|
|
|
|
|
|
5,264,460 |
(7) |
TIC interests in Walgreens
Goldsboro, NC |
|
|
6/04 |
|
|
|
11/04 |
|
|
|
2,303,985 |
|
|
|
2,611,510 |
|
|
|
|
|
|
|
|
|
|
|
4,915,495 |
(7) |
TIC interests in Walgreens
Hamilton, OH |
|
|
7/04 |
|
|
|
10/04 |
|
|
|
2,668,047 |
|
|
|
3,033,250 |
|
|
|
|
|
|
|
|
|
|
|
5,701,297 |
(7) |
TIC interests in Walgreens
Carlsbad, NM |
|
|
7/04 |
|
|
|
12/04 |
|
|
|
2,046,107 |
|
|
|
2,335,000 |
|
|
|
|
|
|
|
|
|
|
|
4,381,107 |
(7) |
TIC interests in Walgreens
Willimantic, CT |
|
|
9/04 |
|
|
|
11/04 |
|
|
|
2,466,690 |
|
|
|
2,709,000 |
|
|
|
|
|
|
|
|
|
|
|
5,175,690 |
(7) |
TIC interests in Walgreens
Fairborn, OH |
|
|
9/04 |
|
|
|
11/04 |
|
|
|
2,372,750 |
|
|
|
2,617,000 |
|
|
|
|
|
|
|
|
|
|
|
4,989,750 |
(7) |
TIC interests in Walgreens
Edgewood, NM |
|
|
9/04 |
|
|
|
11/04 |
|
|
|
1,903,340 |
|
|
|
2,128,000 |
|
|
|
|
|
|
|
|
|
|
|
4,031,340 |
(7) |
TIC interests in Walgreens
Richmond, OH |
|
|
10/04 |
|
|
|
5/05 |
|
|
|
3,056,970 |
|
|
|
3,387,000 |
|
|
|
|
|
|
|
|
|
|
|
6,443,970 |
(7) |
TIC interests in Walgreens
Orlando, FL |
|
|
10/04 |
|
|
|
5/05 |
|
|
|
2,195,810 |
|
|
|
2,417,000 |
|
|
|
|
|
|
|
|
|
|
|
4,612,810 |
(7) |
TIC interests in Walgreens
Garfield Heights, OH |
|
|
11/04 |
|
|
|
8/05 |
|
|
|
2,664,900 |
|
|
|
3,128,000 |
|
|
|
|
|
|
|
|
|
|
|
5,792,900 |
(7) |
TIC interests in Home Depot
Tacoma, WA |
|
|
1/05 |
|
|
|
6/05 |
|
|
|
10,564,495 |
|
|
|
17,323,000 |
|
|
|
|
|
|
|
|
|
|
|
27,887,495 |
(7) |
DST interests in Walgreens
Pineville, LA |
|
|
1/05 |
|
|
|
6/05 |
|
|
|
1,871,330 |
|
|
|
2,923,000 |
|
|
|
|
|
|
|
|
|
|
|
4,794,330 |
(11) |
DST interests in Walgreens
Bartlett, TN |
|
|
1/05 |
|
|
|
6/05 |
|
|
|
1,805,960 |
|
|
|
2,950,000 |
|
|
|
|
|
|
|
|
|
|
|
4,755,960 |
(11) |
DST interests in Walgreens
Sidney, OH |
|
|
1/05 |
|
|
|
6/05 |
|
|
|
1,753,840 |
|
|
|
2,899,000 |
|
|
|
|
|
|
|
|
|
|
|
4,652,840 |
(11) |
DST interests in Walgreens
Wichita Falls, TX |
|
|
2/05 |
|
|
|
6/05 |
|
|
|
1,794,010 |
|
|
|
2,959,000 |
|
|
|
|
|
|
|
|
|
|
|
4,753,010 |
(11) |
DST interests in Walgreens
Nashville, TN |
|
|
5/05 |
|
|
|
8/05 |
|
|
|
2,284,000 |
|
|
|
3,692,000 |
|
|
|
|
|
|
|
|
|
|
|
5,976,000 |
(11) |
DST interests in Walgreens
Metairie, LA |
|
|
7/05 |
|
|
|
12/05 |
|
|
|
3,336,420 |
|
|
|
5,400,000 |
|
|
|
|
|
|
|
|
|
|
|
8,736,420 |
(11) |
DST interests in Wal-Mart
Hazard, KY |
|
|
9/05 |
|
|
|
10/05 |
|
|
|
11,511,420 |
|
|
|
19,715,000 |
|
|
|
|
|
|
|
|
|
|
|
31,226,420 |
(11) |
DST interests in Walgreens
Sumter, SC |
|
|
11/05 |
|
|
|
3/06 |
|
|
|
1,924,830 |
|
|
|
3,153,000 |
|
|
|
|
|
|
|
|
|
|
|
5,077,830 |
(11) |
DST interests in Home Depot
Bellingham, WA (8) |
|
|
12/05 |
|
|
|
4/06 |
|
|
|
22,453,966 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
22,453,966 |
(11) |
Past performance is not necessarily indicative of future results
A-58
TABLE V
RESULTS OF SALES OR DISPOSALS OF PROPERTIES (UNAUDITED) (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling Price, Net
of Closing Costs and GAAP Adjustments |
|
|
|
|
|
|
|
|
|
|
|
Cash |
|
|
|
|
|
|
Purchase Money |
|
|
Adjustments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Received Net |
|
|
Mortgage |
|
|
Mortgage Taken |
|
|
Resulting from |
|
|
|
|
|
|
Date |
|
|
Date |
|
|
of Closing |
|
|
Balance at |
|
|
Back by |
|
|
Application of |
|
|
|
|
Property |
|
Acquired |
|
|
of Sale |
|
|
Costs |
|
|
Time of Sale |
|
|
Program |
|
|
GAAP (4) |
|
|
Total (1) |
|
Cole Collateralized Senior
Notes III, LLC |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DST interests in Walgreens
Derby, KS |
|
|
4/05 |
|
|
|
8/05 |
|
|
$ |
2,098,910 |
|
|
$ |
3,322,000 |
|
|
$ |
|
|
|
$ |
|
|
|
$ |
5,420,910 |
(11) |
DST interests in Walgreens
Blue Springs, MO |
|
|
4/05 |
|
|
|
8/05 |
|
|
|
1,686,830 |
|
|
|
2,680,000 |
|
|
|
|
|
|
|
|
|
|
|
4,366,830 |
(11) |
DST interests in Walgreens
Garden City, KS |
|
|
4/05 |
|
|
|
8/05 |
|
|
|
2,023,760 |
|
|
|
3,211,000 |
|
|
|
|
|
|
|
|
|
|
|
5,234,760 |
(11) |
DST interests in Walgreens
Pittsburg, KS |
|
|
4/05 |
|
|
|
8/05 |
|
|
|
1,801,540 |
|
|
|
2,834,000 |
|
|
|
|
|
|
|
|
|
|
|
4,635,540 |
(11) |
DST interests in Walgreens
Gladstone, MO |
|
|
4/05 |
|
|
|
10/05 |
|
|
|
2,269,960 |
|
|
|
3,794,000 |
|
|
|
|
|
|
|
|
|
|
|
6,063,960 |
(11) |
DST interests in Walgreens
Salt Lake City, UT |
|
|
6/05 |
|
|
|
10/05 |
|
|
|
2,889,420 |
|
|
|
4,809,000 |
|
|
|
|
|
|
|
|
|
|
|
7,698,420 |
(11) |
DST interests in Walgreens
Sandy, UT |
|
|
6/05 |
|
|
|
11/05 |
|
|
|
2,886,440 |
|
|
|
4,735,000 |
|
|
|
|
|
|
|
|
|
|
|
7,621,440 |
(11) |
DST interests in Walgreens
Midvale, UT (12) |
|
|
6/05 |
|
|
|
1/06 |
|
|
|
2,083,520 |
|
|
|
3,373,000 |
|
|
|
|
|
|
|
|
|
|
|
5,456,520 |
(11) |
DST interests in Walgreens
Natchitoches, LA |
|
|
10/05 |
|
|
|
2/06 |
|
|
|
1,569,480 |
|
|
|
2,511,000 |
|
|
|
|
|
|
|
|
|
|
|
4,080,480 |
(11) |
Cole Collateralized Senior
Notes IV, LLC |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TIC interests in Best Buy
Baytown, TX |
|
|
10/05 |
|
|
|
4/06 |
|
|
|
7,695,390 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,695,390 |
(7) |
DST interests in Kohls
St. Joseph, MO |
|
|
11/05 |
|
|
|
7/06 |
|
|
|
3,721,860 |
|
|
|
6,195,000 |
|
|
|
|
|
|
|
|
|
|
|
9,916,860 |
(11) |
TIC interests in Shoppes at North Village
St. Joseph, MO (10) |
|
|
11/05 |
|
|
|
7/06 |
|
|
|
18,716,330 |
|
|
|
30,856,000 |
|
|
|
|
|
|
|
|
|
|
|
49,572,330 |
(7) |
DST interests in Barrywoods Crossing
Kansas City, MO |
|
|
6/06 |
|
|
|
12/06 |
|
|
|
12,119,583 |
|
|
|
19,071,488 |
|
|
|
|
|
|
|
|
|
|
|
31,191,071 |
(13) |
Cole Net Lease Portfolio I DST
Interests in Various Properties |
|
|
Various |
|
|
|
11/06 |
|
|
|
8,601,750 |
|
|
|
13,881,000 |
|
|
|
|
|
|
|
|
|
|
|
22,482,750 |
(14) |
Cole Net Lease Portfolio II DST
Interests in Various Properties |
|
|
Various |
|
|
|
11/06 |
|
|
|
8,984,830 |
|
|
|
14,540,000 |
|
|
|
|
|
|
|
|
|
|
|
23,524,830 |
(14) |
Cole Net Lease Portfolio III DST
Interests in Various Properties (9) |
|
|
Various |
|
|
|
12/06 |
|
|
|
1,726,798 |
|
|
|
2,891,420 |
|
|
|
|
|
|
|
|
|
|
|
4,618,218 |
(14) |
Past performance is not necessarily indicative of future results
A-59
TABLE V
RESULTS OF SALES OR DISPOSALS OF PROPERTIES (UNAUDITED) (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost
of Properties Including Closing and Soft Costs |
|
|
|
|
|
|
|
|
|
|
Total Acquisition |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost, Capital |
|
|
|
|
|
|
Excess (Deficiency) of |
|
|
|
Original |
|
|
Improvements, |
|
|
|
|
|
|
Property Operating |
|
|
|
Mortgage |
|
|
Closing and Soft |
|
|
|
|
|
|
Cash Receipts Over |
|
Property |
|
Financing |
|
|
Costs (2) |
|
|
Total |
|
|
Cash Expenditures |
|
Cole Collateralized Senior Notes, LLC |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restaurant sales (3) |
|
$ |
21,627,215 |
|
|
$ |
10,312,634 |
|
|
$ |
31,939,849 |
|
|
$ |
1,689,803 |
|
TIC interests in Staples in
Tulsa, OK |
|
|
2,800,000 |
|
|
|
773,335 |
|
|
|
3,573,335 |
|
|
|
87,156 |
|
TIC interests in Mimis Café
Lone Tree, CO |
|
|
1,361,168 |
|
|
|
278,141 |
|
|
|
1,639,309 |
|
|
|
56,390 |
|
TIC interests in Walgreens
Westheimer, TX |
|
|
5,800,000 |
|
|
|
1,758,679 |
|
|
|
7,558,679 |
|
|
|
(2,136 |
) |
TIC interests in Walgreens
Slidell, LA |
|
|
3,200,000 |
|
|
|
967,240 |
|
|
|
4,167,240 |
|
|
|
23,507 |
|
TIC interests in Home Depot
Spokane, WA |
|
|
16,760,000 |
|
|
|
4,983,250 |
|
|
|
21,743,250 |
|
|
|
121,196 |
|
TIC interests in Walgreens
Covington, TN |
|
|
3,064,000 |
|
|
|
942,170 |
|
|
|
4,006,170 |
|
|
|
40,574 |
|
TIC interests in Walgreens
Glen Burnie, MD |
|
|
3,369,000 |
|
|
|
3,006,675 |
|
|
|
6,375,675 |
|
|
|
68,054 |
|
TIC interests in Walgreens
Ponca City, OK |
|
|
3,648,000 |
|
|
|
927,950 |
|
|
|
4,575,950 |
|
|
|
122,932 |
|
DST interests in Walgreens
Chicago, IL |
|
|
6,404,000 |
|
|
|
1,067,300 |
|
|
|
7,471,300 |
|
|
|
62,699 |
|
DST interests in Walgreens
Southington, CT |
|
|
5,513,000 |
|
|
|
918,607 |
|
|
|
6,431,607 |
|
|
|
39,300 |
|
TIC interests in Gander Mountain
Spring, TX |
|
|
7,052,400 |
|
|
|
5,117,100 |
|
|
|
12,169,500 |
|
|
|
162,315 |
|
TIC interests in Gander Mountain
Hermantown, MN (8) |
|
|
6,291,600 |
|
|
|
527,120 |
|
|
|
10,818,720 |
|
|
|
98,418 |
|
DST
interests in Kohls
Lakewood, CO |
|
|
13,520,000 |
|
|
|
4,785,130 |
|
|
|
18,305,130 |
|
|
|
92,705 |
|
Cole Collateralized Senior
Notes II, LLC |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TIC interests in Walgreens
Windsor, CO |
|
|
3,900,000 |
|
|
|
1,364,460 |
|
|
|
5,264,460 |
|
|
|
48,793 |
|
TIC interests in Walgreens
Goldsboro, NC |
|
|
3,691,000 |
|
|
|
1,224,495 |
|
|
|
4,915,495 |
|
|
|
41,197 |
|
TIC interests in Walgreens
Hamilton, OH |
|
|
4,321,000 |
|
|
|
1,380,298 |
|
|
|
5,701,298 |
|
|
|
49,394 |
|
TIC interests in Walgreens
Carlsbad, NM |
|
|
3,298,000 |
|
|
|
1,083,107 |
|
|
|
4,381,107 |
|
|
|
39,608 |
|
TIC interests in Walgreens
Willimantic, CT |
|
|
4,000,000 |
|
|
|
1,175,689 |
|
|
|
5,175,689 |
|
|
|
35,170 |
|
TIC interests in Walgreens
Fairborn, OH |
|
|
3,944,000 |
|
|
|
1,045,750 |
|
|
|
4,989,750 |
|
|
|
37,949 |
|
TIC interests in Walgreens
Edgewood, NM |
|
|
3,200,000 |
|
|
|
831,340 |
|
|
|
4,031,340 |
|
|
|
36,744 |
|
TIC interests in Walgreens
Richmond, OH |
|
|
4,800,000 |
|
|
|
1,643,970 |
|
|
|
6,443,970 |
|
|
|
15,139 |
|
TIC interests in Walgreens
Orlando, FL |
|
|
3,490,709 |
|
|
|
1,122,101 |
|
|
|
4,612,810 |
|
|
|
51,187 |
|
TIC interests in Walgreens
Garfield Heights, OH |
|
|
3,128,000 |
|
|
|
2,664,900 |
|
|
|
5,792,900 |
|
|
|
158,491 |
|
TIC interests in Home Depot
Tacoma, WA |
|
|
21,320,000 |
|
|
|
6,567,495 |
|
|
|
27,887,495 |
|
|
|
367,279 |
|
DST interests in Walgreens
Pineville, LA |
|
|
4,047,000 |
|
|
|
747,330 |
|
|
|
4,794,330 |
|
|
|
64,220 |
|
DST interests in Walgreens
Bartlett, TN |
|
|
4,084,000 |
|
|
|
671,961 |
|
|
|
4,755,961 |
|
|
|
58,721 |
|
DST interests in Walgreens
Sidney, OH |
|
|
4,014,000 |
|
|
|
638,840 |
|
|
|
4,652,840 |
|
|
|
53,334 |
|
DST interests in Walgreens
Wichita Falls, TX |
|
|
4,097,000 |
|
|
|
656,010 |
|
|
|
4,753,010 |
|
|
|
41,590 |
|
DST interests in Walgreens
Nashville, TN |
|
|
5,112,000 |
|
|
|
864,000 |
|
|
|
5,976,000 |
|
|
|
45,014 |
|
DST interests in Walgreens
Metairie, LA |
|
|
6,646,000 |
|
|
|
2,090,420 |
|
|
|
8,736,420 |
|
|
|
101,106 |
|
DST interests in Wal-Mart
Hazard, KY |
|
|
24,264,000 |
|
|
|
6,962,420 |
|
|
|
31,226,420 |
|
|
|
103,174 |
|
DST interests in Walgreens
Sumter, SC |
|
|
3,880,000 |
|
|
|
1,197,830 |
|
|
|
5,077,830 |
|
|
|
23,647 |
|
DST interests in Home Depot
Bellingham, WA (8) |
|
|
17,040,000 |
|
|
|
5,413,966 |
|
|
|
22,453,966 |
|
|
|
641,950 |
|
Past performance is not necessarily indicative of future results.
A-60
TABLE V
RESULTS OF SALES OR DISPOSALS OF PROPERTIES (UNAUDITED) (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of Properties Including Closing and Soft Costs |
|
|
|
|
|
|
|
|
|
|
Total Acquisition |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost, Capital |
|
|
|
|
|
|
Excess (Deficiency) of |
|
|
|
Original |
|
|
Improvements, |
|
|
|
|
|
|
Property Operating |
|
|
|
Mortgage |
|
|
Closing and Soft |
|
|
|
|
|
|
Cash Receipts Over |
|
Property |
|
Financing |
|
|
Costs (2) |
|
|
Total |
|
|
Cash Expenditures |
|
Cole Collateralized Senior
Notes III, LLC |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DST interests in Walgreens
Derby, KS |
|
$ |
4,600,000 |
|
|
$ |
820,910 |
|
|
$ |
5,420,910 |
|
|
$ |
35,171 |
|
DST interests in Walgreens
Blue Springs, MO |
|
|
3,711,000 |
|
|
|
655,829 |
|
|
|
4,366,829 |
|
|
|
29,473 |
|
DST interests in Walgreens
Garden City, KS |
|
|
4,445,000 |
|
|
|
789,760 |
|
|
|
5,234,760 |
|
|
|
36,290 |
|
DST interests in Walgreens
Pittsburg, KS |
|
|
3,925,000 |
|
|
|
710,539 |
|
|
|
4,635,539 |
|
|
|
37,866 |
|
DST interests in Walgreens
Gladstone, MO |
|
|
5,253,000 |
|
|
|
810,960 |
|
|
|
6,063,960 |
|
|
|
47,512 |
|
DST interests in Walgreens
Salt Lake City, UT |
|
|
6,615,000 |
|
|
|
1,083,420 |
|
|
|
7,698,420 |
|
|
|
68,428 |
|
DST interests in Walgreens
Sandy, UT |
|
|
6,556,000 |
|
|
|
1,065,440 |
|
|
|
7,621,440 |
|
|
|
68,824 |
|
DST interests in Walgreens
Midvale, UT (12) |
|
|
4,671,000 |
|
|
|
785,520 |
|
|
|
5,456,520 |
|
|
|
36,972 |
|
DST interests in Walgreens
Natchitoches, LA |
|
|
3,091,000 |
|
|
|
989,480 |
|
|
|
4,080,480 |
|
|
|
20,459 |
|
Cole Collateralized Senior
Notes IV, LLC |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TIC interests in Best Buy
Baytown, TX |
|
|
|
|
|
|
7,695,390 |
|
|
|
7,695,390 |
|
|
|
190,589 |
|
DST interests in Kohls
St. Joseph, MO |
|
|
7,624,000 |
|
|
|
2,292,860 |
|
|
|
9,916,860 |
|
|
|
160,290 |
|
TIC interests in Shoppes at North Village
St. Joseph, MO (10) |
|
|
37,976,000 |
|
|
|
11,596,330 |
|
|
|
49,572,330 |
|
|
|
592,214 |
|
DST interests in Barrywoods Crossing
Kansas City, MO |
|
|
25,769,720 |
|
|
|
5,421,351 |
|
|
|
31,191,071 |
|
|
|
445,582 |
|
DST interests in Cole
Net Lease Properties I |
|
|
17,084,000 |
|
|
|
5,398,750 |
|
|
|
22,482,750 |
|
|
|
123,093 |
|
DST
interests in Cole
Net Lease Properties II |
|
|
10,533,000 |
|
|
|
12,991,830 |
|
|
|
23,524,830 |
|
|
|
276,999 |
|
DST
interests in Cole
Net Lease Properties III (9) |
|
|
3,518,148 |
|
|
|
1,100,070 |
|
|
|
4,618,218 |
|
|
|
284,936 |
|
Past
performance is not necessarily indicative of future results.
A-61
NOTES TO TABLE V
|
|
|
(1) |
|
None of the amounts are being reported for tax purposes on the installment basis. See Table IV for allocation
of the taxable gains between ordinary and capital income for all
sales except as noted in footnotes (5) and (6). |
|
(2) |
|
The amounts shown do not include a pro rata share of the original offering costs. There were no carried
interests received in lieu of commissions in connection with the acquisition of the property. |
|
(3) |
|
Amounts represent the combined amounts of twenty-two restaurants sold in separate transactions. |
|
(4) |
|
As the financial statements are prepared on an income tax basis, there are no GAAP adjustments included herein. |
|
(5) |
|
The sale resulted in no ordinary income and a capital gain of approximately $291,000. |
|
(6) |
|
The sales resulted in no ordinary income and capital gains totaling approximately $6,333,000. |
|
(7) |
|
Amounts herein relate to the sale of tenant-in-common interests in a single-tenant commercial property. There
was no gain or loss related to the sales as the interests in the property were sold at cost, with each purchaser
acquiring their interest with cash and the assumption of a pro-rata portion of any existing loan on the property. |
|
(8) |
|
Amounts relate to the sale of an aggregate 99% interest in
the property to various Delaware Statutory Trust investors
through the Cole Capital Partners Delaware Statutory Trust Program. |
|
(9) |
|
Amounts relate to the sale of an aggregate 12% interest in the property to various Delaware statutory trust
investors through the Cole Capital Partners Delaware Statutory Trust Program. |
|
(10) |
|
Amounts relate to the sale of an aggregate 67% interest in the property to various Delaware Statutory Trust investors
through the Cole Capital Partners Delaware Statutory Trust Program. |
|
(11) |
|
Amounts herein relate to the sale of Delaware Statutory Trust interests in a single-tenant commercial
property. There was no gain or loss related to the sales as the interests in the property were sold at cost, with
each purchaser acquiring their interest with cash and the assumption of a pro-rata portion of any existing loan on
the property. |
|
(12) |
|
This Property was acquired by a joint venture between Cole Collateralized Senior Notes, LLC, Cole
Collateralized Senior Notes II, LLC, Cole Collateralized Senior Notes III, LLC, and Cole Collateralized Senior
Notes IV, LLC. |
|
(13) |
|
Amounts herein relate to the sale of Delaware Statutory Trust
interests in a multi-tenant commercial property. There was no gain or
loss related to the sales as the interests in the property were sold
at cost, with each purchaser acquiring their interest with cash and
the assumption of a pro-rata portion of any existing loan on the
property. |
|
(14) |
|
Amounts herein relate to the sale of Delaware Statutory Trust
interests in a portfolio of single-tenant commercial properties.
There was no gain or loss related to the sales as the interests in
the property were sold at cost, with each purchaser acquiring their
interest with cash and the assumption of a pro-rata portion of any
existing loan on the property. |
A-63
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 31. Other Expenses of Issuance and Distribution
The following table sets forth the costs and expenses, other than selling commissions, to be
paid by us while issuing and distributing the common stock being registered. All amounts are
estimates and assume the sale of 55,342,000 shares except the registration fee and the NASD filing
fee.
|
|
|
|
|
SEC Registration Fee |
|
$ |
68,397 |
|
NASD Filing Fee |
|
|
30,500 |
|
Printing Expenses |
|
|
800,000 |
|
Legal Fees and Expenses |
|
|
500,000 |
|
Accounting Fees and Expenses |
|
|
125,000 |
|
Blue Sky Fees and Expenses |
|
|
149,068 |
|
Educational Seminars and Conferences |
|
|
750,000 |
|
Due Diligence Expenses (Retailing) |
|
|
750,000 |
|
Advertising and Sales Literature |
|
|
1,250,000 |
|
Advertising and Sales Expenses |
|
|
2,500,000 |
|
Miscellaneous |
|
|
518,700 |
|
|
|
|
|
|
|
|
|
|
Total expenses |
|
$ |
7,441,665 |
|
|
|
|
|
Item 32. Sales to Special Parties
Item 33. Recent Sales of Unregistered Securities
In connection with our incorporation, we issued 20,000 shares of our common stock to Cole
Holdings Corporation for $10.00 per share in a private offering on September 29, 2004. Such
offering was exempt from the registration requirements pursuant to Section 4(2) of the Securities
Act.
Item 34. Indemnification of the Officers and Directors
The Maryland General Corporation Law, as amended (the MGCL), permits a Maryland corporation
to include in its charter a provision limiting the liability of its directors and officers to the
corporation and its stockholders for money damages except for liability resulting from (a) actual
receipt of an improper benefit or profit in money, property or services or (b) active and
deliberate dishonesty established by a final judgment as being material to the cause of action. Our
charter contains a provision that eliminates directors and officers liability to the maximum
extent permitted by Maryland law.
The MGCL requires a Maryland corporation (unless its charter provides otherwise, which our
charter does not) to indemnify a director or officer who has been successful, on the merits or
otherwise, in the defense of any proceeding to which he or she is made a party by reason of his
service in that capacity. The MGCL permits a Maryland corporation to indemnify its present and
former directors and officers, among others, against judgments, penalties, fines, settlements and
reasonable expenses actually incurred by
them in connection with any proceeding to which they may be made a party by reason of their service
in those or other capacities unless it is established that (a) the act or omission of the director
or officer was material to the matter giving rise to the proceeding and (i) was committed in bad
faith or (ii) was the result of active and deliberate dishonesty, (b) the director or officer
actually received an improper personal benefit in money, property or services or (c) in the case of
any criminal proceeding, the director or officer had reasonable cause to believe that the act or
omission was unlawful. However, under the MGCL a Maryland corporation may not indemnify for an
adverse judgment in a suit by or in the right of the corporation or for a judgment of liability on
the basis that personal benefit was improperly received, unless
II-1
in either case a court orders indemnification and then only for expenses. In addition, the MGCL
permits a corporation to advance reasonable expenses to a director or officer upon the
corporations receipt of (a) a written affirmation by the director or officer of his good faith
belief that he or she has met the standard of conduct necessary for indemnification and (b) a
written undertaking by or on his behalf to repay the amount paid or reimbursed if it shall
ultimately be determined that the standard of conduct was not met. It is the position of the
Commission that indemnification of directors and officers for liabilities arising under the
Securities Act is against public policy and is unenforceable pursuant to Section 14 of the
Securities Act.
Our charter provides that we shall indemnify and hold harmless a director, officer, employee,
agent, advisor or affiliate against any and all losses or liabilities reasonably incurred by such
director, officer, employee, agent, advisor or affiliate in connection with or by reason of any act
or omission performed or omitted to be performed on our behalf in such capacity.
However, under our charter, we shall not indemnify the directors, officers, employees, agents,
advisor or any affiliate for any liability or loss suffered by the directors, officers, employees,
agents, advisors or affiliates, nor shall we provide that the directors, officers, employees,
agents, advisors or affiliates be held harmless for any loss or liability suffered by us, unless
all of the following conditions are met: (i) the directors, officers, employees, agents, advisor or
affiliates have determined, in good faith, that the course of conduct which caused the loss or
liability was in our best interests; (ii) the directors, officers, employees, agents, advisor or
affiliates were acting on our behalf or performing services for us; (iii) such liability or loss
was not the result of (A) negligence or misconduct by the directors, excluding the independent
directors, officers, employees, agents, advisors or affiliates; or (B) gross negligence or willful
misconduct by the independent directors; and (iv) such indemnification or agreement to hold
harmless is recoverable only out of our net assets and not from stockholders. Notwithstanding the
foregoing, the directors, officers, employees, agents, advisors or affiliates and any persons
acting as a broker-dealer shall not be indemnified by us for any losses, liability or expenses
arising from or out of an alleged violation of federal or state securities laws by such party
unless one or more of the following conditions are met: (i) there has been a successful
adjudication on the merits of each count involving alleged securities law violations as to the
particular indemnitee; (ii) such claims have been dismissed with prejudice on the merits by a court
of competent jurisdiction as to the particular indemnitee; and (iii) a court of competent
jurisdiction approves a settlement of the claims against a particular indemnitee and finds that
indemnification of the settlement and the related costs should be made, and the court considering
the request for indemnification has been advised of the position of the Securities and Exchange
Commission and of the published position of any state securities regulatory authority in which our
securities were offered or sold as to indemnification for violations of securities laws.
Our charter provides that the advancement of funds to our directors, officers, employees,
agents, advisors or affiliates for legal expenses and other costs incurred as a result of any legal
action for which indemnification is being sought is permissible only if all of the following
conditions are satisfied: (i) the legal action relates to acts or omissions with respect to the
performance of duties or services on our behalf; (ii) the legal action is initiated by a third
party who is not a stockholder or the legal action is initiated by a stockholder acting in his or
her capacity as such and a court of competent jurisdiction specifically approves such advancement;
(iii) the directors, officers, employees, agents, advisor or affiliates undertake to repay the
advanced funds to us together with the applicable legal rate of interest thereon, in cases in which
such directors, officers, employees, agents, advisor or affiliates are found not to be entitled to
indemnification.
We also have purchased and maintain insurance on behalf of all of our directors and executive
officers against liability asserted against or incurred by them in their official capacities with
us, whether or not we are required or have the power to indemnify them against the same liability.
II-2
Item 35. Treatment of Proceeds from Stock Being Registered
Not Applicable
Item 36. Financial Statements and Exhibits
|
(a) |
|
Financial Statements: The list of the financial statements
filed as part of this Post-Effective Amendment No. 9 to the
Form S-11 is set forth on page F-1 herein. |
|
|
(b) |
|
Exhibits: The list of exhibits filed as part of this
Post-Effective Amendment No. 9 to Form S-11 is submitted in
the Exhibit Index following the Signature pages herein. |
II-3
Item 37. Undertakings
(a) The Registrant undertakes to file, during any period in which offers or sales are
being made, a post-effective amendment to this Registration Statement (i) to include any prospectus
required by Section 10(a)(3) of the Securities Act; (ii) to reflect in the prospectus any facts or
events arising after the effective date of this Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental
change in the information set forth in the Registration Statement; and (iii) to include any
material information with respect to the plan of distribution not previously disclosed in the
Registration Statement or any material change to such information in the Registration Statement.
(b) The Registrant undertakes (i) that, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment may be deemed to be a new registration statement
relating to the securities offered therein and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof, (ii) that all post-effective amendments
will comply with the applicable forms, rules and regulations of the Securities and Exchange
Commission in effect at the time such post-effective amendments are filed, and (iii) to remove from
registration by means of a post-effective amendment any of the securities being registered which
remain unsold at the termination of the offering.
(c) The Registrant undertakes to send to each stockholder, at least on an annual basis, a
detailed statement of any transactions with the advisor or its affiliates, and of fees,
commissions, compensation and other benefits paid, or accrued to the advisor or its affiliates, for
the fiscal year completed, showing the amount paid or accrued to each recipient and the services
performed.
(d) The Registrant undertakes to file a sticker supplement pursuant to Rule 424(c) under the
Securities Act during the distribution period describing each property not identified in the
prospectus at such time as there arises a reasonable probability that such property will be
acquired and to consolidate all such stickers into a post-effective amendment filed at least once
every three months, with the information contained in such amendment provided simultaneously to the
existing stockholders. Each sticker supplement should disclose all compensation and fees received
by the advisor and its affiliates in connection with any such acquisition. The post-effective
amendment shall include audited financial statements meeting the requirements of Rule 3-14 of
Regulation S-X only for properties acquired during the distribution period.
(e) The Registrant undertakes to file, after the end of the distribution period, a current
report on Form 8-K containing the financial statements and any additional information required by
Rule 3-14 of Regulation S-X, to reflect each commitment (i.e., the signing of a binding purchase
agreement) made after the end of the distribution period involving the use of 10.0% or more (on a
cumulative basis) of the net proceeds of the offering and to provide the information contained in
such report to the stockholders at least once each quarter after the distribution period of the
offering has ended.
II-4
(f) The Registrant undertakes that, for the purposes of determining liability under the
Securities Act to any purchaser, each prospectus filed pursuant to Rule 424(b) under the Securities
Act as part a registration statement relating to an offering, other than registration statements
relying on Rule 430B under the Securities Act or other than prospectuses filed in reliance on Rule
430A under the Securities Act, shall be deemed to be part of and included in the Registration
Statement as of the date it is first used after effectiveness; provided, however, that no statement
made in a registration statement or prospectus that is part of the Registration Statement or made
in a document incorporated or deemed incorporated by reference into the Registration Statement or
prospectus that is part of the Registration Statement will, as to a purchaser with a time of
contract of sale prior to such first use, supersede or modify any statement that was made in the
Registration Statement or prospectus that was part of the Registration Statement or made in any
such document immediately prior to such date of first use.
(g) For the purpose of determining liability of the Registrant under the Securities Act to any
purchaser in the initial distribution of the securities, the undersigned Registrant undertakes that
in a primary offering of securities of the undersigned Registrant pursuant to this Registration
Statement, regardless of the underwriting method used to sell the securities to the purchaser, if
the securities are offered or sold to such purchaser by means of any of the following
communications, the undersigned Registrant will be a seller to the purchaser and will be considered
to offer or sell such securities to such purchaser: (i) any preliminary prospectus or prospectus
of the undersigned Registrant relating to the offering required to be filed pursuant to Rule 424
under the Securities Act; (ii) any free writing prospectus relating to the offering prepared by or
on behalf of the undersigned Registrant or used or referred to by the undersigned Registrant; (iii)
the portion of any other free writing prospectus relating to the offering containing material
information about the undersigned Registrant or its securities provided by or on behalf of the
undersigned Registrant; and (iv) any other communication that is an offer in the offering made by
the undersigned Registrant to the purchaser.
(h) The Registrant undertakes to provide to the stockholders the financial statements as
required by Form 10-K for the first full fiscal year of the Registrants operations.
(i) Insofar as indemnification for liabilities arising under the Securities Act may be
permitted to directors, officers and controlling persons of the Registrant pursuant to the
foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy as expressed in
the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses incurred or paid by
a director, officer or controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public policy as expressed
in the Securities Act and will be governed by the final adjudication of such issue.
II-5
TABLE VI (UNAUDITED)
ACQUISITION OF PROPERTIES BY PROGRAMS
Table VI presents summary information on properties acquired in the three years ended December 31, 2006 by Prior Real Estate Programs
with similar investment objectives. This table provides information regarding the general type and location of the properties and the manner
in which the properties were acquired.
|
|
|
|
|
|
|
|
|
|
|
Cole Credit Property |
|
|
Cole Credit Property |
|
|
|
|
Program: |
|
Fund II LP |
|
|
Fund II LP |
|
|
|
TJ Maxx |
|
AT&T Wireless |
|
|
Stauton, VA |
|
Santa Clara, CA |
Name, location, type of property |
|
Retail |
|
Office |
Gross leasable square footage |
|
|
78,823 |
|
|
|
33,257 |
|
Date of purchase |
|
|
02/06/04 |
|
|
|
03/08/04 |
|
Mortgage financing at date of purchase |
|
$ |
|
|
|
$ |
7,048,000 |
|
Cash down payment |
|
|
4,794,000 |
|
|
|
2,232,300 |
|
|
|
|
|
|
|
|
Contract purchase price plus acquisition fee |
|
|
4,794,000 |
|
|
|
9,280,300 |
|
Other cash expenditures expensed |
|
|
|
|
|
|
|
|
Other cash expenditures capitalized |
|
|
7,070 |
|
|
|
12,958 |
|
|
|
|
|
|
|
|
Total acquisition cost |
|
$ |
4,801,070 |
|
|
$ |
9,293,258 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cole Credit Property |
|
|
Cole Credit Property |
|
|
Cole Credit Property |
|
Program: |
|
Fund II LP |
|
|
Fund II LP |
|
|
Fund II LP |
|
|
|
Walgreens |
|
Walgreens |
|
CVS Pharmacy |
|
|
Tulsa, OK |
|
Crossville, TN |
|
Columbia, TN |
Name, location, type of property |
|
Retail |
|
Retail |
|
Retail |
Gross leasable square footage |
|
|
13,500 |
|
|
|
15,070 |
|
|
|
10,722 |
|
Date of purchase |
|
|
03/22/04 |
|
|
|
03/23/04 |
|
|
|
05/28/04 |
|
Mortgage financing at date of purchase |
|
$ |
|
|
|
$ |
3,363,981 |
|
|
$ |
1,860,000 |
|
Cash down payment |
|
|
2,962,750 |
|
|
|
872,079 |
|
|
|
503,850 |
|
|
|
|
|
|
|
|
|
|
|
Contract purchase price plus acquisition fee |
|
|
2,962,750 |
|
|
|
4,236,060 |
|
|
|
2,363,850 |
|
Other cash expenditures expensed |
|
|
|
|
|
|
|
|
|
|
|
|
Other cash expenditures capitalized |
|
|
15,183 |
|
|
|
23,808 |
|
|
|
23,365 |
|
|
|
|
|
|
|
|
|
|
|
Total acquisition cost |
|
$ |
2,977,933 |
|
|
$ |
4,259,868 |
|
|
$ |
2,387,215 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cole Credit Property |
|
|
Cole Credit Property |
|
|
Cole Credit Property |
|
Program: |
|
Fund II LP |
|
|
Fund II LP |
|
|
Trust, Inc. |
|
|
|
CVS Pharmacy |
|
Walgreens |
|
WaWa |
|
|
Columbia, TN |
|
Newton, IA |
|
Clifton Heights, PA |
|
Name, location, type of property |
|
Retail |
|
Retail |
|
Retail |
Gross leasable square footage |
|
|
10,722 |
|
|
|
15,120 |
|
|
|
4,694 |
|
Date of purchase |
|
|
05/28/04 |
|
|
|
10/01/04 |
|
|
|
07/30/04 |
|
Mortgage financing at date of purchase |
|
$ |
1,840,000 |
|
|
$ |
2,393,000 |
|
|
$ |
2,270,297 |
|
Cash down payment |
|
|
554,750 |
|
|
|
2,087,500 |
|
|
|
1,499,136 |
|
|
|
|
|
|
|
|
|
|
|
Contract purchase price plus acquisition fee |
|
|
2,394,750 |
|
|
|
4,480,500 |
|
|
|
3,769,433 |
|
Other cash expenditures expensed |
|
|
|
|
|
|
|
|
|
|
|
|
Other cash expenditures capitalized |
|
|
23,480 |
|
|
|
19,868 |
|
|
|
93,809 |
|
|
|
|
|
|
|
|
|
|
|
Total acquisition cost |
|
$ |
2,418,230 |
|
|
$ |
4,500,368 |
|
|
$ |
3,863,242 |
|
|
|
|
|
|
|
|
|
|
|
II-6
TABLE VI (UNAUDITED)
ACQUISITIONS OF PROPERTIES BY PROGRAMS (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cole Credit Property |
|
|
Cole Credit Property |
|
|
Cole Credit Property |
|
Program: |
|
Trust, Inc. |
|
|
Trust, Inc. |
|
|
Trust, Inc. |
|
|
|
WaWa |
|
WaWa |
|
Walgreens |
|
|
Newark, DE |
|
Vineland, NJ |
|
Houston, TX |
Name, location, type of property |
|
Retail |
|
Retail |
|
Retail |
Gross leasable square footage |
|
|
5,599 |
|
|
|
5,603 |
|
|
|
12,851 |
|
Date of purchase |
|
|
07/30/04 |
|
|
|
07/30/04 |
|
|
|
08/21/04 |
|
Mortgage financing at date of purchase |
|
$ |
2,708,008 |
|
|
$ |
2,709,943 |
|
|
$ |
|
|
Cash down payment |
|
|
1,788,169 |
|
|
|
1,789,446 |
|
|
|
2,260,850 |
|
|
|
|
|
|
|
|
|
|
|
Contract purchase price plus acquisition fee |
|
|
4,496,177 |
|
|
|
4,499,389 |
|
|
|
2,260,850 |
|
Other cash expenditures expensed |
|
|
|
|
|
|
|
|
|
|
|
|
Other cash expenditures capitalized |
|
|
111,895 |
|
|
|
111,975 |
|
|
|
11,076 |
|
|
|
|
|
|
|
|
|
|
|
Total acquisition cost |
|
$ |
4,608,072 |
|
|
$ |
4,611,364 |
|
|
$ |
2,271,926 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cole Credit Property |
|
|
Cole Credit Property |
|
|
Cole Credit Property |
|
Program: |
|
Trust, Inc. |
|
|
Trust, Inc. |
|
|
Trust, Inc. |
|
|
|
Walgreens |
|
Rite Aid |
|
Rite Aid |
|
|
Lawrence, KS |
|
Memphis, TN |
|
Warren, OH |
Name, location, type of property |
|
Retail |
|
Retail |
|
Retail |
Gross leasable square footage |
|
|
12,885 |
|
|
|
11,064 |
|
|
|
11,267 |
|
Date of purchase |
|
|
09/24/04 |
|
|
|
10/20/04 |
|
|
|
10/28/04 |
|
Mortgage financing at date of purchase |
|
$ |
1,357,185 |
|
|
$ |
|
|
|
|
|
|
Cash down payment |
|
|
1,418,235 |
|
|
|
3,523,483 |
|
|
|
2,620,476 |
|
|
|
|
|
|
|
|
|
|
|
Contract purchase price plus acquisition fee |
|
|
2,775,420 |
|
|
|
3,523,483 |
|
|
|
2,620,476 |
|
Other cash expenditures expensed |
|
|
|
|
|
|
|
|
|
|
|
|
Other cash expenditures capitalized |
|
|
16,432 |
|
|
|
131,434 |
|
|
|
112,226 |
|
|
|
|
|
|
|
|
|
|
|
Total acquisition cost |
|
$ |
2,791,852 |
|
|
$ |
3,654,917 |
|
|
$ |
2,732,702 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cole Credit Property |
|
|
Cole Credit Property |
|
|
Cole Credit Property |
|
Program: |
|
Trust, Inc. |
|
|
Trust, Inc. |
|
|
Trust, Inc. |
|
|
|
CarMax |
|
Walgreens |
|
Walgreens |
|
|
Merriam, KS |
|
Cahokia, IL |
|
Cleveland, OH |
Name, location, type of property |
|
Retail |
|
Retail |
|
Retail |
Gross leasable square footage |
|
|
55,466 |
|
|
|
13,381 |
|
|
|
13,380 |
|
Date of purchase |
|
|
11/15/04 |
|
|
|
11/15/04 |
|
|
|
11/22/04 |
|
Mortgage financing at date of purchase |
|
$ |
14,175,000 |
|
|
$ |
1,305,000 |
|
|
$ |
1,224,000 |
|
Cash down payment |
|
|
4,756,337 |
|
|
|
1,139,705 |
|
|
|
1,067,750 |
|
|
|
|
|
|
|
|
|
|
|
Contract purchase price plus acquisition fee |
|
|
18,931,337 |
|
|
|
2,444,705 |
|
|
|
2,291,750 |
|
Other cash expenditures expensed |
|
|
|
|
|
|
|
|
|
|
|
|
Other cash expenditures capitalized |
|
|
53,171 |
|
|
|
14,192 |
|
|
|
18,671 |
|
|
|
|
|
|
|
|
|
|
|
Total acquisition cost |
|
$ |
18,984,508 |
|
|
$ |
2,458,897 |
|
|
$ |
2,310,421 |
|
|
|
|
|
|
|
|
|
|
|
II-7
TABLE VI (UNAUDITED)
ACQUISITIONS OF PROPERTIES BY PROGRAMS (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cole Credit Property |
|
|
Cole Credit Property |
|
|
Cole Credit Property |
|
Program: |
|
Trust, Inc. |
|
|
Trust, Inc. |
|
|
Trust, Inc. |
|
|
|
Lowes |
|
Lowes |
|
CVS Pharmacy |
|
|
Texas City, TX |
|
Jonesboro, AR |
|
Whiteville, NC |
Name, location, type of property |
|
Retail |
|
Retail |
|
Retail |
Gross leasable square footage |
|
|
130,497 |
|
|
|
126,405 |
|
|
|
10,041 |
|
Date of purchase |
|
|
12/28/04 |
|
|
|
01/14/05 |
|
|
|
03/10/05 |
|
Mortgage financing at date of purchase |
|
$ |
8,800,000 |
|
|
$ |
8,400,000 |
|
|
$ |
1,736,000 |
|
Cash down payment |
|
|
2,480,000 |
|
|
|
2,312,000 |
|
|
|
1,014,100 |
|
|
|
|
|
|
|
|
|
|
|
Contract purchase price plus acquisition fee |
|
|
11,280,000 |
|
|
|
10,712,000 |
|
|
|
2,750,100 |
|
Other cash expenditures expensed |
|
|
|
|
|
|
|
|
|
|
|
|
Other cash expenditures capitalized |
|
|
67,038 |
|
|
|
18,227 |
|
|
|
18,250 |
|
|
|
|
|
|
|
|
|
|
|
Total acquisition cost |
|
$ |
11,347,038 |
|
|
$ |
10,730,227 |
|
|
$ |
2,768,350 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cole Credit Property |
|
|
Cole Credit Property |
|
|
Cole Credit Property |
|
Program: |
|
Trust, Inc. |
|
|
Trust, Inc. |
|
|
Trust, Inc. |
|
|
|
Rite Aid |
|
Tractor Supply |
|
Sherwin Williams |
|
|
Bangor, ME |
|
Woodstock, VA |
|
Ashtabula, OH |
Name, location, type of property |
|
Retail |
|
Retail |
|
Retail |
Gross leasable square footage |
|
|
13,100 |
|
|
|
22,962 |
|
|
|
5,400 |
|
Date of purchase |
|
|
04/14/05 |
|
|
|
04/29/05 |
|
|
|
05/09/05 |
|
Mortgage financing at date of purchase |
|
$ |
3,400,000 |
|
|
$ |
1,658,000 |
|
|
$ |
493,000 |
|
Cash down payment |
|
|
850,000 |
|
|
|
1,357,000 |
|
|
|
265,560 |
|
|
|
|
|
|
|
|
|
|
|
Contract purchase price plus acquisition fee |
|
|
4,250,000 |
|
|
|
3,015,000 |
|
|
|
758,560 |
|
Other cash expenditures expensed |
|
|
|
|
|
|
|
|
|
|
|
|
Other cash expenditures capitalized |
|
|
22,923 |
|
|
|
20,445 |
|
|
|
15,835 |
|
|
|
|
|
|
|
|
|
|
|
Total acquisition cost |
|
$ |
4,272,923 |
|
|
$ |
3,035,445 |
|
|
$ |
774,395 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cole Credit Property |
|
|
Cole Credit Property |
|
|
Cole Credit Property |
|
Program: |
|
Trust, Inc. |
|
|
Trust, Inc. |
|
|
Trust, Inc. |
|
|
|
Sherwin Williams |
|
Sherwin Williams |
|
Apria Healthcare |
|
|
Boardman, OH |
|
Angola, IN |
|
Indianapolis, IN |
Name, location, type of property |
|
Retail |
|
Retail |
|
Healthcare |
Gross leasable square footage |
|
|
6,000 |
|
|
|
5,010 |
|
|
|
83,610 |
|
Date of purchase |
|
|
05/09/05 |
|
|
|
05/09/05 |
|
|
|
05/17/05 |
|
Mortgage financing at date of purchase |
|
$ |
595,000 |
|
|
$ |
709,000 |
|
|
$ |
5,680,000 |
|
Cash down payment |
|
|
320,140 |
|
|
|
382,500 |
|
|
|
1,420,000 |
|
|
|
|
|
|
|
|
|
|
|
Contract purchase price plus acquisition fee |
|
|
915,140 |
|
|
|
1,091,500 |
|
|
|
7,100,000 |
|
Other cash expenditures expensed |
|
|
|
|
|
|
|
|
|
|
|
|
Other cash expenditures capitalized |
|
|
16,572 |
|
|
|
16,509 |
|
|
|
20,950 |
|
|
|
|
|
|
|
|
|
|
|
Total acquisition cost |
|
$ |
931,712 |
|
|
$ |
1,108,009 |
|
|
$ |
7,120,950 |
|
|
|
|
|
|
|
|
|
|
|
II-8
TABLE VI (UNAUDITED)
ACQUISITIONS OF PROPERTIES BY PROGRAMS (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cole Credit Property |
|
|
Cole Credit Property |
|
|
Cole Credit Property |
|
Program: |
|
Trust, Inc. |
|
|
Trust, Inc. |
|
|
Trust, Inc. |
|
|
|
Gander Mountain |
|
CVS Pharmacy |
|
Eckerd |
|
|
Houston, TX |
|
Lago Vista, TX |
|
Spartanburg, SC |
Name, location, type of property |
|
Retail |
|
Retail |
|
Retail |
Gross leasable square footage |
|
|
88,475 |
|
|
|
14,560 |
|
|
|
13,824 |
|
Date of purchase |
|
|
05/26/05 |
|
|
|
06/03/05 |
|
|
|
06/29/05 |
|
Mortgage financing at date of purchase |
|
$ |
7,731,600 |
|
|
$ |
3,151,000 |
|
|
$ |
3,406,000 |
|
Cash down payment |
|
|
5,154,400 |
|
|
|
1,696,860 |
|
|
|
1,833,773 |
|
|
|
|
|
|
|
|
|
|
|
Contract purchase price plus acquisition fee |
|
|
12,886,000 |
|
|
|
4,847,860 |
|
|
|
5,239,773 |
|
Other cash expenditures expensed |
|
|
|
|
|
|
|
|
|
|
|
|
Other cash expenditures capitalized |
|
|
33,209 |
|
|
|
17,251 |
|
|
|
14,680 |
|
|
|
|
|
|
|
|
|
|
|
Total acquisition cost |
|
$ |
12,919,209 |
|
|
$ |
4,865,111 |
|
|
$ |
5,254,453 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cole Credit Property |
|
|
Cole Credit Property |
|
|
Cole Credit Property |
|
Program: |
|
Trust, Inc. |
|
|
Trust, Inc. |
|
|
Trust, Inc. |
|
|
|
CVS Pharmacy |
|
Eckerd |
|
Eckerd |
|
|
Independence, MO |
|
|
Murfreesboro, TN |
|
|
Philadelphia, PA |
|
Name, location, type of property |
|
Retail |
|
Retail |
|
Retail |
Gross leasable square footage |
|
|
11,365 |
|
|
|
11,200 |
|
|
|
11,361 |
|
Date of purchase |
|
|
06/20/05 |
|
|
|
06/20/05 |
|
|
|
06/29/05 |
|
Mortgage financing at date of purchase |
|
$ |
2,521,000 |
|
|
$ |
2,303,000 |
|
|
$ |
2,691,000 |
|
Cash down payment |
|
|
1,357,000 |
|
|
|
1,235,000 |
|
|
|
1,448,780 |
|
|
|
|
|
|
|
|
|
|
|
Contract purchase price plus acquisition fee |
|
|
3,878,000 |
|
|
|
3,538,000 |
|
|
|
4,139,780 |
|
Other cash expenditures expensed |
|
|
|
|
|
|
|
|
|
|
|
|
Other cash expenditures capitalized |
|
|
6,990 |
|
|
|
10,262 |
|
|
|
6,460 |
|
|
|
|
|
|
|
|
|
|
|
Total acquisition cost |
|
$ |
3,884,990 |
|
|
$ |
3,548,262 |
|
|
$ |
4,146,240 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cole Credit Property |
|
|
Cole Credit Property |
|
|
Cole Credit Property |
|
Program: |
|
Trust, Inc. |
|
|
Trust, Inc. |
|
|
Trust, Inc. |
|
|
|
CVS Pharmacy |
|
Cinemagic |
|
Rite Aid |
|
|
Duncanville, TX |
|
Rochester, MN |
|
Wheelersburg, OH |
|
Name, location, type of property |
|
Retail |
|
Theatre |
|
Retail |
Gross leasable square footage |
|
|
11,332 |
|
|
|
45,218 |
|
|
|
11,227 |
|
Date of purchase |
|
|
06/20/05 |
|
|
|
06/24/05 |
|
|
|
06/30/05 |
|
Mortgage financing at date of purchase |
|
$ |
2,137,000 |
|
|
$ |
4,070,000 |
|
|
$ |
1,380,000 |
|
Cash down payment |
|
|
1,150,000 |
|
|
|
3,330,000 |
|
|
|
743,000 |
|
|
|
|
|
|
|
|
|
|
|
Contract purchase price plus acquisition fee |
|
|
3,287,000 |
|
|
|
7,400,000 |
|
|
|
2,123,000 |
|
Other cash expenditures expensed |
|
|
|
|
|
|
|
|
|
|
|
|
Other cash expenditures capitalized |
|
|
10,291 |
|
|
|
30,267 |
|
|
|
15,565 |
|
|
|
|
|
|
|
|
|
|
|
Total acquisition cost |
|
$ |
3,297,291 |
|
|
$ |
7,430,267 |
|
|
$ |
2,138,565 |
|
|
|
|
|
|
|
|
|
|
|
II-9
TABLE VI (UNAUDITED)
ACQUISITIONS OF PROPERTIES BY PROGRAMS (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cole Credit Property |
|
|
Cole Credit Property |
|
|
Cole Credit Property |
|
Program: |
|
Trust, Inc. |
|
|
Trust, Inc. |
|
|
Trust, Inc. |
|
|
|
Eckerd |
|
Eckerd |
|
Tractor Supply |
|
|
Hayes, VA |
|
Traveler's Rest, SC |
|
|
Paducha, KY |
Name, location, type of property |
|
Retail |
|
Retail |
|
Retail |
Gross leasable square footage |
|
|
13,813 |
|
|
|
13,813 |
|
|
|
21,677 |
|
Date of purchase |
|
|
07/08/05 |
|
|
|
07/15/05 |
|
|
|
07/22/05 |
|
Mortgage financing at date of purchase |
|
$ |
2,773,000 |
|
|
$ |
3,137,000 |
|
|
$ |
1,187,000 |
|
Cash down payment |
|
|
1,493,000 |
|
|
|
1,689,493 |
|
|
|
971,600 |
|
|
|
|
|
|
|
|
|
|
|
Contract purchase price plus acquisition fee |
|
|
4,266,000 |
|
|
|
4,826,493 |
|
|
|
2,158,600 |
|
Other cash expenditures expensed |
|
|
|
|
|
|
|
|
|
|
|
|
Other cash expenditures capitalized |
|
|
21,820 |
|
|
|
17,820 |
|
|
|
19,042 |
|
|
|
|
|
|
|
|
|
|
|
Total acquisition cost |
|
$ |
4,287,820 |
|
|
$ |
4,844,313 |
|
|
$ |
2,177,642 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cole Credit Property |
|
|
Cole Credit Property |
|
|
Cole Credit Property |
|
Program: |
|
Trust, Inc. |
|
|
Trust, Inc. |
|
|
Trust, Inc. |
|
|
|
Rite Aid |
|
Walgreens |
|
Walgreens |
|
|
St. Marys, OH |
|
Hutchinson, KS |
|
Newton, KS |
Name, location, type of property |
|
Retail |
|
Retail |
|
Retail |
Gross leasable square footage |
|
|
14,564 |
|
|
|
14,395 |
|
|
|
14,444 |
|
Date of purchase |
|
|
07/26/05 |
|
|
|
08/11/05 |
|
|
|
08/11/05 |
|
Mortgage financing at date of purchase |
|
$ |
1,687,000 |
|
|
$ |
4,260,000 |
|
|
$ |
3,558,000 |
|
Cash down payment |
|
|
1,363,000 |
|
|
|
1,065,600 |
|
|
|
889,015 |
|
|
|
|
|
|
|
|
|
|
|
Contract purchase price plus acquisition fee |
|
|
3,050,000 |
|
|
|
5,325,600 |
|
|
|
4,447,015 |
|
Other cash expenditures expensed |
|
|
|
|
|
|
|
|
|
|
|
|
Other cash expenditures capitalized |
|
|
15,626 |
|
|
|
31,562 |
|
|
|
28,761 |
|
|
|
|
|
|
|
|
|
|
|
Total acquisition cost |
|
$ |
3,065,626 |
|
|
$ |
5,357,162 |
|
|
$ |
4,475,776 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cole Credit Property |
|
|
Cole Credit Property |
|
|
Cole Credit Property |
|
Program: |
|
Trust, Inc. |
|
|
Trust, Inc. |
|
|
Trust, Inc. |
|
|
|
Tractor Supply |
|
Best Buy |
|
Conns |
|
|
Glasgow, KY |
|
Tupelo, MS |
|
Hurst, TX |
Name, location, type of property |
|
Retail |
|
Retail |
|
Retail |
Gross leasable square footage |
|
|
21,688 |
|
|
|
20,000 |
|
|
|
25,414 |
|
Date of purchase |
|
|
08/17/05 |
|
|
|
08/24/05 |
|
|
|
08/31/05 |
|
Mortgage financing at date of purchase |
|
$ |
1,388,000 |
|
|
$ |
2,707,000 |
|
|
$ |
1,444,000 |
|
Cash down payment |
|
|
1,136,000 |
|
|
|
1,457,000 |
|
|
|
1,181,000 |
|
|
|
|
|
|
|
|
|
|
|
Contract purchase price plus acquisition fee |
|
|
2,524,000 |
|
|
|
4,164,000 |
|
|
|
2,625,000 |
|
Other cash expenditures expensed |
|
|
|
|
|
|
|
|
|
|
|
|
Other cash expenditures capitalized |
|
|
19,358 |
|
|
|
19,019 |
|
|
|
10,272 |
|
|
|
|
|
|
|
|
|
|
|
Total acquisition cost |
|
$ |
2,543,358 |
|
|
$ |
4,183,019 |
|
|
$ |
2,635,272 |
|
|
|
|
|
|
|
|
|
|
|
II-10
TABLE VI (UNAUDITED)
ACQUISITIONS OF PROPERTIES BY PROGRAMS (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cole Credit Property |
|
|
Cole Credit Property |
|
|
Cole Credit Property |
|
Program: |
|
Trust, Inc. |
|
|
Trust, Inc. |
|
|
Trust, Inc. |
|
|
|
Conns |
|
Conns |
|
Vanguard |
|
|
Pecan Park, TX |
|
Austin, TX |
|
Atlanta, GA |
Name, location, type of property |
|
Retail |
|
Retail |
|
Car Rental |
Gross leasable square footage |
|
|
25,358 |
|
|
|
24,965 |
|
|
|
28,173 |
|
Date of purchase |
|
|
08/31/05 |
|
|
|
08/31/05 |
|
|
|
08/31/05 |
|
Mortgage financing at date of purchase |
|
$ |
2,571,000 |
|
|
$ |
2,640,000 |
|
|
$ |
8,625,000 |
|
Cash down payment |
|
|
2,104,000 |
|
|
|
2,160,000 |
|
|
|
5,750,000 |
|
|
|
|
|
|
|
|
|
|
|
Contract purchase price plus acquisition fee |
|
|
4,675,000 |
|
|
|
4,800,000 |
|
|
|
14,375,000 |
|
Other cash expenditures expensed |
|
|
|
|
|
|
|
|
|
|
|
|
Other cash expenditures capitalized |
|
|
13,415 |
|
|
|
14,510 |
|
|
|
38,250 |
|
|
|
|
|
|
|
|
|
|
|
Total acquisition cost |
|
$ |
4,688,415 |
|
|
$ |
4,814,510 |
|
|
$ |
14,413,250 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cole Credit Property |
|
|
Cole Credit |
|
|
Cole Credit |
|
Program: |
|
Trust, Inc. |
|
|
Property Trust II, Inc. |
|
|
Property Trust II, Inc. |
|
|
|
Rite Aid |
|
Tractor Supply |
|
Walgreens |
|
|
Buxton, ME |
|
Parkersburg, WV |
|
Brainerd, MN |
Name, location, type of property |
|
Retail |
|
Retail |
|
Retail |
Gross leasable square footage |
|
|
11,180 |
|
|
|
21,688 |
|
|
|
15,120 |
|
Date of purchase |
|
|
09/30/05 |
|
|
|
09/27/05 |
|
|
|
10/06/05 |
|
Mortgage financing at date of purchase |
|
$ |
|
|
|
$ |
2,607,000 |
|
|
$ |
3,463,000 |
|
Cash down payment |
|
|
2,402,000 |
|
|
|
652,243 |
|
|
|
865,500 |
|
|
|
|
|
|
|
|
|
|
|
Contract purchase price plus acquisition fee |
|
|
2,402,000 |
|
|
|
3,259,243 |
|
|
|
4,328,500 |
|
Other cash expenditures expensed |
|
|
|
|
|
|
|
|
|
|
|
|
Other cash expenditures capitalized |
|
|
32,812 |
|
|
|
28,815 |
|
|
|
24,781 |
|
|
|
|
|
|
|
|
|
|
|
Total acquisition cost |
|
$ |
2,434,812 |
|
|
$ |
3,288,058 |
|
|
$ |
4,353,281 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cole Credit Property |
|
|
Cole Credit Property |
|
|
Cole Credit Property |
|
Program: |
|
Trust II, Inc. |
|
|
Trust II, Inc. |
|
|
Trust II, Inc. |
|
|
|
Rite Aid |
|
La-Z-Boy |
|
Walgreens |
|
|
Alliance, OH |
|
Glendale, AZ |
|
Florissant, MO |
Name, location, type of property |
|
Retail |
|
Retail |
|
Retail |
Gross leasable square footage |
|
|
11,348 |
|
|
|
23,000 |
|
|
|
15,120 |
|
Date of purchase |
|
|
10/25/05 |
|
|
|
10/25/05 |
|
|
|
11/02/05 |
|
Mortgage financing at date of purchase |
|
$ |
|
|
|
$ |
4,553,000 |
|
|
$ |
4,373,333 |
|
Cash down payment |
|
|
2,100,000 |
|
|
|
1,138,525 |
|
|
|
814,299 |
|
|
|
|
|
|
|
|
|
|
|
Contract purchase price plus acquisition fee |
|
|
2,100,000 |
|
|
|
5,691,525 |
|
|
|
5,187,632 |
|
Other cash expenditures expensed |
|
|
|
|
|
|
|
|
|
|
|
|
Other cash expenditures capitalized |
|
|
11,871 |
|
|
|
18,515 |
|
|
|
10,851 |
|
|
|
|
|
|
|
|
|
|
|
Total acquisition cost |
|
$ |
2,111,871 |
|
|
$ |
5,710,040 |
|
|
$ |
5,198,483 |
|
|
|
|
|
|
|
|
|
|
|
II-11
TABLE VI (UNAUDITED)
ACQUISITIONS OF PROPERTIES BY PROGRAMS (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cole Credit Property |
|
|
Cole Credit Property |
|
|
Cole Credit Property |
|
Program: |
|
Trust II, Inc. |
|
|
Trust II, Inc. |
|
|
Trust II, Inc. |
|
|
|
Walgreens |
|
Walgreens |
|
Walgreens |
|
|
St. Louis, MO |
|
St. Louis, MO |
|
Columbia, MO |
Name, location, type of property |
|
Retail |
|
Retail |
|
Retail |
Gross leasable square footage |
|
|
15,120 |
|
|
|
15,120 |
|
|
|
13,973 |
|
Date of purchase |
|
|
11/02/05 |
|
|
|
11/02/05 |
|
|
|
11/22/05 |
|
Mortgage financing at date of purchase |
|
$ |
4,373,333 |
|
|
$ |
4,373,333 |
|
|
$ |
4,645,369 |
|
Cash down payment |
|
|
686,093 |
|
|
|
1,779,609 |
|
|
|
1,626,002 |
|
|
|
|
|
|
|
|
|
|
|
Contract purchase price plus acquisition fee |
|
|
5,059,426 |
|
|
|
6,152,942 |
|
|
|
6,271,371 |
|
Other cash expenditures expensed |
|
|
|
|
|
|
|
|
|
|
|
|
Other cash expenditures capitalized |
|
|
8,800 |
|
|
|
26,296 |
|
|
|
22,688 |
|
|
|
|
|
|
|
|
|
|
|
Total acquisition cost |
|
$ |
5,068,226 |
|
|
$ |
6,179,238 |
|
|
$ |
6,294,059 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cole Credit Property |
|
|
Cole Credit Property |
|
|
Cole Credit Property |
|
Program: |
|
Trust II, Inc. |
|
|
Trust II, Inc. |
|
|
Trust II, Inc. |
|
|
|
Walgreens |
|
CVS Pharmacy |
|
Lowes |
|
|
Olivette, MO |
|
Alpharetta, GA |
|
Enterprise, AL |
Name, location, type of property |
|
Retail |
|
Retail |
|
Retail |
Gross leasable square footage |
|
|
15,030 |
|
|
|
10,125 |
|
|
|
95,173 |
|
Date of purchase |
|
|
11/22/05 |
|
|
|
12/01/05 |
|
|
|
12/01/05 |
|
Mortgage financing at date of purchase |
|
$ |
5,567,894 |
|
|
$ |
2,480,000 |
|
|
$ |
5,980,000 |
|
Cash down payment |
|
|
2,254,328 |
|
|
|
620,000 |
|
|
|
1,495,000 |
|
|
|
|
|
|
|
|
|
|
|
Contract purchase price plus acquisition fee |
|
|
7,822,222 |
|
|
|
3,100,000 |
|
|
|
7,475,000 |
|
Other cash expenditures expensed |
|
|
|
|
|
|
|
|
|
|
|
|
Other cash expenditures capitalized |
|
|
18,472 |
|
|
|
26,803 |
|
|
|
23,108 |
|
|
|
|
|
|
|
|
|
|
|
Total acquisition cost |
|
$ |
7,840,694 |
|
|
$ |
3,126,803 |
|
|
$ |
7,498,108 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cole Credit Property |
|
|
Cole Credit Property |
|
|
Cole Credit Property |
|
Program: |
|
Trust II, Inc. |
|
|
Trust II, Inc. |
|
|
Trust II, Inc. |
|
|
|
CVS Pharmacy |
|
FedEx |
|
Plastech |
|
|
Richland Hills, TX |
|
|
Rockford, IL |
|
Auburn Hills, MI |
Name, location, type of property |
|
Retail |
|
Distribution Center |
|
Manufacturing Facility |
|
Gross leasable square footage |
|
|
10,908 |
|
|
|
67,925 |
|
|
|
111,881 |
|
Date of purchase |
|
|
12/08/05 |
|
|
|
12/08/05 |
|
|
|
12/15/05 |
|
Mortgage financing at date of purchase |
|
$ |
2,928,000 |
|
|
$ |
4,920,000 |
|
|
$ |
17,700,000 |
|
Cash down payment |
|
|
732,000 |
|
|
|
1,230,000 |
|
|
|
5,900,000 |
|
|
|
|
|
|
|
|
|
|
|
Contract purchase price plus acquisition fee |
|
|
3,660,000 |
|
|
|
6,150,000 |
|
|
|
23,600,000 |
|
Other cash expenditures expensed |
|
|
|
|
|
|
|
|
|
|
|
|
Other cash expenditures capitalized |
|
|
25,747 |
|
|
|
19,921 |
|
|
|
21,417 |
|
|
|
|
|
|
|
|
|
|
|
Total acquisition cost |
|
$ |
3,685,747 |
|
|
$ |
6,169,921 |
|
|
$ |
23,621,417 |
|
|
|
|
|
|
|
|
|
|
|
II-12
TABLE VI (UNAUDITED)
ACQUISITIONS OF PROPERTIES BY PROGRAMS (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cole Credit Property |
|
|
Cole Credit Property |
|
|
Cole Credit Property |
|
Program: |
|
Trust II, Inc. |
|
|
Trust II, Inc. |
|
|
Trust II, Inc. |
|
|
|
Academy Sports |
|
Davids Bridal |
|
Staples |
|
|
Macon, GA |
|
Lenexa, KS |
|
Crossville, TN |
Name, location, type of property |
|
Retail |
|
Retail |
|
Retail |
Gross leasable square footage |
|
|
74,532 |
|
|
|
12,083 |
|
|
|
23,942 |
|
Date of purchase |
|
|
01/06/06 |
|
|
|
01/11/06 |
|
|
|
01/26/06 |
|
Mortgage financing at date of purchase |
|
$ |
4,280,000 |
|
|
$ |
2,616,000 |
|
|
$ |
2,320,000 |
|
Cash down payment |
|
|
1,320,000 |
|
|
|
654,000 |
|
|
|
580,000 |
|
|
|
|
|
|
|
|
|
|
|
Contract purchase price plus acquisition fee |
|
|
5,600,000 |
|
|
|
3,270,000 |
|
|
|
2,900,000 |
|
Other cash expenditures expensed |
|
|
|
|
|
|
|
|
|
|
|
|
Other cash expenditures capitalized |
|
|
97,625 |
|
|
|
18,905 |
|
|
|
13,203 |
|
|
|
|
|
|
|
|
|
|
|
Total acquisition cost |
|
$ |
5,697,625 |
|
|
$ |
3,288,905 |
|
|
$ |
2,913,203 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cole Credit Property |
|
|
Cole Credit Property |
|
|
Cole Credit Property |
|
Program: |
|
Trust II, Inc. |
|
|
Trust II, Inc. |
|
|
Trust II, Inc. |
|
|
|
Rite Aid |
|
Rite Aid |
|
Rite Aid |
|
|
Enterprise, AL |
|
Wauseon, OH |
|
Saco, ME |
Name, location, type of property |
|
Retail |
|
Retail |
|
Retail |
Gross leasable square footage |
|
|
14,564 |
|
|
|
14,564 |
|
|
|
11,180 |
|
Date of purchase |
|
|
01/26/06 |
|
|
|
01/26/06 |
|
|
|
01/27/06 |
|
Mortgage financing at date of purchase |
|
$ |
2,971,000 |
|
|
$ |
3,115,000 |
|
|
$ |
2,000,000 |
|
Cash down payment |
|
|
743,000 |
|
|
|
778,679 |
|
|
|
500,000 |
|
|
|
|
|
|
|
|
|
|
|
Contract purchase price plus acquisition fee |
|
|
3,714,000 |
|
|
|
3,893,679 |
|
|
|
2,500,000 |
|
Other cash expenditures expensed |
|
|
|
|
|
|
|
|
|
|
|
|
Other cash expenditures capitalized |
|
|
19,691 |
|
|
|
14,984 |
|
|
|
24,079 |
|
|
|
|
|
|
|
|
|
|
|
Total acquisition cost |
|
$ |
3,733,691 |
|
|
$ |
3,908,663 |
|
|
$ |
2,524,079 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cole Credit Property |
|
|
Cole Credit Property |
|
|
Cole Credit Property |
|
Program: |
|
Trust II, Inc. |
|
|
Trust II, Inc. |
|
|
Trust II, Inc. |
|
|
|
Wadsworth |
|
Mountainside Fitness |
|
|
Drexel Heritage |
|
|
Denver, CO |
|
Chandler, AZ |
|
Hickory, NC |
Name, location, type of property |
|
Retail |
|
Retail |
|
Retail |
Gross leasable square footage |
|
|
198,477 |
|
|
|
31,063 |
|
|
|
261,057 |
|
Date of purchase |
|
|
02/06/06 |
|
|
|
02/10/06 |
|
|
|
02/24/06 |
|
Mortgage financing at date of purchase |
|
$ |
12,025,000 |
|
|
$ |
|
|
|
$ |
3,400,000 |
|
Cash down payment |
|
|
6,475,000 |
|
|
|
5,863,000 |
|
|
|
850,000 |
|
|
|
|
|
|
|
|
|
|
|
Contract purchase price plus acquisition fee |
|
|
18,500,000 |
|
|
|
5,863,000 |
|
|
|
4,250,000 |
|
Other cash expenditures expensed |
|
|
|
|
|
|
|
|
|
|
|
|
Other cash expenditures capitalized |
|
|
39,813 |
|
|
|
9,795 |
|
|
|
13,297 |
|
|
|
|
|
|
|
|
|
|
|
Total acquisition cost |
|
$ |
18,539,813 |
|
|
$ |
5,872,795 |
|
|
$ |
4,263,297 |
|
|
|
|
|
|
|
|
|
|
|
II-13
TABLE VI (UNAUDITED)
ACQUISITIONS OF PROPERTIES BY PROGRAMS (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cole Credit Property |
|
|
Cole Credit Property |
|
|
Cole Credit Property |
|
Program: |
|
Trust II, Inc. |
|
|
Trust II, Inc. |
|
|
Trust II, Inc. |
|
|
|
Rayford Square |
|
CVS |
|
Wawa |
|
|
Spring, TX |
|
Scioto Trail, OH |
|
Narberth, PA |
Name, location, type of property |
|
Retail |
|
Retail |
|
Retail |
Gross leasable square footage |
|
|
79,968 |
|
|
|
10,170 |
|
|
|
4,461 |
|
Date of purchase |
|
|
03/02/06 |
|
|
|
03/08/06 |
|
|
|
03/29/06 |
|
Mortgage financing at date of purchase |
|
$ |
5,940,000 |
|
|
$ |
1,753,000 |
|
|
$ |
|
|
Cash down payment |
|
|
3,960,000 |
|
|
|
413,000 |
|
|
|
4,206,000 |
|
|
|
|
|
|
|
|
|
|
|
Contract purchase price plus acquisition fee |
|
|
9,900,000 |
|
|
|
2,166,000 |
|
|
|
4,206,000 |
|
Other cash expenditures expensed |
|
|
|
|
|
|
|
|
|
|
|
|
Other cash expenditures capitalized |
|
|
73,044 |
|
|
|
18,648 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total acquisition cost |
|
$ |
9,973,044 |
|
|
$ |
2,184,648 |
|
|
$ |
4,206,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cole Credit Property |
|
|
Cole Credit Property |
|
|
Cole Credit Property |
|
Program: |
|
Trust II, Inc. |
|
|
Trust II, Inc. |
|
|
Trust II, Inc. |
|
|
|
Wawa |
|
Wawa |
|
CVS / Charter One Bank |
|
|
|
Manahawkin, NJ |
|
Hockessin, DE |
|
Lakewood, OH |
Name, location, type of property |
|
Retail |
|
Retail |
|
Retail |
Gross leasable square footage |
|
|
4,695 |
|
|
|
5,160 |
|
|
|
12,800 |
|
Date of purchase |
|
|
03/29/06 |
|
|
|
03/29/06 |
|
|
|
04/20/06 |
|
Mortgage financing at date of purchase |
|
$ |
|
|
|
$ |
|
|
|
$ |
1,960,000 |
|
Cash down payment |
|
|
4,414,000 |
|
|
|
4,830,000 |
|
|
|
490,000 |
|
|
|
|
|
|
|
|
|
|
|
Contract purchase price plus acquisition fee |
|
|
4,414,000 |
|
|
|
4,830,000 |
|
|
|
2,450,000 |
|
Other cash expenditures expensed |
|
|
|
|
|
|
|
|
|
|
|
|
Other cash expenditures capitalized |
|
|
|
|
|
|
|
|
|
|
15,607 |
|
|
|
|
|
|
|
|
|
|
|
Total acquisition cost |
|
$ |
4,414,000 |
|
|
$ |
4,830,000 |
|
|
$ |
2,465,607 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cole Credit Property |
|
|
Cole Credit Property |
|
|
Cole Credit Property |
|
Program: |
|
Trust II, Inc. |
|
|
Trust II, Inc. |
|
|
Trust II, Inc. |
|
|
|
Rite Aid |
|
Rite Aid |
|
Walgreens |
|
|
Fremont, OH |
|
Cleveland, OH |
|
Knoxville, TN |
Name, location, type of property |
|
Retail |
|
Retail |
|
Retail |
Gross leasable square footage |
|
|
11,325 |
|
|
|
11,325 |
|
|
|
15,120 |
|
Date of purchase |
|
|
04/27/06 |
|
|
|
04/27/06 |
|
|
|
05/08/06 |
|
Mortgage financing at date of purchase |
|
$ |
2,020,000 |
|
|
$ |
2,055,000 |
|
|
$ |
3,800,000 |
|
Cash down payment |
|
|
504,500 |
|
|
|
513,700 |
|
|
|
950,000 |
|
|
|
|
|
|
|
|
|
|
|
Contract purchase price plus acquisition fee |
|
|
2,524,500 |
|
|
|
2,568,700 |
|
|
|
4,750,000 |
|
Other cash expenditures expensed |
|
|
|
|
|
|
|
|
|
|
|
|
Other cash expenditures capitalized |
|
|
16,053 |
|
|
|
16,216 |
|
|
|
44,565 |
|
|
|
|
|
|
|
|
|
|
|
Total acquisition cost |
|
$ |
2,540,553 |
|
|
$ |
2,584,916 |
|
|
$ |
4,794,565 |
|
|
|
|
|
|
|
|
|
|
|
II-14
TABLE VI (UNAUDITED)
ACQUISITIONS OF PROPERTIES BY PROGRAMS (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cole Credit Property |
|
|
Cole Credit Property |
|
|
Cole Credit Property |
|
Program: |
|
Trust II, Inc. |
|
|
Trust II, Inc. |
|
|
Trust II, Inc. |
|
|
|
Conns |
|
Rite Aid |
|
CVS |
|
|
San Antonio, TX |
|
Defiance, OH |
|
Madison, OH |
Name, location, type of property |
|
Retail |
|
Retail |
|
Retail |
Gross leasable square footage |
|
|
25,230 |
|
|
|
14,564 |
|
|
|
13,824 |
|
Date of purchase |
|
|
05/26/06 |
|
|
|
05/26/06 |
|
|
|
05/26/06 |
|
Mortgage financing at date of purchase |
|
$ |
|
|
|
$ |
2,321,000 |
|
|
$ |
2,809,000 |
|
Cash down payment |
|
|
4,624,619 |
|
|
|
2,005,165 |
|
|
|
1,654,088 |
|
|
|
|
|
|
|
|
|
|
|
Contract purchase price plus acquisition fee |
|
|
4,624,619 |
|
|
|
4,326,165 |
|
|
|
4,463,088 |
|
Other cash expenditures expensed |
|
|
|
|
|
|
|
|
|
|
|
|
Other cash expenditures capitalized |
|
|
|
|
|
|
16,808 |
|
|
|
29,075 |
|
|
|
|
|
|
|
|
|
|
|
Total acquisition cost |
|
$ |
4,624,619 |
|
|
$ |
4,342,973 |
|
|
$ |
4,492,163 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cole Credit Property |
|
|
Cole Credit Property |
|
|
Cole Credit Property |
|
Program: |
|
Trust II, Inc. |
|
|
Trust II, Inc. |
|
|
Trust II, Inc. |
|
|
|
Dollar General |
|
Dollar General |
|
Dollar General |
|
|
Crossville, TN |
|
Ardmore, TN |
|
Livingston, TX |
Name, location, type of property |
|
Retail |
|
Retail |
|
Retail |
Gross leasable square footage |
|
|
24,341 |
|
|
|
24,341 |
|
|
|
24,341 |
|
Date of purchase |
|
|
06/02/06 |
|
|
|
06/09/06 |
|
|
|
06/12/06 |
|
Mortgage financing at date of purchase |
|
$ |
2,400,000 |
|
|
$ |
2,220,000 |
|
|
$ |
2,285,000 |
|
Cash down payment |
|
|
600,000 |
|
|
|
555,000 |
|
|
|
571,000 |
|
|
|
|
|
|
|
|
|
|
|
Contract purchase price plus acquisition fee |
|
|
3,000,000 |
|
|
|
2,775,000 |
|
|
|
2,856,000 |
|
Other cash expenditures expensed |
|
|
|
|
|
|
|
|
|
|
|
|
Other cash expenditures capitalized |
|
|
20,114 |
|
|
|
17,904 |
|
|
|
18,155 |
|
|
|
|
|
|
|
|
|
|
|
Total acquisition cost |
|
$ |
3,020,114 |
|
|
$ |
2,792,904 |
|
|
$ |
2,874,155 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cole Credit Property |
|
|
Cole Credit Property |
|
|
Cole Credit Property |
|
Program: |
|
Trust II, Inc. |
|
|
Trust II, Inc. |
|
|
Trust II, Inc. |
|
|
|
Wehrenberger Theater |
|
|
Sportsmans Warehouse |
|
|
CVS |
|
|
Arnold, MO |
|
Wichita, KS |
|
Portsmouth, OH |
Name, location, type of property |
|
Retail |
|
Retail |
|
Retail |
Gross leasable square footage |
|
|
50,000 |
|
|
|
50,003 |
|
|
|
10,650 |
|
Date of purchase |
|
|
06/14/06 |
|
|
|
06/27/06 |
|
|
|
06/28/06 |
|
Mortgage financing at date of purchase |
|
$ |
|
|
|
$ |
6,173,250 |
|
|
$ |
|
|
Cash down payment |
|
|
8,200,000 |
|
|
|
2,057,750 |
|
|
|
2,101,708 |
|
|
|
|
|
|
|
|
|
|
|
Contract purchase price plus acquisition fee |
|
|
8,200,000 |
|
|
|
8,231,000 |
|
|
|
2,101,708 |
|
Other cash expenditures expensed |
|
|
|
|
|
|
|
|
|
|
|
|
Other cash expenditures capitalized |
|
|
194,807 |
|
|
|
32,993 |
|
|
|
13,898 |
|
|
|
|
|
|
|
|
|
|
|
Total acquisition cost |
|
$ |
8,394,807 |
|
|
$ |
8,263,993 |
|
|
$ |
2,115,606 |
|
|
|
|
|
|
|
|
|
|
|
II-15
TABLE VI (UNAUDITED)
ACQUISITIONS OF PROPERTIES BY PROGRAMS (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cole Credit Property |
|
|
Cole Credit Property |
|
|
Cole Credit Property |
|
Program: |
|
Trust II, Inc. |
|
|
Trust II, Inc. |
|
|
Trust II, Inc. |
|
|
|
Advanced Auto |
|
Advanced Auto |
|
Advanced Auto |
|
|
Greenfield, IN |
|
Trenton, OH |
|
Lansing, MI |
Name, location, type of property |
|
Retail |
|
Retail |
|
Retail |
Gross leasable square footage |
|
|
7,000 |
|
|
|
7,000 |
|
|
|
11,680 |
|
Date of purchase |
|
|
06/29/06 |
|
|
|
06/29/06 |
|
|
|
06/29/06 |
|
Mortgage financing at date of purchase |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Cash down payment |
|
|
1,375,500 |
|
|
|
1,060,000 |
|
|
|
1,735,000 |
|
|
|
|
|
|
|
|
|
|
|
Contract purchase price plus acquisition fee |
|
|
1,375,500 |
|
|
|
1,060,000 |
|
|
|
1,735,000 |
|
Other cash expenditures expensed |
|
|
|
|
|
|
|
|
|
|
|
|
Other cash expenditures capitalized |
|
|
9,106 |
|
|
|
11,124 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total acquisition cost |
|
$ |
1,384,606 |
|
|
$ |
1,071,124 |
|
|
$ |
1,735,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cole Credit Property |
|
|
Cole Credit Property |
|
|
Cole Credit Property |
|
Program: |
|
Trust II, Inc. |
|
|
Trust II, Inc. |
|
|
Trust II, Inc. |
|
|
|
Advanced Auto |
|
Advanced Auto |
|
CVS |
|
|
Fergus Falls, MN |
|
Columbia Heights, MN |
|
|
Okeechobee, FL |
Name, location, type of property |
|
Retail |
|
Retail |
|
Retail |
Gross leasable square footage |
|
|
7,000 |
|
|
|
7,000 |
|
|
|
13,050 |
|
Date of purchase |
|
|
07/06/06 |
|
|
|
07/06/06 |
|
|
|
07/07/06 |
|
Mortgage financing at date of purchase |
|
$ |
963,000 |
|
|
$ |
1,384,000 |
|
|
$ |
5,016,000 |
|
Cash down payment |
|
|
240,171 |
|
|
|
346,578 |
|
|
|
1,443,262 |
|
|
|
|
|
|
|
|
|
|
|
Contract purchase price plus acquisition fee |
|
|
1,203,171 |
|
|
|
1,730,578 |
|
|
|
6,459,262 |
|
Other cash expenditures expensed |
|
|
|
|
|
|
|
|
|
|
|
|
Other cash expenditures capitalized |
|
|
33,220 |
|
|
|
|
|
|
|
59,354 |
|
|
|
|
|
|
|
|
|
|
|
Total acquisition cost |
|
$ |
1,236,291 |
|
|
$ |
1,730,578 |
|
|
$ |
6,518,616 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cole Credit Property |
|
|
Cole Credit Property |
|
|
Cole Credit Property |
|
Program: |
|
Trust II, Inc. |
|
|
Trust II, Inc. |
|
|
Trust II, Inc. |
|
|
|
Office Depot |
|
CVS |
|
Office Depot |
|
|
Dayton, OH |
|
Orlando, FL |
|
Greenville, MS |
Name, location, type of property |
|
Retail |
|
Retail |
|
Retail |
Gross leasable square footage |
|
|
19,880 |
|
|
|
13,013 |
|
|
|
25,083 |
|
Date of purchase |
|
|
07/07/06 |
|
|
|
07/12/06 |
|
|
|
07/12/06 |
|
Mortgage financing at date of purchase |
|
$ |
2,621,000 |
|
|
$ |
3,712,000 |
|
|
$ |
2,698,000 |
|
Cash down payment |
|
|
795,526 |
|
|
|
1,244,763 |
|
|
|
793,470 |
|
|
|
|
|
|
|
|
|
|
|
Contract purchase price plus acquisition fee |
|
|
3,416,526 |
|
|
|
4,956,763 |
|
|
|
3,491,470 |
|
Other cash expenditures expensed |
|
|
|
|
|
|
|
|
|
|
|
|
Other cash expenditures capitalized |
|
|
20,001 |
|
|
|
47,665 |
|
|
|
23,110 |
|
|
|
|
|
|
|
|
|
|
|
Total acquisition cost |
|
$ |
3,436,527 |
|
|
$ |
5,004,428 |
|
|
$ |
3,514,520 |
|
|
|
|
|
|
|
|
|
|
|
II-16
TABLE VI (UNAUDITED)
ACQUISITIONS OF PROPERTIES BY PROGRAMS (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cole Credit Property |
|
|
Cole Credit Property |
|
|
Cole Credit Property |
|
Program: |
|
Trust II, Inc. |
|
|
Trust II, Inc. |
|
|
Trust II, Inc. |
|
|
|
Advanced Auto |
|
Advanced Auto |
|
Advanced Auto |
|
|
Holland Township, MI |
|
|
Holland, MI |
|
Zeeland, MI |
Name, location, type of property |
|
Retail |
|
Retail |
|
Retail |
Gross leasable square footage |
|
|
7,000 |
|
|
|
70,000 |
|
|
|
70,000 |
|
Date of purchase |
|
|
07/12/06 |
|
|
|
07/12/06 |
|
|
|
07/12/06 |
|
Mortgage financing at date of purchase |
|
$ |
1,642,000 |
|
|
$ |
1,590,000 |
|
|
$ |
1,409,000 |
|
Cash down payment |
|
|
495,244 |
|
|
|
481,843 |
|
|
|
431,715 |
|
|
|
|
|
|
|
|
|
|
|
Contract purchase price plus acquisition fee |
|
|
2,137,244 |
|
|
|
2,071,843 |
|
|
|
1,840,715 |
|
Other cash expenditures expensed |
|
|
|
|
|
|
|
|
|
|
|
|
Other cash expenditures capitalized |
|
|
27,394 |
|
|
|
27,541 |
|
|
|
26,108 |
|
|
|
|
|
|
|
|
|
|
|
Total acquisition cost |
|
$ |
2,164,638 |
|
|
$ |
2,099,384 |
|
|
$ |
1,866,823 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cole Credit Property |
|
|
Cole Credit Property |
|
|
Cole Credit Property |
|
Program: |
|
Trust II, Inc. |
|
|
Trust II, Inc. |
|
|
Trust II, Inc. |
|
|
|
Office Depot |
|
CVS |
|
Advanced Auto |
|
|
Warrensburg, MO |
|
Gulfport, MS |
|
Grand Forks, ND |
Name, location, type of property |
|
Retail |
|
Retail |
|
Retail |
Gross leasable square footage |
|
|
20,000 |
|
|
|
11,359 |
|
|
|
7,000 |
|
Date of purchase |
|
|
07/19/06 |
|
|
|
08/10/06 |
|
|
|
08/15/06 |
|
Mortgage financing at date of purchase |
|
$ |
2,228,000 |
|
|
$ |
3,213,000 |
|
|
$ |
1,120,000 |
|
Cash down payment |
|
|
652,552 |
|
|
|
1,201,117 |
|
|
|
279,657 |
|
|
|
|
|
|
|
|
|
|
|
Contract purchase price plus acquisition fee |
|
|
2,880,552 |
|
|
|
4,414,117 |
|
|
|
1,399,657 |
|
Other cash expenditures expensed |
|
|
|
|
|
|
|
|
|
|
|
|
Other cash expenditures capitalized |
|
|
11,415 |
|
|
|
27,217 |
|
|
|
16,404 |
|
|
|
|
|
|
|
|
|
|
|
Total acquisition cost |
|
$ |
2,891,967 |
|
|
$ |
4,441,334 |
|
|
$ |
1,416,061 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cole Credit Property |
|
|
Cole Credit Property |
|
|
Cole Credit Property |
|
Program: |
|
Trust II, Inc. |
|
|
Trust II, Inc. |
|
|
Trust II, Inc. |
|
|
|
CVS |
|
Oxford Theatre |
|
Advanced Auto |
|
|
Clinton, NY |
|
Oxford, MS |
|
Duluth, MN |
Name, location, type of property |
|
Retail |
|
Retail |
|
Retail |
Gross leasable square footage |
|
|
10,055 |
|
|
|
35,000 |
|
|
|
7,000 |
|
Date of purchase |
|
|
08/24/06 |
|
|
|
08/31/06 |
|
|
|
09/08/06 |
|
Mortgage financing at date of purchase |
|
$ |
2,440,000 |
|
|
$ |
5,175,000 |
|
|
$ |
|
|
Cash down payment |
|
|
610,000 |
|
|
|
4,517,503 |
|
|
|
1,432,565 |
|
|
|
|
|
|
|
|
|
|
|
Contract purchase price plus acquisition fee |
|
|
3,050,000 |
|
|
|
9,692,503 |
|
|
|
1,432,565 |
|
Other cash expenditures expensed |
|
|
|
|
|
|
|
|
|
|
|
|
Other cash expenditures capitalized |
|
|
26,257 |
|
|
|
17,678 |
|
|
|
11,375 |
|
|
|
|
|
|
|
|
|
|
|
Total acquisition cost |
|
$ |
3,076,257 |
|
|
$ |
9,710,181 |
|
|
$ |
1,443,940 |
|
|
|
|
|
|
|
|
|
|
|
II-17
TABLE VI (UNAUDITED)
ACQUISITIONS OF PROPERTIES BY PROGRAMS (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cole Credit Property |
|
|
Cole Credit Property |
|
|
Cole Credit Property |
|
Program: |
|
Trust II, Inc. |
|
|
Trust II, Inc. |
|
|
Trust II, Inc. |
|
|
|
Walgreens |
|
Kohls |
|
Lowes |
|
|
Picayune, MS |
|
Wichita, KS |
|
Midland, TX |
Name, location, type of property |
|
Retail |
|
Retail |
|
Retail |
Gross leasable square footage |
|
|
14,820 |
|
|
|
86,584 |
|
|
|
134,050 |
|
Date of purchase |
|
|
09/15/06 |
|
|
|
09/27/06 |
|
|
|
09/27/06 |
|
Mortgage financing at date of purchase |
|
$ |
3,404,000 |
|
|
$ |
5,200,000 |
|
|
$ |
7,150,000 |
|
Cash down payment |
|
|
851,000 |
|
|
|
2,666,000 |
|
|
|
3,949,000 |
|
|
|
|
|
|
|
|
|
|
|
Contract purchase price plus acquisition fee |
|
|
4,255,000 |
|
|
|
7,866,000 |
|
|
|
11,099,000 |
|
Other cash expenditures expensed |
|
|
|
|
|
|
|
|
|
|
|
|
Other cash expenditures capitalized |
|
|
20,652 |
|
|
|
67,629 |
|
|
|
77,644 |
|
|
|
|
|
|
|
|
|
|
|
Total acquisition cost |
|
$ |
4,275,652 |
|
|
$ |
7,933,629 |
|
|
$ |
11,176,644 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cole Credit Property |
|
|
Cole Credit Property |
|
|
Cole Credit Property |
|
Program: |
|
Trust II, Inc. |
|
|
Trust II, Inc. |
|
|
Trust II, Inc. |
|
|
|
Lowes |
|
Advanced Auto |
|
Advanced Auto |
|
|
Lubbock, TX |
|
Rainsville, AL |
|
Grand Bay, AL |
Name, location, type of property |
|
Retail |
|
Retail |
|
Retail |
Gross leasable square footage |
|
|
137,480 |
|
|
|
7,000 |
|
|
|
7,000 |
|
Date of purchase |
|
|
09/27/06 |
|
|
|
09/29/06 |
|
|
|
09/29/06 |
|
Mortgage financing at date of purchase |
|
$ |
7,475,000 |
|
|
$ |
|
|
|
$ |
|
|
Cash down payment |
|
|
4,033,000 |
|
|
|
1,328,000 |
|
|
|
1,115,605 |
|
|
|
|
|
|
|
|
|
|
|
Contract purchase price plus acquisition fee |
|
|
11,508,000 |
|
|
|
1,328,000 |
|
|
|
1,115,605 |
|
Other cash expenditures expensed |
|
|
|
|
|
|
|
|
|
|
|
|
Other cash expenditures capitalized |
|
|
79,065 |
|
|
|
10,599 |
|
|
|
9,773 |
|
|
|
|
|
|
|
|
|
|
|
Total acquisition cost |
|
$ |
11,587,065 |
|
|
$ |
1,338,599 |
|
|
$ |
1,125,378 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cole Credit Property |
|
|
Cole Credit Property |
|
|
Cole Credit Property |
|
Program: |
|
Trust II, Inc. |
|
|
Trust II, Inc. |
|
|
Trust II, Inc. |
|
|
|
Advanced Auto |
|
Golds Gym |
|
Rite Aid |
|
|
Hurley, MS |
|
OFallon, IL |
|
Glassport, PA |
Name, location, type of property |
|
Retail |
|
Retail |
|
Retail |
Gross leasable square footage |
|
|
7,000 |
|
|
|
38,000 |
|
|
|
14,564 |
|
Date of purchase |
|
|
09/29/06 |
|
|
|
09/29/06 |
|
|
|
10/04/06 |
|
Mortgage financing at date of purchase |
|
$ |
|
|
|
$ |
5,840,000 |
|
|
$ |
2,325,000 |
|
Cash down payment |
|
|
1,083,195 |
|
|
|
1,460,000 |
|
|
|
1,463,000 |
|
|
|
|
|
|
|
|
|
|
|
Contract purchase price plus acquisition fee |
|
|
1,083,195 |
|
|
|
7,300,000 |
|
|
|
3,788,000 |
|
Other cash expenditures expensed |
|
|
|
|
|
|
|
|
|
|
|
|
Other cash expenditures capitalized |
|
|
9,774 |
|
|
|
18,155 |
|
|
|
69,635 |
|
|
|
|
|
|
|
|
|
|
|
Total acquisition cost |
|
$ |
1,092,969 |
|
|
$ |
7,318,155 |
|
|
$ |
3,857,635 |
|
|
|
|
|
|
|
|
|
|
|
II-18
TABLE VI (UNAUDITED)
ACQUISITIONS OF PROPERTIES BY PROGRAMS (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cole Credit Property |
|
|
Cole Credit Property |
|
|
Cole Credit Property |
|
Program: |
|
Trust II, Inc. |
|
|
Trust II, Inc. |
|
|
Trust II, Inc. |
|
|
|
Radio Shack / Davids Bridal |
|
|
Rite Aid |
|
American TV and Appliance |
|
|
|
Topeka, KS |
|
Hanover, PA |
|
Peoria, IL |
Name, location, type of property |
|
Retail |
|
Retail |
|
Retail |
Gross leasable square footage |
|
|
10,150 |
|
|
|
14,564 |
|
|
|
126,852 |
|
Date of purchase |
|
|
10/13/06 |
|
|
|
10/17/06 |
|
|
|
10/23/06 |
|
Mortgage financing at date of purchase |
|
$ |
|
|
|
$ |
4,115,000 |
|
|
$ |
7,358,971 |
|
Cash down payment |
|
|
3,021,000 |
|
|
|
2,215,000 |
|
|
|
3,978,012 |
|
|
|
|
|
|
|
|
|
|
|
Contract purchase price plus acquisition fee |
|
|
3,021,000 |
|
|
|
6,330,000 |
|
|
|
11,336,983 |
|
Other cash expenditures expensed |
|
|
|
|
|
|
|
|
|
|
|
|
Other cash expenditures capitalized |
|
|
9,801 |
|
|
|
103,464 |
|
|
|
22,650 |
|
|
|
|
|
|
|
|
|
|
|
Total acquisition cost |
|
$ |
3,030,801 |
|
|
$ |
6,433,464 |
|
|
$ |
11,359,633 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cole Credit Property |
|
|
Cole Credit Property |
|
|
Cole Credit Property |
|
Program: |
|
Trust II, Inc. |
|
|
Trust II, Inc. |
|
|
Trust II, Inc. |
|
|
|
Tractor Supply |
|
Staples |
|
FedEx |
|
|
LaGrange, TX |
|
Peru, IL |
|
Council Bluffs, IA |
Name, location, type of property |
|
Retail |
|
Retail |
|
Retail |
Gross leasable square footage |
|
|
24,727 |
|
|
|
23,925 |
|
|
|
23,510 |
|
Date of purchase |
|
|
11/06/06 |
|
|
|
11/09/06 |
|
|
|
11/15/06 |
|
Mortgage financing at date of purchase |
|
$ |
|
|
|
$ |
1,930,000 |
|
|
$ |
2,185,000 |
|
Cash down payment |
|
|
2,580,000 |
|
|
|
1,285,000 |
|
|
|
1,176,000 |
|
|
|
|
|
|
|
|
|
|
|
Contract purchase price plus acquisition fee |
|
|
2,580,000 |
|
|
|
3,215,000 |
|
|
|
3,361,000 |
|
Other cash expenditures expensed |
|
|
|
|
|
|
|
|
|
|
|
|
Other cash expenditures capitalized |
|
|
17,476 |
|
|
|
17,417 |
|
|
|
26,630 |
|
|
|
|
|
|
|
|
|
|
|
Total acquisition cost |
|
$ |
2,597,476 |
|
|
$ |
3,232,417 |
|
|
$ |
3,387,630 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cole Credit Property |
|
|
Cole Credit Property |
|
|
Cole Credit Property |
|
Program: |
|
Trust II, Inc. |
|
|
Trust II, Inc. |
|
|
Trust II, Inc. |
|
|
|
FedEx |
|
CVS |
|
Advanced Auto |
|
|
Edwardsville, KS |
|
Glenville Socia, NY |
|
|
Ashland, KY |
Name, location, type of property |
|
Retail |
|
Retail |
|
Retail |
Gross leasable square footage |
|
|
155,965 |
|
|
|
12,900 |
|
|
|
7,000 |
|
Date of purchase |
|
|
11/15/06 |
|
|
|
11/16/06 |
|
|
|
11/17/06 |
|
Mortgage financing at date of purchase |
|
$ |
12,880,000 |
|
|
$ |
4,200,000 |
|
|
$ |
|
|
Cash down payment |
|
|
6,935,000 |
|
|
|
1,050,000 |
|
|
|
1,681,000 |
|
|
|
|
|
|
|
|
|
|
|
Contract purchase price plus acquisition fee |
|
|
19,815,000 |
|
|
|
5,250,000 |
|
|
|
1,681,000 |
|
Other cash expenditures expensed |
|
|
|
|
|
|
|
|
|
|
|
|
Other cash expenditures capitalized |
|
|
64,012 |
|
|
|
40,759 |
|
|
|
13,501 |
|
|
|
|
|
|
|
|
|
|
|
Total acquisition cost |
|
$ |
19,879,012 |
|
|
$ |
5,290,759 |
|
|
$ |
1,694,501 |
|
|
|
|
|
|
|
|
|
|
|
II-19
TABLE VI (UNAUDITED)
ACQUISITIONS OF PROPERTIES BY PROGRAMS (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cole Credit Property |
|
|
Cole Credit Property |
|
|
Cole Credit Property |
|
Program: |
|
Trust II, Inc. |
|
|
Trust II, Inc. |
|
|
Trust II, Inc. |
|
|
|
Advanced Auto |
|
Advanced Auto |
|
Advanced Auto |
|
|
Jackson, OH |
|
New Boston, OH |
|
Scottsburg, IN |
Name, location, type of property |
|
Retail |
|
Retail |
|
Retail |
Gross leasable square footage |
|
|
7,000 |
|
|
|
7,000 |
|
|
|
7,000 |
|
Date of purchase |
|
|
11/17/06 |
|
|
|
11/17/06 |
|
|
|
11/17/06 |
|
Mortgage financing at date of purchase |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Cash down payment |
|
|
1,352,000 |
|
|
|
1,516,000 |
|
|
|
1,272,000 |
|
|
|
|
|
|
|
|
|
|
|
Contract purchase price plus acquisition fee |
|
|
1,352,000 |
|
|
|
1,516,000 |
|
|
|
1,272,000 |
|
Other cash expenditures expensed |
|
|
|
|
|
|
|
|
|
|
|
|
Other cash expenditures capitalized |
|
|
13,665 |
|
|
|
14,337 |
|
|
|
12,070 |
|
|
|
|
|
|
|
|
|
|
|
Total acquisition cost |
|
$ |
1,365,665 |
|
|
$ |
1,530,337 |
|
|
$ |
1,284,070 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cole Credit Property |
|
|
Cole Credit Property |
|
|
Cole Credit Property |
|
Program: |
|
Trust II, Inc. |
|
|
Trust II, Inc. |
|
|
Trust II, Inc. |
|
|
|
Old Time Pottery |
|
Office Depot |
|
Tractor Supply |
|
|
Fairview Heights, IL |
|
|
Benton, AR |
|
Livingston, TX |
Name, location, type of property |
|
Retail |
|
Retail |
|
Retail |
Gross leasable square footage |
|
|
97,849 |
|
|
|
20,515 |
|
|
|
24,727 |
|
Date of purchase |
|
|
11/21/06 |
|
|
|
11/21/06 |
|
|
|
11/22/06 |
|
Mortgage financing at date of purchase |
|
$ |
3,424,000 |
|
|
$ |
2,130,000 |
|
|
$ |
|
|
Cash down payment |
|
|
856,000 |
|
|
|
1,145,000 |
|
|
|
3,100,000 |
|
|
|
|
|
|
|
|
|
|
|
Contract purchase price plus acquisition fee |
|
|
4,280,000 |
|
|
|
3,275,000 |
|
|
|
3,100,000 |
|
Other cash expenditures expensed |
|
|
|
|
|
|
|
|
|
|
|
|
Other cash expenditures capitalized |
|
|
11,674 |
|
|
|
15,708 |
|
|
|
19,462 |
|
|
|
|
|
|
|
|
|
|
|
Total acquisition cost |
|
$ |
4,291,674 |
|
|
$ |
3,290,708 |
|
|
$ |
3,119,462 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cole Credit Property |
|
|
Cole Credit Property |
|
|
Cole Credit Property |
|
Program: |
|
Trust II, Inc. |
|
|
Trust II, Inc. |
|
|
Trust II, Inc. |
|
|
|
Tractor Supply |
|
Infiniti |
|
Office Depot |
|
|
New Braunfels, TX |
|
|
Davie, FL |
|
Oxford, MS |
Name, location, type of property |
|
Retail |
|
Auto |
|
Retail |
Gross leasable square footage |
|
|
24,727 |
|
|
|
20,927 |
|
|
|
20,000 |
|
Date of purchase |
|
|
11/22/06 |
|
|
|
11/30/06 |
|
|
|
12/01/06 |
|
Mortgage financing at date of purchase |
|
$ |
|
|
|
$ |
|
|
|
$ |
2,295,000 |
|
Cash down payment |
|
|
3,150,000 |
|
|
|
9,432,000 |
|
|
|
1,192,450 |
|
|
|
|
|
|
|
|
|
|
|
Contract purchase price plus acquisition fee |
|
|
3,150,000 |
|
|
|
9,432,000 |
|
|
|
3,487,450 |
|
Other cash expenditures expensed |
|
|
|
|
|
|
|
|
|
|
|
|
Other cash expenditures capitalized |
|
|
21,529 |
|
|
|
100,336 |
|
|
|
16,218 |
|
|
|
|
|
|
|
|
|
|
|
Total acquisition cost |
|
$ |
3,171,529 |
|
|
$ |
9,532,336 |
|
|
$ |
3,503,668 |
|
|
|
|
|
|
|
|
|
|
|
II-20
TABLE VI (UNAUDITED)
ACQUISITIONS OF PROPERTIES BY PROGRAMS (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cole Credit Property |
|
|
Cole Credit Property |
|
|
Cole Credit Property |
|
Program: |
|
Trust II, Inc. |
|
|
Trust II, Inc. |
|
|
Trust II, Inc. |
|
|
|
Tractor Supply |
|
Mercedes Benz |
|
Dicks Sporting Goods |
|
|
|
Crockett, TX |
|
Atlanta, GA |
|
Amherst, NY |
Name, location, type of property |
|
Retail |
|
Auto |
|
Retail |
Gross leasable square footage |
|
|
24,727 |
|
|
|
40,588 |
|
|
|
55,745 |
|
Date of purchase |
|
|
12/01/06 |
|
|
|
12/15/06 |
|
|
|
12/20/06 |
|
Mortgage financing at date of purchase |
|
$ |
1,325,000 |
|
|
$ |
|
|
|
$ |
6,321,000 |
|
Cash down payment |
|
|
1,125,000 |
|
|
|
11,760,000 |
|
|
|
3,404,000 |
|
|
|
|
|
|
|
|
|
|
|
Contract purchase price plus acquisition fee |
|
|
2,450,000 |
|
|
|
11,760,000 |
|
|
|
9,725,000 |
|
Other cash expenditures expensed |
|
|
|
|
|
|
|
|
|
|
|
|
Other cash expenditures capitalized |
|
|
18,224 |
|
|
|
10,525 |
|
|
|
88,643 |
|
|
|
|
|
|
|
|
|
|
|
Total acquisition cost |
|
$ |
2,468,224 |
|
|
$ |
11,770,525 |
|
|
$ |
9,813,643 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cole Credit Property |
|
|
Cole Credit Property |
|
|
|
Program: |
|
Trust II, Inc. |
|
|
Trust II, Inc. |
|
|
|
Chilis |
|
Staples |
|
|
Paris, TX |
|
Clarksville, IN |
Name, location, type of property |
|
Retail |
|
Retail |
Gross leasable square footage |
|
|
6,698 |
|
|
|
20,388 |
|
Date of purchase |
|
|
12/28/06 |
|
|
|
12/29/06 |
|
Mortgage financing at date of purchase |
|
$ |
1,790,000 |
|
|
$ |
2,900,000 |
|
Cash down payment |
|
|
960,000 |
|
|
|
1,530,000 |
|
|
|
|
|
|
|
|
Contract purchase price plus acquisition fee |
|
|
2,750,000 |
|
|
|
4,430,000 |
|
Other cash expenditures expensed |
|
|
|
|
|
|
|
|
Other cash expenditures capitalized |
|
|
15,204 |
|
|
|
15,249 |
|
|
|
|
|
|
|
|
Total acquisition cost |
|
$ |
2,765,204 |
|
|
$ |
4,445,249 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cole Collateralized |
|
|
Cole Collateralized |
|
|
Cole Collateralized |
|
Program: |
|
Senior Notes, LLC |
|
|
Senior Notes, LLC |
|
|
Senior Notes, LLC |
|
|
|
Wawa |
|
Wawa |
|
Wawa |
|
|
Narberth, PA |
|
Hockessin, DE |
|
Manahawkin, NJ |
|
Name, location, type of property |
|
Retail |
|
Retail |
|
Retail |
Gross leasable square footage |
|
|
4,461 |
|
|
|
5,160 |
|
|
|
4,695 |
|
Date of purchase |
|
|
02/27/04 |
|
|
|
02/27/04 |
|
|
|
02/27/04 |
|
Mortgage financing at date of purchase |
|
$ |
2,254,080 |
|
|
$ |
2,607,859 |
|
|
$ |
2,372,848 |
|
Cash down payment |
|
|
1,406,766 |
|
|
|
1,627,558 |
|
|
|
1,480,889 |
|
|
|
|
|
|
|
|
|
|
|
Contract purchase price plus acquisition fee |
|
|
3,660,845 |
|
|
|
4,235,417 |
|
|
|
3,853,737 |
|
Other cash expenditures expensed |
|
|
|
|
|
|
|
|
|
|
|
|
Other cash expenditures capitalized |
|
|
20,281 |
|
|
|
23,465 |
|
|
|
21,350 |
|
|
|
|
|
|
|
|
|
|
|
Total acquisition cost |
|
$ |
3,681,127 |
|
|
$ |
4,258,882 |
|
|
$ |
3,875,087 |
|
|
|
|
|
|
|
|
|
|
|
II-21
TABLE VI (UNAUDITED)
ACQUISITIONS OF PROPERTIES BY PROGRAMS (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cole Collateralized |
|
|
Cole Collateralized |
|
|
Cole Collateralized |
|
Program: |
|
Senior Notes, LLC |
|
|
Senior Notes, LLC |
|
|
Senior Notes, LLC |
|
|
|
Walgreens |
|
Walgreens |
|
Walgreens |
|
|
Houston, TX |
|
Slidell, LA |
|
Covington, TN |
Name, location, type of property |
|
Retail |
|
Retail |
|
Retail |
Gross leasable square footage |
|
|
13,562 |
|
|
|
14,560 |
|
|
|
14,568 |
|
Date of purchase |
|
|
10/04/04 |
|
|
|
10/15/04 |
|
|
|
10/22/04 |
|
Mortgage financing at date of purchase |
|
$ |
5,800,000 |
|
|
$ |
3,200,000 |
|
|
$ |
3,064,000 |
|
Cash down payment |
|
|
1,676,600 |
|
|
|
904,550 |
|
|
|
860,300 |
|
|
|
|
|
|
|
|
|
|
|
Contract purchase price plus acquisition fee |
|
|
7,476,600 |
|
|
|
4,104,550 |
|
|
|
3,924,300 |
|
Other cash expenditures expensed |
|
|
|
|
|
|
|
|
|
|
|
|
Other cash expenditures capitalized |
|
|
35,882 |
|
|
|
20,851 |
|
|
|
30,227 |
|
|
|
|
|
|
|
|
|
|
|
Total acquisition cost |
|
$ |
7,512,482 |
|
|
$ |
4,125,401 |
|
|
$ |
3,954,527 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cole Collateralized |
|
|
Cole Collateralized |
|
|
Cole Collateralized |
|
Program: |
|
Senior Notes, LLC |
|
|
Senior Notes, LLC |
|
|
Senior Notes, LLC |
|
|
|
Home Depot |
|
Walgreens |
|
Walgreens |
|
|
Spokane, WA |
|
Glen Burnie, MD |
|
|
Ponca City, OK |
Name, location, type of property |
|
Retail |
|
Retail |
|
Retail |
Gross leasable square footage |
|
|
132,805 |
|
|
|
13,660 |
|
|
|
14,639 |
|
Date of purchase |
|
|
10/27/04 |
|
|
|
11/15/04 |
|
|
|
11/24/04 |
|
Mortgage financing at date of purchase |
|
$ |
16,760,000 |
|
|
$ |
3,369,000 |
|
|
$ |
3,648,000 |
|
Cash down payment |
|
|
4,694,900 |
|
|
|
2,889,750 |
|
|
|
887,260 |
|
|
|
|
|
|
|
|
|
|
|
Contract purchase price plus acquisition fee |
|
|
21,454,900 |
|
|
|
6,258,750 |
|
|
|
4,535,260 |
|
Other cash expenditures expensed |
|
|
|
|
|
|
|
|
|
|
|
|
Other cash expenditures capitalized |
|
|
54,751 |
|
|
|
19,393 |
|
|
|
95,257 |
|
|
|
|
|
|
|
|
|
|
|
Total acquisition cost |
|
$ |
21,509,651 |
|
|
$ |
6,278,143 |
|
|
$ |
4,630,517 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cole Collateralized |
|
|
Cole Collateralized |
|
|
Cole Collateralized |
|
Program: |
|
Senior Notes, LLC |
|
|
Senior Notes, LLC |
|
|
Senior Notes, LLC |
|
|
|
Walgreens |
|
Walgreens |
|
Gander Mountain |
|
|
|
Chicago, IL |
|
Southington, CT |
|
Spring, TX |
Name, location, type of property |
|
Retail |
|
Retail |
|
Retail |
Gross leasable square footage |
|
|
15,330 |
|
|
|
14,560 |
|
|
|
87,383 |
|
Date of purchase |
|
|
03/18/05 |
|
|
|
04/08/05 |
|
|
|
05/26/05 |
|
Mortgage financing at date of purchase |
|
$ |
6,404,000 |
|
|
$ |
5,513,000 |
|
|
$ |
7,052,400 |
|
Cash down payment |
|
|
888,875 |
|
|
|
612,000 |
|
|
|
4,701,600 |
|
|
|
|
|
|
|
|
|
|
|
Contract purchase price plus acquisition fee |
|
|
7,292,875 |
|
|
|
6,125,000 |
|
|
|
11,754,000 |
|
Other cash expenditures expensed |
|
|
|
|
|
|
|
|
|
|
|
|
Other cash expenditures capitalized |
|
|
8,042 |
|
|
|
51,883 |
|
|
|
24,231 |
|
|
|
|
|
|
|
|
|
|
|
Total acquisition cost |
|
$ |
7,300,917 |
|
|
$ |
6,176,883 |
|
|
$ |
11,778,231 |
|
|
|
|
|
|
|
|
|
|
|
II-22
TABLE VI (UNAUDITED)
ACQUISITIONS OF PROPERTIES BY PROGRAMS (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cole Collateralized |
|
|
Cole Collateralized |
|
|
Cole Collateralized |
|
Program: |
|
Senior Notes, LLC |
|
|
Senior Notes, LLC |
|
|
Senior Notes, LLC |
|
|
|
Gander Mountain |
|
|
Kohls |
|
BJs |
|
|
Hermantown, MN |
|
|
Lakewood, CO |
|
Homestead, FL |
Name, location, type of property |
|
Retail |
|
Retail |
|
Retail |
Gross leasable square footage |
|
|
66,025 |
|
|
|
88,248 |
|
|
|
119,217 |
|
Date of purchase |
|
|
09/01/05 |
|
|
|
10/27/05 |
|
|
|
12/16/05 |
|
Mortgage financing at date of purchase |
|
$ |
6,291,600 |
|
|
$ |
13,520,000 |
|
|
$ |
15,215,000 |
|
Cash down payment |
|
|
4,194,400 |
|
|
|
4,080,000 |
|
|
|
3,803,000 |
|
|
|
|
|
|
|
|
|
|
|
Contract purchase price plus acquisition fee |
|
|
10,486,000 |
|
|
|
17,600,000 |
|
|
|
19,018,000 |
|
Other cash expenditures expensed |
|
|
|
|
|
|
|
|
|
|
|
|
Other cash expenditures capitalized |
|
|
49,803 |
|
|
|
24,223 |
|
|
|
213,746 |
|
|
|
|
|
|
|
|
|
|
|
Total acquisition cost |
|
$ |
10,535,803 |
|
|
$ |
17,624,223 |
|
|
$ |
19,231,746 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cole Collateralized |
|
|
Cole Collateralized |
|
|
Cole Collateralized |
|
Program: |
|
Senior Notes II, LLC |
|
|
Senior Notes II, LLC |
|
|
Senior Notes II, LLC |
|
|
|
CarMax |
|
Walgreens |
|
Walgreens |
|
|
Merriam, KS |
|
Windsor, CO |
|
Hamilton, OH |
Name, location, type of property |
|
Retail |
|
Retail |
|
Retail |
Gross leasable square footage |
|
|
55,466 |
|
|
|
14,633 |
|
|
|
13,675 |
|
Date of purchase |
|
|
04/29/04 |
|
|
|
06/03/04 |
|
|
|
06/25/04 |
|
Mortgage financing at date of purchase |
|
$ |
14,175,000 |
|
|
$ |
|
|
|
$ |
4,289,589 |
|
Cash down payment |
|
|
4,725,500 |
|
|
|
5,194,224 |
|
|
|
1,335,711 |
|
|
|
|
|
|
|
|
|
|
|
Contract purchase price plus acquisition fee |
|
|
18,900,500 |
|
|
|
5,194,224 |
|
|
|
5,625,300 |
|
Other cash expenditures expensed |
|
|
|
|
|
|
|
|
|
|
|
|
Other cash expenditures capitalized |
|
|
53,171 |
|
|
|
10,803 |
|
|
|
19,914 |
|
|
|
|
|
|
|
|
|
|
|
Total acquisition cost |
|
$ |
18,953,671 |
|
|
$ |
5,205,027 |
|
|
$ |
5,645,214 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cole Collateralized |
|
|
Cole Collateralized |
|
|
Cole Collateralized |
|
Program: |
|
Senior Notes II, LLC |
|
|
Senior Notes II, LLC |
|
|
Senior Notes II, LLC |
|
|
|
Walgreens |
|
Wendys |
|
Walgreens |
|
|
Goldsboro, NC |
|
Hardeeville, SC |
|
Carlsbad, NM |
Name, location, type of property |
|
Retail |
|
Retail |
|
Retail |
Gross leasable square footage |
|
|
14,532 |
|
|
|
3,012 |
|
|
|
14,525 |
|
Date of purchase |
|
|
06/29/04 |
|
|
|
07/08/04 |
|
|
|
07/13/04 |
|
Mortgage financing at date of purchase |
|
$ |
3,691,000 |
|
|
$ |
|
|
|
$ |
3,298,000 |
|
Cash down payment |
|
|
1,152,164 |
|
|
|
1,099,010 |
|
|
|
1,031,900 |
|
|
|
|
|
|
|
|
|
|
|
Contract purchase price plus acquisition fee |
|
|
4,843,164 |
|
|
|
1,099,010 |
|
|
|
4,329,900 |
|
Other cash expenditures expensed |
|
|
|
|
|
|
|
|
|
|
|
|
Other cash expenditures capitalized |
|
|
13,458 |
|
|
|
8,278 |
|
|
|
12,118 |
|
|
|
|
|
|
|
|
|
|
|
Total acquisition cost |
|
$ |
4,856,622 |
|
|
$ |
1,107,288 |
|
|
$ |
4,342,018 |
|
|
|
|
|
|
|
|
|
|
|
II-23
TABLE VI (UNAUDITED)
ACQUISITIONS OF PROPERTIES BY PROGRAMS (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cole Collateralized |
|
|
Cole Collateralized |
|
|
Cole Collateralized |
|
Program: |
|
Senior Notes II, LLC |
|
|
Senior Notes II, LLC |
|
|
Senior Notes II, LLC |
|
|
|
Rite Aid |
|
Rite Aid |
|
Walgreens |
|
|
Warren, OH |
|
Memphis, TN |
|
Willimantic, CT |
Name, location, type of property |
|
Retail |
|
Retail |
|
Retail |
Gross leasable square footage |
|
|
11,267 |
|
|
|
11,064 |
|
|
|
13,559 |
|
Date of purchase |
|
|
07/13/04 |
|
|
|
07/30/04 |
|
|
|
09/03/04 |
|
Mortgage financing at date of purchase |
|
$ |
|
|
|
$ |
|
|
|
$ |
4,000,000 |
|
Cash down payment |
|
|
3,352,650 |
|
|
|
3,502,000 |
|
|
|
1,048,125 |
|
|
|
|
|
|
|
|
|
|
|
Contract purchase price plus acquisition fee |
|
|
3,352,650 |
|
|
|
3,502,000 |
|
|
|
5,048,125 |
|
Other cash expenditures expensed |
|
|
|
|
|
|
|
|
|
|
|
|
Other cash expenditures capitalized |
|
|
14,576 |
|
|
|
29,434 |
|
|
|
25,827 |
|
|
|
|
|
|
|
|
|
|
|
Total acquisition cost |
|
$ |
3,367,226 |
|
|
$ |
3,531,434 |
|
|
$ |
5,073,952 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cole Collateralized |
|
|
Cole Collateralized |
|
|
Cole Collateralized |
|
Program: |
|
Senior Notes II, LLC |
|
|
Senior Notes II, LLC |
|
|
Senior Notes II, LLC |
|
|
|
Walgreens |
|
Walgreens |
|
Walgreens |
|
|
Edgewood, NM |
|
Fairborn, OH |
|
Richmond Heights, OH |
|
Name, location, type of property |
|
Retail |
|
Retail |
|
Retail |
Gross leasable square footage |
|
|
14,488 |
|
|
|
14,490 |
|
|
|
13,227 |
|
Date of purchase |
|
|
09/10/04 |
|
|
|
09/14/04 |
|
|
|
10/08/04 |
|
Mortgage financing at date of purchase |
|
$ |
3,200,000 |
|
|
$ |
3,944,000 |
|
|
$ |
4,800,000 |
|
Cash down payment |
|
|
771,372 |
|
|
|
1,002,913 |
|
|
|
1,545,740 |
|
|
|
|
|
|
|
|
|
|
|
Contract purchase price plus acquisition fee |
|
|
3,971,372 |
|
|
|
4,946,913 |
|
|
|
6,345,740 |
|
Other cash expenditures expensed |
|
|
|
|
|
|
|
|
|
|
|
|
Other cash expenditures capitalized |
|
|
15,098 |
|
|
|
32,491 |
|
|
|
33,658 |
|
|
|
|
|
|
|
|
|
|
|
Total acquisition cost |
|
$ |
3,986,470 |
|
|
$ |
4,979,404 |
|
|
$ |
6,379,398 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cole Collateralized |
|
|
Cole Collateralized |
|
|
Cole Collateralized |
|
Program: |
|
Senior Notes II, LLC |
|
|
Senior Notes II, LLC |
|
|
Senior Notes II, LLC |
|
|
|
Walgreens |
|
Walgreens |
|
Walgreens |
|
|
Orlando, FL |
|
Garfield Heights, OH |
|
|
Jacksonville, AR |
Name, location, type of property |
|
Retail |
|
Retail |
|
Retail |
Gross leasable square footage |
|
|
14,481 |
|
|
|
13,650 |
|
|
|
14,560 |
|
Date of purchase |
|
|
10/28/04 |
|
|
|
11/19/04 |
|
|
|
11/30/04 |
|
Mortgage financing at date of purchase |
|
$ |
3,490,709 |
|
|
$ |
3,128,000 |
|
|
$ |
3,600,000 |
|
Cash down payment |
|
|
1,036,141 |
|
|
|
2,673,760 |
|
|
|
952,890 |
|
|
|
|
|
|
|
|
|
|
|
Contract purchase price plus acquisition fee |
|
|
4,526,850 |
|
|
|
5,801,760 |
|
|
|
4,552,890 |
|
Other cash expenditures expensed |
|
|
|
|
|
|
|
|
|
|
|
|
Other cash expenditures capitalized |
|
|
49,880 |
|
|
|
19,223 |
|
|
|
19,070 |
|
|
|
|
|
|
|
|
|
|
|
Total acquisition cost |
|
$ |
4,576,730 |
|
|
$ |
5,820,983 |
|
|
$ |
4,571,960 |
|
|
|
|
|
|
|
|
|
|
|
II-24
TABLE VI (UNAUDITED)
ACQUISITIONS OF PROPERTIES BY PROGRAMS (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cole Collateralized |
|
|
Cole Collateralized |
|
|
Cole Collateralized |
|
Program: |
|
Senior Notes II, LLC |
|
|
Senior Notes II, LLC |
|
|
Senior Notes II, LLC |
|
|
|
Walgreens |
|
Walgreens |
|
Home Depot |
|
|
Spring, TX |
|
Columbus, OH |
|
Tacoma, WA |
Name, location, type of property |
|
Retail |
|
Retail |
|
Retail |
Gross leasable square footage |
|
|
14,461 |
|
|
|
14,264 |
|
|
|
137,071 |
|
Date of purchase |
|
|
12/08/04 |
|
|
|
12/16/04 |
|
|
|
01/11/05 |
|
Mortgage financing at date of purchase |
|
$ |
2,880,000 |
|
|
$ |
4,135,018 |
|
|
$ |
21,320,000 |
|
Cash down payment |
|
|
797,700 |
|
|
|
1,168,122 |
|
|
|
6,129,500 |
|
|
|
|
|
|
|
|
|
|
|
Contract purchase price plus acquisition fee |
|
|
3,677,700 |
|
|
|
5,303,140 |
|
|
|
27,449,500 |
|
Other cash expenditures expensed |
|
|
|
|
|
|
|
|
|
|
|
|
Other cash expenditures capitalized |
|
|
16,997 |
|
|
|
20,639 |
|
|
|
34,338 |
|
|
|
|
|
|
|
|
|
|
|
Total acquisition cost |
|
$ |
3,694,697 |
|
|
$ |
5,323,779 |
|
|
$ |
27,483,838 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cole Collateralized |
|
|
Cole Collateralized |
|
|
Cole Collateralized |
|
Program: |
|
Senior Notes II, LLC |
|
|
Senior Notes II, LLC |
|
|
Senior Notes II, LLC |
|
|
|
Walgreens |
|
Walgreens |
|
Walgreens |
|
|
Pineville, LA |
|
Bartlett, TN |
|
Sidney, OH |
Name, location, type of property |
|
Retail |
|
Retail |
|
Retail |
Gross leasable square footage |
|
|
14,820 |
|
|
|
14,490 |
|
|
|
14,416 |
|
Date of purchase |
|
|
01/13/05 |
|
|
|
01/21/05 |
|
|
|
01/28/05 |
|
Mortgage financing at date of purchase |
|
$ |
2,923,000 |
|
|
$ |
4,084,000 |
|
|
$ |
4,014,000 |
|
Cash down payment |
|
|
1,707,880 |
|
|
|
454,000 |
|
|
|
512,900 |
|
|
|
|
|
|
|
|
|
|
|
Contract purchase price plus acquisition fee |
|
|
4,630,880 |
|
|
|
4,538,000 |
|
|
|
4,526,900 |
|
Other cash expenditures expensed |
|
|
|
|
|
|
|
|
|
|
|
|
Other cash expenditures capitalized |
|
|
11,245 |
|
|
|
62,824 |
|
|
|
20,096 |
|
|
|
|
|
|
|
|
|
|
|
Total acquisition cost |
|
$ |
4,642,125 |
|
|
$ |
4,600,824 |
|
|
$ |
4,546,996 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cole Collateralized |
|
|
Cole Collateralized |
|
|
Cole Collateralized |
|
Program: |
|
Senior Notes II, LLC |
|
|
Senior Notes II, LLC |
|
|
Senior Notes II, LLC |
|
|
|
Walgreens |
|
Walgreens |
|
Walgreens |
|
|
Marion, IL |
|
Wichita Falls, TX |
|
Nashville, TN |
Name, location, type of property |
|
Retail |
|
Retail |
|
Retail |
Gross leasable square footage |
|
|
14,259 |
|
|
|
14,553 |
|
|
|
13,676 |
|
Date of purchase |
|
|
02/11/05 |
|
|
|
02/24/05 |
|
|
|
04/07/05 |
|
Mortgage financing at date of purchase |
|
$ |
3,690,000 |
|
|
$ |
4,097,000 |
|
|
$ |
5,112,000 |
|
Cash down payment |
|
|
512,500 |
|
|
|
546,040 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contract purchase price plus acquisition fee |
|
|
4,202,500 |
|
|
|
4,643,040 |
|
|
|
5,680,000 |
|
Other cash expenditures expensed |
|
|
|
|
|
|
|
|
|
|
|
|
Other cash expenditures capitalized |
|
|
66,036 |
|
|
|
14,094 |
|
|
|
35,359 |
|
|
|
|
|
|
|
|
|
|
|
Total acquisition cost |
|
$ |
4,268,536 |
|
|
$ |
4,657,134 |
|
|
$ |
5,715,359 |
|
|
|
|
|
|
|
|
|
|
|
II-25
TABLE VI (UNAUDITED)
ACQUISITIONS OF PROPERTIES BY PROGRAMS (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cole Collateralized |
|
|
Cole Collateralized |
|
|
Cole Collateralized |
|
Program: |
|
Senior Notes II, LLC |
|
|
Senior Notes II, LLC |
|
|
Senior Notes II, LLC |
|
|
|
Walgreens |
|
Walgreens |
|
Walgreens |
|
|
St. Joseph, MO |
|
Newton, KS |
|
Hutchinson, KS |
Name, location, type of property |
|
Retail |
|
Retail |
|
Retail |
Gross leasable square footage |
|
|
14,573 |
|
|
|
14,444 |
|
|
|
14,395 |
|
Date of purchase |
|
|
07/20/05 |
|
|
|
07/20/05 |
|
|
|
07/20/05 |
|
Mortgage financing at date of purchase |
|
$ |
4,123,000 |
|
|
$ |
3,558,000 |
|
|
$ |
4,260,000 |
|
Cash down payment |
|
|
1,030,908 |
|
|
|
889,015 |
|
|
|
1,065,600 |
|
|
|
|
|
|
|
|
|
|
|
Contract purchase price plus acquisition fee |
|
|
5,153,908 |
|
|
|
4,447,015 |
|
|
|
5,325,600 |
|
Other cash expenditures expensed |
|
|
|
|
|
|
|
|
|
|
|
|
Other cash expenditures capitalized |
|
|
20,397 |
|
|
|
26,088 |
|
|
|
28,888 |
|
|
|
|
|
|
|
|
|
|
|
Total acquisition cost |
|
$ |
5,174,305 |
|
|
$ |
4,473,103 |
|
|
$ |
5,354,488 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cole Collateralized |
|
|
Cole Collateralized |
|
|
Cole Collateralized |
|
Program: |
|
Senior Notes II, LLC |
|
|
Senior Notes II, LLC |
|
|
Senior Notes II, LLC |
|
|
|
Walgreens |
|
CVS Pharmacy |
|
Walmart |
|
|
Metairie, LA |
|
Winterhaven, FL |
|
Hazard, KY |
Name, location, type of property |
|
Retail |
|
Retail |
|
Retail |
Gross leasable square footage |
|
|
13,570 |
|
|
|
13,824 |
|
|
|
209,847 |
|
Date of purchase |
|
|
07/20/05 |
|
|
|
08/29/05 |
|
|
|
09/02/05 |
|
Mortgage financing at date of purchase |
|
$ |
6,646,000 |
|
|
$ |
4,214,000 |
|
|
$ |
24,264,000 |
|
Cash down payment |
|
|
1,661,692 |
|
|
|
1,053,000 |
|
|
|
6,066,000 |
|
|
|
|
|
|
|
|
|
|
|
Contract purchase price plus acquisition fee |
|
|
8,307,692 |
|
|
|
5,267,000 |
|
|
|
30,330,000 |
|
Other cash expenditures expensed |
|
|
|
|
|
|
|
|
|
|
|
|
Other cash expenditures capitalized |
|
|
27,380 |
|
|
|
39,902 |
|
|
|
530,980 |
|
|
|
|
|
|
|
|
|
|
|
Total acquisition cost |
|
$ |
8,335,072 |
|
|
$ |
5,306,902 |
|
|
$ |
30,860,980 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cole Collateralized |
|
|
Cole Collateralized |
|
|
Cole Collateralized |
|
Program: |
|
Senior Notes II, LLC |
|
|
Senior Notes II, LLC |
|
|
Senior Notes II, LLC |
|
|
|
La-Z-Boy |
|
Walgreens |
|
Walgreens |
|
|
Flagstaff, AZ |
|
Sumter, SC |
|
Twin Oaks, MO |
Name, location, type of property |
|
Retail |
|
Retail |
|
Retail |
Gross leasable square footage |
|
|
21,330 |
|
|
|
14,820 |
|
|
|
14,375 |
|
Date of purchase |
|
|
10/25/05 |
|
|
|
11/22/05 |
|
|
|
12/16/05 |
|
Mortgage financing at date of purchase |
|
$ |
2,540,510 |
|
|
$ |
3,880,000 |
|
|
$ |
4,606,000 |
|
Cash down payment |
|
|
1,367,965 |
|
|
|
970,000 |
|
|
|
1,151,500 |
|
|
|
|
|
|
|
|
|
|
|
Contract purchase price plus acquisition fee |
|
|
3,908,475 |
|
|
|
4,850,000 |
|
|
|
5,757,500 |
|
Other cash expenditures expensed |
|
|
|
|
|
|
|
|
|
|
|
|
Other cash expenditures capitalized |
|
|
14,764 |
|
|
|
25,025 |
|
|
|
16,882 |
|
|
|
|
|
|
|
|
|
|
|
Total acquisition cost |
|
$ |
3,923,239 |
|
|
$ |
4,875,025 |
|
|
$ |
5,774,382 |
|
|
|
|
|
|
|
|
|
|
|
II-26
TABLE VI (UNAUDITED)
ACQUISITIONS OF PROPERTIES BY PROGRAMS (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cole Collateralized |
|
|
Cole Collateralized |
|
|
Cole Collateralized |
|
Program: |
|
Senior Notes II, LLC |
|
|
Senior Notes II, LLC |
|
|
Senior Notes II, LLC |
|
|
|
Home Depot |
|
Tortuga Cantina |
|
Walgreens |
|
|
Bellingham, WA |
|
The Woodlands, TX |
|
|
New Kensington, PA |
|
Name, location, type of property |
|
Retail |
|
Restaurant |
|
Retail |
Gross leasable square footage |
|
|
106,794 |
|
|
|
5,001 |
|
|
|
14,820 |
|
Date of purchase |
|
|
01/10/06 |
|
|
|
11/16/05 |
|
|
|
04/28/06 |
|
Mortgage financing at date of purchase |
|
$ |
17,040,000 |
|
|
$ |
|
|
|
$ |
4,006,000 |
|
Cash down payment |
|
|
4,667,000 |
|
|
|
1,987,964 |
|
|
|
1,001,407 |
|
|
|
|
|
|
|
|
|
|
|
Contract purchase price plus acquisition fee |
|
|
21,707,000 |
|
|
|
1,987,964 |
|
|
|
5,007,407 |
|
Other cash expenditures expensed |
|
|
|
|
|
|
|
|
|
|
|
|
Other cash expenditures capitalized |
|
|
224,722 |
|
|
|
|
|
|
|
29,742 |
|
|
|
|
|
|
|
|
|
|
|
Total acquisition cost |
|
$ |
21,931,722 |
|
|
$ |
1,987,964 |
|
|
$ |
5,037,149 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cole Collateralized |
|
|
Cole Collateralized |
|
|
Cole Collateralized |
|
Program: |
|
Senior Notes II, LLC |
|
|
Senior Notes III, LLC |
|
|
Senior Notes III, LLC |
|
|
|
Walgreens |
|
Walgreens |
|
Walgreens |
|
|
Lorain, OH |
|
Warrensburg, MO |
|
Blue Springs, MO |
Name, location, type of property |
|
Retail |
|
Retail |
|
Retail |
Gross leasable square footage |
|
|
14,550 |
|
|
|
14,371 |
|
|
|
14,505 |
|
Date of purchase |
|
|
11/18/06 |
|
|
|
04/21/05 |
|
|
|
04/21/05 |
|
Mortgage financing at date of purchase |
|
$ |
|
|
|
$ |
3,973,000 |
|
|
$ |
3,711,000 |
|
Cash down payment |
|
|
4,830,000 |
|
|
|
441,814 |
|
|
|
412,703 |
|
|
|
|
|
|
|
|
|
|
|
Contract purchase price plus acquisition fee |
|
|
4,830,000 |
|
|
|
4,414,814 |
|
|
|
4,123,703 |
|
Other cash expenditures expensed |
|
|
|
|
|
|
|
|
|
|
|
|
Other cash expenditures capitalized |
|
|
17,887 |
|
|
|
20,635 |
|
|
|
22,307 |
|
|
|
|
|
|
|
|
|
|
|
Total acquisition cost |
|
$ |
4,847,887 |
|
|
$ |
4,435,449 |
|
|
$ |
4,146,010 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cole Collateralized |
|
|
Cole Collateralized |
|
|
Cole Collateralized |
|
Program: |
|
Senior Notes III, LLC |
|
|
Senior Notes III, LLC |
|
|
Senior Notes III, LLC |
|
|
|
Walgreens |
|
Walgreens |
|
Walgreens |
|
|
Derby, KS |
|
Garden City, KS |
|
Gladstone, MO |
Name, location, type of property |
|
Retail |
|
Retail |
|
Retail |
Gross leasable square footage |
|
|
14,585 |
|
|
|
14,492 |
|
|
|
14,672 |
|
Date of purchase |
|
|
04/21/05 |
|
|
|
04/21/05 |
|
|
|
04/21/05 |
|
Mortgage financing at date of purchase |
|
$ |
4,600,000 |
|
|
$ |
4,445,000 |
|
|
$ |
5,253,000 |
|
Cash down payment |
|
|
511,111 |
|
|
|
494,259 |
|
|
|
584,037 |
|
|
|
|
|
|
|
|
|
|
|
Contract purchase price plus acquisition fee |
|
|
5,111,111 |
|
|
|
4,939,259 |
|
|
|
5,837,037 |
|
Other cash expenditures expensed |
|
|
|
|
|
|
|
|
|
|
|
|
Other cash expenditures capitalized |
|
|
33,175 |
|
|
|
39,231 |
|
|
|
23,938 |
|
|
|
|
|
|
|
|
|
|
|
Total acquisition cost |
|
$ |
5,144,286 |
|
|
$ |
4,978,490 |
|
|
$ |
5,860,975 |
|
|
|
|
|
|
|
|
|
|
|
II-27
TABLE VI (UNAUDITED)
ACQUISITIONS OF PROPERTIES BY PROGRAMS (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cole Collateralized |
|
|
Cole Collateralized |
|
|
Cole Collateralized |
|
Program: |
|
Senior Notes III, LLC |
|
|
Senior Notes III, LLC |
|
|
Senior Notes III, LLC |
|
|
|
Walgreens |
|
Walgreens |
|
Walgreens |
|
|
Great Bend, KS |
|
Pittsburg, KS |
|
Midvale, UT |
Name, location, type of property |
|
Retail |
|
Retail |
|
Retail |
Gross leasable square footage |
|
|
14,597 |
|
|
|
14,726 |
|
|
|
14,749 |
|
Date of purchase |
|
|
04/21/05 |
|
|
|
04/21/05 |
|
|
|
06/06/05 |
|
Mortgage financing at date of purchase |
|
$ |
3,840,000 |
|
|
$ |
3,925,000 |
|
|
$ |
4,671,000 |
|
Cash down payment |
|
|
426,666 |
|
|
|
435,711 |
|
|
|
518,867 |
|
|
|
|
|
|
|
|
|
|
|
Contract purchase price plus acquisition fee |
|
|
4,266,666 |
|
|
|
4,360,711 |
|
|
|
5,189,867 |
|
Other cash expenditures expensed |
|
|
|
|
|
|
|
|
|
|
|
|
Other cash expenditures capitalized |
|
|
21,359 |
|
|
|
36,940 |
|
|
|
46,210 |
|
|
|
|
|
|
|
|
|
|
|
Total acquisition cost |
|
$ |
4,288,025 |
|
|
$ |
4,397,651 |
|
|
$ |
5,236,077 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cole Collateralized |
|
|
Cole Collateralized |
|
|
Cole Collateralized |
|
Program: |
|
Senior Notes III, LLC |
|
|
Senior Notes III, LLC |
|
|
Senior Notes III, LLC |
|
|
|
Walgreens |
|
Walgreens |
|
Walgreens |
|
|
Salt Lake City, UT |
|
Sandy, UT |
|
Aldine, TX |
Name, location, type of property |
|
Retail |
|
Retail |
|
Retail |
Gross leasable square footage |
|
|
14,293 |
|
|
|
14,225 |
|
|
|
14,425 |
|
Date of purchase |
|
|
06/01/05 |
|
|
|
06/03/05 |
|
|
|
05/05/05 |
|
Mortgage financing at date of purchase |
|
$ |
6,615,000 |
|
|
$ |
6,556,000 |
|
|
$ |
2,846,000 |
|
Cash down payment |
|
|
783,755 |
|
|
|
728,178 |
|
|
|
315,750 |
|
|
|
|
|
|
|
|
|
|
|
Contract purchase price plus acquisition fee |
|
|
7,398,755 |
|
|
|
7,284,178 |
|
|
|
3,161,750 |
|
Other cash expenditures expensed |
|
|
|
|
|
|
|
|
|
|
|
|
Other cash expenditures capitalized |
|
|
50,325 |
|
|
|
61,656 |
|
|
|
24,258 |
|
|
|
|
|
|
|
|
|
|
|
Total acquisition cost |
|
$ |
7,449,080 |
|
|
$ |
7,345,834 |
|
|
$ |
3,186,008 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cole Collateralized |
|
|
Cole Collateralized |
|
|
Cole Collateralized |
|
Program: |
|
Senior Notes III, LLC |
|
|
Senior Notes III, LLC |
|
|
Senior Notes III, LLC |
|
|
|
Walgreens |
|
Walgreens |
|
Walgreens |
|
|
Natchitoches, LA |
|
East Ridge, TN |
|
Asheboro, NC |
Name, location, type of property |
|
Retail |
|
Retail |
|
Retail |
Gross leasable square footage |
|
|
14,820 |
|
|
|
15,120 |
|
|
|
14,550 |
|
Date of purchase |
|
|
10/26/05 |
|
|
|
11/16/05 |
|
|
|
02/22/06 |
|
Mortgage financing at date of purchase |
|
$ |
3,091,000 |
|
|
$ |
3,614,000 |
|
|
$ |
4,123,000 |
|
Cash down payment |
|
|
772,636 |
|
|
|
904,000 |
|
|
|
1,030,850 |
|
|
|
|
|
|
|
|
|
|
|
Contract purchase price plus acquisition fee |
|
|
3,863,636 |
|
|
|
4,518,000 |
|
|
|
5,153,850 |
|
Other cash expenditures expensed |
|
|
|
|
|
|
|
|
|
|
|
|
Other cash expenditures capitalized |
|
|
12,719 |
|
|
|
34,887 |
|
|
|
21,000 |
|
|
|
|
|
|
|
|
|
|
|
Total acquisition cost |
|
$ |
3,876,355 |
|
|
$ |
4,552,887 |
|
|
$ |
5,174,850 |
|
|
|
|
|
|
|
|
|
|
|
II-28
TABLE VI (UNAUDITED)
ACQUISITIONS OF PROPERTIES BY PROGRAMS (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cole Collateralized |
|
|
Cole Collateralized |
|
|
Cole Collateralized |
|
Program: |
|
Senior Notes III, LLC |
|
|
Senior Notes III, LLC |
|
|
Senior Notes III, LLC |
|
|
|
CW |
|
BJ |
|
CVS |
|
|
Perinton, NY |
|
Homestead, FL |
|
Baton Rogue, LA |
Name, location, type of property |
|
Retail |
|
Retail |
|
Retail |
Gross leasable square footage |
|
|
8,877 |
|
|
|
117,593 |
|
|
|
13,814 |
|
Date of purchase |
|
|
11/6/03 |
|
|
|
12/16/05 |
|
|
|
07/14/06 |
|
Mortgage financing at date of purchase |
|
$ |
|
|
|
$ |
15,215,000 |
|
|
$ |
|
|
Cash down payment |
|
|
4,009,250 |
|
|
|
3,803,000 |
|
|
|
5,626,592 |
|
|
|
|
|
|
|
|
|
|
|
Contract purchase price plus acquisition fee |
|
|
4,009,250 |
|
|
|
19,018,000 |
|
|
|
5,626,592 |
|
Other cash expenditures expensed |
|
|
|
|
|
|
|
|
|
|
|
|
Other cash expenditures capitalized |
|
|
|
|
|
|
218,561 |
|
|
|
13,318 |
|
|
|
|
|
|
|
|
|
|
|
Total acquisition cost |
|
$ |
4,009,250 |
|
|
$ |
19,236,561 |
|
|
$ |
5,639,910 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cole Collateralized |
|
|
Cole Collateralized |
|
|
Cole Collateralized |
|
Program: |
|
Senior Notes III, LLC |
|
|
Senior Notes III, LLC |
|
|
Senior Notes III, LLC |
|
|
|
CVS |
|
Walgreens |
|
Walgreens |
|
|
Mobile, AL |
|
Morgantown, WV |
|
Grandview, MO |
Name, location, type of property |
|
Retail |
|
Retail |
|
Retail |
Gross leasable square footage |
|
|
11,970 |
|
|
|
11,247 |
|
|
|
14,490 |
|
Date of purchase |
|
|
5/3/06 |
|
|
|
09/11/06 |
|
|
|
09/13/06 |
|
Mortgage financing at date of purchase |
|
$ |
5,264,000 |
|
|
$ |
4,385,000 |
|
|
$ |
4,918,000 |
|
Cash down payment |
|
|
1,316,000 |
|
|
|
1,096,481 |
|
|
|
1,230,000 |
|
|
|
|
|
|
|
|
|
|
|
Contract purchase price plus acquisition fee |
|
|
6,580,000 |
|
|
|
5,481,481 |
|
|
|
6,148,000 |
|
Other cash expenditures expensed |
|
|
|
|
|
|
|
|
|
|
|
|
Other cash expenditures capitalized |
|
|
35,750 |
|
|
|
40,236 |
|
|
|
36,382 |
|
|
|
|
|
|
|
|
|
|
|
Total acquisition cost |
|
$ |
6,615,750 |
|
|
$ |
5,521,717 |
|
|
$ |
6,184,382 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cole Collateralized |
|
|
Cole Collateralized |
|
|
Cole Collateralized |
|
Program: |
|
Senior Notes III, LLC |
|
|
Senior Notes III, LLC |
|
|
Senior Notes III, LLC |
|
|
|
Walgreens |
|
BJ |
|
Walgreens |
|
|
Lees Summit, MO |
|
Kendall, FL |
|
Kinston, NC |
Name, location, type of property |
|
Retail |
|
Retail |
|
Retail |
Gross leasable square footage |
|
|
13,871 |
|
|
|
113,000 |
|
|
|
14,820 |
|
Date of purchase |
|
|
09/13/06 |
|
|
|
10/04/06 |
|
|
|
11/29/06 |
|
Mortgage financing at date of purchase |
|
$ |
3,536,000 |
|
|
$ |
20,606,000 |
|
|
$ |
3,756,000 |
|
Cash down payment |
|
|
879,000 |
|
|
|
5,151,353 |
|
|
|
939,000 |
|
|
|
|
|
|
|
|
|
|
|
Contract purchase price plus acquisition fee |
|
|
4,415,000 |
|
|
|
25,757,353 |
|
|
|
4,695,000 |
|
Other cash expenditures expensed |
|
|
|
|
|
|
|
|
|
|
|
|
Other cash expenditures capitalized |
|
|
19,355 |
|
|
|
291,203 |
|
|
|
21,567 |
|
|
|
|
|
|
|
|
|
|
|
Total acquisition cost |
|
$ |
4,434,355 |
|
|
$ |
26,048,556 |
|
|
$ |
4,716,567 |
|
|
|
|
|
|
|
|
|
|
|
II-29
TABLE VI (UNAUDITED)
ACQUISITIONS OF PROPERTIES BY PROGRAMS (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cole Collateralized |
|
|
Cole Collateralized |
|
|
Cole Collateralized |
|
Program: |
|
Senior Notes IV, LLC |
|
|
Senior Notes IV, LLC |
|
|
Senior Notes IV, LLC |
|
|
|
Conns |
|
CVS |
|
Office Depot |
|
|
San Antonio, TX |
|
Orlando, FL |
|
Warrensburg, MO |
Name, location, type of property |
|
Retail |
|
Retail |
|
Retail |
Gross leasable square footage |
|
|
25,358 |
|
|
|
13,013 |
|
|
|
20,000 |
|
Date of purchase |
|
|
12/29/05 |
|
|
|
03/13/06 |
|
|
|
03/22/06 |
|
Mortgage financing at date of purchase |
|
$ |
|
|
|
$ |
3,712,000 |
|
|
$ |
2,228,000 |
|
Cash down payment |
|
|
4,475,000 |
|
|
|
927,500 |
|
|
|
557,000 |
|
|
|
|
|
|
|
|
|
|
|
Contract purchase price plus acquisition fee |
|
|
4,475,000 |
|
|
|
4,639,500 |
|
|
|
2,785,000 |
|
Other cash expenditures expensed |
|
|
|
|
|
|
|
|
|
|
|
|
Other cash expenditures capitalized |
|
|
15,643 |
|
|
|
44,333 |
|
|
|
12,379 |
|
|
|
|
|
|
|
|
|
|
|
Total acquisition cost |
|
$ |
4,490,643 |
|
|
$ |
4,683,833 |
|
|
$ |
2,797,379 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cole Collateralized |
|
|
Cole Collateralized |
|
|
Cole Collateralized |
|
Program: |
|
Senior Notes IV, LLC |
|
|
Senior Notes IV, LLC |
|
|
Senior Notes IV, LLC |
|
|
|
JC Penney |
|
Walgreens |
|
CVS |
|
|
Independence, MO |
|
Auburn, AL |
|
Kissimmee, FL |
Name, location, type of property |
|
Retail |
|
Retail |
|
Retail |
Gross leasable square footage |
|
|
123,289 |
|
|
|
14,758 |
|
|
|
10,908 |
|
Date of purchase |
|
|
04/27/06 |
|
|
|
05/17/06 |
|
|
|
05/10/06 |
|
Mortgage financing at date of purchase |
|
$ |
|
|
|
$ |
4,314,000 |
|
|
$ |
3,464,000 |
|
Cash down payment |
|
|
9,125,000 |
|
|
|
1,078,000 |
|
|
|
865,900 |
|
|
|
|
|
|
|
|
|
|
|
Contract purchase price plus acquisition fee |
|
|
9,125,000 |
|
|
|
5,392,000 |
|
|
|
4,329,900 |
|
Other cash expenditures expensed |
|
|
|
|
|
|
|
|
|
|
|
|
Other cash expenditures capitalized |
|
|
13,478 |
|
|
|
35,112 |
|
|
|
41,269 |
|
|
|
|
|
|
|
|
|
|
|
Total acquisition cost |
|
$ |
9,138,498 |
|
|
$ |
5,427,112 |
|
|
$ |
4,371,169 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cole Collateralized |
|
|
Cole Collateralized |
|
|
Cole Collateralized |
|
Program: |
|
Senior Notes IV, LLC |
|
|
Senior Notes IV, LLC |
|
|
Senior Notes IV, LLC (1) |
|
|
|
Walgreens |
|
Walgreens |
|
Best Buy |
|
|
Lake Charles, LA |
|
El Camino, TX |
|
Baytown, TX |
Name, location, type of property |
|
Retail |
|
Retail |
|
Retail |
Gross leasable square footage |
|
|
14,490 |
|
|
|
15,050 |
|
|
|
30,038 |
|
Date of purchase |
|
|
05/11/06 |
|
|
|
05/15/06 |
|
|
|
10/06/05 |
|
Mortgage financing at date of purchase |
|
$ |
3,340,000 |
|
|
$ |
3,729,000 |
|
|
$ |
|
|
Cash down payment |
|
|
835,000 |
|
|
|
1,011,000 |
|
|
|
7,500,000 |
|
|
|
|
|
|
|
|
|
|
|
Contract purchase price plus acquisition fee |
|
|
4,175,000 |
|
|
|
4,740,000 |
|
|
|
7,500,000 |
|
Other cash expenditures expensed |
|
|
|
|
|
|
|
|
|
|
|
|
Other cash expenditures capitalized |
|
|
15,971 |
|
|
|
47,791 |
|
|
|
46,457 |
|
|
|
|
|
|
|
|
|
|
|
Total acquisition cost |
|
$ |
4,190,971 |
|
|
$ |
4,787,791 |
|
|
$ |
7,546,457 |
|
|
|
|
|
|
|
|
|
|
|
II-30
TABLE VI (UNAUDITED)
ACQUISITIONS OF PROPERTIES BY PROGRAMS (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cole Collateralized |
|
|
Cole Collateralized |
|
|
Cole Collateralized |
|
Program: |
|
Senior Notes IV, LLC (1) |
|
|
Senior Notes IV, LLC (1) |
|
|
Senior Notes IV, LLC (1) |
|
|
|
Kohls |
|
North Village |
|
Rite Aid |
|
|
St. Joseph, MO |
|
St. Joseph, MO |
|
Defiance, OH |
Name, location, type of property |
|
Retail |
|
Retail |
|
Retail |
Gross leasable square footage |
|
|
88,799 |
|
|
|
226,225 |
|
|
|
14,564 |
|
Date of purchase |
|
|
11/04/05 |
|
|
|
11/04/05 |
|
|
|
01/04/06 |
|
Mortgage financing at date of purchase |
|
$ |
7,624,000 |
|
|
$ |
37,976,000 |
|
|
$ |
3,377,000 |
|
Cash down payment |
|
|
1,906,000 |
|
|
|
9,494,000 |
|
|
|
843,804 |
|
|
|
|
|
|
|
|
|
|
|
Contract purchase price plus acquisition fee |
|
|
9,530,000 |
|
|
|
47,470,000 |
|
|
|
4,220,804 |
|
Other cash expenditures expensed |
|
|
|
|
|
|
|
|
|
|
|
|
Other cash expenditures capitalized |
|
|
30,838 |
|
|
|
115,389 |
|
|
|
16,808 |
|
|
|
|
|
|
|
|
|
|
|
Total acquisition cost |
|
$ |
9,560,838 |
|
|
$ |
47,585,389 |
|
|
$ |
4,237,612 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cole Collateralized |
|
|
Cole Collateralized |
|
|
Cole Collateralized |
|
Program: |
|
Senior Notes IV, LLC (1) |
|
|
Senior Notes IV, LLC (1) |
|
|
Senior Notes IV, LLC (1) |
|
|
|
CVS |
|
CVS |
|
Office Depot |
|
|
Okeechobee, FL |
|
Madison, MS |
|
Dayton, OH |
Name, location, type of property |
|
Retail |
|
Retail |
|
Retail |
Gross leasable square footage |
|
|
13,050 |
|
|
|
13,824 |
|
|
|
19,880 |
|
Date of purchase |
|
|
01/13/06 |
|
|
|
01/19/06 |
|
|
|
01/31/06 |
|
Mortgage financing at date of purchase |
|
$ |
5,016,000 |
|
|
$ |
3,457,000 |
|
|
$ |
2,621,000 |
|
Cash down payment |
|
|
1,254,000 |
|
|
|
864,000 |
|
|
|
655,724 |
|
|
|
|
|
|
|
|
|
|
|
|
Contract purchase price plus acquisition fee |
|
|
6,270,000 |
|
|
|
4,321,000 |
|
|
|
3,276,724 |
|
Other cash expenditures expensed |
|
|
|
|
|
|
|
|
|
|
|
|
Other cash expenditures capitalized |
|
|
59,354 |
|
|
|
29,075 |
|
|
|
20,001 |
|
|
|
|
|
|
|
|
|
|
|
Total acquisition cost |
|
$ |
6,329,354 |
|
|
$ |
4,350,075 |
|
|
$ |
3,296,725 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cole Collateralized |
|
|
Cole Collateralized |
|
|
Cole Collateralized |
|
Program: |
|
Senior Notes IV, LLC (1) |
|
|
Senior Notes IV, LLC (1) |
|
|
Senior Notes IV, LLC (1) |
|
|
|
Office Depot |
|
CVS |
|
CVS |
|
|
Greenville, MS |
|
Portsmouth, OH |
|
Gulfport, MS |
Name, location, type of property |
|
Retail |
|
Retail |
|
Retail |
Gross leasable square footage |
|
|
25,083 |
|
|
|
10,170 |
|
|
|
11,359 |
|
Date of purchase |
|
|
02/14/06 |
|
|
|
03/07/06 |
|
|
|
03/13/06 |
|
Mortgage financing at date of purchase |
|
$ |
2,698,000 |
|
|
$ |
|
|
|
$ |
3,213,000 |
|
Cash down payment |
|
|
675,000 |
|
|
|
2,027,000 |
|
|
|
803,220 |
|
|
|
|
|
|
|
|
|
|
|
Contract purchase price plus acquisition fee |
|
|
3,373,000 |
|
|
|
2,027,000 |
|
|
|
4,016,220 |
|
Other cash expenditures expensed |
|
|
|
|
|
|
|
|
|
|
|
|
Other cash expenditures capitalized |
|
|
23,110 |
|
|
|
13,898 |
|
|
|
27,217 |
|
|
|
|
|
|
|
|
|
|
|
Total acquisition cost |
|
$ |
3,396,110 |
|
|
$ |
2,040,878 |
|
|
$ |
4,043,437 |
|
|
|
|
|
|
|
|
|
|
|
II-31
TABLE VI (UNAUDITED)
ACQUISITIONS OF PROPERTIES BY PROGRAMS (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cole Collateralized |
|
|
Cole Collateralized |
|
|
Cole Collateralized |
|
Program: |
|
Senior Notes IV, LLC (1) |
|
|
Senior Notes IV, LLC (1) |
|
|
Senior Notes IV, LLC (1) |
|
|
|
Advance Auto |
|
Advance Auto |
|
Advance Auto |
|
|
Holland Township, MI |
|
|
Holland, MI |
|
Zeeland, MI |
Name, location, type of property |
|
Retail |
|
Retail |
|
Retail |
Gross leasable square footage |
|
|
7,000 |
|
|
|
7,000 |
|
|
|
7,000 |
|
Date of purchase |
|
|
04/04/06 |
|
|
|
04/04/06 |
|
|
|
04/04/06 |
|
Mortgage financing at date of purchase |
|
$ |
1,642,000 |
|
|
$ |
1,590,000 |
|
|
$ |
1,409,000 |
|
Cash down payment |
|
|
410,100 |
|
|
|
397,500 |
|
|
|
352,200 |
|
|
|
|
|
|
|
|
|
|
|
Contract purchase price plus acquisition fee |
|
|
2,052,100 |
|
|
|
1,987,500 |
|
|
|
1,761,200 |
|
Other cash expenditures expensed |
|
|
|
|
|
|
|
|
|
|
|
|
Other cash expenditures capitalized |
|
|
27,394 |
|
|
|
27,541 |
|
|
|
26,108 |
|
|
|
|
|
|
|
|
|
|
|
Total acquisition cost |
|
$ |
2,079,494 |
|
|
$ |
2,015,041 |
|
|
$ |
1,787,308 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cole Collateralized |
|
|
Cole Collateralized |
|
|
Cole Collateralized |
|
Program: |
|
Senior Notes IV, LLC (1) |
|
|
Senior Notes IV, LLC (1) |
|
|
Senior Notes IV, LLC (1) |
|
|
|
CVS |
|
Walgreens |
|
CVS |
|
|
Robertsdale, AL |
|
Albany, OR |
|
Haines City, FL |
Name, location, type of property |
|
Retail |
|
Retail |
|
Retail |
Gross leasable square footage |
|
|
12,296 |
|
|
|
13,650 |
|
|
|
10,908 |
|
Date of purchase |
|
|
04/07/06 |
|
|
|
04/10/06 |
|
|
|
04/27/06 |
|
Mortgage financing at date of purchase |
|
$ |
3,348,000 |
|
|
$ |
5,220,000 |
|
|
$ |
3,302,000 |
|
Cash down payment |
|
|
837,000 |
|
|
|
1,305,000 |
|
|
|
825,000 |
|
|
|
|
|
|
|
|
|
|
|
Contract purchase price plus acquisition fee |
|
|
4,185,000 |
|
|
|
6,525,000 |
|
|
|
4,127,000 |
|
Other cash expenditures expensed |
|
|
|
|
|
|
|
|
|
|
|
|
Other cash expenditures capitalized |
|
|
29,918 |
|
|
|
28,585 |
|
|
|
36,570 |
|
|
|
|
|
|
|
|
|
|
|
Total acquisition cost |
|
$ |
4,214,918 |
|
|
$ |
6,553,585 |
|
|
$ |
4,163,570 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cole Collateralized |
|
|
Cole Collateralized |
|
|
Cole Collateralized |
|
Program: |
|
Senior Notes IV, LLC (1) |
|
|
Senior Notes IV, LLC (1) |
|
|
Senior Notes IV, LLC (1) |
|
|
|
CVS |
|
Walgreens |
|
Walgreens |
|
|
Mobile, AL |
|
Harvey, LA |
|
Sam Houston, TX |
Name, location, type of property |
|
Retail |
|
Retail |
|
Retail |
Gross leasable square footage |
|
|
11,970 |
|
|
|
14,490 |
|
|
|
15,050 |
|
Date of purchase |
|
|
05/03/06 |
|
|
|
05/11/06 |
|
|
|
05/11/06 |
|
Mortgage financing at date of purchase |
|
$ |
5,264,000 |
|
|
$ |
4,360,000 |
|
|
$ |
3,414,000 |
|
Cash down payment |
|
|
1,316,000 |
|
|
|
1,090,000 |
|
|
|
1,839,000 |
|
|
|
|
|
|
|
|
|
|
|
Contract purchase price plus acquisition fee |
|
|
6,580,000 |
|
|
|
5,450,000 |
|
|
|
5,253,000 |
|
Other cash expenditures expensed |
|
|
|
|
|
|
|
|
|
|
|
|
Other cash expenditures capitalized |
|
|
35,750 |
|
|
|
16,204 |
|
|
|
22,758 |
|
|
|
|
|
|
|
|
|
|
|
Total acquisition cost |
|
$ |
6,615,750 |
|
|
$ |
5,466,204 |
|
|
$ |
5,275,758 |
|
|
|
|
|
|
|
|
|
|
|
II-32
TABLE VI (UNAUDITED)
ACQUISITIONS OF PROPERTIES BY PROGRAMS (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cole Collateralized |
|
|
Cole Collateralized |
|
|
Cole Collateralized |
|
Program: |
|
Senior Notes IV, LLC (1) |
|
|
Senior Notes IV, LLC (1) |
|
|
Senior Notes IV, LLC (1) |
|
|
|
Barrywoods Crossing |
|
|
CVS |
|
Walgreens |
|
|
Kansas City, MO |
|
Chandler, AZ |
|
Penn Hills, PA |
Name, location, type of property |
|
Retail |
|
Retail |
|
Retail |
Gross leasable square footage |
|
|
245,583 |
|
|
|
13,814 |
|
|
|
14,820 |
|
Date of purchase |
|
|
06/08/06 |
|
|
|
06/29/06 |
|
|
|
07/17/06 |
|
Mortgage financing at date of purchase |
|
$ |
38,200,000 |
|
|
$ |
3,946,000 |
|
|
$ |
4,267,000 |
|
Cash down payment |
|
|
5,300,000 |
|
|
|
987,000 |
|
|
|
1,066,333 |
|
|
|
|
|
|
|
|
|
|
|
Contract purchase price plus acquisition fee |
|
|
43,500,000 |
|
|
|
4,933,000 |
|
|
|
5,333,333 |
|
Other cash expenditures expensed |
|
|
|
|
|
|
|
|
|
|
|
|
Other cash expenditures capitalized |
|
|
55,095 |
|
|
|
30,779 |
|
|
|
33,816 |
|
|
|
|
|
|
|
|
|
|
|
Total acquisition cost |
|
$ |
43,555,095 |
|
|
$ |
4,963,729 |
|
|
$ |
5,367,149 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cole Collateralized |
|
Program: |
|
Senior Notes IV, LLC (1) |
|
|
CVS |
|
San Antonio, TX |
Name, location, type of property |
Retail |
Gross leasable square footage |
|
|
13,813 |
Date of purchase |
|
|
08/02/06 |
Mortgage financing at date of purchase |
|
$ |
3,311,000 |
Cash down payment |
|
|
828,100 |
|
|
|
Contract purchase price plus acquisition fee |
|
|
4,139,100 |
Other cash expenditures expensed |
|
|
|
Other cash expenditures capitalized |
|
|
44,598 |
|
|
|
Total acquisition cost |
|
$ |
4,183,698 |
|
|
|
|
|
|
(1) |
|
The Property was acquired by a joint venture between Cole
Collateralized Senior Notes, LLC Cole Collateralized Senior Notes II,
LLC, Cole Collateralized Senior Notes III, LLC, and Cole
Collateralized Senior Notes IV, LLC. |
II-33
SIGNATURES
Pursuant
to the requirements of the Securities Act of 1933, the Registrant certifies that it
has reasonable grounds to believe that it meets all the requirements for filing on Form S-11 and
has duly caused this Post-Effective Amendment No. 9 to the Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of Phoenix, State of Arizona,
on the 27th day of April, 2007.
|
|
|
|
|
|
COLE CREDIT PROPERTY TRUST II, INC.
|
|
|
By: |
/s/ Christopher H. Cole
|
|
|
|
Christopher H. Cole, Chief Executive
Officer and President |
|
|
|
|
|
|
Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been
signed by the following persons in the capacities indicated and on the dates indicated.
|
|
|
|
|
Signature |
|
Title |
|
Date |
/s/ Christopher H. Cole
Christopher H. Cole
|
|
Chief Executive
Officer, President
and Director
(Principal
Executive Officer)
|
|
April 27, 2007 |
|
|
|
|
|
/s/ Blair D. Koblenz
Blair D. Koblenz
|
|
Executive Vice
President and Chief
Financial Officer
(Principal
Financial and
Accounting Officer)
|
|
April 27, 2007 |
|
|
|
|
|
/s/ Marcus E. Bromley
Marcus E. Bromley
|
|
Director
|
|
April 27, 2007 |
|
|
|
|
|
/s/ Elizabeth L. Watson
Elizabeth L. Watson
|
|
Director
|
|
April 27, 2007 |
EXHIBIT INDEX
The following exhibits are included, or incorporated by reference, in this Post-Effective
Amendment No. 9 to Form S-11 (and are numbered in accordance with Item 601 of Regulation S-K).
|
|
|
Exhibit No. |
|
Description |
1.1
|
|
Form of Dealer Manager Agreement. (Incorporated by
reference to Exhibit 1.1 to the Companys Form 10-Q (File
No. 333-121094), filed on August 12, 2005) |
|
|
|
3.1
|
|
Fifth Articles of Amendment and Restatement, as corrected.
(Incorporated by reference to Exhibit 3.1 to the Companys
Form 10-K (File No. 333-121094), filed on March 23, 2006) |
|
|
|
3.2
|
|
Amended and Restated Bylaws. (Incorporated by reference to
Exhibit 99.1 to the Companys Form 8-K (File No.
333-121094), filed on September 6, 2005) |
|
|
|
3.3
|
|
Articles of Amendment to Fifth Articles of Amendment and
Restatement. (Incorporated by reference to Exhibit 3.3 of the Companys
Form S-11 (File No. 333-138444), filed on November 3, 2006) |
|
|
|
4.1
|
|
Form of Subscription Agreement and Subscription Agreement
Signature Page (included as Appendix B to prospectus).
(Incorporated by reference to Exhibit 4.1 to the Companys pre-effective amendment to
Form S-11 (File No. 333-121094), filed on June 16, 2005) |
|
|
|
4.2
|
|
Form of Additional Investment Subscription Agreement for
(included as Appendix D to Supplement No. 13 to the prospectus). (Incorporated by
reference to Exhibit 10.64 to the Companys POS AM (File No. 333-121094),
filed on December 20, 2006) |
|
|
|
5.1
|
|
Opinion of Venable LLP as to legality of securities.
(Incorporated by reference to Exhibit 5.1 to the Companys
pre-effective amendment to Form S-11 (File No. 333-121094), filed on June 16, 2005) |
|
|
|
8.1
|
|
Opinion of Morris, Manning & Martin, LLP as to tax
matters. (Incorporated by reference to Exhibit 8.1 to the
Companys pre-effective amendment to Form S-11 (File No. 333-121094), filed on June
2, 2005) |
|
|
|
10.1
|
|
2004 Independent Directors Stock Option Plan.
(Incorporated by reference to Exhibit 10.5 to the
Companys Form S-11 (File No. 333-121094), filed on
December 9, 2004) |
|
|
|
10.2
|
|
Form of Stock Option Agreement under 2004 Independent
Directors Stock Option Plan. (Incorporated by reference
to Exhibit 10.6 to the Companys pre-effective amendment to Form S-11 (File No.
333-121094), filed on April 11, 2005) |
|
|
|
10.3
|
|
Amended and Restated Property Management and Leasing
Agreement, dated September 16, 2005, by and among Cole
Credit Property Trust II, Inc., Cole Operating Partnership
II, LP and Fund Realty Advisors, Inc. (Incorporated by
reference to Exhibit 10.1 to the Companys Form 8-K (File
No. 333-121094), filed on September 23, 2005) |
|
|
|
10.4
|
|
Amended and Restated Advisory Agreement, dated September
16, 2005, by and between Cole Credit Property Trust II,
Inc. and Cole REIT Advisors II, LLC. (Incorporated by
reference to Exhibit 10.2 to the Companys Form 8-K (File
No. 333-121094), filed on September 23, 2005) |
|
|
|
10.5
|
|
Amended and Restated Agreement of Limited Partnership of
Cole Operating Partnership II, LP, dated September 16,
2005, by and between Cole Credit Property Trust II, Inc.
and the limited partners thereto. (Incorporated by
reference to Exhibit 10.3 to the Companys Form 8-K (File
No. 333-121094), filed on September 23, 2005) |
|
|
|
Exhibit No. |
|
Description |
10.6
|
|
Amended and Restated Distribution Reinvestment Plan
(included as Appendix C to prospectus). (Incorporated by
reference to Exhibit 10.1 to the Companys Form 8-K (File
No. 333-121094), filed on December 22, 2005) |
|
|
|
10.7
|
|
First Amendment to Amended and Restated Advisory
Agreement, dated April 17, 2006, between Cole Credit Property Trust II, Inc. and Cole REIT
Advisors II, LLC. (Incorporated by reference to Exhibit 10.1 to the Companys
Form 10-Q (File No. 000-51963), filed on May 12, 2006) |
|
|
|
10.8
|
|
Purchase Agreement between Cole AS Katy TX, LP and 44.385
Acres, Ltd. and Mason MSG, Ltd. pursuant to and Assignment of Agreement to Purchase and Sale
Agreement dated January 17, 2007. (Incorporated by reference to Exhibit 10.9 to the
Companys Form 10-K (File No. 000-51963), filed on March 20,
2007) |
|
|
|
10.9
|
|
Promissory Note between Cole AS Katy TX, LP and Bear
Stearns Commercial Mortgage, Inc. dated January 18, 2007. (Incorporated by reference to
Exhibit 10.10 to the Companys Form 10-K (File No. 000-51963), filed
on March 20, 2007) |
|
|
|
21.1 |
|
List of Subsidiaries. (Incorporated
by reference to Exhibit 21.1 to the Companys post-effective
amendment (File
No. 333-121094), filed December 20, 2006) |
|
|
|
23.1 |
|
Consent of Morris, Manning & Martin, LLP with respect to tax opinion (included
in Exhibit 8.1). (Incorporated by reference to Exhibit 23.2 to the Companys
pre-effective amendment to Form S-11 (File No. 333-121094), filed on June 2, 2005) |
|
|
|
23.2 |
|
Consent of Venable LLP (included in Exhibit 5.1). (Incorporated by reference to
Exhibit 23.1 to the Companys pre-effective amendment to Form S-11 (File No. 333-121094), filed on June
16, 2005) |
|
|
|
23.3* |
|
Consent of Deloitte & Touche LLP, Independent Registered Public Accounting Firm. |
|
|
|
23.4* |
|
Consent of Deloitte & Touche LLP, Independent Auditors. |
|
|
|
24.1 |
|
Power of Attorney (included on signature page to the registration statement).
(Incorporated by reference to Exhibit 24.1 to the Companys Form S-11 (File No.
333-121094), filed on December 9, 2004) |