Filed Pursuant to Rule 424(b)(3)

Registration No. 333-108355

CNL INCOME PROPERTIES, INC.

Supplement No. Four, dated January 25, 2006

to Prospectus, dated April 18, 2005

This Prospectus Supplement is part of, and should be read in conjunction with, the prospectus dated April 18, 2005. This Prospectus Supplement replaces all prior Supplements to the prospectus. Capitalized terms used in this Prospectus Supplement have the same meaning as in the prospectus unless otherwise stated herein. The terms “we,” “our,” “us” and “CNL Income Properties” include CNL Income Properties, Inc. and its subsidiaries.

Information as to the number and types of properties for which we have entered into initial commitments to acquire and properties we have acquired is presented as of January 4, 2006, and all references to property acquisitions and commitments should be read in that context. Properties for which CNL Income Properties enters into initial commitments to acquire, as well as properties we acquire after January 4, 2006, will be reported in a subsequent supplement.

RECENT DEVELOPMENTS

As of January 4, 2006, we own an interest in retail and commercial properties at seven resort villages, one merchandise mart, two waterpark resorts, one sky lift attraction and have made one loan. We have also committed to acquire one ski attraction. The properties in which we own interests and which we have commitments to acquire are or will be leased on a long-term basis to affiliated or third-party tenants and managed by third-party operators who we consider to be significant industry leaders.

Gatlinburg Sky Lift and Cypress Mountain Ski Attraction

On December 22, 2005, we acquired the Gatlinburg Sky Lift in Gatlinburg, Tennessee from a subsidiary of Boyne USA, Inc. for approximately $19.9 million, excluding acquisition costs. The attraction consists of an uphill chairlift and ticket office. The scenic overlook from the sky lift affords views of the Smoky Mountains on the way to the top of Crockett Mountain, which towers more than 500 feet over Gatlinburg. For the past five years, the property has attracted more than 400,000 visitors annually. The acquisition included an assignment of the existing ground lease and easements to the mountain on which the sky lift operates. We lease the property to a subsidiary of Boyne USA, Inc. on a long-term, triple-net lease basis.

Also on that date, we entered into an agreement with another subsidiary of Boyne USA, Inc. to acquire within 180 days the Cypress Mountain ski area, a freestyle skiing and snowboarding attraction located approximately 20 minutes north of Vancouver, British Columbia. It is anticipated that the Cypress Mountain ski attraction will also be leased to a subsidiary of Boyne on a long-term, triple-net basis. The pending Cypress Mountain acquisition is subject to the fulfillment of certain conditions which include settlement and execution of definitive documents, completion of customary closing conditions and certain special conditions. Accordingly, there can be no assurances that we will acquire the Cypress Mountain ski attraction.

1

Great Wolf Waterpark Resorts

On October 3, 2005, we formed a joint venture with Great Wolf Resorts, Inc. and two of its subsidiaries to jointly own, operate, market and lease the waterpark resort and hotel properties known as “Great Wolf Lodge-Wisconsin Dells” in Wisconsin Dells, Wisconsin and “Great Wolf Lodge-Sandusky” in Sandusky, Ohio. These properties are valued at approximately $114.5 million in the aggregate. On October 11, 2005, we acquired an approximate 61.1% partnership interest in the joint venture formed to own these properties in exchange for a contribution of approximately $69.9 million in cash. On November 3, 2005, we invested $10.1 million in additional capital in the partnership, resulting in a 70.0% ownership interest. The partnership expects to obtain mortgage financing on the two waterpark resorts by the end of the first quarter of 2006. There can be no assurances that the partnership will be able to obtain financing on the waterpark resorts or, if obtained, that the terms of such financing will be favorable to us or to the partnership.

Dallas Market Center

On May 25, 2005, the second tranche of the Dallas Market Center acquisition was completed, and we acquired the International Floral and Gift Center at the Dallas Market Center. In connection with this acquisition, we contributed approximately $11.2 million, excluding transaction costs, to CNL Dallas Market Center, L.P., the partnership formed to acquire the Dallas Market Center. The partnership became obligated for approximately $17.0 million in existing debt on the center. The center is leased to a subsidiary of the existing management company, Market Center Management Company, Ltd., under a long-term master lease agreement.

On October 12, 2005, CNL Dallas Market Center, L.P. entered into an agreement to develop an approximate 500,000 square foot expansion, which includes a 160,000 square foot lighting center expansion and additional parking, at the Trade Mart at the Dallas Market Center. On October 14, 2005, we contributed approximately $3.5 million and our partner,

2

the Dallas Market Center, contributed approximately $0.9 million to the partnership. On January 11, 2006, we contributed an additional $5.8 million toward the expansion. The total construction costs are expected to be approximately $21.3 million. Our share of the total contribution to the partnership for the expansion is estimated to be approximately $17.0 million and will be made in accordance with the current partnership structure. The expansion is expected to be completed at the end of 2006 and will be leased to an affiliate of the Dallas Market Center. This project is expected to retain and strengthen the Dallas Market Center’s leading position in the lighting arena.

Other

On September 29, 2005, we made a $3.0 million loan to a subsidiary of Consolidated Conversions, LLC, which was used to purchase the 295-room Holiday Inn Main Gate West for conversion to a condominium hotel. The property is located near Walt Disney World in Kissimmee, Florida.

On May 20, 2005, we closed on a $5.0 million revolving line of credit with Branch Banking and Trust. The line will primarily be used to fund working capital needs, distributions to stockholders and bridge financing on real estate investments. Also on this date, the $45.0 million bridge loan from Intrawest Resort Finance, Inc. was refinanced with loans from Sun Life Assurance Company of Canada made to the subsidiaries of our unconsolidated partnership with Intrawest Corporation in the aggregate principal amount of $46.0 million.

THE OFFERING

We commenced active operations on June 23, 2004, when the minimum required offering proceeds were received and funds were released to us from escrow. As of November 30, 2005, we had received aggregate offering proceeds totaling $332.7 million (33,318,649 shares) from 11,305 investors in connection with this offering, including $3.6 million (375,225 shares) purchased through our reinvestment plan.

3

SUITABILITY STANDARDS AND HOW TO SUBSCRIBE

HOW TO SUBSCRIBE

The second paragraph on page ii of the prospectus is updated and replaced by the following:

An investor who meets the suitability standards described above may subscribe for shares by completing and executing the subscription agreement and delivering it to a participating broker-dealer, together with a check for the full purchase price of the shares for which they have subscribed, payable to “Wachovia Bank.” Certain participating broker-dealers who have “net capital,” as defined in the applicable federal securities regulations, of $250,000 or more may instruct their customers to make their checks for shares for which they have subscribed payable directly to the participating broker-dealer. Care should be taken to ensure that the subscription agreement is filled out correctly and completely. Partnerships, individual fiduciaries signing on behalf of trusts, estates, and in other capacities, and persons signing on behalf of corporations and corporate trustees may be required to obtain additional documents from participating broker-dealers. Any subscription may be rejected by us in whole or in part, regardless of whether the subscriber meets the minimum suitability standards.

In addition, all references to “South Trust Bank” throughout the prospectus are replaced with “Wachovia Bank.”

CNL INCOME PROPERTIES, INC.

OUR MANAGEMENT

The following paragraph should be read in conjunction with the section entitled “CNL Income Properties, Inc. — Our Management,” beginning on page 5 of the prospectus:

As of May 3, 2005, CNL Investment Company (“CIC”), a Florida corporation, was merged with and into CNL Capital Markets, Inc. (“CCMI”), a Florida corporation. CIC’s directors approved the merger by unanimous written consent on April 30, 2005. All references to “CNL Investment Company” throughout the prospectus are replaced with “CNL Capital Markets, Inc.”

The following paragraph updates and replaces the first full paragraph on page 8 of the prospectus:

OUR AFFILIATES

The “Prior Performance Information” section of this prospectus contains a narrative discussion of the other real estate programs sponsored by our affiliates and our advisor's affiliates in the past, including two public REITs. During the twenty-year period ended on December 31, 2004, these entities, which invest in properties that are leased primarily on a “triple-net” lease basis or leased to taxable REIT subsidiaries, but do not invest in the types of properties in which we initially intend to invest, had purchased (or purchased interests in), directly or indirectly, approximately 2,100 fast-food, family-style, and casual-dining restaurant properties, 136 hotel properties and 222 retirement facilities and other health-care related properties, including in each case properties which were sold during such period. Based on an analysis of the operating results of such prior public programs in which Mr. Seneff, our Chairman, and Mr. Bourne, our Vice Chairman and Treasurer, have served, individually or with others, as general partners or officers and directors, Messrs. Seneff and Bourne believe that each of such prior public programs has met, or is in the process of meeting, its principal investment objectives. Statistical data relating to certain of the public limited partnerships and the unlisted public REITs are contained in Appendix B — Prior Performance Tables.

RISK FACTORS

The following paragraph updates and replaces the third paragraph on page 16 of the prospectus:

This is an unspecified property offering.

You cannot evaluate the types or specific properties that we will acquire or the loans or other permitted investments that we may make in the future. Our board has absolute discretion in implementing the investment policies set forth in our articles of incorporation. See the section of the prospectus entitled “Investment Objectives and Policies” for additional discussion regarding our investment policies. We have established certain models and/or

4

criteria for evaluating the properties, loans and other permitted investments and the tenants and operators of the properties. Because we have not yet identified real estate assets that we may acquire or loans we may make in the future, we are not able to provide you with information that you may want to evaluate before deciding to invest in our shares. Our investment policies are very broad and permit us to invest in many types of real estate including developed and undeveloped properties, regardless of geographic location or property type. As of January 4, 2006, we have invested in retail and commercial properties at seven resort villages, one merchandise mart property, two waterpark resorts and one attraction, have made one loan and have committed to acquire one additional ski area, but we have not entered into any arrangements that create a reasonable probability that we will make any other permitted investments.

The following paragraph updates and replaces the fifth paragraph on page 16 of the prospectus:

We may not be diversified which will make us more susceptible to regional or seasonal downturns. There is no limit on the number of properties in a particular property sector that we may acquire, or loans or other permitted investments that we may make, and we are not obligated to invest in more than one industry sector. There may be times during which we are not diversified in terms of location, asset classes, tenants and operators. Because of this, we will be more susceptible to certain downturns. Our board of directors, however, including a majority of the independent directors, will review our properties and potential investments in terms of geographic, property class, tenant and operator diversification.

The following paragraphs should be added under the heading “Risk Factors – Real Estate and Other Investment Risks” beginning on page 19 of the prospectus:

Your investment may be subject to additional risks if we make international investments. We have purchased properties in Canada and we may purchase properties located in the Caribbean and Europe and other foreign venues. Such investments could be affected by factors peculiar to the laws and business practices of those countries. These laws or business practices may expose us to risks that are different from, and in addition to, those commonly found in the United States. Foreign investments could be subject to the following risks:

• the imposition of unique tax structures, changes in real estate, differences in taxation policies and rates and other operating expenses in particular countries;

• non-recognition of particular structures intended to limit certain tax and legal liabilities;

• changing governmental rules and policies, including changes in land use and zoning laws;

• enactment of laws relating to the foreign ownership of real property or mortgages and laws restricting the ability of foreign persons or companies to remove profits earned from activities within the country to the person’s or company’s country of origin;

• our limited experience and expertise in foreign countries relative to our experience and expertise in the United States;

• variations in currency exchange rates;

• adverse market conditions caused by terrorism, civil unrest and changes in national or local governmental or economic conditions;

• the willingness of domestic or foreign lenders to make mortgage loans in certain countries and changes in the availability, cost and terms of mortgage funds resulting from varying national economic policies;

• general political and economic instability; and

• more stringent environmental laws or changes in such laws.

All of these individual risks increase the risk that we will not continue to qualify as a REIT.

Our taxable REIT subsidiaries are subject to increased operating expenses and taxation. We may employ a TRS lease structure in connection with certain properties. Under this structure, we generally would lease the property to a TRS owned in whole or in part by our REIT, or to an entity affiliated with our TRS, and the TRS or affiliated entity would contract with an eligible independent contractor to operate the property. Under this arrangement, our TRSs are subject to additional operational risks with respect to the leased property, including changes in property revenues, changes to our TRSs’ ability to pay the rent due under the leases, and increased operating expenses, including, but not limited to, the following:

• more stringent environmental laws or changes in such laws.

5

• wage and benefit costs;

• repair and maintenance expenses;

• energy costs;

• property taxes;

• insurance costs; and

• other operating expenses

Any increases in these operating expenses could have a significant adverse impact on our earnings, cash flows and financial position.

Our TRSs are “C” corporations and are subject to federal and state taxation as such. In addition, a TRS lease structure subjects us to tax penalties to the extent that leases to our TRSs are inconsistent with arms-length standards, which penalties would adversely impact our profitability and cash flows.

The following paragraphs should be added under the heading “Risk Factors – Real Estate and Other Investment Risks – There are risks associated with lending” beginning on page 22 of the prospectus:

Borrowings may reduce the funds available for distribution and increase the risk of loss since defaults may cause us to lose the properties securing the loans. We may, in some instances, acquire real estate assets by using either existing financing or borrowing new monies. Our articles of incorporation generally limit the total amount we may borrow to 300.0% of our net assets. In addition, we may obtain loans secured by some or all of our properties or other assets to fund additional acquisitions or operations, including to satisfy the requirement that we distribute at least 90.0% of our annual “REIT taxable income” to our stockholders, or as is otherwise necessary or advisable to qualify as a REIT for federal income tax purposes. Payments required on any amounts we borrow will reduce the funds available for distribution to our stockholders because cash otherwise available for distribution will be required to pay principal and interest associated with the borrowed amounts.

Defaults on loans secured by a property we own may result in foreclosure actions initiated by lenders and our loss of the property or properties securing the loan that is in default. For tax purposes, a foreclosure would be treated as a sale of the property for a purchase price equal to the outstanding balance of the debt secured by the property. If the outstanding balance of the debt exceeds our tax basis in the property, we would recognize taxable income on the foreclosure, all or a portion of such taxable income may be subject to tax, and/or required to be distributed to our stockholders in order for us to qualify as a REIT. We would not receive any cash proceeds, pay such tax or make such distributions. We also may fully or partially guarantee any monies that subsidiaries borrow to purchase or operate real estate assets. In these cases, we will be responsible to the lender for repaying the loans if the subsidiary is unable to do so. If any mortgages contain cross collateralization or cross default provisions, more than one property may be affected by a default. If any of our properties are foreclosed upon due to a default, our financial condition, results of operations and ability to pay distributions to you will be adversely affected.

The following paragraph updates and replaces the fourth paragraph on page 28 of the prospectus:

We may borrow money to make distributions and distributions may not come from funds from operations. We have borrowed and may continue to borrow money as necessary or advisable to make distributions. Our distributions have exceeded our funds from operations in the past and may do so in the future. In the event that we make distributions in excess of our earnings and profits, such distributions could constitute a return of capital for federal income tax and accounting purposes. Furthermore, in the event that we are unable to fund future distributions from our funds from operations, the value of your shares upon the possible listing of our stock, the sale of our assets or any other liquidity event may be negatively impacted.

The following three paragraphs update and replace the fifth, sixth and seventh paragraphs on page 28 of the prospectus:

We will be subject to increased taxation if we fail to qualify as a REIT for federal income tax purposes. We believe that we have been organized and have operated, and intend to continue to be organized and to operate in a

6

manner that will enable us to meet the requirements for qualification and taxation as a REIT for federal income tax purposes, commencing with our taxable year ended December 31, 2004. A REIT generally is not taxed at the federal corporate level on income it distributes to its stockholders, as long as it distributes annually at least 90% of its taxable income to its stockholders. We have not requested, and do not plan to request, a ruling from the Internal Revenue Service that we will qualify as a REIT. Based upon representations made by our officers with respect to certain factual matters, and upon counsel’s assumption that we have operated and will continue to operate in the manner described in the representations and in the prospectus, our tax counsel, Greenberg Traurig, LLP, will render an opinion that we were organized and have operated in conformity with the requirements for qualification as a REIT and that our proposed method of operation will enable us to continue to meet the requirements for qualification as a REIT. Our continued qualification as a REIT will depend on our continuing ability to meet highly technical and complex requirements concerning, among other things, the ownership of our outstanding shares of beneficial interest, the nature of our assets, the sources of our income, the amount of our distributions to our stockholders and the filing of TRS elections. No assurance can be provided that we qualify or will continue to qualify as a REIT or that new legislation, Treasury Regulations, administrative interpretations or court decisions will not significantly change the tax laws with respect to our qualification as a REIT. For a discussion of the basis on which our tax counsel’s opinion was issued and the assumptions which underlie such opinion, see the section of the prospectus entitled “Federal Income Tax Considerations — Taxation of CNL Income Properties — Opinion of Counsel.”

You should be aware that opinions of counsel are not binding on the Internal Revenue Service or on any court. Furthermore, the conclusions stated in the opinion are conditioned on, and our continued qualification as a REIT will depend on, our management meeting various requirements, which are discussed in more detail under the heading “Federal Income Tax Considerations — Taxation of CNL Income Properties — Requirements for Qualification as a REIT.”

If we fail to qualify as a REIT, we would be subject to federal income tax at regular corporate rates. In addition to these taxes, we may be subject to the federal alternative minimum tax. Unless we are entitled to relief under specific statutory provisions, we also could not elect to be taxed as a REIT for four taxable years following the year during which we were disqualified. Therefore, if we fail to qualify as a REIT, the funds available for distribution to you, as a stockholder, would be reduced substantially for each of the years involved. For additional discussion regarding REIT qualification and the consequences if we fail to qualify as a REIT, see the section of the prospectus entitled “Federal Income Tax Considerations.”

The following three paragraphs update and replace the second full paragraph on page 30 of the prospectus:

Despite our REIT status, we remain subject to various taxes which would reduce operating cash flow if and to the extent these liabilities are incurred. Even if we qualify as a REIT, we are subject to some federal, state and local taxes on our income and property that could reduce operating cash flow, including but not limited to, (i) tax on any undistributed real estate investment trust taxable income, (ii) “alternative minimum tax” on our items of tax preference, (iii) certain state income taxes because not all states treat REITs the same as they are treated for federal income tax purposes, (iv) a tax equal to 100% of net gain from “prohibited transactions,” (v) tax on gains from the sale of certain “foreclosure property,” (vi) tax on gains of sale of certain “built-in gain” properties” and (vi) certain taxes and penalties if we fail to comply with one or more REIT qualification requirements, but nevertheless qualify to maintain our status as a REIT. See the discussion in the section of the prospectus entitled “Federal Income Tax Considerations — Taxation of CNL Income Properties.”

We may be required to pay a penalty tax upon the sale of a property. The federal income tax provisions applicable to REITs provide that any gain realized by a REIT on the sale of property held as inventory or other property held primarily for sale to customers in the ordinary course of business is treated as income from a “prohibited transaction” that is subject to a 100% penalty tax. Under current law, unless a sale of real property qualifies for a safe harbor, the question of whether the sale of a property constitutes the sale of property held primarily for sale to customers is generally a question of the facts and circumstances regarding a particular transaction. We intend that we and our subsidiaries will hold the interests in our properties for investment with a view to long-term appreciation, to engage in the business of acquiring and owning properties, and to make occasional sales as are consistent with our investment objectives. We do not intend to engage in prohibited transactions. We cannot assure you, however, that we will only make sales that satisfy the requirements of the safe harbors or that the IRS will not successfully assert that one or more of such sales are prohibited transactions.

7

Recent changes in taxation of corporate dividends may adversely affect the value of our common stock. The Jobs and Growth Tax Relief Reconciliation Act of 2003, which was enacted into law on May 28, 2003, among other things, generally reduces to 15% the maximum marginal rate of tax payable by domestic non-corporate taxpayers on dividends received from a regular C corporation. This reduced tax rate, however, will not apply to dividends paid to domestic non-corporate taxpayers by a REIT on its stock, except for certain limited amounts. Although the earnings of a REIT that are distributed to its stockholders still generally could be subject to less federal income taxation than earnings of a non-REIT C corporation that are distributed to its stockholders net of corporate-level income tax, this legislation could cause domestic non-corporate investors to view the stock of regular C corporations as more attractive relative to the stock of a REIT than was the case prior to the enactment of the legislation, because the dividends from regular C corporations will generally be taxed at a lower rate while dividends from REITs will generally be taxed at the same rate as the individual’s other ordinary income. We cannot predict what effect, if any, the enactment of this legislation may have on the value of the stock of REITs in general or on our common stock in particular.

ESTIMATED USE OF PROCEEDS

The following paragraph updates and replaces the first paragraph on page 32 of the prospectus:

The table set forth below summarizes certain information relating to the anticipated use of offering proceeds by CNL Income Properties, assuming that: (i) the minimum offering of 250,000 shares is sold; (ii) only 100 million shares are sold; and (iii) a maximum offering of 200 million shares are sold. As of November 30, 2005, 33,318,649 shares had been sold in the Offering, including 375,225 shares issued through the reinvestment plan. The table below assumes that no shares will be issued through the reinvestment plan if 250,000 shares are sold, 1.1 million shares will be issued through the reinvestment plan if 100 million shares are sold and 1.65 million shares will be issued through the reinvestment plan if 200 million shares are sold. All shares issued through the reinvestment plan for this offering will be at a purchase price of $9.50 per share.

The table and accompanying footnotes on the following page update and replace the table and accompanying footnotes beginning on page 33 of the prospectus. The table and footnotes are being updated in order to clarify the description of estimated Acquisition Fees contained therein and to modify the maximum amount of due diligence expense reimbursements payable to our managing dealer and to participating broker-dealers from 0.01% to 0.10% of offering proceeds.

As a result of this change in the amount of maximum due diligence expense reimbursements, the number “$0.2 million” should be updated and replaced with the number “$2.0 million” in the following sections of the prospectus: (i) in the section entitled “CNL Income Properties—Compensation to be Paid to our Advisor and Affiliates” on page 9, in the second column of the chart with respect to due diligence expense reimbursements, (ii) in the section entitled “Management Compensation” on page 36, in the third column of the chart with respect to due diligence expense reimbursements, and (iii) in the section entitled “Certain Relationships and Related Transactions” on page 114, in the third column of the chart with respect to due diligence expense reimbursements.

[The remainder of this page intentionally left blank.]

8

	Minimum Offering 250,000 Shares				Assuming Sale of 100,000,000 Shares				Maximum Offering 200,000,000 Shares
	Amount		Percent		Amount		Percent		Amount		Percent
OFFERING PROCEEDS TO CNL INCOME PROPERTIES (1)	$	2,500,000	100.0	%	$	989,700,000	100.0	%	$	1,979,675,000	100.0	%
Less:
Selling Commissions to CNL Securities Corp. (1)		162,500	6.50	%		57,947,500	5.86	%		116,252,500	5.87	%
Marketing Support Fee to CNL Securities Corp. (1)		62,500	2.50	%		22,287,500	2.25	%		44,712,500	2.26	%
Due Diligence Reimbursement to CNL Securities Corp. (1)		2,500	0.10	%		1,000,000	0.10	%		2,000,000	0.10	%
Organizational and Offering Expenses (2)		97,500	3.90	%		21,250,000	2.15	%		26,650,000	1.35	%
NET PROCEEDS TO CNL INCOME PROPERTIES		2,175,000	87.00	%		887,215,000	89.64	%		1,790,060,000	90.42	%
Less:
Acquisition Fees to the Advisor (3)		75,000	3.00	%		29,008,500	2.93	%		58,025,250	2.93	%
Acquisition Expenses (4)		6,250	0.25	%		2,470,000	0.25	%		4,950,000	0.25	%
Initial Working Capital Reserve (5)		—	—			—	—			—	—
CASH AVAILABLE FOR PURCHASE OF PROPERTIES AND THE MAKING OR ACQUIRING OF LOANS AND OTHER PERMITTED INVESTMENTS BY CNL INCOME PROPERTIES (6)	$	2,093,750	83.75	%	$	855,736,500	86.46	%	$	1,727,084,750	87.24	%

FOOTNOTES:

(1) For the minimum offering, offering proceeds are calculated as if all shares are sold at $10.00 per share and do not take into account any reduction in selling commissions, the marketing support fee and/or the acquisition fee. As stated above, assuming 100 million shares are sold, approximately 89% of the shares sold will not be sold subject to a discount, approximately 1.0% of the shares will be issued through the reinvestment plan at a purchase price of $9.50 per share, approximately 5.0% of the shares sold will be sold at a price “net” of selling commissions and the marketing support fee and approximately 5% of the shares will be sold at a price “net” of selling commissions and the marketing support fee, and subject to a reduced Acquisition Fee of 1.0%. Accordingly, offering proceeds are calculated as if (i) selling commissions equal to 6.5% of aggregate Gross Proceeds, a marketing support fee equal to 2.5% of aggregate Gross Proceeds and an Acquisition Fee equal to 3.0% are applied to approximately 89% of the shares sold; (ii) approximately 1.0% of the shares are sold pursuant to the reinvestment plan at a purchase price of $9.50 per share; (iii) no selling commissions, no marketing support fee and an Acquisition Fee equal to 3.0% of Gross Proceeds are applied to approximately 5.0% of the shares sold; and (iv) no selling commissions, no marketing support fee and a reduced Acquisition Fee equal to 1.0% of Gross Proceeds are applied to approximately 5.0% of the shares sold. Assuming 200 million shares are sold, approximately 89% of the shares sold will not be sold subject to a discount, approximately 1.0% of the shares will be issued through the reinvestment plan at a purchase price of $9.50 per share, approximately 5.0% of the shares sold will be sold at a price “net” of selling commissions and the marketing support fee and approximately 5.0% of the shares will be sold at a price “net” of selling commissions and the marketing support fee, and subject to a reduced Acquisition Fee of 1.0%. Accordingly, offering proceeds are calculated as if (i) selling commissions equal to 6.5% of aggregate Gross Proceeds, a marketing support fee equal to 2.5% of aggregate Gross Proceeds and an Acquisition Fee equal to 3.0% are applied to approximately 89% of the shares sold; (ii) approximately 1.0% of the shares are sold pursuant to the reinvestment plan at a purchase price of $9.50 per share; (iii) no selling commissions, no marketing support fee and an Acquisition Fee equal to 3.0% of Gross Proceeds are applied to approximately 5.0% of the shares sold; and (iv) no selling commissions, no marketing support fee and a reduced Acquisition Fee equal to 1.0% of Gross Proceeds are applied to approximately 5.0% of the shares sold. See “The Offering — Plan of Distribution” for a description of the circumstances under which selling commissions and the marketing support fee may not be charged in connection with certain purchases, including, but not limited to purchases by registered representatives or principals of the managing dealer or Participating Brokers, directors, officers and employees of CNL Income Properties and of CNL Income Properties' Affiliates and those persons’ Affiliates and via registered investment advisers. A portion of the selling commissions will be reduced in connection with volume purchases, which will be reflected by a corresponding reduction in the per share purchase price. Selling commissions and the marketing support fee will not be paid in connection with the purchase of shares pursuant to the reinvestment plan.

9

(2) Organizational and Offering Expenses include, without limitation, legal, accounting, printing, escrow, filing, registration, qualification, and other expenses of the organization of CNL Income Properties and the offering of the shares, including marketing and sales costs, but exclude selling commissions, the marketing support fee and due diligence expense reimbursements. Pursuant to state securities laws, the Organizational and Offering Expenses paid by CNL Income Properties together with the 6.5% selling commissions, the marketing support fee and due diligence expense reimbursements incurred by CNL Income Properties may not exceed 15% of the proceeds raised in connection with this offering. Notwithstanding the additional expenses CNL Income Properties could incur by virtue of this cap, CNL Income Properties estimates that in general, assuming the maximum number of shares is sold, selling commissions will not exceed 6.5%, the marketing support fee will not exceed 2.5%, due diligence expense reimbursements will not exceed 0.10% and Organizational and Offering expenses will not exceed 1.35%. The difference between the “15% limitation” and these estimates represents additional costs that CNL Income Properties may incur under state securities laws, but does not anticipate incurring. In accordance with CNL Income Properties’ articles of incorporation, the total amount of selling commissions, marketing support fees, due diligence expense reimbursements, and Organizational and Offering Expenses to be paid may not exceed 13% of the aggregate offering proceeds. Therefore, the calculation of the Organization and Offering Expenses for the minimum offering assumes the maximum amount that could be paid within the 13% limitation.

(3) Acquisition Fees include all fees and commissions paid by CNL Income Properties to any person or entity in connection with the selection or acquisition of any Property or the making or acquisition of any loan or other Permitted Investment, including to Affiliates or non-Affiliates. Acquisition Fees do not include Acquisition Expenses. See “The Offering – Plan of Distribution” for a description of the circumstances under which Acquisition Fees will be reduced and an applicable discount will be available to purchasers. In connection with making investments, if CNL Income Properties assumes or takes an investment subject to existing debt, CNL Income Properties will not be able to pay Acquisition Fees with respect to such debt out of debt proceeds and may need to use Net Offering Proceeds (defined in Note 5 below) to pay such Acquisition Fees. In that event, the cash available to make investments will decrease. For example, assuming CNL Income Properties raises the maximum offering amount of $1,979,675,000, uses all of the $1,727,084,750 available to make investments, and such investments are subject to 25% assumed debt, then the estimated Acquisition Fees payable from offering proceeds will increase by approximately $12,953,136, or 0.65%. Assuming CNL Income Properties raises the midpoint offering amount of $989,700,000, uses all of the $855,736,500 available to make investments, and such investments are subject to 25% assumed debt, then the estimated Acquisition Fees payable from offering proceeds will increase by approximately $6,418,024 or 0.65%.

(4) Represents Acquisition Expenses that are neither reimbursed to CNL Income Properties nor included in the purchase price of the Properties, and on which rent is not received, but does not include certain expenses associated with Property acquisitions that are part of the purchase price of the Properties, that are included in the basis of the Properties, and on which rent is received. Acquisition Expenses include any and all expenses incurred by CNL Income Properties, the advisor, or any Affiliate of either in connection with the selection or acquisition of any Property or the making or acquisition of any loan or other Permitted Investment, whether or not acquired or made, including, without limitation, legal fees and expenses, travel and communication expenses, costs of appraisals, nonrefundable option payments on property not acquired, accounting fees and expenses, taxes, and title insurance, but exclude Acquisition Fees. Pursuant to state securities laws, the total of all Acquisition Fees and any Acquisition Expenses shall be reasonable and shall not exceed an amount equal to 6.0% of the Real Estate Asset Value of a Property, or in the case of a loan, 6.0% of the funds advanced, unless a majority of the board of directors, including a majority of the Independent Directors not otherwise interested in the transaction, approves fees in excess of this limit subject to a determination that the transaction is commercially competitive, fair and reasonable to CNL Income Properties.

(5) Because leases generally will be on a triple-net lease basis, it is not anticipated that a permanent reserve for maintenance and repairs will be established. However, to the extent that CNL Income Properties has insufficient funds for such purposes, the advisor may, but is not required to, contribute to CNL Income Properties an aggregate amount of up to 1.0% of the net offering proceeds (the “Net Offering Proceeds”) available to CNL Income Properties for maintenance and repairs. As used herein, “Net Offering Proceeds” means Gross Proceeds less (i) selling commissions; (ii) Organizational and Offering Expenses; (iii) the marketing support fee and (iv) due diligence expense reimbursements. The advisor also may, but is not required to, establish reserves from offering proceeds, operating funds, and the available proceeds of any sales of CNL Income Properties' assets.

(6) Offering proceeds designated for investment in Properties or for the making or acquisition of loans or other Permitted Investments may also be used to repay debt borrowed in connection with such acquisitions. Offering proceeds designated for investment in Properties or for the making or acquisition of loans or other Permitted Investments temporarily may be invested in short-term, highly liquid investments with appropriate safety of principal. CNL Income Properties may, at our discretion, use up to $100,000 per calendar quarter of offering proceeds for redemptions of shares. See “Redemption of Shares.”

10

MANAGEMENT COMPENSATION

For information concerning compensation paid to the Advisor and its Affiliates, see “Certain Relationships and Related Transactions.”

SUMMARY OF REINVESTMENT PLAN

PARTICIPANT ACCOUNTS, FEES AND ALLOCATION OF SHARES

The following paragraph updates and replaces the last paragraph on page 48 of the prospectus:

Subject to the provisions of the articles of incorporation relating to certain restrictions on and the effective dates of transfer, shares acquired pursuant to the reinvestment plan will entitle the Participant to the same rights and to be treated in the same manner as those purchased by the Participants in the offering. In the event the proceeds from the sale of shares are used to acquire Properties or to invest in loans or other Permitted Investments, CNL Income Properties will pay Acquisition Fees of 3.0% of the purchase price of the shares sold pursuant to the reinvestment plan. CNL Income Properties may also pay approximately 2.15%, 0.10% and 0.25% to Affiliates as reimbursement for Organizational and Offering Expenses, due diligence expenses and Acquisition Expenses, respectively. As a result, aggregate fees and expenses payable to Affiliates of CNL Income Properties will total approximately 5.50% of the proceeds of reinvested distributions.

BUSINESS

The following information should be added as a new section following the section entitled “Business – Initial Investment Focus” beginning on page 58 of the prospectus:

OTHER ATTRACTIONS

Waterpark Resort Industry Overview. According to a January 2005 U.S. Realty Consultants, Inc. (“USRC”) study, the indoor waterpark resort has established itself as a viable segment of the travel industry and expanded well beyond its Wisconsin base. During the period 1983 to 2004, 60 indoor waterpark resorts opened or expanded their properties in the United States and Canada totaling approximately 2,058,000 square feet and offering over 15,000 hotel rooms. The size of indoor waterparks has grown significantly since their inception in the early 1980’s, while the average number of hotel rooms attached to these waterparks has also increased substantially over the years.

In 1994 there were six indoor waterpark resorts operating in the U.S. and Canada with a total of 1,388 guestrooms and 310,800 square feet of indoor waterpark space. This equaled approximately one guestroom per every 224 square feet of indoor waterpark space offered. By 2004, 60 indoor waterpark resorts were operating with a total of 15,023 guestrooms and 2,058,400 square feet of indoor waterpark space. This represented approximately one guestroom per every 137 square feet of indoor waterpark space. The increase in the number of guestrooms constructed has kept pace with increases in demand for indoor waterparks, which has also grown steadily.

There are 98 indoor waterpark resorts known to be in the planning or development stages in a variety of locations throughout the United States and Canada. These properties average 43,689 square feet of indoor waterpark space. These include expansions of existing hotels and development of new resorts. If all of these facilities are constructed, this would result in over 4,280,000 square feet of new indoor waterpark space. The largest developer of new projects is Great Wolf Resorts. Although the majority of the indoor waterpark resorts planned are located in northern states, the first Texas indoor waterpark is under development in Galveston. Schlitterbahn Waterparks is developing the world’s first “convertible” waterpark on 25 acres that will include an approximately 50,000 square foot indoor section with a retractable roof. The approximately 200 room resort is tentatively slated to open in 2006. Schlitterbahn operates two existing outdoor waterpark resorts in Texas.

Indoor waterpark resorts have grown in size as well as popularity since their inception in the 1980’s. The average size of the indoor waterpark component has swelled to accommodate more amenities (such as wave pools, additional activity pools, “toddler friendly” play areas, dry activity components, and more intricate tubes and slides). For example, the Great Wolf Resorts have increased the size of their indoor waterparks’ design as demand for more intricate waterplay features has increased as a result of the concept’s popularity. The Wolf Sandusky Property (which opened in 2001) was constructed with a 34,000 square foot indoor waterpark area. The Wolf Dells Property, which opened in 1997, was constructed with a 38,000 square foot indoor waterpark and has a 35,000 square foot addition under construction.

11

As of 2004, there were 60 indoor waterpark resorts in North America. Of those 60, 49 were indoor waterpark resorts located in the United States with nearly half located in Wisconsin. Of the 24 total Wisconsin indoor waterpark resorts, 15 are located in the Wisconsin Dells area, where the Wolf Dells Property is located. In addition, there are 11 indoor waterpark resorts in Canada, although, many other hotels in Canada offer smaller indoor water features with less than 10,000 square feet.

Competition. Waterpark resorts compete with other forms of family vacation travel, including theme parks, waterparks, amusement parks and other recreational activities, including other resorts located near these types of attractions. This business is also subject to factors that affect the recreation and leisure and resort industries generally, such as general economic conditions and changes in consumer spending habits. We believe that the principal competitive factors of a family entertainment resort include location, room rates, name recognition, reputation, the uniqueness and perceived quality of the attractions and amenities, the atmosphere and cleanliness of the attractions and amenities, the quality of the lodging accommodations, the quality of the food and beverage service, convenience, service levels and reservation systems.

A 2005 USRC survey identified 24 properties in the United States and Canada meeting their definition of an indoor waterpark destination resort that were open and 14 additional destination resorts expected to open in 2005. Two additional waterparks have been identified as under construction and are expected to open in 2006.

PROPERTY ACQUISITIONS

The following information updates the information under the heading “Business – Property Acquisitions – Merchandise Marts,” beginning on page 67 of the prospectus.

Merchandise Marts. Through a partnership with the Dallas Market Center (“DMC”), a Dallas company affiliated with Crow Holdings (the “DMC Partnership”), we own an 80% interest in the Dallas Market Center. The Dallas Market Center consists of the Trade Mart, the World Trade Center, the International Floral and Gift Center (the “IFGC”) and Market Hall buildings, as well as leases for the underlying land and related parking facilities on the property (the “DMC Property”). The World Trade Center consists of 15 floors encompassing the Fashion Center Dallas, showrooms and retailers offering gifts and home textiles. The Trade Mart has five floors encompassing gifts, housewares and lighting. Market Hall is a consumer and tradeshow exhibition hall. DMC estimates that the Dallas Market Center receives more than 200,000 visitors each year from all 50 states and 84 countries. Each year the Dallas Market Center offers hundreds of events and seminars to assist retailers expand their business and profitability.

12

Under the terms of our partnership agreement with DMC, we receive a preferred return up to a certain threshold with that preference alternating between the partners at various thresholds thereafter. Although we own an 80% interest in the DMC Property and receive a certain return prior to any payments to DMC, DMC has equal voting rights on the management board of the DMC Property and shares control over certain key decisions with us.

On May 25, 2005, the second tranche of the DMC Property acquisition was completed and the DMC Partnership acquired the International Floral and Gift Center (the “IFGC”) located at the Dallas Market Center for approximately $31.0 million, including the assumption of a $17.0 million existing mortgage loan. We contributed $11.2 million, excluding transaction costs, to the DMC Partnership in connection with the IFGC acquisition. The IFGC consists of approximately 440,000 square feet and houses permanent showrooms for floral products, holiday decorative products and related accessories. The IFGC serves as the headquarters for the American Floral Industry Association and is home to two annual floral shows, the Holiday and Home Expos. The IFGC is leased to IFDC Operating, L.P., a wholly-owned subsidiary of the existing management company, Market Center Management Company, Ltd. (“MCMC”), under a long-term master lease agreement. MCMC or related predecessor entities have managed the IFGC since its inception.

On October 12, 2005, the DMC Partnership entered into a memorandum of understanding and a development agreement to develop an approximately 500,000 square foot expansion, which includes a 160,000 square foot lighting center expansion and additional parking, at the Trade Mart (the “Trade Mart Expansion”) at the DMC Property. Under the memorandum, we funded approximately $3.5 million and our partner, DMC, funded approximately $0.9 million. On January 11, 2006, we contributed an additional $5.8 million toward the initial development costs of the Trade Mart Expansion. The total construction costs are expected to be approximately $21.3 million. Our share of the total contribution to the DMC Partnership for the Trade Mart Expansion is estimated to be approximately $17 million of the total and will be made in accordance with the current partnership structure. The Trade Mart Expansion is expected to be completed at the end of 2006 and will be leased under the existing triple-net lease to Dallas Market Center Operating L.P., a subsidiary of MCMC, with rent under that lease being increased proportionately. This project is expected to retain and strengthen the DMC Property’s leading position in the lighting arena, and demonstrates the DMC Partnership’s commitment to improving the DMC Property and preserving its status as a world market center.

The following is a description of the DMC Partnership acquisition.

Property location and description	Description of real estate acquired	Purchase price(1)		Leasable square feet
Dallas Market Center — Texas Dallas Market Center is the world’s largest wholesale merchandise mart according to Guinness World Records. It showcases home furnishings, gifts, decorative accessories, lighting, floral, apparel and accessories. The market center hosts more than 50 wholesale markets, or tradeshows, each year.	The facilities and long term ground leases for the underlying land for the World Trade Center, Trade Mart, Market Hall, IFGC and related parking facilities	$	249 million	4.8 million

FOOTNOTES:

(1) The amount represents the total purchase price paid by the DMC Partnership for the Dallas Market Center, including the assumption of existing mortgage loans totaling approximately $160 million. Our share of the total consideration contributed to the DMC Partnership was $71.2 million. The remaining $17.8 million represents the value assigned to

13

DMC as its interest in the DMC Partnership. The federal income tax basis of the real estate assets acquired is estimated to be approximately $200 million, representing our 80% ownership interest, which will be depreciated on a straight-line basis over the estimated remaining useful lives of the assets acquired.

Leases. The DMC Partnership leased the DMC Property to Dallas Market Center Operating, L.P. and IFDC Operating L.P., both subsidiaries of MCMC, the existing management company, which is an affiliate of Crow Holdings. MCMC or related predecessor entities have managed the DMC Property since its inception in 1957. Both leases are five-year triple-net leases with five five-year renewals. Renewals are automatic, unless the parties mutually agree in writing not to renew the lease at least seven months in advance of expiration of the applicable lease period. The leases call for payment of the greater of minimum annual rent of approximately $23.7 million or percentage rent. Pursuant to the leases, percentage rent is equal to certain applicable percentages of various revenue thresholds achieved by MCMC at the DMC Property. We believe that the DMC Property is adequately insured. Management believes that there is no immediate need for repairs on the DMC Property. DMC has invested approximately $50 million in improvements at the DMC Property over the last six years. Management will continue to evaluate opportunities with MCMC that could result in capital improvements as well as increased minimum annual rent at the DMC Property.

The following table contains information regarding the historical occupancy rates for the DMC Property.

Location	Fiscal year	Average occupancy rate
Dallas Market Center - Texas	2005	93.40%
Dallas Market Center, Market Hall and Trade Mart	2004	93.82%
	2003	87.47%
	2002	89.72%
	2001	92.19%
International Floral & Gift Center	2005	99.20%
	2004	98.78%
	2003	100.00%
	2002	98.92%
	2001	99.38%

Dallas Market Center/Crow Holdings. The indirect owner of the Dallas Market Center, Crow Holdings, is the diversified group of investment companies that owns and directs the investments of the Trammell Crow family and its investment partners. Crow Holdings has significant investments including substantial stakes in privately held operating businesses around the world and in diversified financial assets. The Crow Family is one of the largest local developers in the history of Dallas, Texas, having developed with its partners more than 5 million square feet of commercial projects within the downtown Dallas district and more than 30 million square feet within the City of Dallas. Crow Holdings’ investments in the Dallas real estate market include the Dallas Market Center, the Wyndham Anatole Hotel, Crow Design District, Medical City Dallas and Trammell Crow Residential. Prior to forming the DMC Partnership, Crow Holdings, its subsidiaries and affiliates were not related to us, affiliated with us or a partner in our business.

14

For a discussion of the competitive factors affecting the DMC Property, see the section of the prospectus entitled “Business – Merchandise Marts.”

Ski Resorts.

The following table updates and replaces the Intrawest lease information beginning on page 75 of the prospectus:

The table below presents information about the leases at each location that will expire during the next ten years (2006 through 2015). The years in which no leases are scheduled to expire have been omitted.

Location	Year	Number of leases expiring(1)	Total square feet of expiring leases	Annual base rents of expiring leases(2)(4)		Percentage of gross annual base rents represented by such leases (4)
Blue Mountain	2006	2	3,594	$	213,000	13.9%
	2007	7	11,829		701,000	45.6%
	2008	4	2,197		127,000	8.3%
	2009	1	1,072		61,000	4.0%
	2010	1	921		53,000	3.5%
	2013	3	9,753		627,000	40.8%
Whistler Creekside	2008	3	3,305	$	203,000	9.3%
	2009	7	8,567		501,000	23.0%
	2012	1	5,147		231,000	10.6%
	2014	7	17,937		938,000	43.0%

15

Location	Year	Number of leases expiring(1)	Total square feet of expiring leases	Annual base rents of expiring leases(2)(4)			Percentage of gross annual base rents represented by such leases (4)
Copper	2006	4	6,271	$	218,000		10.9%
	2007	4	6,477		164,000		8.2%
	2008	12	24,830		849,000		42.5%
	2010	1	882		30,000		1.5%
	2012	1	2,428		95,000		4.8%
	2013	2	4,780		110,000		5.5%
Mammoth	2007	1	682	$	39,000		2.1%
	2008	19	29,046		1,614,000		87.6%
	2009	1	992		56,000		3.1%
	2013	6	21,793		1,215,000		65.9%
	2014	3	3,360		191,000		10.4%
Sandestin	2007	9	9,208	$	353,000		25.1%
	2008	5	4,612		182,000		13.0%
	2011	1	445		—	(3)	<1.0%
	2012	9	30,804		1,149,000		81.7%
Snowshoe	2006	2	1,364	$	79,000		9.7%
	2008	2	5,168		213,000		26.1%
	2009	1	1,502		107,000		13.1%
	2010	1	2,600		125,000		15.3%
	2013	1	4,831		237,000		29.1%
Stratton	2006	1	574	$	22,000		3.4%
	2007	3	3,430		131,000		19.7%
	2008	4	17,908		227,000		34.2%
	2009	1	964		35,000		5.3%
	2013	1	3,025		34,000		5.2%

FOOTNOTES:

(1) Based upon the initial lease term or renewal options currently exercised. Most of the leases include renewal options that, if exercised, will result in the leases expiring in later years.

(2) The amounts for the Blue Mountain and Whistler Creekside locations are expressed in Canadian Dollars. On January 4, 2006, $1.00 Canadian dollar was equal to approximately $0.87 U.S. dollars.

(3) Lease will commence in 2008 and expire in 2011. Base rent at time of expiration cannot currently be projected.

(4) The gross annual base rent for each location was calculated based on the total monthly base rent as of January 2006 annualized.

16

The following information should be added to the end of the section entitled “Business – Property Acquisitions” beginning on page 67 of the prospectus:

GREAT WOLF RESORTS

Great Wolf Waterpark Resorts. On October 3, 2005, we entered into a venture formation and contribution agreement (the “Wolf VFA Agreement”) with Great Bear Lodge of Wisconsin Dells, LLC (“Wolf Dells”), Great Bear Lodge of Sandusky, LLC (“Wolf Sandusky”) and Great Wolf Resorts, Inc., the parent company of Wolf Dells and Wolf Sandusky (collectively, “Great Wolf”). On October 7, 2005, Wolf Dells and Wolf Sandusky formed a partnership (the “Wolf Partnership”) and contributed the waterpark resort and hotel properties known as “Great Wolf Lodge-Wisconsin Dells” in Wisconsin Dells, Wisconsin (the “Wolf Dells Property”) and “Great Wolf Lodge-Sandusky” in Sandusky, Ohio (the “Wolf Sandusky Property”), valued at an approximate $114.5 million in the aggregate, to the Wolf Partnership in exchange for partnership interests. On October 11, 2005, in accordance with the Wolf VFA Agreement, we acquired partnership interests in the Wolf Partnership representing an approximate 61.1% interest in the two waterpark resorts through a cash purchase price of approximately $69.9 million. On November 3, 2005, we invested approximately $10.1 million in additional capital in the Wolf Partnership, increasing our ownership interest to 70%. We receive a preferred return on our invested capital up to a certain threshold, after which Great Wolf receives its preferred return up to a certain threshold, and then returns are split pro rata. Capital proceeds upon liquidation of the venture will be split pro rata between the partners.

17

Great Wolf may receive additional funds up to $3.0 million per waterpark resort if those properties achieve certain financial performance goals during 2007 and 2008. Although we own a majority interest in the Wolf Partnership, we share voting and decision making rights with Great Wolf. There is currently no mortgage debt on the waterpark resorts. The Wolf Partnership has entered into a non-binding agreement with a third party lender and expects to obtain mortgage financing on the resorts by the end of the first quarter of 2006. We currently anticipate that such mortgage financing will be for approximately $63 million for a term of seven years and the interest rate is expected to be fixed at a rate of approximately 6.0%. The loan is expected to be “interest only” for the first three years with principal amortization over the 30 years thereafter. The Wolf Partnership made non-refundable deposits totaling $680,000 in connection with this loan. There can be no assurances that the Wolf Partnership will be able to obtain financing on the waterpark resorts or, if obtained, that the terms of such financing will be favorable to us or to the partnership.

Also on October 11, 2005, two subsidiaries of the Wolf Partnership entered into separate lease agreements as landlords with two affiliated tenant partnerships as tenants for the leasing of each of the waterpark resorts. The Wolf Dells Property and the Wolf Sandusky Property are each operated by an affiliate of Great Wolf Resorts, Inc. pursuant to separate management agreements and separate coterminous license agreements. Under this structure, we lease the properties to affiliated tenant partnerships, and our ownership in such tenant partnerships is held through a taxable REIT subsidiary, or “TRS”. The tenant partnerships owned by the TRS lease the properties from affiliated landlord entities and engage third-party managers to conduct day-to-day operations, as opposed to a structure whereby the affiliated landlord entities lease the properties to third-party tenants in exchange for rental revenue. For properties owned and leased to related tenants, our financial statements will include the operating results of the resorts rather than rent that would be recorded if such properties were leased to unrelated third-party tenants as equity in earnings (losses) of unconsolidated entities. The general terms of the lease agreements are described in the section of the prospectus entitled “Business – Description of Property Leases.”

The following table sets forth the location of each of the properties described above and a summary of the principal terms of the acquisition and lease of each property.

[The remainder of this page intentionally left blank]

18

PROPERTY ACQUISITIONS

Property location and description	Purchase price(1)		Date acquired	Lease expiration and renewal options	Minimum annual rent	Percentage rent
Great Wolf Lodge Wisconsin Dells (2) The Wolf Dells Property is a waterpark resort located in the Wisconsin Dells, Wisconsin approximately one hour from Madison, Wisconsin and two hours from Milwaukee, Wisconsin. The property includes 309 guest suites, 77 condominium units with 128 rooms, a 64,000 square foot indoor entertainment area with a waterpark, an additional 35,000 square foot indoor waterpark expansion currently under development, five restaurants, 5,400 square feet of meeting space, a concept spa and salon, an arcade and a gift shop.	$	60,000,000	10/11/05	10/2010; five five-year renewal options	The greater of (i) minimum rent ranging from $2,300,000 to $3,500,000, depending on the applicable lease year, or (ii) a percentage of gross revenues of the property ranging from 15% to 36% for the applicable year	See Minimum annual rent
Great Wolf Lodge Sandusky (2) The Wolf Sandusky Property is a waterpark resort located in Sandusky, Ohio on Lake Erie, approximately one hour from Cleveland, Ohio and two hours from Detroit, Michigan. The property includes 271 guest suites, a 42,000 square foot indoor entertainment area with a waterpark, two 150-seat restaurants, 6,000 square feet of meeting space, a fitness center, an arcade and a gift shop.	$	54,500,000	10/11/05	10/2010; five five-year renewal options	The greater of (i) $3,250,000 or (ii) a percentage of gross revenues of the property ranging from 20% to 35% for the applicable year	See Minimum annual rent

FOOTNOTES:

(1) The approximate federal income tax basis of the depreciable portion (the building and equipment portion) of each of the properties is set forth below (the balances are presented at our approximate 70.0% interest):

Property	Estimated federal tax basis
Wolf Dells	$	38,500,000
Wolf Sandusky	$	31,300,000

(2) The Wolf Dells Property and the Wolf Sandusky Property are owned through a joint venture, the Wolf Partnership, of which we indirectly own a 70.0% equity interest and Great Wolf owns a 30.0% equity interest. The properties are leased to related tenant partnerships and are operated under long-term management agreements and license agreements by an affiliate of Great Wolf Resorts, Inc. For properties subject to this arrangement, our consolidated financial statements will generally report our share of the net income (loss) of the underlying waterpark resorts rather than our share of the rent that would be recorded if the properties were leased to unrelated third-parties as equity in earnings (loss) of unconsolidated entities.

19

The following table contains information on the historical average occupancy rates, ADR and RevPar for the properties.

Location	Fiscal year		Average occupancy rate		ADR(1)			RevPar(2)
Great Wolf Lodge Wisconsin	2004		62.2	%	$	188.76		$	117.47
	2003		60.6	%		199.72			121.06
	2002		66.3	%		192.49			127.62
	2001		70.0	%		196.36			137.51
	2000		71.2	%		194.08			138.19
Great Wolf Lodge Ohio	2004		68.0	%	$	231.45		$	157.50
	2003		70.0	%		224.20			156.88
	2002		67.0	%		219.16			146.82
	2001	(3)	64.6	%(3)		198.62	(3)		128.31	(3)

FOOTNOTES:

(1) ADR means the average daily room rate. We define ADR by dividing gross room revenue by the total number of rooms occupied by hotel and resort guests on a paid basis during the applicable period.

(2) RevPAR is a commonly used measure within the lodging industry to evaluate hotel and resort operations. We define RevPAR as the product of (i) ADR, multiplied by (ii) the average daily occupancy achieved.

(3) Property opened in March 2001.

20

Great Wolf Resorts, Inc. Great Wolf Resorts, Inc., headquartered in Madison, Wisconsin, is the nation’s largest owner, operator, and developer of family-oriented, destination resorts featuring indoor waterparks. The company owns, operates and franchises these primarily drive-to resorts under both the Great Wolf Lodge and Blue Harbor Resort brands. Great Wolf has owned and developed hotels since 1995 and has been involved with the indoor waterpark business since acquiring the Great Wolf Lodge in the Wisconsin Dells in 1999.

License and Management Agreements. A subsidiary of Great Wolf will continue to manage the Wolf Dells Property and the Wolf Sandusky Property and will license the Great Wolf Lodge brand to the Wolf Partnership pursuant to 25-year management and license agreements, which are subject to performance termination provisions by the tenant partnerships. These agreements provide for a base management fee of 3.0% of gross revenues, incentive management fees upon achievement of certain financial performance goals by the properties and a base license fee of 3.0% of gross revenues.

Development Agreement. Prior to the contribution of the Wolf Dells Property to the Wolf Partnership, Great Wolf commenced construction of an additional 35,000 square foot indoor waterpark attraction at an estimated total cost of $14.8 million. It is intended that the indoor waterpark at the Wolf Dells Property will include a wave pool and other amenities and features. Wolf Dells remains obligated for the construction and completion of the indoor waterpark attraction pursuant to a Development Agreement with the Wolf Partnership. The projected costs were funded in escrow at the October 11, 2005 closing and were included in our approximately $69.9 million contribution. At the Wolf Sandusky Property, we estimate only customary improvements will be required. We believe that both the Wolf Dells Property and the Wolf Sandusky Property are adequately insured.

Competition. Based on the 2005 USRC survey, Great Wolf’s eight resorts that are expected to be open at the end of 2005 will comprise approximately 21% of the supply of existing destination waterpark resorts in this market segment. In the Sandusky, Ohio market, there are few other family entertainment resorts featuring indoor waterparks. In May 2005, the Kalahari Sandusky Resort opened, adding another 308 rooms and an 80,000 square foot indoor waterpark to the market. The opening of the resort, combined with introductory room rate pricing, negatively impacted the performance of Great Wolf during the summer season. In the Wisconsin Dells, Wisconsin, where indoor waterparks were first introduced, there are approximately 16 other resorts and hotels with some type of indoor water-related activity or amenity. As a result, our waterpark resorts face significant competition from both lower priced unthemed waterparks and larger, more expensive waterparks with thrill rides and other attractions in the Wisconsin Dells market. While the Wisconsin Dells market has a significant number of resorts with indoor waterparks, we believe the competitive landscape in that small, regional market is not representative of the competition we may face if we further expand our portfolio of waterpark resorts. The vast majority of indoor waterpark resorts in Wisconsin Dells are family-owned or privately operated businesses that have yet to develop additional resorts outside of that market.

Competition within the waterpark resort market will increase in the foreseeable future. We believe that a number of other resort operators are developing or considering the development of family entertainment resorts with indoor waterparks, which will compete with the waterpark resorts in which we own interests. One such resort is being constructed by a competitor in Sandusky.

Gatlinburg Sky Lift. Pursuant to the terms of an asset purchase agreement (the “Cypress-Gatlinburg Asset Purchase Agreement”) with Cypress Bowl Recreations, LP (“Boyne – Cypress”) and Gatlinburg Skylift, LLC (“Boyne – Gatlinburg”), the Gatlinburg Sky Lift in Gatlinburg, Tennessee (the “Gatlinburg Sky Lift Property”) was acquired on December 22, 2005 from Boyne – Gatlinburg for approximately $19.9 million, excluding acquisition costs. Boyne – Cypress and Boyne – Gatlinburg are both subsidiaries of Boyne USA, Inc. (“Boyne”). The acquisition included an assignment of the existing ground lease and easements to the mountain on which the sky lift operates. Also on December 22, 2005, we entered into a long term triple-net lease with Boyne – Gatlinburg to operate the attraction. The initial lease term expires on March 31, 2026 and has four five-year renewal options. Boyne also received the option to repurchase the property in the future at an amount sufficient to provide us with a stated rate of return on our initial purchase price. The option can be exercised by Boyne beginning on March 31, 2012 until March 31, 2030 or upon termination of the lease, whichever is earlier. Reasonable reserves will be set aside to fund annual improvements. We believe that the Gatlinburg Sky Lift Property is adequately insured.

21

In operation since 1954, the attraction consists of an uphill chairlift and ticket office. The scenic overlook from the sky lift affords views of the Smoky Mountains on the way to the top of Crockett Mountain, which towers more than 500 feet over Gatlinburg. An estimated 13.2 million visitors come to the tourist towns of Tennessee’s Sevier County each year, which includes Gatlinburg and Pigeon Forge. According to the National Park Service, Great Smoky Mountains National Park is the country’s most visited national park, and is located within 550 miles of one-third of the American population. For the past five years, the property has attracted more than 400,000 visitors annually.

The following table sets forth the location of the Gatlinburg Sky Lift Property and a summary of the principal terms of the acquisition and lease of the property.

[The remainder of this page intentionally left blank.]

22

PROPERTY ACQUISITIONS

Property location and description	Purchase price (1)		Date acquired	Lease term and renewal options	Minimum annual rent	Percentage rent (2)
Gatlinburg Sky Lift The Gatlinburg Sky Lift Property is a sky lift attraction located in Gatlinburg, Tennessee. The property includes an uphill chairlift and ticket office.	$	19,940,000	12/22/05	20 years; four 5-year renewal options; lease will be cross-defaulted with Cypress Mountain	10.25%, increasing 25 basis points annually and capped at 13.0% ($2,078,120 in the initial year); guaranteed by Boyne for first 4 years	3.0% of gross revenues

FOOTNOTES:

(1) Purchase price does not include acquisition costs and approximates the federal tax basis of the assets acquired.

(2) Percentage rent will be paid in addition to minimum rent.

23

Boyne USA, Inc. Boyne’s primary business is the operation of geographically diverse four season destination resorts and day-ski venues located near major metropolitan areas. The business has been managed by the Kircher family since 1948 and is the largest privately owned four season resort company in North America. The founder, Everett Kircher, is recognized within the ski community as having been a pioneer with a passion for winter sports and the outdoors. Along with Cypress Mountain and the Gatlinburg Sky Lift, Boyne owns Big Sky Resort in Montana, Crystal Mountain in Washington, Brighton Ski Resort in Utah and Boyne Mountain, Boyne Highlands and The Inn at Bay Harbor, three of Michigan’s premier snowsports and golf resorts.

Competition. The Gatlinburg Sky Lift Property is located in Gatlinburg, Tennessee and is a tourist destination bordering Great Smoky Mountains National Park. Ober Gatlinburg, America’s largest aerial tramway, is located a short distance from the Gatlinburg Sky Lift. Other area tourist attractions, such as Ripley’s Believe It Or Not Museum compete with the Gatlinburg Sky Lift for tourists’ time and entertainment dollars. Other competing Gatlinburg attractions include the Guinness World of Records Museum, the Gatlinburg Space Needle, Rafting in the Smoky Mountains and a Star Cars Museum.

PENDING INVESTMENTS

Ski. As of January 4, 2006, pursuant to the Cypress-Gatlinburg Asset Purchase Agreement, we agreed to acquire Cypress Mountain, a ski attraction located in British Columbia (the “Cypress Mountain Property”) from Boyne-Cypress, a subsidiary of Boyne. The acquisition is expected to take place no later than 180 days from December 22, 2005, the date of our original agreement. We expect to grant Boyne the option to repurchase the property from us at a price that will result in a fixed return to us. The option will be exercisable beginning in the seventh year through the 25^th year following the acquisition.

We will not assume any debt, and at this time we do not foresee obtaining debt financing on the Cypress Mountain Property. The property is located on land owned by the British Columbia provincial authority, which has issued a permit allowing Boyne’s use and operation of a ski area for a term that expires in 29 years. Subject to the approval of the provincial authority, the permit will be assigned to us. As of the date of this filing, we are seeking to finalize the transfer of the permit. Additionally, our acquisition of the Cypress Mountain Property is subject to the satisfaction of certain conditions related to potential environmental issues at the property. We anticipate that the property will be adequately insured if it is acquired. Income and distributions related to this investment may be subject to foreign taxation.

The Cypress Mountain ski area is a freestyle skiing and snowboarding attraction located approximately 20 minutes north of Vancouver, British Columbia. The property includes 38 downhill runs, 5 chairlifts and a base lodge, and has been chosen to host the Freestyle Skiing and Snowboarding competitions for the 2010 Winter Olympics. With an average annual snowfall of 20 feet and 250 skiable acres, Cypress Mountain is the second most visited ski resort in British Columbia, logging over 350,000 skier visits in 2004. With the largest vertical rise (1,680 feet) on the North Shore of Vancouver, the resort offers downhill skiing, snowboarding and cross-country skiing activities for more than 2,000 skiers per day on 12 miles of groomed trails. The resort offers night skiing/riding, snowsport instruction for entry-level to advanced skiers, a cafeteria, lounge facilities and an equipment retail, rental and repair shop. It is primarily a family-oriented, day-ski venue. It is expected that the property will benefit directly from an estimated $10.3 million in pending improvements to be made and paid for by the Vancouver Olympic Committee. The improvements for these events will include the installation of an additional chairlift, snowmaking equipment, an aerial jump site, a mogul course and a snowboard half-pipe.

This acquisition is subject to the fulfillment of certain conditions which include negotiation and execution of definitive documents, completion of customary closing conditions and certain special conditions. There can be no assurance that any or all of these conditions will be satisfied or, if satisfied, that the property will ultimately be acquired. If acquired, the lease for the property is expected to be entered into on substantially the same terms described in the section of the prospectus entitled “Business – Description of Property Leases.”

Leases. Summarized below are the expected lease terms for Cypress Mountain. More information relating to this property and its related lease will be provided if and when it is acquired.

24

PENDING INVESTMENT PROPERTIES

As of January 4, 2006

Property	Estimated purchase price (1)		Lease term and renewal options (2)	Estimated minimum annual rent	Percentage rent (3)
Cypress Mountain Property Ski attraction The property is located approximately 20 minutes north of Vancouver, British Columbia and includes 38 downhill runs, 5 chairlifts and a base lodge.	$	27,500,000	20 years; four 5-year renewal options; lease will be cross-defaulted with Gatlinburg lease (4)	10.25%, increasing 25 basis points annually; capped at 13.0% (estimated to be approximately $2,854,625 in the initial year); guaranteed by Boyne for first 4 years	9.0% of gross revenues in excess of $10 million

FOOTNOTES:

(1) Estimated purchase price does not include acquisition costs.

(2) The lease is expected to be on a triple-net basis.

(3) Percentage rent will be paid in addition to minimum rent.

(4) Renewals will be subject to term of Canadian Permit, currently expiring in 2034.

25

Competition. The Cypress Mountain Property is located in British Columbia and generally competes with 36 other ski and snowboard areas including Big White Ski Resort, Apex Mountain, Crystal Mountain, Mt. Washington, Phoenix Mountain, Powder King, Summit Lake and Whitewater Ski Resort. Whistler and Blackcomb Mountains, Grouse Mountain and Mount Seymour are the closest in proximity to Cypress Mountain. Whistler and Blackcomb Mountains are located only two hours from Vancouver, British Columbia. Whistler Mountain has an average annual snowfall of 30 feet, 4,757 skiable acres, over 100 trails, 8 restaurants, a peak elevation of 7,160 feet and 16 chairlifts. Blackcomb Mountain has an average annual snowfall of 30 feet, 3,414 skiable acres, over 100 trails, 9 restaurants, a peak elevation of 7,494 feet and 17 chairlifts. In addition, Grouse Mountain and Mount Seymour, located only 15 minutes from downtown Vancouver, compete directly with Cypress Mountain for day skier visits. Grouse Mountain offers a summit elevation of 4,100 feet, a vertical drop of 1,260 feet, 212 skiable acres, 9 chairlifts, 24 trails and an average annual snowfall of 10 feet. Mount Seymour has a summit elevation of 4,134 feet, a vertical drop of 1,115 feet, 600 skiable acres, 5 chairlifts, 24 trails and an average annual snowfall of over 14 feet.

MORTGAGE LOANS AND OTHER LOANS

The following information should be read in conjunction with the section entitled “Business – Mortgage Loans and Other Loans,” beginning on page 87 of the prospectus.

On September 29, 2005, we made a $3 million loan to a subsidiary of Consolidated Conversions, LLC, which was used to purchase the 295-room Holiday Inn Main Gate West for conversion to a condominium hotel. The property is located in Kissimmee, Florida, which is west of Walt Disney World. Our loan earns interest at a rate of 15% per year and requires interest payments based on an annual percentage rate of 8.5% per month with the remaining 6.5% becoming due and payable upon the loan’s maturity or earlier upon the sale of the condominium hotel units. The term of the loan is 18 months and may be extended by the borrower for up to three additional six-month periods. The loan is collateralized by a first mortgage on ten vacant acres of land adjacent to the hotel and a second priority mortgage on the remainder of the property which includes the hotel. Completion of the condominium conversion and related improvements is guaranteed by the principals of Consolidated Conversions, LLC. The loan may be prepaid at anytime, but in no event will we receive less than our 15% return for at least one year.

BORROWING

The following information should be read in conjunction with the section entitled “Business – Borrowing,” beginning on page 89 of the prospectus.

In connection with the acquisition of the Wolf Dells Property and the Wolf Sandusky Property, the Wolf Partnership has submitted a loan application to a third party lender and anticipates obtaining mortgage financing on the resorts by the end of the first quarter of 2006. We anticipate that such mortgage financing will be for approximately $63 million for a term of seven years and we anticipate that the interest rate will be fixed at a rate of approximately 6.0%. The loan is expected to be “interest only” for the first three years with principal amortization over the 30 years thereafter. The Wolf Partnership made non-refundable deposits totaling $680,000 in connection with this loan; however, there can be no assurance that the Wolf Partnership will obtain this financing.

On May 20, 2005, we closed on a $5.0 million revolving line of credit with Branch Banking and Trust. The line will primarily be used for working capital needs, distributions to stockholders and bridge financing on real estate investments. The line of credit is unsecured, bears interest at the 30-day LIBOR plus 2.25% and has a term of two years. We plan to obtain lines of credit, in an amount up to $100 million. The lines of credit may be increased at the discretion of our board of directors and may be repaid with offering proceeds, proceeds from the sale of assets, working capital or permanent financing. There can be no assurance that additional lines of credit will be obtained.

The acquisition of the Canadian Resort Village Properties on December 3, 2004 was funded, in part, with approximately $22.3 million ($26.6 million Canadian dollars) of permanent debt financing secured by a mortgage on the Canadian Resort Village Properties, which was obtained on December 3, 2004. The loan bears interest at a fixed rate of 5.83%, requires payments of interest-only for the first two years, and thereafter requires monthly payments of principal and interest based upon a 30 year amortization period and a maturity date on the tenth anniversary. The balance due upon maturity assuming no prepayment of principal will be approximately $19.5 million ($23.3 million Canadian dollars).

26

In connection with our acquisition of the U.S. Resort Village Properties through our unconsolidated partnership with Intrawest Corporation, Intrawest Resort Finance, Inc. provided bridge financing in the principal amount of $45.0 million. On May 20, 2005, the $45.0 million bridge loan was refinanced with loans from Sun Life Assurance Company of Canada made to the subsidiary owners of the properties in the aggregate principal amount of $46.0 million. The loans bear interest at a fixed rate of 5.75%, require the subsidiaries of our unconsolidated partnership with Intrawest Corporation to make monthly principal and interest payments in the aggregate amount of $289,389 (based on a 25-year amortization), mature on May 20, 2015, and may not be prepaid except with payment of a premium. The balance due upon maturity assuming no prepayment of principal will be approximately $35.0 million.

On February 14, 2005, upon closing the first tranche of the acquisition of the Dallas Market Center, the DMC Partnership became obligated for approximately $143 million in existing debt on the DMC Property. The securitized loan bears interest at a blended rate of 6.04% and requires monthly principal and interest payments of $889,145. The balance due upon maturity of the $143 million securitized loan on the DMC Property, assuming no prepayment of principal, will be approximately $113.1 million. Further, on May 25, 2005, upon closing the second tranche of the acquisition, the DMC Partnership became obligated for approximately $17.0 million in existing debt on the IFGC. The IFGC loan bears interest at a fixed rate of 5.45% and requires aggregate monthly principal and interest payments of $110,663. The loan is amortized over 22 years, matures in September 2012 and allows prepayment after August 2006 under certain terms and conditions. The balance due upon maturity assuming no prepayment of principal will be approximately $12.4 million.

[The remainder of this page intentionally left blank.]

27

SELECTED FINANCIAL DATA

The following selected financial data for CNL Income Properties should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” beginning on page 94 of the prospectus and the Financial Information commencing on page F-1:

	Nine Months Ended September 30,					Year Ended December 31,
	2005 (Unaudited)		2004 (Unaudited) (1)			2004 (1)			2003 (1)
Operating Data:
Net income (loss)	$	4,660,932	$	(835,122	)	$	(683,263	)	$	—
Net income (loss) per share		0.29		(0.41	)		(0.17	)		—
Weighted average number of shares outstanding (basic and diluted)		15,944,406		2,017,035			4,075,979			20,000
Funds from operations (“FFO”) (3)		9,337,586		(835,122	)		(579,129	)		—
FFO per share		0.59		(0.41	)		(0.14	)		—
Cash distributions paid (2)		6,092,865		470,512			1,172,688			—
Cash distributions paid per share		0.40		0.13			0.26			—
Cash provided by operating activities		1,136,796		90,344			754,656			—
Cash used in investing activities		89,615,753		6,590,000			41,780,499			—
Cash provided by financing activities		137,269,935		37,793,320			77,734,960			—
	As of September 30,					Year Ended December 31,
	2005 (Unaudited)		2004 (Unaudited) (1)			2004 (1)			2003 (1)
Balance Sheet Data:
Investment in unconsolidated entities	$	123,519,064	$	—		$	41,913,212		$	—
Cash		85,501,095		31,294,664			36,710,117			1,000
Total assets		226,735,858		45,443,696			85,956,427			1,311,797
Long term debt obligations		—		—			—			—
Total liabilities		14,409,602		11,058,461			11,004,049			1,111,797
Stockholders’ equity		212,326,256		34,385,235			74,952,378			200,000
Other Data:
Properties owned by unconsolidated entities at end of the quarter/year		8		—			7			—
Properties acquired by unconsolidated entities during the quarter/year		—		—			7			—

28

FOOTNOTES:

(1) Operations commenced on June 23, 2004 when we received minimum offering proceeds of $2.5 million and funds were released from escrow. We completed our first investment in December 2004, and as of December 31, 2004, we owned investments in unconsolidated entities accounted for under the equity method of accounting with carrying values totaling approximately $41.9 million. The results of operations for the year ended December 31, 2004 are not necessarily indicative of future performance due to the limited time during which we were operational, our incurrence of organizational costs, and having not completed our first investment until December 2004. The results from operations for the nine months ended September 30, 2004 include only the interest income earned subsequent to becoming operational, organizational costs incurred on our behalf by an Affiliate, and general operating and administrative expenses for the period. Selected financial data for 2003 covers the period August 11, 2003 (date of inception) through December 31, 2003.

(2) Cash distributions are declared by the board of directors and generally are based on various factors, including expected and actual net cash from operations and our general financial condition, among others. Approximately, 54.0%, 0.0%, and 24.0% of the distributions received by stockholders were considered to be ordinary income and approximately 46.0%, 100.0%, and 76.0% were considered as return of capital for federal income tax purpose for the nine months ended September 30, 2005 and 2004, and for the year ended December 31, 2004, respectively. Distributions to stockholders may be considered a return of capital to the extent the amount of such distributions exceed net income calculated in accordance with generally accepted accounting principles (“GAAP”). Accordingly, for the nine months ended September 30, 2005 and 2004, and for the year ended December 31, 2004, approximately 24.0%, 100.0%, and 100.0% of the distributions, respectively, represented a return of capital if calculated using GAAP net income as the basis. We have not treated such amounts as a return of capital for purposes of calculating the stockholders’ return on their invested capital.

(3) We consider funds from operations (“FFO”) to be a common non-GAAP measure that is indicative of operating performance due to the significant effect of depreciation of real estate assets on net income. FFO, based on the revised definition adopted by the Board of Governors of the National Association of Real Estate Investment Trusts (“NAREIT”) and as used herein, means net income determined in accordance with GAAP, excluding gains or losses from sales of property, plus depreciation and amortization of real estate assets and after adjustments for unconsolidated partnerships and joint ventures. We believe that by excluding the effect of depreciation and amortization, FFO can facilitate comparisons of operating performance between periods and between other equity REITs. FFO was developed by NAREIT as a relative measure of performance of an equity REIT in order to recognize that income-producing real estate historically has not depreciated on the basis determined under GAAP. However, FFO (i) does not represent cash generated from operating activities determined in accordance with GAAP (which, unlike FFO, generally reflects all cash effects of transactions and other events that enter into the determination of net income); (ii) is not necessarily indicative of cash flow available to fund cash needs; and (iii) should not be considered as an alternative to net income determined in accordance with GAAP as an indication of our operating performance, or to cash flow from operating activities determined in accordance with GAAP as a measure of either liquidity or our ability to make distributions. FFO as presented may not be comparable to amounts calculated by other companies. Accordingly, we believe that in order to facilitate a clear understanding of the consolidated historical operating results, FFO should be considered in conjunction with our net income and cash flows as reported in the accompanying consolidated financial statements and notes thereto.

Reconciliation of net income (loss) to FFO for the nine months ended September 30, 2005 and 2004, and the year ended December 31, 2004 and 2003:

	Nine Months Ended September 30,						Year Ended December 31,
	2005 (Unaudited)			2004 (Unaudited)			2004			2003
Net income (loss)	$	4,660,932		$	(835,122	)	$	(683,263	)	$	—
Adjustments:
Equity in earnings of unconsolidated entities		(7,461,670	)		—			(218,466	)		—
FFO from unconsolidated entities		12,138,324			—			322,600			—
Funds from operations	$	9,337,586		$	(835,122	)	$	(579,129	)	$	—
Weighted average number of shares of common stock outstanding (basic and diluted)		15,944,406			2,017,035			4,075,979			—
FFO per share	$	0.59		$	(0.41	)	$	(0.14	)	$	—

29

MANAGEMENT'S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following information should be read in conjunction with the “Management's Discussion and Analysis of Financial Condition and Results of Operations” section beginning on page 94 of the prospectus.

INTRODUCTION

The following discussion is based on the condensed consolidated financial statements as of September 30, 2005 and December 31, 2004 and for the quarter and nine months ended September 30, 2005. Amounts as of December 31, 2004 included in the unaudited condensed consolidated financial statements have been derived from audited consolidated financial statements as of that date. This information should be read in conjunction with the accompanying unaudited condensed consolidated financial statements and the notes thereto, as well as the consolidated financial statements and notes thereto included in our annual report on Form 10-K for the year ended December 31, 2004.

STATEMENT REGARDING FORWARD LOOKING INFORMATION

The following information contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements generally are characterized by the use of terms such as “may,” “will,” “should,” “plan,” “anticipate,” “estimate,” “intend,” “predict,” “believe” and “expect” or the negative of these terms or other comparable terminology. Such forward-looking statements involve known and unknown risks, uncertainties and other factors. Although we believe that the expectations reflected in such forward-looking statements are based upon reasonable assumptions, our actual results, performance or achievements could differ materially from those set forth in the forward-looking statements. Some factors that might cause such a difference include the following: conditions affecting the CNL brand name, increased direct competition, changes in general economic conditions, changes in government regulations, changes in local and national real estate conditions, terrorism, extended U.S. military combat operations, our ability to obtain additional lines of credit or permanent financing on satisfactory terms, availability of proceeds from our offering of shares, our ability to identify suitable investments, our ability to close on identified investments, our qualification as a real estate investment trust, inaccuracies of our accounting estimates, failure of properties to perform as expected, our ability to locate suitable tenants and operators for our properties and borrowers for mortgage loans, and the ability of such tenants and borrowers to make payments under their respective leases or mortgage loans. Given these uncertainties, we caution you not to place undue reliance on such statements. We undertake no obligation to publicly release the results of any revisions to these forward-looking statements that may be made to reflect future events or circumstances or to reflect the occurrence of unanticipated events. Although we believe that our current expectations are based on reasonable assumptions, we can give no assurances that such expectations will be attained.

GENERAL

CNL Income Properties, Inc. was organized pursuant to the laws of the State of Maryland on August 11, 2003. We were formed primarily to acquire properties in the United States that will be leased on a long-term (generally five to 20 years, plus multiple renewal options), triple-net or gross basis to tenants or operators who are significant industry leaders. We currently operate and have elected to be taxed as a real estate investment trust (a “REIT”) for federal income tax purposes beginning with the taxable year ended December 31, 2004. We have retained CNL Income Corp. (the “Advisor”) as our advisor to provide management, acquisition, advisory and administrative services.

Beginning on April 16, 2004, we offered for sale up to $2 billion in shares of common stock (200 million shares of common stock at $10 per share) pursuant to a registration statement on Form S-11 under the Securities Act of 1933, as amended (the “Offering”). We commenced active operations on June 23, 2004, when the minimum required offering proceeds were received and funds were released to us from escrow. The activities from August 11, 2003 (our inception) through June 23, 2004 were devoted to the organization of the company. As of November 30, 2005, we had received aggregate offering proceeds totaling $332.7 million (33,318,649 shares) from 11,305 investors in connection with this offering, including $3.6 million (375,225 shares) purchased through our distribution reinvestment plan. The shares sold and the gross offering proceeds received from such sales do not include the 20,000 shares purchased by the Advisor for $200,000 preceding the commencement of the initial offering or the $1.2 million

30

(117,708 restricted common shares) issued in December 2004 to CNL Financial Group, Inc., a company affiliated with our Advisor and wholly owned indirectly by our chairman of the board and his wife. As of September 30, 2005, we had also redeemed 24,193 shares at $9.50 per share for a total of $229,834. We have and will continue to use proceeds from the Offering to invest in properties and other permitted investments.

We have and will continue to focus our investment activities on and use the proceeds of our Offering primarily for the acquisition, development and ownership of lifestyle properties that we believe:

• Are part of an asset class wherein the supply of developed, specific-use real estate is greater than the demand for the intended use of such real estate;

• Where a change in operational control is anticipated to improve value;

• Are part of an industry that is experiencing constraints on the availability of new capital, which we believe typically has the effect of lowering the purchase price of such properties from that which would typically be available; and/or

• Have the potential for long-term revenue generation based upon certain demographic data including an aging baby boomer population and associated concentrations of wealth.

31

We have invested in, and will most likely continue to invest in, properties in the following asset classes (in no order of priority):

• Property leased to dealerships including, for example, automobile, motorcycle, recreational vehicle and boat dealerships;

• Campgrounds, recreational vehicle (“RV”) parks, whose operators rent lots and offer other services;

• Health clubs, athletic training facilities, wellness centers and spa facilities;

• Parking lots, whose operators offer monthly and daily parking space rentals in urban areas;

• Merchandise marts, whose operators lease showrooms and host tradeshows for merchandise manufacturers and wholesalers in major metropolitan areas;

• Destination retail and entertainment centers, whose operators develop and lease properties featuring entertainment-oriented stores, restaurants and/or attractions;

• Marinas, whose operators offer recreational boat slip rentals and other services;

• Ski resorts, including real estate in and around ski resorts such as ski-in/ski-out alpine villages, townhouses, lodging and other related properties;

• Golf courses and golf resorts, including real estate in and around golf courses and golf resorts, such as retail villages, townhouses, lodges and other related properties;

• Amusement parks, waterparks and family entertainment centers, which may include lodging facilities;

• Real estate in and around lifestyle communities;

• Vacation ownership interests, which entitle a purchaser of the interests to exclusive use of resort accommodations at a resort property or properties for a particular period of time each year; and

• Other attractions, such as sports-related venues and cultural facilities such as visual and performing arts centers or zoological parks or aquariums.

Although these are the asset classes in which we have invested and will most likely continue to invest, we may acquire or invest in other types of properties which are not listed above that we believe have the potential for long-term revenue generation based upon underwriting criteria and models that we have developed and/or certain demographic criteria as described above.

We have elected to be taxed as a REIT for federal income tax purposes. As a REIT we generally will not be subject to federal income tax on income that we distribute annually 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 lost. Such an event could materially and adversely affect our net income and cash flows. We believe that we are organized and have operated in a manner to qualify for treatment as a REIT beginning with the year ended December 31, 2004. In addition, we intend to continue to be organized and to operate so as to remain qualified as a REIT for federal income tax purposes. (See the sections of the prospectus entitled “Risk Factors – We Will Be Subject to Increased Taxation if we Fail to Qualify as a REIT for Federal Income Tax Purposes,” and “Federal Income Tax Considerations.”)

32

CRITICAL ACCOUNTING POLICIES

Consolidation. The consolidated financial statements include our accounts and the accounts of our wholly owned subsidiaries and entities in which we have a controlling interest in accordance with the provisions of Statement of Position 78-9 “Accounting for Investments in Real Estate Ventures” (“SOP 78-9”) or are the primary beneficiary as defined in FASB Interpretation No. 46 (revised December 2003), Consolidation of Variable Interest Entities, (“FIN 46”). The application of FIN 46 and SOP 78-9 requires management to make significant estimates and judgments about our, and our venture partners’, rights, obligations and economic interests in the related venture entities. The equity method of accounting is applied in the consolidated financial statements with respect to those investments in entities in which we are not the primary beneficiary under FIN 46 or have less than a controlling interest due to the significance of rights and obligations held by other parties under SOP 78-9.

Investments in Unconsolidated Entities. The equity method of accounting is applied with respect to investments in entities for which we have determined that consolidation is not appropriate under FIN 46 or SOP 78-9. We recognize equity in earnings from our unconsolidated entities under the hypothetical liquidation at book value (“HLBV”) method of accounting due to the capital structure of those entities and the rights and priorities of the partners. The HLBV method differs from other generally accepted accounting methods in which an investing partner recognizes the percentage of a venture’s net income or loss based upon the partner’s percentage of ownership. Under the HLBV method, we must estimate at the balance sheet date what we would receive or be obligated to pay in accordance with the governing agreements if our unconsolidated entities were to liquidate all of their assets, pay their debts and distribute the remaining equity. As a result, we recognize income (equity in earnings) in each reporting period equal to the change in our share of assumed proceeds from the liquidation of the underlying unconsolidated entities at book value. Under this method, in any given period we could be recording more or less income than actual cash distributions received and more or less than we may receive in the event of an actual liquidation.

Impairments. For real estate owned by us and accounted for under the equity method, we compare the estimated fair value of our investment to the carrying value at each reporting date. To the extent the fair value of the investment is less than the carrying amount, and the decline in value is determined to be other than a temporary decline, an impairment charge will be recorded.

For real estate to be directly owned by us, we will monitor events and changes in circumstance that may indicate that the carrying amounts of the real estate assets may not be recoverable. When such events or changes in circumstances are present, we will assess potential impairment by comparing estimated future undiscounted operating cash flows expected to be generated over the life of the asset and from its eventual disposition, to the carrying amount of the asset. In the event that the carrying amount exceeds the estimated future undiscounted operating cash flows, we would recognize an impairment loss to adjust the carrying amount of the asset to the estimated fair value.

The determination of both the estimated fair value of our investment and the estimation of future cash flows to be generated over the life of the assets requires management to make significant estimates and judgments.

LIQUIDITY AND CAPITAL RESOURCES

General

Our principal demand for funds will be for property acquisitions, loans and other permitted investments and the payment of operating expenses and distributions to stockholders. Generally, our cash needs for items other than property acquisitions will be generated from operations, our investments or advances from affiliates, although our affiliates are not obligated to advance such funds. We have also entered into a revolving line of credit with a capacity of $5.0 million, which we use to bridge short term liquidity needs that arise due to timing of cash receipts and payments.

We intend to continue to acquire properties and consider making loans and other permitted investments with proceeds from our public offering and permanent debt financing to be obtained. If sufficient capital is not raised, it would limit our ability to acquire additional properties, make loans or permitted investments. This could impact our ability to pay distributions or raise the distribution rate due to our limited income from operations, unless we choose to borrow to do so.

33

We intend to continue to pay distributions to our stockholders on a quarterly basis. Operating cash flows are expected to be generated from properties, loans and other permitted investments to cover such distributions. In the event we are unable to acquire properties at the pace expected, we may not be able to continue to pay distributions to stockholders or may need to reduce the distribution rate or borrow to continue paying distributions, all of which may negatively impact a stockholder’s investment in the long term.

We believe that our current and anticipated capital resources, including cash on hand and the availability of funds from our line of credit are sufficient to meet our liquidity needs for the coming year.

Common Stock Offering

As of September 30, 2005, we had received aggregate offering proceeds of approximately $247.1 million (24,770,899 shares) from 8,275 investors in connection with this offering, including $3.6 million (375,225 shares) purchased through our distribution reinvestment plan, excluding the 20,000 shares purchased by the Advisor for $200,000 preceding the commencement of the initial offering and the $1.2 million (117,708 restricted common shares) issued in December 2004 to CNL Financial Group, Inc., a company affiliated with our Advisor and wholly owned indirectly by our chairman of the board and his wife. As of September 30, 2005, we had also redeemed 24,193 shares at $9.50 per share for a total of $229,834. We raised on average approximately $20.6 million per month during the third quarter of 2005. During the period October 1, 2005 through November 30, 2005, we received additional subscription proceeds of approximately $85.4 million (8,547,750 shares). We primarily use the capital we raise to acquire properties and make other permitted investments and to pay fees and expenses in connection with the offering and acquisitions.

Investments in and Earnings from Unconsolidated Entities

As of September 30, 2005, we had invested in properties at eight locations through our unconsolidated entities. We are entitled to receive quarterly cash distributions from the unconsolidated entities. Distributions receivable from our unconsolidated entities as of September 30, 2005 and December 31, 2004 were approximately $3.7 million and $225,555, respectively. These distributions are generally received within 45 days after quarter end and, when received, are expected to contribute to our cash from operating activities.

Investments

Various wholly-owned subsidiaries and unconsolidated entities have been and will be formed in the future by us for the purpose of acquiring and owning real estate properties. As of September 30, 2005, we have invested in retail and commercial properties at seven resort villages and one merchandise mart property. Management expects to continue to acquire properties with a view to diversify among the types of tenants, operators and the geographic location of the properties. The following is a summary of our investments as of September 30, 2005:

In December 2004 we invested in a partnership that acquired retail and commercial properties at seven resort villages in the U.S. and Canada (the “Resort Village Properties”). All of the Resort Village Properties were acquired from Intrawest Corporation (“Intrawest”). Due to certain legal, tax and lender requirements, the Canadian Resort Village Properties were acquired by us through a trust. Intrawest retained a 20% ownership interest in the partnership which owns the U.S. Resort Village Properties (the “Intrawest Partnership”). Intrawest continues to operate the Resort Village Properties pursuant to management agreements. Although we own an 80% interest in the Intrawest Partnership, our ownership percentage exceeds our economic interest and our voting rights, and Intrawest may receive a greater return than us when the Resort Village Properties perform at certain levels. The Resort Village Properties consist of approximately 408,000 square feet of leasable space that was 100% economically leased and 96% physically leased as of September 30, 2005.

On February 14, 2005, we formed the DMC Partnership to acquire the DMC Property located in Dallas, Texas. The acquisition of the first tranche was completed on February 14, 2005 and included the World Trade Center, Dallas Trade Mart and Market Hall buildings as well as leases for the underlying land and related parking facilities on the property. Additional funding for the first tranche occurred on March 11, 2005. The DMC Partnership acquired the DMC Property for $218.0 million, including the assumption of existing mortgage loans totaling approximately $143.0 million.

34

We invested approximately $60.0 million in the DMC Partnership, representing an 80% equity interest, in connection with the acquisition of the DMC Property. The DMC Property consists of approximately 4.3 million leasable square feet of showroom and exhibition space. The DMC Property is leased to Dallas Market Center Operating, L.P., a subsidiary of the existing management company, MCMC, which continues to manage the DMC Property. MCMC or related predecessor entities have managed the DMC Property since its inception.

On May 25, 2005, the DMC Partnership acquired the IFGC located at the DMC Property for approximately $31.0 million, including the assumption of a $17.0 million existing mortgage loan. We contributed $11.2 million, excluding transaction costs, to the DMC Partnership in connection with the IFGC acquisition. The IFGC consists of approximately 440,000 square feet and houses permanent showrooms for floral products, holiday decorative products and related accessories. The IFGC is leased to IFDC Operating, L.P., a wholly-owned subsidiary of the existing management company, MCMC, under a long-term master lease agreement. MCMC or related predecessor entities have managed the IFGC since its inception.

As of September 30, 2005, we have invested approximately $71.2 million, excluding transaction costs and hold an 80% interest in the DMC Partnership. Although we own an 80% interest in the DMC Property and IFGC and receive a certain return prior to any payments to DMC, DMC has equal voting rights on the management board of the DMC Property and shares control over certain key decisions with us.

Subsequent to September 30, 2005, we made the following investments:

On October 3, 2005, we entered into the Wolf VFA Agreement with Great Wolf, pursuant to which we agreed to enter into a joint venture with Great Wolf to jointly own, operate, market and lease the waterpark resort and hotel properties known as the Wolf Dells Property and the Wolf Sandusky Property. Pursuant to the Wolf VFA Agreement, on October 7, 2005, Wolf Dells and Wolf Sandusky formed the Wolf Partnership and contributed the Wolf Dells Property and the Wolf Sandusky Property, valued at an approximate $114.5 million in the aggregate, to the Wolf Partnership in exchange for partnership interests.

On October 11, 2005, also pursuant to the Wolf VFA Agreement, we acquired approximately 61.1% of the partnership interests in the Wolf Partnership in exchange for a contribution of approximately $69.9 million in cash. On November 3, 2005, we contributed an additional $10.1 million to the Wolf Partnership resulting in a 70.0% ownership interest. We receive a preferred return on our invested capital up to a certain threshold, after which Great Wolf receives a preferred return on its invested capital up to a certain threshold, and then residual returns are split pro rata. Capital proceeds upon liquidation of the venture are split pro rata between the partners. Great Wolf may receive additional funds up to $3.0 million per waterpark resort if those properties achieve certain financial performance goals during 2007 and 2008. The Wolf Partnership expects to obtain mortgage financing on the two waterpark resorts by the end of the first quarter of 2006. The financing is not expected to exceed 55% of the combined loan to cost ratio for the two properties.

On October 12, 2005, the DMC Partnership entered into a memorandum of understanding and a development agreement to develop the Trade Mart Expansion, an approximately 500,000 square foot lighting center expansion (160,000 leasable square feet) at the Trade Mart at the DMC Property. On October 14, 2005, we contributed approximately $3.5 million and DMC contributed approximately $0.9 million to fund the initial costs of the Trade Mart Expansion. On January 11, 2006, we contributed an additional $5.8 million toward the Trade Mart Expansion. The total construction costs are expected to be approximately $21.3 million. Our share of the total contribution to the DMC Partnership for the Trade Mart Expansion is estimated to be approximately $17.0 million and will be made in accordance with the current partnership structure. The remaining costs will be funded over the remainder of the development period. The Trade Mart Expansion is expected to be completed at the end of 2006 and will be leased to an affiliate of DMC.

35

On December 22, 2005, we entered into the Cypress-Gatlinburg Asset Purchase Agreement with Boyne-Cypress and Boyne-Gatlinburg, subsidiaries of Boyne, the largest privately owned four-season resort company in North America to acquire the Cypress Mountain ski area and the Gatlinburg Sky Lift. The properties will be acquired in a series of two closings for an aggregate purchase price of approximately $47.5 million.

Pursuant to the terms of the Cypress-Gatlinburg Asset Purchase Agreement, the Gatlinburg Sky Lift was acquired on December 22, 2005 for approximately $19.9 million excluding closing costs. The acquisition included an assignment of the existing ground lease and easements to the mountain on which the sky lift operates. Also on December 22, 2005, we entered into a long term triple-net lease with Boyne-Gatlinburg. The initial lease term expires on March 31, 2026 and has four five-year renewal options. The minimum annual rent is equal to 10.25% of the purchase price plus acquisition costs, and increases 25 basis points annually to a maximum of 13.0%. Additional percentage rent due under the lease is initially based on 3.0% of gross revenues of the properties. Boyne has guaranteed the tenant’s payment of minimum annual rent under the lease for the first four years. Boyne also received the option to repurchase the properties in the future at an amount sufficient to provide us with a stated rate of return on our initial purchase price. The option can be exercised by Boyne beginning on March 31, 2012 until March 31, 2030 or upon termination of the lease, whichever is earlier.

We have also committed to acquire the Cypress Mountain Property from Boyne-Cypress, a subsidiary of Boyne, for an estimated purchase price of $27.5 million. Boyne is expected to lease the property on a triple-net lease basis, with a lease term of 20 years with several optional extensions, and will continue to operate the attraction through its subsidiaries. We expect to grant Boyne the option to repurchase the property from us at a price that will result in a certain fixed return to us. The option will be exercisable beginning in the seventh year through the 25^th year following the acquisition. We expect to acquire the Cypress Mountain Property area no later than 180 days from December 22, 2005, the date of our original commitment.

Borrowings

We intend to borrow money to acquire assets and to pay certain related fees. We have, and may continue to borrow money to pay distributions to stockholders. We also intend to encumber assets in connection with such

36

borrowings. In general, the aggregate amount of permanent financing is not expected to exceed 50% of our total assets on an annual basis, however, it may likely exceed 50% for a limited period in our early acquisition stage. The maximum amount we may borrow is 300% of our net assets in the absence of a satisfactory showing that a higher level of borrowing is appropriate. In order to borrow an amount in excess of 300% of our net assets, a majority of the independent members of our board of directors must approve the borrowing, and the borrowing must be disclosed and explained to stockholders in our first quarterly report after such approval occurs.

We plan to obtain lines of credit, in an amount up to $100 million. The lines of credit may be increased at the discretion of our board of directors and may be repaid with offering proceeds, proceeds from the sale of assets, working capital or permanent financing. On May 20, 2005, we closed on a $5.0 million revolving line of credit with Branch Banking and Trust. The line is used primarily for working capital needs, distributions to stockholders and bridge financing on real estate investments. The line of credit is unsecured, bears interest at the 30-day LIBOR plus 2.25% (approximately 5.73% for the quarter ended September 30, 2005) and has a term of two years. As of September 30, 2005, we had outstanding borrowings under the line of credit of approximately $2.8 million. The loan agreement contains certain affirmative, negative and financial covenants including quarterly and annual financial reporting requirements, minimum net worth, and limitations on the incurrence of additional debt. We were in compliance with these covenants at September 30, 2005.

See the section below titled “Off Balance Sheet and Other Arrangements – Borrowings of our Unconsolidated Entities” for a description of the borrowings of our unconsolidated entities.

Mortgage Loans and Other Loans

On September 29, 2005, we made a $3.0 million loan to a subsidiary of Consolidated Conversions, LLC, which was used toward the purchase of the 295-room Holiday Inn Main Gate West for conversion to a condominium hotel. The property is located in Kissimmee, Florida, which is west of Walt Disney World. Our loan earns interest at a rate of 15% per year and requires monthly interest payments based on an annual percentage rate of 8.5% with the remaining 6.5% becoming due and payable upon the loan’s maturity or earlier upon the sale of the condominium hotel units. The term of the loan is 18 months and may be extended by the borrower for up to three additional six-month periods. The loan is collateralized by a first mortgage on ten vacant acres of land adjacent to the hotel and a second priority mortgage on the remainder of the property which includes the hotel. Completion of the condominium conversion and related improvements is guaranteed by the principals of Consolidated Conversions, LLC. The loan may be prepaid at anytime, but in no event will we receive less than our 15% return for at least one year.

Related Party Arrangements

As of September 30, 2005, we owed our Advisor and certain of its affiliates approximately $10.3 million for certain organizational and offering expenses, acquisition fees, asset management fees, selling commissions, marketing support fees, due diligence expense reimbursements and operating expenses incurred on our behalf. In accordance with our amended and restated articles of incorporation, the total amount of certain offering, organization and stock issuance costs we pay may not exceed 13% of the aggregate offering proceeds. Accordingly, approximately $6.7 million of these costs have been capitalized and deferred as of September 30, 2005, with a corresponding amount due to our Advisor and certain of its affiliates. The deferred offering costs will be deducted from future offering proceeds and reimbursed to affiliates to the extent the costs are within the 13% limitation. We are not obligated to pay our Advisor or certain of its affiliates costs that exceed the 13% limitation as of the end of the Offering.

In addition, to the extent that operating expenses, in any four consecutive fiscal quarters (the “Expense Year”), exceed the greater of 2% of average invested assets or 25% of net income, the Advisor shall reimburse us the amount by which the total operating expenses paid or incurred exceed the greater of the 2% or 25% threshold (the “Expense Cap”). The first Expense Year was the twelve months ended June 30, 2005, for which our operating expenses exceeded the Expense Cap by $398,071. Therefore, such amount was recorded as a reduction in operating expenses and amounts due to affiliates. For the Expense Year ended September 30, 2005, operating expenses did not exceed the Expense Cap.

Distributions

We intend to pay distributions to our stockholders on a quarterly basis. The amount of distributions declared to our stockholders will be determined by our board of directors and is dependent upon a number of factors, including expected and actual net cash from operations for the year, our financial condition, a balanced analysis of

37

value creation reflective of both current and long-term stabilized cash flows from our properties, our objective of continuing to qualify as a REIT for federal income tax purposes, the actual operating results of each quarter, economic conditions, other operating trends, capital requirements and avoidance of volatility of distributions. Operating cash flows are expected to be generated from properties, loans and other permitted investments acquired or made by us. We declared and paid distributions of approximately $2.8 million ($0.137 per share) and $6.1 million ($0.398 per share) for the quarter and nine months ended September 30, 2005, respectively.

Distributions paid in the first quarter of 2005 were primarily funded with a temporary advance of approximately $1.3 million from an affiliate of the Advisor. The advance was repaid in the second quarter of 2005 upon receipt of our first quarter earnings from our unconsolidated entities. Distributions paid in the second, third and fourth quarters of 2005 were temporarily funded, in part, by borrowings under our line of credit due to the timing differences between our payment of distributions to the stockholders and receipt of the distributions from our unconsolidated entities.

Our board of directors declared distributions of $0.0458 per share to stockholders of record at the close of business on July 1, August 1 and September 1, 2005 which were paid by September 30, 2005 and on October 1, November 1, and December 1, 2005 which were paid by December 31, 2005, and on January 1, 2006, which will be paid by March 31, 2006.

The distributions declared and paid during the nine months ended September 30, 2005 were $6.1 million and exceeded net income for the nine months ended September 30, 2005 by approximately $1.4 million. Distributions to stockholders may be considered a return of capital to the extent the amount of such distributions exceeds net income calculated in accordance with generally accepted accounting principles (“GAAP”). Accordingly, for the nine months ended September 30, 2005, approximately 24% of the distributions represented a return of capital, if calculated using GAAP net income as the basis. Approximately 46% of the distributions for the nine months ended September 30, 2005 constitute a return of capital for federal income tax purposes. No amount distributed to stockholders is required to or has represented a return of capital for purposes of calculating the stockholders’ return on their invested capital. The characterization of distributions declared for the quarter and nine months ended September 30, 2005 may not be indicative of the characterization of distributions that may be expected for the year ending December 31, 2005.

Cash Flow Analysis

Our net cash flows provided by operating activities were approximately $1.1 million for the nine months ended September 30, 2005 and were comprised of interest earned on invested cash, the receipt of distributions from our unconsolidated entities and payments made for operating expenses, as compared to the net cash flow from operating activities of $90,344 for the nine months ended September 30, 2004, which consisted solely of interest income earned and received during the period in which we were operational.

Cash flows used in investing activities were approximately $89.6 million for the nine months ended September 30, 2005 and consisted primarily of contributions made to acquire our interests in the DMC Partnership, our investment in a mortgage loan and the payment of acquisition fees and costs. We had no investing activities during the nine months ended September 30, 2004 other than a deposit on a pending acquisition which was completed in the fourth quarter of 2004.

38

For the nine months ended September 30, 2005, the net cash flows provided by financing activities were approximately $137.3 million and were primarily attributable to: the receipt of approximately $160.4 million of subscription proceeds, the payment of approximately $19.8 million in stock issuance costs in connection with the offering, distributions paid to stockholders of approximately $6.1 million, and net borrowings under our line of credit of approximately $2.8 million. The net cash flows provided by financing activities for the nine months ended September 30, 2004 were approximately $37.8 million and consisted primarily of subscriptions proceeds received of approximately $41.0 million, the payment of approximately $3.2 million in stock issuance costs and distributions paid to stockholders of approximately $0.5 million.

RESULTS OF OPERATIONS

From the time of our formation on August 11, 2003 through June 23, 2004, we had not commenced active operations because we were in our organizational stage and had not received the minimum required offering amount of $2.5 million (250,000 shares). Operations commenced on June 23, 2004 when we received aggregate subscription proceeds in excess of the minimum offering amount. We had not made any property acquisitions or other permitted investments as of September 30, 2004. Accordingly, our net loss for the quarter and nine months ended September 30, 2004 consisted solely of general operating and administrative expenses, interest income and organization costs.

For the quarter and nine months ended September 30, 2005, our net income was approximately $1.8 million and $4.7 million, respectively and net operating expenses were approximately $1.6 million and $3.6 million, respectively. The overall increase in our operating expenses is directly related to the overall increase in our operating activities and the addition of assets under management as compared to the same period of the prior year when we were in our organizational stage . Currently, our primary source of income is the equity in earnings generated from our investments in unconsolidated entities. The structure and agreements governing those entities provides us a stated return on our investment in priority to any returns to our partners. We recognized equity in earnings of approximately $3.0 million and $7.5 million generated from our investments in unconsolidated entities for the quarter and nine months ended September 30, 2005, respectively. See also the description of income recognition for our investments in unconsolidated entities in the section titled “Critical Accounting Policies” above.

Our results of operations for the quarter and nine months ended September 30, 2005 are not necessarily indicative of what the results of operations will be for the year ending December 31, 2005.

OTHER

Funds from Operations

We consider funds from operations (“FFO”) to be an indicative measure of operating performance due to the significant effect of depreciation of real estate assets on net income. FFO, based on the revised definition adopted by the Board of Governors of the National Association of Real Estate Investment Trusts (“NAREIT”) and as used herein, means net income determined in accordance with GAAP, excluding gains or losses from sales of property, plus depreciation and amortization of real estate assets and after adjustments for unconsolidated partnerships and joint ventures. We believe that by excluding the effect of depreciation and amortization, FFO can facilitate comparisons of operating performance between periods and between other equity REITs. FFO was developed by NAREIT as a relative measure of performance of an equity REIT in order to recognize that income-producing real estate historically has not depreciated on the basis determined under GAAP. However, FFO (i) does not represent cash generated from operating activities determined in accordance with GAAP (which, unlike FFO, generally reflects all cash effects of transactions and other events that enter into the determination of net income), (ii) is not necessarily indicative of cash flow available to fund cash needs and (iii) should not be considered as an alternative to net income determined in accordance with GAAP as an indication of our operating performance, or to cash flow from operating activities determined in accordance with GAAP as a measure of either liquidity or our ability to make distributions. FFO as presented may not be comparable to amounts calculated by other companies.

39

Accordingly, we believe that in order to facilitate a clear understanding of the consolidated historical operating results, FFO should be considered in conjunction with our net income and cash flows as reported in the accompanying consolidated financial statements and notes thereto.

Reconciliation of net income to FFO for the quarter and nine months ended September 30, 2005 and 2004:

	Quarter Ended September 30,						Nine Months Ended September 30,
	2005			2004			2005			2004
Net income (loss)	$	1,791,991			(619,651	)	$	4,660,932			(835,122	)
Adjustments:
Equity in earnings of unconsolidated entities		(2,979,572	)		—			(7,461,670	)		—
Pro-rata share of FFO from unconsolidated entities		5,132,901			—			12,138,324			—
Total funds from operations	$	3,945,320		$	(619,651	)	$	9,337,586		$	(835,122	)
Weighted average number of shares of common stock outstanding (basic and diluted)		21,031,765			2,134,059			15,944,406			2,017,035
FFO per share (basic and diluted)	$	0.19		$	(0.29	)	$	0.59		$	(0.41	)

OFF BALANCE SHEET AND OTHER ARRANGEMENTS

We hold interests in unconsolidated entities that may affect our results of operations, financial liquidity, and capital expenditures. Our equity in earnings from unconsolidated entities for the quarter and nine months ended September 30, 2005 contributed approximately $3.0 million and $7.5 million, respectively, to our results of operations. The partnership agreements governing the allocation of cash flows from the entities provide for the payment of a preferred return on our invested capital and thereafter in accordance with specified residual sharing percentages. With respect to our investment in the Intrawest Partnership, Intrawest may receive a greater return than us when the Resort Village Properties perform at certain levels.

40

Intrawest executed leases as a tenant for all unleased space at the time that we acquired the Resort Village Properties and guaranteed the leases for all space then leased to Intrawest or its affiliates. The failure of Intrawest to meet this commitment would put us at risk in the event of a default or vacancy, thereby potentially reducing our expected return.

In connection with the two loans encumbering the Resort Village Properties (described below), if we engage in certain prohibited activities, we could become liable for the obligations of the unconsolidated entities which own the Resort Village Properties for certain enumerated recourse liabilities related to those entities and the Resort Village Properties. In the case of the borrowing for the Resort Village Properties located in Canada, our obligations are such that we could become liable for the entire loan if we triggered a default due to bankruptcy or other similar events.

We may also be responsible for a portion of capital expenditures for the Resort Village Properties. We do not expect to make any significant capital expenditures or contributions for these properties in the near term.

Borrowings of Our Unconsolidated Entities

Upon closing the first tranche of the acquisition of the Dallas Market Center on February 14, 2005, the DMC Partnership became obligated for approximately $143 million in existing debt on the DMC Property. The securitized loan bears interest at a blended rate of 6.04% and requires aggregate monthly principal and interest payments of $889,145. The loan matures in September 2014 and allows prepayment after October 2006 under certain terms and conditions.

On May 25, 2005, upon closing of the second tranche of the acquisition of IFGC, the DMC Partnership became obligated for approximately $17.0 million in existing debt. The IFGC loan bears interest at a fixed rate of 5.45% and requires aggregate monthly principal and interest payments of $110,663. The loan is amortized over 22 -years, matures in September 2012 and allows prepayment after August 2006 under certain terms and conditions.

On December 16, 2004, we completed our acquisition of a portfolio of resort village properties through our unconsolidated partnership with Intrawest Corporation. In connection with that acquisition, Intrawest Resort Finance, Inc. provided bridge financing in the principal amount of $45.0 million. On May 20, 2005, the $45.0 million bridge loan was refinanced with loans from Sun Life Assurance Company of Canada made to the subsidiary owners of the partnership in the aggregate principal amount of $46.0 million. The loans bear interest at a fixed rate of 5.75%, require the subsidiary owners of our unconsolidated partnership with Intrawest Corporation to make monthly principal and interest payments in the aggregate amount of $289,389 (based on a 25-year amortization), mature on May 20, 2015, and may not be prepaid except with payment of a premium.

The acquisition of the Canadian Resort Village Properties on December 3, 2004 was funded, in part, with approximately $22.3 million ($26.6 million Canadian dollars) of permanent debt financing secured by a mortgage on the Canadian Resort Village Properties, which was obtained on December 3, 2004. The loan matures in 2014, bears interest at a fixed rate of 5.83%, requires payments of interest -only for the first two years and thereafter requires monthly payments of principal and interest based upon a 30-year amortization period.

COMMITMENTS, CONTINGENCIES AND CONTRACTUAL OBLIGATIONS

The following table presents our contingent commitments and contractual obligations and the related payment periods as of September 30, 2005:

	Payments due in
	Less than 1 year		Years 1-3		Years 3-5		More than 5 years		Total
Line of credit	$	—	$	2,784,299	$	—	$	—	$	2,784,299
Contingent purchase consideration (1)		—		—		3,750,000		—		3,750,000
Total contractual obligations	$	—	$	2,784,299	$	3,750,000	$	—	$	6,534,299

41

FOOTNOTES:

(1) In connection with the purchase of the resort village property located at Copper Mountain, Colorado, the Intrawest Partnership agreed to pay additional future purchase consideration contingent upon the Copper Mountain property achieving certain levels of financial performance, as specified in the purchase and sale agreement. The amount of the contingent purchase price will be determined as of December 31, 2008, and in no event, will the amount exceed $3.75 million. We have guaranteed the payment of the contingent purchase price to Intrawest on behalf of the Intrawest Partnership.

Subsequent to September 30, 2005, we entered into the Wolf Partnership. In connection with our investment in the Wolf Partnership, Great Wolf may receive additional funds up to $3.0 million per waterpark resort if those properties achieve certain financial performance goals during 2007 and 2008.

Quantitative and Qualitative Disclosures About Market Risk

We may be exposed to interest rate changes primarily as a result of long-term debt used to acquire properties and to make loans and other permitted investments. Our interest rate risk management objectives will be to limit the impact of interest rate changes on earnings and cash flows and to lower our overall borrowing costs. To achieve our objectives, we expect to borrow primarily at fixed rates or variable rates with the lowest margins available, and in some cases, with the ability to convert variable rates to fixed rates. With regard to variable rate financing, we will assess interest rate cash flow risk by continually identifying and monitoring changes in interest rate exposures that may adversely impact expected future cash flows and by evaluating hedging opportunities.

As of September 30, 2005, we did not have any direct borrowings under long-term debt. However, on May 25, 2005 we closed on a $5.0 million revolving line of credit, on which we had drawn approximately $2.8 million as of September 30, 2005. The line is used primarily for working capital needs, distributions to stockholders and bridge financing on real estate investments. The line of credit is unsecured, bears interest at the 30-day LIBOR plus 2.25% (5.73% for the quarter ended September 30, 2005) and has a term of two years.

On September 29, 2005, we made a $3.0 million loan to a subsidiary of Consolidated Conversions, LLC, which was used toward the purchase of the 295-room Holiday Inn Main Gate West for conversion to a condominium hotel. The property is located in Kissimmee, Florida, which is west of Walt Disney World. Our loan earns interest at a rate of 15% per year and requires monthly interest payments based on an annual percentage rate of 8.5% with the remaining 6.5% becoming due and payable upon the loan’s maturity or earlier upon the sale of the condominium hotel units. The term of the loan is 18 months and may be extended by the borrower for up to three additional six-month periods. The loan is collateralized by a first mortgage on ten vacant acres of land adjacent to the hotel and a second priority mortgage on the remainder of the property which includes the hotel. The loan may be prepaid at anytime, but in no event will we receive less than our 15% return for at least one year.

We are indirectly exposed to foreign currency risk related to our investment in unconsolidated Canadian entities. We are also indirectly exposed to credit risk and interest rate risk due to the properties, mortgages and leasing activities in our unconsolidated entities. However, we believe our risk of foreign exchange loss and exposure to credit and interest rate risks are adequately mitigated as a result of our right to receive a preferred return on our investment from our investments in unconsolidated entities.

42

MANAGEMENT

FIDUCIARY RESPONSIBILITY OF THE BOARD OF DIRECTORS

The following paragraph updates and replaces the sixth paragraph on page 103 of the prospectus:

The directors have established written policies on investments and borrowings and will monitor the administrative procedures, investment operations, and performance of CNL Income Properties and the advisor to assure that such policies are in the best interest of the stockholders and are fulfilled. Until modified by the directors, CNL Income Properties will follow the policies on investments and borrowings set forth in the prospectus. See “Investment Objectives and Policies” and “Business – Borrowing.”

The following chart updates and replaces the chart on page 104 of the prospectus and updates the information beginning on page 104:

DIRECTORS AND EXECUTIVE OFFICERS

Name	Age	Position
James M. Seneff, Jr.	59	Director and Chairman of the Board
Robert A. Bourne	58	Director, Vice Chairman of the Board and Treasurer
Bruce Douglas	73	Independent Director
Dennis N. Folken	71	Independent Director
Robert J. Woody	62	Independent Director
R. Byron Carlock, Jr.	43	Interim Chief Executive Officer and President
Charles A. Muller	47	Chief Operating Officer and Executive Vice President
Tammie A. Quinlan	42	Chief Financial Officer, Executive Vice President and Secretary

Effective August 31, 2005, Thomas J. Hutchison III resigned as our Chief Executive Officer. Effective September 19, 2005, R. Byron Carlock, Jr. assumed the position of Interim Chief Executive Officer of CNL Income Properties.

Effective September 19, 2005, Thomas G. Huffsmith resigned as Chief Investment Officer and Senior Vice President of CNL Income Properties.

Effective September 29, 2005, our board of directors appointed Tammie A. Quinlan as Executive Vice President of CNL Income Properties.

43

COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS

The following paragraph updates and replaces the corresponding paragraph beginning on page 108 of the prospectus:

Each Director is entitled to receive $30,000 annually for serving on the Board of Directors, as well as fees of $1,500 per meeting of the Board of Directors attended ($1,500 for each telephonic meeting of the Board of Directors in which the Director participates). Each Director is entitled to receive $1,500 per Audit Committee meeting attended or participated in telephonically. In addition to the fee for each Audit Committee meeting, the chairman of the Audit Committee shall receive an annual retainer of $5,000 and shall be entitled to receive a fee of $1,500 per meeting attended or telephonic meeting in which such Chairman participates with CNL Income Properties’ independent accountants as a representative of the Audit Committee. In addition, each Director is entitled to receive $750 (or $1,000, in the case of the chairman of any committee) per meeting of any other committee of the Board of Directors attended or telephonic meeting of any such committee in which the Director participates. Directors that are members of a special committee are entitled to receive fees of $1,000 per day for service as representatives of such special committee in lieu of the above compensation (to the extent that such Directors devote in excess of three hours on such day to matters relating to such special committee). CNL Income Properties will not pay any compensation to the officers and Directors of CNL Income Properties who also serve as officers and directors of the Advisor. No additional compensation shall be paid for attending the annual stockholders meeting.

THE ADVISOR AND THE ADVISORY AGREEMENT

THE ADVISOR

The following information updates the corresponding information beginning on page 109 of the prospectus:

Effective August 31, 2005, Thomas J. Hutchison III resigned as Chief Executive Officer and Director of our Advisor.

Effective September 19, 2005, Thomas G. Huffsmith resigned as Chief Investment Officer and Senior Vice President of our Advisor.

Effective September 29, 2005, our Advisor’s board of directors appointed Tammie A. Quinlan as Executive Vice President.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The following paragraph updates and replaces the last paragraph on page 112 of the prospectus:

Our managing dealer is entitled to receive selling commissions amounting to 6.5% of the total amount raised from the sale of Shares from this offering, up to 6.0% of which may be paid as commissions to other broker-dealers. During the period commencing April 16, 2004 through September 30, 2005, we incurred approximately $15.5 million of such fees in connection with this offering, the majority of which has been or will be paid by CNL Securities Corp. as commissions to other broker-dealers.

The following paragraphs update and replace the first four paragraphs on page 113 of the prospectus:

In addition, the managing dealer is entitled to receive a marketing support fee of 2.5% of the total amount raised from the sale of shares from this offering, all or a portion of which may be reallowed to other broker-dealers who enter into a Participating Broker Agreement with the managing dealer. During the period commencing April 16, 2004 through September 30, 2005, we incurred approximately $6.0 million of such fees in connection with this offering, the majority of which has been or will be reallowed to other broker-dealers.

In connection with this offering, our Advisor is entitled to receive Acquisition Fees for services in connection with the selection, purchase, development or construction of real property and the incurrence of debt from Lines of Credit and Permanent Financing that are used to acquire Properties or to make or acquire loans and other Permitted Investments equal to up to 3.0% of the total amount raised in this offering and 3.0% of loan proceeds from Permanent Financing, however no Acquisition Fees will be paid on proceeds from any Line of Credit until such time as all Net Offering Proceeds have been invested. During the period commencing April 16, 2004 through September 30, 2005, we incurred approximately $12.8 million of such fees in connection with this offering.

44

We have entered into an Advisory Agreement with our Advisor pursuant to which the Advisor receives a monthly asset management fee of 0.08334% of an amount equal to the total amount invested in our properties, loans and other permitted investments (exclusive of acquisition fees and expenses) as of the end of the preceding month. The asset management fee, which will not exceed fees which are competitive for similar services in the same geographic area, may or may not be taken, in whole or in part as to any year, at the sole discretion of the Advisor. All or any portion of the asset management fee not taken as to any fiscal year shall be deferred without interest and may be taken in such other fiscal year as the Advisor shall determine. During the period commencing April 16, 2004 through September 30, 2005, we incurred approximately $1.8 million of such fees.

Our Advisor and its Affiliates provide various general operating and administrative services to us, including services related to accounting; financial, tax and regulatory compliance reporting; stockholder distributions and reporting; due diligence and marketing; and investor relations (including administrative services in connection with the offering of shares) on a day-to-day basis. During the period commencing April 16, 2004 through September 30, 2005, we incurred approximately $1.1 million for these services.

The following information should be read in conjunction with the section entitled “Certain Relationships and Related Transactions,” beginning on page 112 of the prospectus:

AFFILIATE LITIGATION

On August 16, 2004, a shareholder filed a complaint in the United States District Court for the Middle District of Florida against, among others, CNL Hotels & Resorts, Inc. (“CHR”), CNL Hospitality Corp. (“CHC”), certain affiliates of CHR and CHC, and certain of CHR’s directors and officers, including James M. Seneff, Jr. and Robert A. Bourne (the “CHR Litigation”). James M. Seneff, Jr. and Robert A. Bourne are directors of both CNL Income Properties and CHR. Neither CNL Income Properties, CNL Income Properties’ advisor nor CNL Income Properties’ directors or officers, in their capacities with CNL Income Properties, are defendants in the CHR Litigation. The action asserts claims on behalf of two separate classes, those persons who purchased CHR’s shares during the class period pursuant to certain registration statements and those persons who received and were entitled to vote on CHR’s proxy statement dated May 7, 2004, as amended. The complaint alleges violations of Sections 11, 12(a)(2) and 15 of the Securities Act, and Section 14(a), including Rule 14a-9 thereunder, and Section 20(a) of the Exchange Act, based upon, among other things, allegations that (i) the defendants used improper accounting practices to materially inflate CHR’s earnings to support the payment of distributions and bolster CHR’s share price; (ii) conflicts of interest and self-dealing by the defendants resulted in excessive fees being paid to CHC, overpayment for certain properties which CHR acquired and the proposed merger between CHR and CHC, (iii) the CHR proxy statement and certain CHR registration statements and prospectuses contained materially false and misleading statements; and (iv) the individual defendants and CHC breached their fiduciary duties. The complaint seeks, among other things, certification of the two putative classes, unspecified monetary damages, rescissory damages, nullification of the various shareholder approvals obtained at CHR’s 2004 annual meeting, payment of reasonable attorneys’ fees and experts’ fees, and an injunction enjoining the proposed, but later postponed, underwritten offering and listing until the Court approves certain actions, including the nomination and election of new independent directors and retention of a new financial advisor.

In addition, on September 8, 2004, a second putative class action complaint was filed against CHR in the United States District Court for the Middle District of Florida containing allegations that are substantially similar to those contained in the CHR Litigation described above. On November 10, 2004, the two complaints were consolidated (the “Consolidated CHR Litigation”). On December 21, 2004, the Court designated lead plaintiffs for each of the two putative classes. On December 23, 2004, the plaintiffs served a corrected, consolidated and amended complaint asserting substantially the same claims and allegations. On February 11, 2005 the defendants filed motions to dismiss the consolidated, amended complaint. On May 9, 2005, the Court dismissed all causes of action against CHR’s operating partnerships, CNL Hospitality Partners, L.P., and RFS Partnership, L.P., and against CHC, CNL Financial Group (“CFG”), and other advisor-related entities. The Court sustained the sufficiency of the pleading relating to the Sections 11, 12(a)(2), and 15 claims against CHR and the individual defendants, but instructed plaintiffs to re-plead to specifically identify in the particular registration statements the alleged misstatements or omissions attributable to each defendant. The Court deferred consideration of the Section 14 (a) and 20(a) claims in light of CHR’s April 8, 2005 disclosure relating to the possible amendment of the Agreement and Plan of Merger, dated as of April 29, 2004, as amended on June 17, 2004, by and among CHR, CHC, CNL Hospitality Properties Acquisition Corp., the stockholders of CHR’s advisor identified therein, and CFG (the “Existing Merger Agreement”). Finally, the Court dismissed the breach of fiduciary duty claims, finding they were

45

derivative and that the plaintiffs had neither made the required demand on CHR to assert the claims or properly pleaded the futility of making such demand. On May 31, 2005, plaintiffs filed a Consolidated First Amended Class Action Complaint, which eliminates one of the named co-plaintiffs and certain previously named defendants, including CNL Hospitality Partners, L.P., RFS Partnership, L.P., CFG, CNL Real Estate Group, Inc. and Five Arrows Realty Securities II, LLC, and adds CNL Securities Corp. as a defendant for alleged violations of Sections 12(a)(2) and 15 of the Securities Act and Section 14(a) of the Exchange Act. CNL Securities Corp. is the Managing Dealer for CNL Income Properties’ public offering and was the Managing Dealer for each of CHR’s public offerings. CNL Securities Corp., in its capacity as Managing Dealer to CNL Income Properties, is not a defendant in the Consolidated CHR Litigation. The Consolidated First Amended Class Action Complaint continues to assert claims pursuant to Sections 11, 12(a)(2) and 15 of the Securities Act and Section 14(a), including Rule 14a-9 hereunder, and Section 20(a) of the Exchange Act. The breach of fiduciary duty is expressly asserted as derivative. On June 15, 2005, the Court entered a scheduling order allowing defendants to file motions to dismiss the Consolidated First Amended Class Action Complaint by July 15, 2005, and directed a hearing on such motions on September 9, 2005. On July 22, 2005, CHR and the other defendants filed separate motions to dismiss the First Amended Complaint. Oral argument was heard by the Court on September 9, 2005. On September 9, 2005, the Court dismissed without prejudice the Section 14(a) and 20(a) claims as moot, and granted plaintiff leave to amend its complaint, within thirty days, to add additional plaintiffs that have standing to assert certain Sections 11, 12(a)(2), and 15 claims, and instructed defendants to advise the Court, within thirty days thereafter, whether they have any additional defenses to raise in support of their motions to dismiss in light of any new plaintiffs. On September 13, 2005, the Court dismissed the derivative claims with prejudice finding that plaintiffs had failed to make a pre-suit demand or establish that such demand would have been futile. On September 20, 2005, the Court dismissed the claims asserted against CNL Securities Corp. On September 21, 2005, the Court denied the motion to dismiss CNL Hospitality Corp. as a defendant in the complaint. On October 10, 2005, plaintiffs filed a Consolidated Second Amended Shareholder Complaint (the “Second Amended Complaint”), which added three additional named plaintiffs to assert Sections 11, 12(a)(2), and 15 claims against the defendants. On November 9, 2005, CHR moved to dismiss the Second Amended Complaint. Plaintiffs’ opposition is scheduled to be filed on November 29, 2005, and defendants’ reply is scheduled to be filed on December 9, 2005.

In the event that the remaining claims are not dismissed in all respects, the case will likely proceed to the determination of class certification and thereafter potentially to a trial. According to CHR’s Quarterly Report for the period ending September 30, 2005 on Form 10-Q, CHR believes that the allegations contained in the Second Amended Complaint alleged by the plaintiffs in their individual capacities are without merit and CHR intends to vigorously defend the claims against them.

PRIOR PERFORMANCE INFORMATION

The following paragraph updates and replaces the last paragraph on page 118 of the prospectus:

CNL Realty Corporation, which was organized as a Florida corporation in November 1985 and whose sole stockholders are Messrs. Seneff and Bourne, served as the corporate general partner with Messrs. Seneff and Bourne as individual general partners of 18 CNL Income Fund limited partnerships, all of which were organized to invest in fast-food, family-style and in the case of two of the partnerships, casual-dining restaurant properties until February 25, 2005. In addition, Mr. Seneff served as a director and an officer and Mr. Bourne served as a director of CNL Restaurant Properties, Inc., an unlisted public REIT organized to invest in fast-food, family-style and casual-dining restaurant properties, mortgage loans and secured equipment leases until February 25, 2005. On February 25, 2005, CNL Restaurant Properties, Inc. merged with and into U.S. Restaurant Properties, Inc. The surviving entity of the merger is Trustreet Properties, Inc. In connection with that merger, on February 25, 2005, each of the CNL Income Funds merged with a separate wholly owned subsidiary of Trustreet Properties, Inc.’s operating partnership. As a result, each of the CNL Income Funds is a wholly owned subsidiary of Trustreet Properties, Inc. Mr. Seneff serves as Chairman of the Board and Mr. Bourne serves as a director of Trustreet Properties, Inc. Messrs. Seneff

46

and Bourne also currently serve as directors of CNL Hotels & Resorts, Inc., an unlisted public REIT organized to invest in hotel properties and mortgage loans. Mr. Seneff currently serves as a director and Mr. Bourne currently serves as a director and treasurer of CNL Retirement Properties, Inc., an unlisted public REIT organized to invest in retirement and seniors’ housing facilities, medical office buildings, mortgage loans and secured equipment leases. All of the unlisted public REITs have investment objectives similar to those of ours. During the twenty year period ended on December 31, 2004, the 18 partnerships and the three unlisted REITs altogether raised approximately $4.7 billion from approximately 186,000 investors, and purchased (or purchased interests in), directly or indirectly, approximately 2,100 fast-food, family-style and casual-dining restaurant properties, 136 hotel properties and 222 retirement properties and health-care related properties, including in each case properties which were sold during such period. Although CNL Hotels & Resorts, Inc. has invested in golf courses in connection with its ownership of hotels, none of the 18 public partnerships or the three unlisted public REITs has invested a material amount of their assets in the types of properties in which CNL Income Properties seeks to acquire. Certain information relating to the offerings and investment history of the 18 public partnerships and CNL Restaurant Properties, Inc., CNL Retirement Properties, Inc. and CNL Hotels & Resorts, Inc. is set forth below.

The following text updates and replaces the corresponding text on page 120 of the prospectus and the total number of properties acquired by CNL Restaurant Properties, Inc. appearing on page 122 of the prospectus:

The following table sets forth summary information regarding total properties acquired by the 18 limited partnerships and CNL Restaurant Properties, Inc., CNL Retirement Properties, Inc. and CNL Hotels & Resorts, Inc. as of December 31, 2004. This table lists properties owned by these entities or in which these entities owned interests and does not reflect dispositions that have occurred.

CNL Restaurant Properties, Inc. 1,366 fast-food, family-style or casual-dining restaurants.

The following footnote should be added to the footnotes on page 123 of the prospectus.

(4) CNL Hotels & Resorts, Inc. registered five offerings for sale. The offerings closed on June 17, 1999, September 14, 2000, April 23, 2002, February 5, 2003 and March 12, 2004. The offerings sold 153,753,632 shares as set forth above.

The following sentence updates and replaces the third sentence in the third paragraph below the footnotes on page 123 of the prospectus:

During the thirty year period ended on December 31, 2004, these 70 partnerships raised a total of approximately $187 million from approximately 4,600 investors, and purchased, directly or through participation in a joint venture or limited partnership, interests in a total of 314 projects, including properties that were sold during such period.

DISTRIBUTION POLICY

DISTRIBUTIONS

The following paragraphs update and replace the fourth paragraph under the table on page 128 of the prospectus:

On January 1, 2005 and February 1, 2005, our board of directors declared distributions of $0.0417 per share for stockholders of record on January 1, 2005 and February 1, 2005, respectively, which were paid by March 31, 2005. On February 15, 2005, our board of directors declared a distribution of $0.0438 per share for stockholders of record at the close of business on March 1, 2005, and paid such distributions by March 31, 2005. The January, February, and March distributions were primarily funded with a temporary advance of approximately $1.3 million from an affiliate of our Advisor. The advance was repaid subsequent to March 31, 2005 upon receipt of our first quarter earnings distributions from our unconsolidated entities.

47

Our board of directors declared distributions of $0.0438 per share to stockholders of record at the close of business on April 1, 2005 and May 1, 2005, and $0.0458 per share to shareholders of record at the close of business on June 1, 2005, all of which were paid by June 30, 2005.

Our board of directors declared distributions of $0.0458 per share to stockholders of record at the close of business on July 1, August 1 and September 1, 2005 which were paid by September 30, 2005. Our board of directors also declared distributions of $0.0458 per share to stockholders of record at the close of business on October 1, November 1, and December 1, 2005 which were paid by December 31, 2005 and on January 1, 2006, which will be paid by March 31, 2006. Distributions paid in the second, third and fourth quarters of 2005 were temporarily funded, in part, by borrowings under our line of credit due to the timing differences between our payment of distributions to the stockholders and receipt of the distributions from our unconsolidated entities.

The distributions declared and paid during the nine months ended September 30, 2005 were $6.1 million and exceeded net income for the nine months ended September 30, 2005 by approximately $1.4 million. Distributions to stockholders may be considered a return of capital to the extent the amount of such distributions exceeds net income calculated in accordance with generally accepted accounting principles (“GAAP”). Accordingly, for the nine months ended September 30, 2005, approximately 24% of the distributions represented a return of capital, if calculated using GAAP net income as the basis. Approximately 46% of the distributions for the nine months ended September 30, 2005 constitute a return of capital for federal income tax purposes. No amount distributed to stockholders is required to or has represented a return of capital for purposes of calculating the stockholders’ return on their invested capital. The characterization of distributions declared for the quarter and nine months ended September 30, 2005 may not be indicative of the characterization of distributions that may be expected for the year ending December 31, 2005.

SUMMARY OF THE ARTICLES OF INCORPORATION AND BYLAWS

The following paragraph updates and replaces the last paragraph on page 129 of the prospectus:

DESCRIPTION OF CAPITAL STOCK

CNL Income Properties has authorized a total of 1.32 billion shares of capital stock, consisting of 1 billion shares of common stock, $0.01 par value per share, 200 million shares of preferred stock, and 120 million shares of excess stock (“Excess Shares”), $0.01 par value per share. Of the 120 million Excess Shares, 100 million are issuable in exchange for common stock and 20 million are issuable in exchange for preferred stock as described below at “Summary of the Articles of Incorporation and Bylaws — Restriction of Ownership.” As of November 30, 2005, CNL Income Properties had 33,456,357 shares of common stock outstanding (including shares issued to the advisor prior to the commencement of this Offering and restricted shares issued to CNL Financial Group, Inc., as described in the “Certain Relationships and Related Transactions” section of the prospectus) and no preferred stock or Excess Shares outstanding.

48

REPORTS TO STOCKHOLDERS

The following information should be read in conjunction with the section entitled “Reports to Stockholders,” beginning on page 147 of the prospectus:

CNL Income Properties is required by the Securities Exchange Act of 1934, as amended, to file quarterly, annual and periodic reports with the Securities and Exchange Commission. Those reports may contain information which is not set forth in this prospectus. Such reports can be obtained on the Commission’s website at www.sec.gov and on CNL Income Properties’ website at www.cnlonline.com/ir/investcnl_ip.asp and investors are encouraged to access such reports.

THE OFFERING

PLAN OF DISTRIBUTION

The following table updates and replaces the table at the top of page 150 of the prospectus:

Type of Compensation	Estimated Amount*
Selling commissions	6.5% of Gross Proceeds
Due diligence expense reimbursements	0.10% of Gross Proceeds
Marketing support fee	2.5% of Gross Proceeds

The following sentence is inserted at the end of the footnote to the table on page 150 of the prospectus:

All or a portion of the selling commissions, marketing support fee and due diligence expense reimbursements may be reallowed by the managing dealer to Participating Brokers in the offering.

The following paragraph updates and replaces the first full paragraph on page 150 of the prospectus:

Purchases net of selling commissions and the marketing support fee and, in certain circumstances, subject to a reduced 1.0% Acquisition Fee. The following persons and entities may purchase shares net of 6.5% selling commissions and the 2.5% marketing support fee, at a per share purchase price of $9.10 (assuming no other discounts apply): (i) a registered principal or representative of the managing dealer or a Participating Broker, subject to the limitation contained in NASD Rule 2790; (ii) employees, officers and directors of CNL Income Properties or the advisor, or of the Affiliates of either of the foregoing entities (and the immediate family members of any of the foregoing persons, provided that “immediate family members” means such person's spouse, parents, children, grandparents, grandchildren and any such person who is so related by marriage such that this includes “step- ” and “-in law” relations as well as such persons so related by adoption), and any Plan established exclusively for the benefit of such persons or entities; (iii) a client of an investment adviser registered under the Investment Advisers Act of 1940, as amended, or under applicable state securities laws; and (iv) a person investing in a bank trust account with respect to which the decision-making authority for investments made has been delegated to the bank trust department. As all sales must be made through a registered broker-dealer, the investment adviser must arrange the placement of the transaction through a broker-dealer that will waive compensation, or may contact the managing dealer for such assistance. The amount of proceeds to CNL Income Properties will not be affected by eliminating selling commissions and the marketing support fee payable in connection with sales to investors purchasing through such registered investment advisers or bank trust departments. In addition, Participating Brokers that have a contractual arrangement with their clients for the payment of fees on terms that are inconsistent with the acceptance of all or a portion of the selling commissions and the marketing support fee may elect not to accept all or a portion of their compensation in the form of selling commissions and the marketing support fee offered by CNL Income Properties for shares that they sell. In that event, such shares shall be sold to the investor net of 6.5% selling commissions and the marketing support fee, at a per share purchase price of $9.10.

The following sentence is inserted at the end of the fourth full paragraph on page 152 of the prospectus:

Expenses which may be paid to Participating Brokers by CNL Income Properties or reallowed to Participating Brokers by the managing dealer include reimbursements for costs and expenses related to investor and broker-dealer sales meetings and broker-dealer training and education meetings, including those meetings conducted by CNL Income Properties, the managing dealer or Participating Brokers.

49

EXPERTS

The following paragraphs update and replace the paragraphs under the heading “Experts” on page 157 of the prospectus:

The financial statements of CNL Income Properties as of December 31, 2004 and 2003, and for the year ended December 31, 2004, and the period from August 11, 2003 (date of inception) through December 31, 2003, the consolidated financial statements of CNL Village Retail Partnership, LP and its subsidiaries as of December 31, 2004 and for the period from October 1, 2004 (date of inception) to December 31, 2004, and the financial statements of CNL Income Canada Lessee Corporation and US Canadian Property Trust Alpha as of December 31, 2004 and for the period from December 3, 2004 (date of inception) to December 31, 2004 included in this Post-Effective Amendment No. Six to Form S-11 have been so included in reliance on the reports of PricewaterhouseCoopers LLP, independent registered certified public accounting firm, given on the authority of said firm as experts in auditing and accounting.

The combined statement of revenue and certain expenses of Intrawest Portfolio Commercial Properties, for the year ended June 30, 2004 included in this Post-Effective Amendment No. Six to Form S-11 have been audited by KPMG LLP, independent registered public accounting firm, as indicated in their report with respect thereto, and are included herein in reliance upon the authority of said firm as experts in auditing and accounting.

The audited historical combined statement of revenue and certain expenses of the DMC Properties for the year ended January 31, 2005 included in this Post-Effective Amendment No. Six to Form S-11 have been so included in reliance on the report of PricewaterhouseCoopers LLP, independent registered public accounting firm, given on the authority of said firm as experts in auditing and accounting.

The combined financial statements of Great Bear Lodge of Wisconsin Dells, LLC and Great Bear Lodge of Sandusky, LLC as of and for the periods ended December 20, 2004, December 31, 2003 and December 31, 2002 included in this Post-Effective Amendment No. Six to Form S-11 have been audited by RubinBrown LLP, independent registered public accounting firm, given on the authority of said firm as experts in auditing and accounting.

The balance sheets of Gatlinburg Skylift, LLC and Cypress Bowl Recreations, LP as and for the periods ended December 31, 2004 and December 31, 2003 and the related Statement of Operations, Parent’s Investment Account and Cash Flows for the years ended December 31, 2004, 2003 and 2002 included in this Post-Effective Amendment No. Six to Form S-11 have been audited by Moss Adam LLP, independent registered public accounting firm, given on the authority of said firm as experts in auditing and accounting.

50

INDEX TO FINANCIAL STATEMENTS

CNL Income Properties, Inc.

Pro Forma Consolidated Financial Information:
Unaudited Pro Forma Consolidated Financial Information	F - 1
Unaudited Pro Forma Consolidated Balance Sheet as of September 30, 2005	F - 2
Unaudited Pro Forma Consolidated Statement of Operations for the nine months ended September 30, 2005	F - 3
Unaudited Pro Forma Consolidated Statement of Operations for the year ended December 31, 2004	F - 4
Notes to Unaudited Pro Forma Consolidated Financial Statements	F - 5
Interim Unaudited Condensed Consolidated Financial Statements as recently filed in CNL Income Properties Inc.’s September 30, 2005 Form 10-Q:
Condensed Consolidated Balance Sheets as of September 30, 2005 and December 31, 2004	F -11
Condensed Consolidated Statements of Operations for the quarter and nine months ended September 30, 2005 and 2004	F -12
Condensed Consolidated Statements of Stockholders’ Equity for the nine months ended September 30, 2005 and the year ended December 31, 2004	F -13
Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2005 and 2004	F -14
Notes to Condensed Consolidated Financial Statements	F -15
Index to Other Financial Statements	F -23

CNL INCOME PROPERTIES, INC.

AND SUBSIDIARIES

UNAUDITED PRO FORMA

CONSOLIDATED FINANCIAL INFORMATION

The accompanying Unaudited Pro Forma Consolidated Balance Sheet of CNL Income Properties, Inc. (the “Company”) is presented as if the transactions described in Notes (c) and (d) had occurred on September 30, 2005.

The following Unaudited Pro Forma Consolidated Statements of Operations are presented for the nine months ended September 30, 2005 and the year ended December 31, 2004 (the “Pro Forma Periods”), and include certain pro forma adjustments to illustrate the estimated effect of the transactions described in the notes to the pro forma financial statements as if they had occurred on January 1, 2004.

This pro forma consolidated financial information is presented for informational purposes only and does not purport to be indicative of the Company’s financial results or condition if the various events and transactions reflected herein had occurred on the dates or been in effect during the periods indicated. This pro forma consolidated financial information should not be viewed as indicative of the Company’s financial results or conditions in the future.

F-1

CNL INCOME PROPERTIES, INC.

AND SUBSIDIARIES

UNAUDITED PROFORMA CONSOLIDATED BALANCE SHEET

SEPTEMBER 30, 2005

	Historical (a)			Pro Forma Adjustments			Pro Forma
ASSETS
Real estate investment properties	$	—		$	50,760,800	(d)	$	50,760,800
Investment in unconsolidated entities		123,519,064			39,775,265	(c)		163,294,329
Cash		85,501,095			1,658,439	(b)		—
					(38,296,334	)(c)
					(48,863,200	)(d)
Distributions receivable from unconsolidated entities		3,693,484			—			3,693,484
Due from unconsolidated entities		606,617			—			606,617
Note receivable		3,000,000			—			3,000,000
Deferred offering costs		6,669,802			—			6,669,802
Prepaid expenses and other assets		3,745,796			56,538	(b)		425,803
					(1,478,931	)(c)
					(1,897,600	)(d)
Total Assets	$	226,735,858		$	1,714,977		$	228,450,835
LIABILITIES AND STOCKHOLDERS’ EQUITY
Line of credit	$	2,784,299		$	—		$	2,784,299
Accounts payable and accrued expenses		1,312,561			—			1,312,561
Due to affiliates		10,312,742			—			10,312,742
Total Liabilities		14,409,602			—			14,409,602
Commitments and Contingencies
Stockholders’ equity:
Preferred stock, $.01 par value per share 200 million shares authorized and unissued		—			—			—
Excess shares, $.01 par value per share 120 million shares authorized and unissued		—			—			—
Common stock, $.01 par value per share One billion shares authorized at September 30, 2005, 24,884,414 shares issued and outstanding (historical) 25,072,873 shares issued and outstanding (pro forma basis)		248,844			1,885	(b)		250,729
Capital in excess of par value		215,365,296			1,713,092	(b)		217,078,388
Accumulated distributions in excess of net income		(3,287,884	)		—			(3,287,884	)
		212,326,256			1,714,977			214,041,233
Total Liabilities and Stockholders’ Equity	$	226,735,858		$	1,714,977		$	228,450,835

See accompanying notes to unaudited pro forma consolidated financial statements

F-2

CNL INCOME PROPERTIES, INC.

AND SUBSIDIARIES

UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005

	Historical (1)			Pro Forma Adjustments			Pro Forma Results
Revenues
Rental income from operating leases	$	—		$	4,805,722	(2)	$	5,463,472
					657,750	(3)
FF&E reserve income		—			603,255	(4)		603,255
		—			6,066,727			6,066,727
Expenses:
General and administrative		1,755,042			—			1,755,042
Asset management fees to advisor		1,802,145			1,312,013	(5)		3,114,158
Land lease and permit expense		—			657,750	(3)		657,750
Depreciation and amortization		—			1,367,010	(6)		1,367,010
		3,557,187			3,336,773			6,893,960
Operating income (loss)		(3,557,187	)		2,729,954			(827,233	)
Other income:
Interest income		800,612			(800,612	)(7)		—
Interest expense and loan cost amortization		(44,163	)		—			(44,163	)
Equity in earnings of unconsolidated entities		7,461,670			1,230,685	(8)		10,298,278
					1,797,100	(9)
					(191,177	)(11)
Total other income		8,218,119			2,035,996			10,254,115
Net income	$	4,660,932		$	4,765,950		$	9,426,882
Earnings (Loss) Per Share of Common Stock (Basic and Diluted)	$	0.29					$	0.38
Weighted Average Number of Shares of Common Stock Outstanding (Basic and Diluted)		15,944,406				(12)		25,072,873

See accompanying notes to unaudited pro forma consolidated financial statement

F-3

CNL INCOME PROPERTIES, INC.

AND SUBSIDIARIES

UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS

FOR THE YEAR ENDED DECEMBER 31, 2004

	Historical (1)			Pro Forma Adjustments			Pro Forma Results
Revenues
Rental income from operating leases	$	—		$	6,407,629	(2)	$	7,284,629
					877,000	(3)
FF&E reserve income		—			804,339	(4)		804,339
		—			8,088,968			8,088,968
Expenses:
General and administrative		1,259,119			—			1,259,119
Organization costs		21,351			—			21,351
Asset management fees to advisor		—			4,152,211	(5)		4,152,211
Land lease and permit expenses		—			877,000	(3)		877,000
Depreciation and amortization		—			1,822,680	(6)		1,822,680
		1,280,470			6,851,891			8,132,361
Operating income (loss)		(1,280,470	)		1,237,077			(43,393	)
Other income:
Interest income		378,741			(378,741	)(7)		—
Equity in earnings of unconsolidated entities		218,466			1,891,172	(8)		14,442,216
					8,018,803	(9)
					5,130,885	(10)
					(817,110	)(11)
Total other income		597,207			13,845,009			14,442,216
Net income (loss)	$	(683,263	)	$	15,082,086		$	14,398,823
Earnings (Loss) Per Share of Common Stock (Basic and Diluted)	$	(0.17	)				$	0.57
Weighted Average Number of Shares of Common Stock Outstanding (Basic and Diluted)		4,075,979				(12)		25,072,873

See accompanying notes to unaudited pro forma consolidated financial statements

F-4

CNL INCOME PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED PRO FORMA CONSOLIDATED

FINANCIAL STATEMENTS

Unaudited Pro Forma Consolidated Balance Sheet:

(a) Reflects the Company’s historical balance sheet as of September 30, 2005.

(b) Represents the receipt of approximately $1.9 million in additional gross offering proceeds from the sale of 188,459 shares and the payment of selling commissions of $122,498 (6.5% of gross proceeds) and marketing support fees of $47,115 (2.5% of gross proceeds), both of which have been netted against stockholders’ equity. Also reflects the payment and capitalization of additional acquisition fees of $56,538 (3.0% of gross proceeds). The additional offering proceeds included in the pro forma adjustments have been limited to approximate the amount of proceeds necessary to acquire the Company’s investments described in Note (c) and (d).

(c) On October 11, 2005, the Company entered into a joint venture (the “GW Partnership”) with Great Wolf Resorts, Inc. and affiliates (“Great Wolf”) that acquired two waterpark resorts: the 309-suite Great Wolf Lodge in Wisconsin Dells, Wisconsin and the 271-suite Great Wolf Lodge in Sandusky, Ohio (the “Great Wolf Properties”), both of which were previously owned and operated by Great Wolf. The Great Wolf Properties were contributed to the GW Partnership from Great Wolf and valued at $114.5 million, excluding transaction costs of approximately $1.3 million. The Company initially contributed approximately $80.0 million to the GW Partnership for a 70% partnership interest in connection with the transaction and Great Wolf holds the remaining 30% interest in the partnership.

The GW Partnership expects to obtain debt financing on the properties up to $63.0 million (approximately 55.0% of the combined value of the properties) in the first quarter of 2006 from a third-party lender, at which time the partners will receive a proportionate distribution of proceeds such that the partnership interests will remain at 30% held by Great Wolf and 70% by the Company, resulting in net contributions by the Company to the GW Partnership of approximately $36.1 million excluding transaction costs and acquisition fees. The loan is expected to have a seven year term with payments of interest only for the first three years and an interest rate of approximately 6.0%.

The pro forma adjustment reflects the Company’s investment in the GW Partnership of approximately $39.8 million, including $36.1 million net cash contribution to the venture, closing costs of approximately $900,000, debt acquisition fees of approximately $1.3 million and the reclassification of certain acquisition fees and costs of approximately $1.5 million that were previously capitalized in other assets.

The venture was evaluated in accordance with FASB Interpretation No. 46 (revised December 2003), Consolidation of Variable Interest Entities (“FIN 46”) and it was determined that the Company is not the primary beneficiary due to the greater variability of expected cash flows, rights and obligations retained by Great Wolf and the disproportionate economic interests of the venture partners as compared to their respective ownership and voting percentages. Accordingly, the Company accounts for the investments under the equity method of accounting.

(d) On November 10, 2005, the Company entered into an agreement with Boyne USA, Inc. (“Boyne USA”) to acquire and leaseback two real estate properties: Cypress Mountain, a ski resort in British Columbia and the Gatlinburg Sky Lift, a scenic chairlift attraction in Gatlinburg, Tennessee. The Company will own 100.0% of the properties, including improvements and leasehold interests for a total purchase price of approximately $47.5 million and estimated closing costs of approximately $1.4 million. Boyne USA is expected to lease the properties on a triple-net lease basis for a term of 20 years with four five-year renewal options, and will continue to operate both properties. On December 22, 2005, the Company acquired the Gatlinburg Sky Lift, and it is expected that the Cypress Mountain ski area will be acquired in the first quarter of 2006. The pro forma adjustment includes the acquisition of the two real estate properties and the reclassification of certain acquisition fees and costs of approximately $1.9 million that were previously capitalized in other assets.

The following is a preliminary allocation of purchase price to the assets acquired at the two properties. Depreciation will be computed using the straight-line method of accounting over the estimated useful lives of the related assets.

F-5

CNL INCOME PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED PRO FORMA CONSOLIDATED

FINANCIAL STATEMENTS

Unaudited Pro Forma Consolidated Balance Sheet (Continued):

Property	Assets	Purchase Price		Estimated Useful Life	Annual Depreciation Expense
Gatlinburg Sky Lift	Leasehold interest	$	19,247,200	46 years	$	418,417
	Buildings & improvements		157,600	39 years		4,041
	Furniture, fixtures & equipment		1,133,400	7 years		161,914
	Total	$	20,538,200		$	584,372
Cypress Mountain	Permit rights	$	18,707,000	28 years	$	668,107
	Buildings & improvements		1,316,900	20 years		65,845
	Ski lifts		7,339,400	20 years		366,970
	Furniture, fixtures & equipment		961,700	7 years		137,386
	Total	$	28,325,000		$	1,238,308

Unaudited Pro Forma Consolidated Statements of Operations:

(1) Represents the Company’s historical operating results for the respective Pro Forma Periods being presented.

(2) Represents rental income generated from the Cypress and Gatlinburg properties discussed in Note (d) above. The minimum annual rent under the triple net leases is equal to 10.25% of the purchase price plus acquisition costs, increasing 25 basis points annually to a maximum of 13.0% and straight-lined over the 20 year expected lease term. Additional percentage rent due under the lease is initially based on 3.0% of gross revenues at Gatlinburg and 9% of gross revenues over $10 million at Cypress. The historical audited revenues of the properties were used to estimate the additional percentage rent due under the leases for the pro forma periods presented.

(3) The Gatlinburg Sky Lift operates on land under an operating lease with annual rent expense equal to approximately 15.0% of gross sales. The Cypress Mountain ski area operates on land owned by the Canadian Provincial Government under a Special Park Use Permit with annual fees of approximately 2.0% of revenues. Both the lease payments and permit fees are paid by the tenants under the triple-net leases discussed in Note (2).

(4) FF&E reserve income represents capital that is set aside by the tenants for capital expenditure purposes only. Pursuant to the sublease agreements, tenants shall transfer 5.0% of gross revenue to an established account at a financial institution until the reserve accounts reach $500,000 per property, after which time the tenants can contribute the lesser of 5.0% or the amount required to maintain the reserve account at $500,000. The Company has exclusive rights to and ownership of the account.

(5) Represents asset management fees associated with owning interests in real estate, including the Company’s proportionate share of properties owned through its unconsolidated entities. The assets are managed by the Company’s advisor for an annual asset management fee of 1% of the Company’s pro-rata share of the “Real Estate Asset Value” as defined in the Company’s Prospectus dated April 18, 2005. The pro forma adjustments include asset management fees for all properties acquired on pending acquisition as if the acquisitions had occurred at the beginning of the pro forma periods presented.

(6) Represents depreciation expense on the two real estate properties, Gatlinburg Sky Lift and Cypress Mountain ski area described in Note (d) above.

(7) Reflects a reduction in interest income due to the decrease in the amount of cash available to invest in interest bearing accounts after the Company’s purchase of its interest in the properties described in Notes (c) and (d).

F-6

CNL INCOME PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED PRO FORMA CONSOLIDATED

FINANCIAL STATEMENTS

Unaudited Pro Forma Consolidated Statements of Operations (Continued):

(8) The pro forma adjustment represents the Company’s equity in earnings generated from the unconsolidated GW Partnership as described in Note (c) above. The following estimated operating results of the Great Wolf Properties and equity in earnings of the Company are presented as if the investment had been made on January 1, 2004:

	Pro Forma Period Ended
	September 30, 2005			December 31, 2004
Revenues (hotel operations) (i)	$	29,606,570		$	38,905,024
Hotel operating expenses (i)		(10,892,055	)		(13,502,400	)
Other property operating costs (i)		(8,987,849	)		(11,535,143	)
Management & license fees (ii)		(2,072,460	)		(2,723,352	)
Depreciation and amortization (iii)		(3,449,119	)		(4,598,825	)
Interest expense including loan cost amortization of $47,250 and $63,000, respectively (iv)		(2,882,723	)		(3,843,630	)
Pro forma net income of the properties	$	1,322,364		$	2,701,674
Allocation of income (loss) to:
Great Wolf	$	91,679		$	810,502
The Company	$	1,230,685		$	1,891,172

FOOTNOTES:

^i. Amounts for the pro forma period ended December 31, 2004 are derived from the audited combined statement of operations for the period beginning January 1, 2004 and ended December 20, 2004. Amounts for the pro forma period ended September 30, 2005 are derived from the unaudited combined statement of operations for the nine months ended September 30, 2005.

^ii. A subsidiary of Great Wolf continues to operate the Great Wolf Properties and license the Great Wolf Lodge brand to the venture pursuant to a 25-year management and license agreement. The agreement provides for management fees of 3% and license fees of 3% to be paid based on a percentage of gross revenue. In addition, there is a 1% license fee paid to a third-party.

^iii. Depreciation and amortization of long-lived assets is based on a preliminary allocation of the base purchase price of the Properties of $114.5 million and estimated closing costs.

^iv. Interest expense is based on the debt financing on the properties up to $63.0 million expected to be obtained through a third-party lender for a term of seven years with the current locked interest rate of 6.001%.

The allocation of profits and losses to the venture partners of the GW Partnership are based on the equity ownership percentages of the respective partners. The distribution of cash flows is distributed to each partner first to pay preferences on unreturned capital balances and the residual is allocated based on each partners’ respective ownership percentage. The Company records its share of equity in earnings of the GW Partnership using the hypothetical liquidation at book value (“HLBV”) method of accounting. Under the HLBV method, the Company recognizes income in each period equal to the change in its share of assumed proceeds from the liquidation of the underlying unconsolidated entities at depreciated book value.

F-7

CNL INCOME PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED PRO FORMA CONSOLIDATED

FINANCIAL STATEMENTS

Unaudited Pro Forma Consolidated Statements of Operations (Continued):

(9) The pro forma adjustment represents the Company’s equity in earnings generated from an unconsolidated partnership (the “DMC Partnership”) with Dallas Market Center Company Ltd. (“DMC”). On January 14, 2005, the Company announced its intent to form the DMC Partnership to acquire, in two phases, interests in certain real estate and related assets at the Dallas Market Center in Dallas, Texas. In the first phase, which occurred on February 14 and March 11, 2005, the DMC Partnership was formed and acquired the Trade Mart, the World Trade Center, Market Hall and surface and garage parking areas at the Dallas Market Center (the “DMC Property”). The DMC Property consists of approximately 4.3 million leaseable square feet of showroom and exhibition space and is leased to Dallas Market Center Operating, L.P., a subsidiary of the existing management company, Market Center Management Company, Ltd., (“MCMC”) which continues to manage the DMC Property. The Company invested approximately $60.0 million in the DMC Partnership, excluding transaction costs, for an 80% equity ownership interest in the DMC Property.

In phase two of the transaction, which was completed on May 25, 2005, the Company invested an additional $11.2 million in the DMC Partnership, excluding certain transaction costs and fees. Concurrently, the DMC Partnership acquired the International Floral and Gift Center (the “IFGC”) located at the Dallas Market Center. The IFGC consists of approximately 440,000 square feet of wholesale merchandising and exhibition space and is leased to a subsidiary of MCMC which continues to manage the IFGC. The DMC Partnership acquired the IFGC for approximately $31.0 million including the assumption of an existing mortgage loan in the amount of approximately $17.0 million. The Company’s $11.2 million investment represents its 80% equity ownership interest in the IFGC.

The DMC Partnership was evaluated in accordance with FIN 46 and was determined to be a variable interest entity in which the Company is not the primary beneficiary. Accordingly, the Company has accounted for its interest in the DMC Partnership under the equity method of accounting. The DMC Partnership agreement provides for allocations of income, losses and cash flows in varying amounts based on certain factors, including performance and the Company receives an annual preferred return on its investment. Accordingly, the Company has reflected its equity in earnings of the partnership under the HLBV method of accounting.

The following estimated operating results of the properties owned by the DMC Partnership and the allocation of profits and losses are presented as if the investment had been made on January 1, 2004:

	Pro Forma Period Ended
	September 30, 2005			December 31, 2004
Revenue (net rental revenues under triple-net leases)	$	18,223,455		$	24,298,000
Depreciation and amortization		(5,415,587	)		(7,220,783	)
Interest expense including loan cost amortization of $113,069 and $150,758, respectively		(7,236,079	)		(9,648,105	)
Pro forma net income of the DMC Property and IFGC	$	5,571,789		$	7,429,112
Allocation of income (loss) to:
DMC	$	(442,314	)	$	(589,691	)
The Company	$	6,014,103		$	8,018,803
Less: amount recognized in historical results		(4,217,003	)		—
Net pro forma income adjustment	$	1,797,100		$	8,018,803

F-8

CNL INCOME PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED PRO FORMA CONSOLIDATED

FINANCIAL STATEMENTS

Unaudited Pro Forma Consolidated Statements of Operations (Continued):

(10) Reflects the Company’s estimated equity in earnings from its investment in unconsolidated entities acquired prior to December 31, 2004 as follows:

In August 2004, the Company entered into a commitment to acquire an 80% interest in certain existing retail and commercial real estate properties located in and around various ski and golf resort villages through a partnership with Intrawest Corporation and affiliates (collectively “Intrawest”). Intrawest owned and operated these properties prior to these transactions and continues to own an interest in and operate the properties under long-term management agreements. The Company’s interest in the properties was acquired from Intrawest through a series of transactions in December 2004.

On December 3, 2004, the Company formed a trust (the “Trust”) that acquired retail and commercial real estate at two resort villages: the Village at Blue Mountain located in Ontario, Canada and Whistler Creekside, located in British Columbia, Canada (the “Canadian Properties”) from Intrawest for an aggregate purchase price of approximately $30.3 million excluding transaction costs. The Trust was funded with mezzanine loans totaling approximately $11.2 million, of which 80% was provided by the Company and 20% by Intrawest, and a $22.3 million mortgage loan obtained from a third party lender. The Canadian Properties are leased to CNL Income Canada Lessee Corp. (the “CNL Tenant”), which in turn assumed the existing in-place leases with the multiple tenants at the Canadian Properties.

The Company also acquired an 80% interest (a .01% general partnership interest and a 79.99% limited partnership interest) in CNL Village Retail Partnership, LP (the “Intrawest Partnership”), with the remaining interest held by Intrawest. The Partnership was capitalized with approximately $38.0 million, of which 80% was provided by the Company and 20% by Intrawest. On December 16, 2004, the Intrawest Partnership acquired certain retail and commercial real estate at five additional resort villages: the Village at Copper Mountain, Colorado; the Village at Mammoth Mountain, California; the Village at Baytowne Wharf, Florida; the Village at Snowshoe Mountain, West Virginia; and the Village at Stratton, Vermont (the “U.S. Properties”) from Intrawest for an aggregate purchase price of $80.6 million excluding transaction costs. The Intrawest Partnership borrowed $45.0 million under temporary bridge financing to fund the acquisition of the U.S. Properties. On May 20, 2005, the $45.0 million bridge loan was refinanced with loans with Sun Life Assurance Company of Canada in the aggregate principal amount of $46.0 million. The loans bear interest at a fixed rate of 5.75%.

The Company evaluated the Trust, the CNL Tenant, and the Intrawest Partnership in accordance with FIN 46 and determined that the Company is not the primary beneficiary of these variable interest entities due to the significant rights and obligations retained by Intrawest and the disproportionate economic interests of the venture partners as compared to their respective ownership percentages. Accordingly, the Company accounts for these investments under the equity method of accounting.

The allocation of profits and losses and distribution of cash flows to the partners of the Intrawest Partnership are dependent, in part, upon the cash flows generated from the Canadian Properties through the Trust and the CNL Tenant and are disproportionate to the ownership percentages of the respective partners. Generally, net cash flow is distributed to each partner first to pay preferences on unreturned capital balances and thereafter in accordance with specified residual sharing percentages as specified in the partnership agreement. The Company records its share of equity in earnings of the entities using the HLBV method of accounting. Under the HLBV method, the Company recognizes income in each period equal to the change in its share of assumed proceeds from the liquidation of the underlying unconsolidated entities at depreciated book value.

F-9

CNL INCOME PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED PRO FORMA CONSOLIDATED

FINANCIAL STATEMENTS

Unaudited Pro Forma Consolidated Statements of Operations (Continued):

The following estimated operating results of the properties owned through the Intrawest Partnership and Trust and the related allocation of profits and losses to the partners are presented as if the investment had been made on January 1, 2004:

Revenues (in excess of certain expenses) (i)	$	11,127,698
Depreciation and amortization		(5,568,053	)
Property management fee		(451,655	)
Interest expense including loan cost amortization of $64,058		(4,296,828	)
Pro forma net income of properties owned by unconsolidated entities	$	811,162
Allocation of income (loss) to:
Intrawest	$	(4,538,189	)
The Company	$	5,349,351
Less: amount recognized in historical results		(218,466	)
Net pro forma income adjustment	$	5,130,885

    FOOTNOTES:

^i. The estimated rental income and related operating expenses for the Canadian and U.S. Properties is derived from the actual operating results during the period in which the properties were owned by the Intrawest Partnership and Trust.

(11) Represents additional amortization of capitalized acquisition fees and debt acquisition fees paid to the Company’s advisor in connection with the Company’s unconsolidated investments. The fees are paid and capitalized upon the sale of shares or incurrence of debt and subsequently allocated to the basis of the investments upon closing. These capitalized fees are amortized over the life of the related underlying assets or debt amortization period.

(12) Historical earnings per share were calculated based upon the actual weighted average number of shares of common stock outstanding during the respective Pro Forma Periods presented. The pro forma earnings per share were calculated assuming that proceeds from the sale of shares were sufficient to fund the acquisitions described in Notes (c), (d), (8), (9) and (10) above at the beginning of the Pro Forma Periods and that those shares of common stock were outstanding for the entire Pro Forma Periods presented.

F-10

CNL INCOME PROPERTIES, INC.

AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

	September 30, 2005			December 31, 2004
ASSETS
Investment in unconsolidated entities	$	123,519,064		$	41,913,212
Cash		85,501,095			36,710,117
Distributions receivable from unconsolidated entities		3,693,484			225,555
Due from unconsolidated entities		606,617			—
Note receivable		3,000,000			—
Deferred offering costs		6,669,802			5,381,749
Prepaid expenses and other assets		3,745,796			1,725,794
Total Assets	$	226,735,858		$	85,956,427
LIABILITIES AND STOCKHOLDERS’ EQUITY
Line of credit	$	2,784,299		$	—
Accounts payable and accrued expenses		1,312,561			589,215
Due to affiliates		10,312,742			10,414,834
Total Liabilities		14,409,602			11,004,049
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $.01 par value per share 200 million shares authorized and unissued		—			—
Excess shares, $.01 par value per share 120 million shares authorized and unissued		—			—
Common stock, $.01 par value per share One billion shares authorized; 24,884,414 and 8,838,978 shares issued and outstanding as of September 30, 2005 and December 31, 2004, respectively		248,844			88,390
Capital in excess of par value		215,365,296			76,719,939
Accumulated distributions in excess of net income		(3,287,884	)		(1,855,951	)
		212,326,256			74,952,378
Total Liabilities and Stockholders’ Equity	$	226,735,858		$	85,956,427

See accompanying notes to condensed consolidated financial statements.

F-11

CNL INCOME PROPERTIES, INC.

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

	Quarter Ended September 30,						Nine Months Ended September 30,
	2005			2004			2005			2004
Revenue	$	—		$	—		$	—		$	—
Expenses:
Asset management fees to advisor		811,193			—			1,802,145			—
General and administrative		800,284			709,608			1,755,042			904,115
Organization costs (recoveries)		—			(1,006	)		—			21,351
Total expenses		1,611,477			708,602			3,557,187			925,466
Operating loss		(1,611,477	)		(708,602	)		(3,557,187	)		(925,466	)
Other income (expense):
Interest and other income		443,543			88,951			800,612			90,344
Interest expense and loan cost amortization		(19,647	)		—			(44,163	)		—
Equity in earnings of unconsolidated entities		2,979,572			—			7,461,670			—
Total other income		3,403,468			88,951			8,218,119			90,344
Net income (loss)	$	1,791,991		$	(619,651	)	$	4,660,932		$	(835,122	)
Earnings (loss) per share of common stock (basic and diluted)	$	0.09		$	(0.29	)	$	0.29		$	(0.41	)
Weighted average number of shares of common stock outstanding (basic and diluted)		21,031,765			2,134,059			15,944,406			2,017,035

See accompanying notes to condensed consolidated financial statements.

F-12

CNL INCOME PROPERTIES, INC.

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

Nine Months Ended September 30, 2005 and Year Ended December 31, 2004

(UNAUDITED)

	Common Stock					Capital in Excess of Par Value			Accumulated Distributions in Excess of Net Income			Total Stockholders’ Equity
	Number of Shares		Par Value
Balance at December 31, 2003	20,000		$	200		$	199,800		$	—		$	200,000
Subscriptions received for common stock through public offering and reinvestment plan	8,701,270			87,013			86,591,031			—			86,678,044
Issuance of restricted common stock	117,708			1,177			1,175,903			—			1,177,080
Stock issuance and offering costs	—			—			(11,246,795	)		—			(11,246,795	)
Net loss	—			—			—			(683,263	)		(683,263	)
Distributions, declared and paid ($0.2593 per share)	—			—			—			(1,172,688	)		(1,172,688	)
Balance at December 31, 2004	8,838,978			88,390			76,719,939			(1,855,951	)		74,952,378
Subscriptions received for common stock through public offering and reinvestment plan	16,069,629			160,696			160,226,879			—			160,387,575
Redemption of common stock	(24,193	)		(242	)		(229,592	)		—			(229,834	)
Stock issuance and offering costs	—			—			(21,351,930	)		—			(21,351,930	)
Net income	—			—			—			4,660,932			4,660,932
Distributions, declared and paid ($0.398 per share)	—			—			—			(6,092,865	)		(6,092,865	)
Balance at September 30, 2005	24,884,414		$	248,844		$	215,365,296		$	(3,287,884	)	$	212,326,256

See accompanying notes to condensed consolidated financial statements.

F-13

CNL INCOME PROPERTIES, INC.

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

	Nine Months Ended September 30,
	2005			2004
Increase (decrease) in cash:
Operating activities:
Net cash provided by operating activities	$	1,136,796		$	90,344
Investing activities:
Investments in unconsolidated entities		(73,503,837	)		—
Investments in mortgage loans		(3,000,000	)		—
Deposits		—			(6,590,000	)
Acquisition fees and costs		(13,111,916	)		—
Net cash used in investing activities		(89,615,753	)		(6,590,000	)
Financing activities:
Subscriptions received from stockholders		160,387,575			40,972,159
Stock issuance costs		(19,771,024	)		(3,152,841	)
Loan origination fees		—			(45,000	)
Proceeds from borrowings from affiliate		—			470,512
Increase in amounts due to affiliates		—			19,002
Borrowings under line of credit, net of payments		2,784,299			—
Payment of loan costs		(38,050	)		—
Distributions to stockholders		(6,092,865	)		(470,512	)
Net cash provided by financing activities		137,269,935			37,793,320
Net increase (decrease) in cash		48,790,978			31,293,664
Cash at beginning of period		36,710,117			1,000
Cash at end of period	$	85,501,095		$	31,294,664
Supplemental disclosure of non-cash investing activities:
Amounts incurred but not paid (included in due to affiliates):
Acquisition fees and costs	$	—		$	2,479,003
Allocation of acquisition fees to investments in unconsolidated entities	$	3,583,567		$	—
Supplemental disclosure of non-cash financing activities:
Amounts incurred but not paid (included in due to affiliates):
Offering and stock issuance costs	$	1,640,481		$	7,469,085
Distributions declared but not paid	$	—		$	176,261
Redemption of stock received but not paid	$	229,834		$	—

See accompanying notes to condensed consolidated financial statements.

F-14

CNL INCOME PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

QUARTER ENDED SEPTEMBER 30, 2005

(UNAUDITED)

1. Organization and Nature of Business:

CNL Income Properties, Inc. (the “Company”) was organized in Maryland on August 11, 2003. The Company operates and has elected to be taxed as a real estate investment trust (a “REIT”) for federal income tax purposes beginning with its taxable year ended December 31, 2004. Various wholly owned subsidiaries have been and will be formed by the Company for the purpose of acquiring and owning direct or indirect interests in real estate. The Company was formed primarily to acquire directly and indirectly properties in the United States that will be leased on a long-term (generally five to 20-years, plus multiple renewal options), triple-net or gross basis to tenants or operators who are significant industry leaders. The Company may also lease properties to taxable REIT subsidiary (TRS) tenants and engage independent third-party managers to operate those properties. The asset classes in which the Company initially is most likely to invest or has invested include the following:

• Property leased to dealerships

• Campgrounds or recreational vehicle (“RV”) parks

• Health clubs

• Parking lots

• Merchandise marts

• Destination retail and entertainment centers

• Marinas

• Ski resorts, including real estate in and around ski resorts such as ski-in/ski-out alpine villages, lodging and other related properties

• Golf courses and golf resorts, including real estate in and around golf courses

• Amusement parks, waterparks and family entertainment centers, which may include lodging facilities

• Real estate in and around lifestyle communities

• Vacation ownership interests

• Other attractions, such sports-related venues, and cultural facilities such as visual and performing arts centers, zoological parks or aquariums.

The Company may also make or acquire loans or other permitted investments related to interests in real estate and may purchase equity and other interests in financings. In addition, the Company may invest up to 10% of its assets in businesses that provide services to, or are otherwise ancillary to, the types of properties in which it is permitted to invest. As of September 30, 2005, and December 31, 2004, the Company indirectly owned interests in properties at eight and seven locations, respectively, through its investments in unconsolidated entities.

2. Significant Accounting Policies:

Basis of Presentation—The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and do not include all of the information and note disclosures required by generally accepted accounting principles. The unaudited condensed consolidated financial statements reflect all adjustments, consisting of normal recurring adjustments, which are, in the opinion of management, necessary for the fair presentation of the Company’s results for the interim period presented. Operating results for the quarter and nine months ended September 30, 2005 may not be indicative of the results that may be expected for the year ending December 31, 2005. Amounts as of December 31, 2004 included in the condensed consolidated financial statements have been derived from audited consolidated financial statements as of that date. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Form 10-K for the year ended December 31, 2004.

The Company commenced active operations on June 23, 2004, when the minimum required offering proceeds were received and funds were released from escrow. Since operations had not begun, activities during the period August 11, 2003 (date of inception) through June 23, 2004 were devoted to the organization of the Company.

F-15

CNL INCOME PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

QUARTER ENDED SEPTEMBER 30, 2005

(UNAUDITED)

2. Significant Accounting Policies (Continued):

Principles of Consolidation—The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries and entities in which the Company has a controlling interest in accordance with the provisions of Statement of Position 78-9 “Accounting for Investments in Real Estate Ventures” (“SOP 78-9”), or is the primary beneficiary as defined in FASB Interpretation No. 46 (revised December 2003), Consolidation of Variable Interest Entities (“FIN 46”).

Reclassifications—Certain prior period amounts in the condensed consolidated financial statements have been reclassified to conform with the current period presentation.

Investment in Unconsolidated Entities—The equity method of accounting is applied with respect to investments in entities in which the Company has determined that consolidation is not appropriate under FIN 46 or SOP 78-9. The difference between the Company’s carrying amount of its investments in unconsolidated entities and the underlying equity in the net assets of the entities is due to acquisition fees and expenses which have been allocated to the Company’s investment. These amounts are amortized over the estimated useful life of the underlying real estate tangible assets when the properties were acquired. The Company records its equity in earnings of the entities under the hypothetical liquidation at book value method of accounting. Under this method, the Company recognizes income in each period equal to the change in its share of assumed proceeds from the liquidation of the underlying unconsolidated entities at book value.

Distributions Receivable—In accordance with the partnership agreements governing the unconsolidated entities in which the Company has invested, at the end of each quarter the partner distributions are calculated for the period and the partnership is obligated to make those distributions generally within 45 days after the quarter end. As such, the Company has recorded its share of the distribution receivable from its unconsolidated entities.

3. Investment in Unconsolidated Entities:

As of September 30, 2005, the Company owned investments in unconsolidated entities accounted for under the equity method of accounting with carrying values totaling approximately $123.5 million.

In December 2004, the Company invested approximately $41.8 million in a partnership and a trust that acquired a portfolio of commercial real estate properties located in and around various ski and golf resort villages in the United States and Canada (the “Resort Village Properties”). Intrawest Corporation and its affiliates owned and operated these properties prior to the transaction and continue to own a 20% interest in, and operate, the properties under long-term management agreements. The Resort Village Properties consist of approximately 408,000 square feet of leasable retail and commercial space.

On February 14, 2005, the Company formed a partnership (the “DMC Partnership”) with Dallas Market Center Company, Ltd. (“DMC”) that acquired the Trade Mart, the World Trade Center, Market Hall and surface and garage parking areas at the Dallas Market Center (the “DMC Property”) located in Dallas, Texas for approximately $218.0 million, including the assumption of existing mortgage loans totaling approximately $143.0 million. The Company invested approximately $60.0 million in the DMC Partnership, representing an 80% equity interest, in connection with the acquisition of the DMC Property. The DMC Property consists of approximately 4.3 million leasable square feet of showroom and exhibition space.

F-16

CNL INCOME PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

QUARTER ENDED SEPTEMBER 30, 2005

(UNAUDITED)

3. Investment in Unconsolidated Entities (Continued):

On May 25, 2005, the DMC Partnership acquired the International Floral and Gift Center (the “IFGC”) located at the Dallas Market Center for approximately $31.0 million, including the assumption of a $17.0 million existing mortgage loan. The Company contributed $11.2 million, excluding transaction costs, to the DMC Partnership in connection with the IFGC acquisition. The IFGC consists of approximately 440,000 square feet and houses permanent showrooms for floral products, holiday decorative products and related accessories. The Company has invested approximately $71.2 million, excluding transaction costs, in the DMC Partnership for an 80% equity interest.

The Company evaluated all of the variable interest entities that were formed in connection with the above transactions in accordance with FIN 46 and determined that the Company is not the primary beneficiary due to the significant rights and obligations retained by other venture partners and the disproportionate economic interests of the venture partners as compared to their respective ownership and voting percentages. Accordingly, the Company accounts for these investments under the equity method of accounting and records its share of equity in earnings from the entities using the hypothetical liquidation at book value method. Under this method, the Company’s share of the economic results of the unconsolidated entities is subject to change over time based on performance of those entities.

Under the hypothetical liquidation at book value method of accounting, the Company recognizes income in each period equal to the change in its share of assumed proceeds from the liquidation of the underlying unconsolidated entities at depreciated book value. For the quarter and nine months ended September 30, 2005, the Company recognized equity in earnings from the entities of approximately $3.0 million and $7.5 million, respectively. As of September 30, 2005 and December 31, 2004, the Company had distributions receivable of approximately $3.7 million and $225,555 from its unconsolidated entities, respectively.

In connection with the investments, the Company incurred certain acquisition and advisory fees which are paid to an affiliate. These fees are capitalized as part of the basis in the investments. Any excess carrying value of the investments over the book value of the underlying equity is amortized over the estimated useful lives of the underlying real estate tangible assets, which represent the assets to which the excess is most clearly related.

The following presents unaudited condensed financial information for the unconsolidated entities as of and for the quarter and nine months ended September 30, 2005:

	Quarter Ended September 30, 2005						Nine Months Ended September 30, 2005
	Intrawest Venture			DMC Partnership			Intrawest Venture			DMC Partnership
Revenue	$	4,204,542		$	6,155,331		$	12,113,630		$	14,554,967
Property operating expenses		(1,651,258	)		(139,461	)		(4,810,741	)		(320,517	)
Depreciation & amortization expenses		(1,503,096	)		(1,938,634	)		(4,395,657	)		(4,613,994	)
Interest expense		(1,023,533	)		(2,409,882	)		(2,992,944	)		(5,726,873	)
Net income (loss)	$	26,655		$	1,667,354		$	(85,712	)	$	3,893,583
Loss allocable to other venture partners	$	(1,112,646	)	$	(347,559	)	$	(3,466,463	)	$	(614,308	)
Income allocable to the Company (1)	$	1,139,301		$	2,014,913		$	3,380,751		$	4,507,891
Amortization of capitalized costs		(61,806	)		(112,836	)		(136,084	)		(290,888	)
Equity in earnings of unconsolidated entities	$	1,077,495		$	1,902,077		$	3,244,667		$	4,217,003

FOOTNOTES:

⁽¹⁾ Income is allocated to the Company on the hypothetical liquidation at book value method of accounting (see Note 2).

F-17

CNL INCOME PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

QUARTER ENDED SEPTEMBER 30, 2005

(UNAUDITED)

3. Investment in Unconsolidated Entities (Continued):

	As of September 30, 2005				As of December 31, 2004
	Intrawest Venture		DMC Partnership		Intrawest Venture		DMC Partnership
Total assets	$	123,224,960	$	251,632,868	$	121,051,018	$	—
Total long-term debt obligations	$	68,805,815	$	157,173,146	$	67,085,980	$	—

4. Deferred Offering and Stock Issuance Costs:

Beginning on April 16, 2004, the Company offered for sale up to $2 billion in shares of common stock (200 million shares of common stock at $10 per share) (the “Offering”), pursuant to a registration statement on Form S-11 under the Securities Act of 1933. The Company has and will continue to incur costs in connection with the Offering and issuance of shares, including filing fees, legal, accounting, printing, selling commissions, marketing support fees, due diligence expense reimbursements and escrow fees, which are deducted from the gross proceeds of the Offering. As of September 30, 2005, the total Offering and stock issuance costs incurred to date were approximately $39.3 million.

Under the terms of the Offering, certain affiliates are entitled to receive selling commissions of up to 6.5% of gross offering proceeds on all shares sold, a marketing support fee of up to 2.5% of gross offering proceeds, and reimbursement of actual expenses incurred in connection with due diligence of the Offering (see Note 7). In accordance with the Company’s amended and restated articles of incorporation, the total amount of selling commissions, marketing support fees, due diligence expense reimbursements, and organizational and offering expenses to be paid by the Company may not exceed 13% of the aggregate offering proceeds. Therefore, offering costs of approximately $6.7 million, representing the portion of those costs exceeding 13% of the offering proceeds, have been deferred as of September 30, 2005. Deferred offering costs as of December 31, 2004 totaled approximately $5.4 million. The deferred offering costs will be deducted from future offering proceeds and reimbursed to affiliates to the extent the costs are within the 13% limitation. The Company is not obligated to pay the Advisor or certain of its affiliates costs that exceed the 13% limitation as of the end of the Offering. The remaining $32.6 million was deducted from the offering proceeds and charged to capital in excess of par value.

5. Note Receivable:

On September 29, 2005, the Company made a $3.0 million loan to a subsidiary of Consolidated Conversions, LLC, which was used toward the purchase of the 295-room Holiday Inn Main Gate West for conversion to a condominium hotel. The property is located in Kissimmee, Florida, which is west of Walt Disney World. The loan earns interest at a rate of 15% per year and requires monthly interest payments based on an annual percentage rate of 8.5% with the remaining 6.5% becoming due and payable upon the loan’s maturity or earlier upon the sale of the condominium hotel units. The term of the loan is 18 months and may be extended by the borrower for up to three additional six-month periods. The loan is collateralized by a first mortgage on ten vacant acres of land adjacent to the hotel and a second priority mortgage on the remainder of the property which includes the hotel. Completion of the condominium conversion and related improvements is guaranteed by the principals of Consolidated Conversions, LLC. The loan may be prepaid at anytime, but in no event will the Company receive less than a 15% return for at least one year.

F-18

CNL INCOME PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

QUARTER ENDED SEPTEMBER 30, 2005

(UNAUDITED)

6. Line of Credit:

On May 20, 2005 the Company closed on a $5.0 million revolving line of credit with Branch Banking and Trust. The line is used primarily for working capital needs, distributions to stockholders and bridge financing on real estate investments. The line of credit is unsecured, bears interest at the 30-day LIBOR plus 2.25% (which was approximately 5.73% for the quarter ended September 30, 2005) and has a term of two years. As of September 30, 2005, borrowings outstanding under the line of credit were approximately $2.8 million. The loan agreement contains certain affirmative, negative and financial covenants including quarterly and annual financial reporting requirements, minimum net worth, and limitations on the incurrence of additional debt. The Company was in compliance with these covenants at September 30, 2005.

7. Related Party Arrangements:

Certain directors and officers of the Company hold similar positions with CNL Income Corp., a stockholder and the advisor (the “Advisor”) of the Company, and with the managing dealer of the Company’s public offering, CNL Securities Corp. The Company’s chairman of the board indirectly owns a controlling interest in the parent company of the Advisor. These affiliates receive fees and compensation in connection with the Offering and the acquisition, management and sale of the Company’s assets. CNL Securities Corp., the managing dealer of the Company’s public offering, receives selling commissions of up to 6.5% of gross offering proceeds on all shares sold, a marketing support fee of up to 2.5% of gross offering proceeds, and reimbursement of actual expenses incurred up to 0.01% of proceeds in connection with due diligence of the Offering. A substantial portion of the selling commissions and marketing support fees are reallowed to third party participating broker dealers. During the quarter and nine months ended September 30, 2005 and 2004, the Company incurred the following fees:

	Quarter Ended September 30,				Nine Months Ended September 30,
	2005		2004		2005		2004
Selling commissions	$	3,928,204	$	2,288,840	$	10,129,456	$	2,500,367
Marketing support fee & due diligence expense reimbursements		1,511,829		880,712		3,907,693		962,069
Total	$	5,440,033	$	3,169,552	$	14,037,149	$	3,462,436

F-19

CNL INCOME PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

QUARTER ENDED SEPTEMBER 30, 2005

(UNAUDITED)

7. Related Party Arrangements (Continued):

During the quarters and nine months ended September 30, 2005 and 2004, the Advisor earned fees and incurred reimbursable expenses as follows:

	Quarter Ended September 30,					Nine Months Ended September 30,
	2005		2004			2005		2004
Acquisition fees (1):
Acquisition fees from offering proceeds	$	1,857,935	$	1,087,929		$	4,814,081	$	1,235,865
Acquisition fees from debt proceeds		38,049		—			4,946,948		—
Total		1,895,984		1,087,929			9,761,029		1,235,865
Asset management fees (2):		811,193		—			1,802,145		—
Reimbursable expenses (3):
Offering costs		4,628,079		4,593,821			8,602,835		6,684,119
Organizational costs (recoveries)		—		(1,006	)		—		21,351
Acquisition costs		498,579		512,366			1,077,662		582,668
Operating expenses		303,945		158,655			784,536		584,517
Total		5,430,603		5,263,836			10,465,033		7,872,655
Total fees earned and reimbursable expenses	$	8,137,780	$	6,351,765		$	22,028,207	$	9,108,520

FOOTNOTES:

⁽¹⁾ Acquisition fees for services in the selection, purchase, development or construction of real property, generally equal to 3.0% of gross offering proceeds, and 3.0% of loan proceeds for services in connection with the incurrence of debt. The debt acquisition fees for the quarter and nine months ended September 30, 2005 were incurred in connection with the Company’s investment in the DMC Partnership with DMC and the partnership’s assumption of mortgage loans upon acquisition of the DMC Property and IFGC.

⁽²⁾ Asset management fees of 0.08334% per month of the Company’s “real estate asset value,” as defined in the Company’s prospectus dated April 18, 2005, and the outstanding principal amount of any mortgage loan as of the end of the preceding month.

⁽³⁾ The Advisor and its affiliates are entitled to reimbursement of certain expenses incurred on behalf of the Company in connection with the Company’s organization, offering, acquisitions, and operating activities. Pursuant to the advisory agreement, the Company will not reimburse the Advisor any amount by which total operating expenses paid or incurred by the Company exceed the greater of 2% of average invested assets or 25% of net income (the “Expense Cap”) in any expense year, as defined in the advisory agreement. The first applicable expense year and measurement period was the twelve months ended June 30, 2005, for which the Company’s operating expenses exceeded the Expense Cap by $398,071. In accordance with the advisory agreement, such amount was not reimbursed to the Advisor and was recorded as a reduction in general and administrative expenses and the amounts due to affiliates. For the Expense Year ended September 30, 2005, operating expenses did not exceed the Expense Cap.

F-20

CNL INCOME PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

QUARTER ENDED SEPTEMBER 30, 2005

(UNAUDITED)

7. Related Party Arrangements (Continued):

Amounts due to affiliates for fees and expenses described above are as follows:

	September 30, 2005		December 31, 2004
Due to the Advisor and its affiliates:
Offering expenses	$	8,334,483	$	6,960,292
Asset management fees		239,712		—
Operating expenses (reimbursements)		622,140		1,207,252
Acquisition fees and expenses		435,900		1,893,200
Total	$	9,632,235	$	10,060,744
Due to CNL Securities Corp:
Selling commissions	$	491,477	$	320,767
Marketing support fees and due diligence expense reimbursements		189,030		123,373
Offering costs		—		(90,050	)
Total	$	680,507	$	354,090
Total due to affiliates	$	10,312,742	$	10,414,834

8. Redemption of Shares:

During the quarter and year ended September 30, 2005, the Company redeemed 24,193 shares of common stock at $9.50 per share for a total of $229,834. The redemption price per share is the lesser of the price at which the shares were initially sold by the Company or a fixed redemption price of $9.50 per share.

9. Distributions:

The Company declared and paid distributions of approximately $2.8 million ($0.137 per share) and $6.1 million ($0.398 per share) for the quarter and nine months ended September 30, 2005, respectively.

For the nine months ended September 30, 2005, approximately 54% of the distributions paid to the stockholders were considered ordinary income and approximately 46% were considered a return of capital for federal income tax purposes. No amounts distributed to stockholders are required to be or have been treated as a return of capital for purposes of calculating the stockholders’ return on their invested capital. The characterization of distributions declared for the quarter and nine months ended September 30, 2005 may not be indicative of the characterization of distributions that may be expected for the year ending December 31, 2005.

F-21

CNL INCOME PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

QUARTER ENDED SEPTEMBER 30, 2005

(UNAUDITED)

10. Commitments & Contingencies:

In connection with the purchase of the resort village property located at Copper Mountain, Colorado, the Intrawest Partnership agreed to pay additional future purchase consideration contingent upon the Copper Mountain property achieving certain levels of financial performance, as specified in the purchase and sale agreement. The amount of the contingent purchase price will be determined as of December 31, 2008, and in no event, will the amount exceed $3.75 million. The Company has guaranteed the payment of the contingent purchase price to Intrawest on behalf of the Intrawest Partnership.

11. Subsequent Events:

The Company’s board of directors declared distributions of $0.0458 per share to stockholders of record at the close of business on October 1, 2005 and November 1, 2005 to be paid by December 31, 2005.

On October 3, 2005, the Company entered into a venture formation and contribution agreement (the “VFA Agreement”) with Great Wolf Resorts, Inc. and affiliates (“Great Wolf”). Pursuant to the VFA Agreement, the parties agreed to form a partnership (the “Partnership”) to own two waterpark resorts: the 309-suite Great Wolf Lodge in Wisconsin Dells, Wisconsin and the 271-suite Great Wolf Lodge in Sandusky, Ohio (the “Properties”). On October 7, 2005, pursuant to the terms of the Wolf VFA Agreement, Great Wolf formed a partnership to serve as the joint venture partnership (the “Wolf Partnership”) and contributed the Properties, valued at approximately $114.5 million, to the Wolf Partnership in exchange for partnership interests.

On October 11, 2005, the Company entered into an amended and restated limited partnership agreement (the “Wolf Partnership Agreement”) governing the Wolf Partnership and contributed approximately $69.9 million to the venture, representing a 61.1% ownership interest. On November 3, 2005 the Company contributed an additional $10.1 million to the Wolf Partnership resulting in a 70.0% ownership interest. The Company receives preferred returns on its invested capital up to a certain threshold, after which Great Wolf receives a preferred return on its invested capital up to a certain threshold and residual returns are split pro rata. Capital proceeds upon liquidation of the venture are split pro rata between the partners. Although the Company owns a majority interest in the venture, the Company shares voting rights and decision making with its partner and will apply the equity method of accounting for this investment.

On October 12, 2005, the Company, through the DMC Partnership with DMC entered into a memorandum of understanding and a development agreement to develop an approximately 500,000 square foot lighting center expansion (160,000 leasable square feet) at the Trade Mart (the “Trade Mart Expansion”) at the DMC Property. The total estimated construction costs are expected to be approximately $21.3 million. The Company’s total contribution to the DMC Partnership for the Trade Mart Expansion is estimated to be approximately $17.0 million and will be made in accordance with the current partnership structure. On October 14, 2005, the Company contributed $3.5 million and DMC contributed $0.9 million to fund the initial costs of the Trade Mart Expansion. The remaining costs will be funded over the remainder of the development period. The Trade Mart Expansion is expected to be completed at the end of 2006 and will be leased to an affiliate of DMC.

F-22

INDEX TO OTHER FINANCIAL STATEMENTS

The following financial information is filed as part of this Prospectus Supplement as a result of the Company’s completed and pending acquisition of properties from Gatlinburg Skylift, LLC and Cypress Bowl Recreations, LP. For information regarding this investment and the leases into which the Company has entered, see the “Business—Property Acquisitions” and “Pending Acquisitions” sections of the Prospectus and the Prospectus Supplement.

	Page
Gatlinburg Skylift, LLC
Unaudited Financial Statements as of September 30, 2005 and for the Nine Months Ended September 30, 2005 and 2004
Unaudited Balance Sheets	F-25
Unaudited Statements of Operations	F-26
Unaudited Statements of Cash Flows	F-27
Notes to Unaudited Financial Statements	F-28
Balance Sheets as of December 31, 2004 and 2003 and the related Statement of Operations, Parent’s Investment Account, and Cash Flows for the years ended December 31, 2004, 2003, and 2002
Independent Auditor’s Report	F-29
Balance Sheets	F-30
Statements of Operations	F-31
Statement of Parent’s Investment Account	F-32
Statements of Cash Flows	F-33
Notes to Financial Statements	F-34
Cypress Bowl Recreations, LP
Unaudited Financial Statements as of September 30, 2005 and for the Nine Months Ended September 30, 2005 and 2004
Unaudited Balance Sheets	F-41
Unaudited Statements of Operations	F-42
Unaudited Statements of Cash Flows	F-43
Notes to Unaudited Financial Statements	F-44
Balance Sheets as of December 31, 2004 and 2003 and the related Statement of Income, Stockholder’s Equity and Other Comprehensive Income (Loss), and Cash Flows for the years ended December 31, 2004, 2003, and 2002
Independent Auditor’s Report	F-45
Balance Sheets	F-46
Statement of Income	F-47

F-23

	Page
Statement of Stockholder’s Equity and Accumulated Other Comprehensive Income (Loss)	F-48
Statement of Cash Flows	F-49
Notes to Financial Statements	F-50

The following financial information is filed as part of this Prospectus Supplement as a result of the Company acquiring an interest in two waterpark resorts: Great Wolf Lodge in Wisconsin Dells, Wisconsin and Great Wolf Lodge in Sandusky, Ohio. For information regarding this investment and the leases into which the Company has entered, see the “Business—Property Acquisitions” section of the Prospectus and the Prospectus Supplement.

Great Bear Lodge of Wisconsin Dells, LLC and Great Bear Lodge of Sandusky, LLC
Unaudited Combined Financial Statements as of September 30, 2005 and for the Nine Months Ended September 30, 2005 and 2004
Unaudited Combined Balance Sheet	F-59
Unaudited Combined Statement of Operations	F-60
Unaudited Combined Statement of Cash Flows	F-61
Notes to Unaudited Combined Financial Statements	F-62
Combined Financial Statements as of and for the period ended December 20, 2004
Independent Auditor’s Report	F-63
Combined Balance Sheet	F-64
Combined Statement of Operations	F-65
Combined Statement of Members’ Equity (Deficit)	F-66
Combined Statement of Cash Flows	F-67
Notes to Combined Financial Statements	F-68

The following financial information is filed as part of this Prospectus Supplement as a result of the Company acquiring an interest in real estate and related leasehold assets at the Dallas Market Center. For information regarding this investment and the leases into which the Company has entered, see the “Business—Property Acquisitions” section of the Prospectus and the Prospectus Supplement.

DMC Properties:
Combined Statement of Revenues and Certain Expenses for the quarter ended April 30, 2005 (unaudited)	F-79
Unaudited Notes to Combined Statement of Revenues and Certain Expenses	F-80
Report of Independent Auditors	F-81
Combined Statement of Revenues and Certain Expenses for the year ended January 31, 2005	F-82
Notes to Combined Statement of Revenue and Certain Expenses	F-83

F-24

GATLINBURG SKYLIFT, LLC

UNAUDITED BALANCE SHEETS

	September 30, 2005		December 31, 2004
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	51,107	$	137,804
Other		2,017		—
		53,124		137,804
RESORT FACILITIES AND EQUIPMENT, net		128,237		131,772
LOAN FEES, net		—		60,155
Total assets	$	181,361	$	329,731
LIABILITIES AND PARENT’S INVESTMENT ACCOUNT
CURRENT LIABILITIES
Accounts payable and accrued liabilities	$	135,358	$	209,966
Current portion of senior debt		—		1,899,996
Total current liabilities		135,358		2,109,962
SENIOR DEBT, net of current portion		—		6,966,672
PARENT’S INVESTMENT ACCOUNT		46,003		(8,746,903	)
	$	181,361	$	329,731

See accompanying notes to unaudited financial statements.

F-25

GATLINBURG SKYLIFT, LLC

UNAUDITED STATEMENTS OF OPERATIONS

	Nine Months Ended September 30,
	2005			2004
REVENUES	$	3,579,766		$	3,532,863
OPERATING EXPENSE
Resort operating expenses		1,150,756			1,151,737
Sales and marketing		10,245			20,279
Depreciation and amortization		66,414			42,651
Total operating expenses		1,227,415			1,214,667
OTHER EXPENSE
Interest		(461,988	)		(225,365	)
NET INCOME	$	1,890,363		$	2,092,831

See accompanying notes to unaudited financial statements.

F-26

GATLINBURG SKYLIFT, LLC

UNAUDITED STATEMENTS OF CASH FLOWS

	Nine Months Ended September 30,
	2005			2004
CASH FLOW FROM OPERATING ACTIVITIES
Net income	$	1,890,363		$	2,092,831
Adjustment to reconcile net income to net cash flows from operating activities
Depreciation and amortization		66,414			42,651
Change in operating assets and liabilities:
Other current assets		(2,017	)		(299	)
Accounts payable and accrued liabilities		(74,608	)		130,047
		1,880,152			2,265,230
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of facilities and equipment		(2,724	)		(15,805	)
CASH FLOWS FROM FINANCING ACTIVITIES
Payments on senior debt		(8,866,668	)		(940,646	)
Borrowings on senior debt		—			2,752,552
Loan fees		—			(25,500	)
Investment from (disbursements to) Parent, net		6,902,543			(4,069,280	)
		(1,964,125	)		(2,282,874	)
CHANGE IN CASH AND CASH EQUIVALENTS		(86,697	)		(33,449	)
CASH AND CASH EQUIVALENTS
Beginning of year		137,804			92,855
End of year	$	51,107		$	59,406
SUPPLEMENTAL INFORMATION
Cash paid during the year for interest	$	461,988		$	225,365

See accompanying notes to unaudited financial statements.

F-27

GATLINBURG SKYLIFT, LLC

NOTES TO UNAUDITED FINANCIAL STATEMENTS

NINE MONTHS ENDED SEPTEMBER 30, 2005

1. General

The statements presented herein have been prepared in conformity with accounting principles generally accepted in the United States of America and should be read in conjunction with the audited balance sheets as of December 31, 2004 and 2003, and the related statements of income, stockholder’s equity and accumulated other comprehensive income (loss), and cash flows for the years ended December 31, 2004, 2003 and 2002. In the opinion of management, all adjustments that are deemed necessary have been made in order to fairly present the unaudited interim financial statements for the period and accounting policies have been consistently applied.

F-28

INDEPENDENT AUDITOR’S REPORT

To the Board of Directors and Shareholders

Gatlinburg Skylift, LLC

We have audited the accompanying balance sheets of Gatlinburg Skylift, LLC (the Company), as of December 31, 2004 and 2003, and the related statements of operations, Parent’s investment account, and cash flows for the years ended December 31, 2004, 2003 and 2002. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform an audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes 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, the financial statements referred to above present fairly, in all material respects, the financial position of Gatlinburg Skylift, LLC as of December 31, 2004 and 2003, and the results of its operations and cash flows for the years ended December 31, 2004, 2003 and 2002, in conformity with accounting principles generally accepted in the United States of America.

/s/    MOSS ADAMS LLP        

Moss Adams LLP

Seattle, Washington

November 18, 2005

F-29

GATLINBURG SKYLIFT, LLC

BALANCE SHEETS

DECEMBER 31, 2004 AND 2003

	2004			2003
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	137,804		$	92,855
RESORT FACILITIES AND EQUIPMENT, net		131,772			124,374
LOAN FEES, net		60,155			84,013
Total assets	$	329,731		$	301,242
LIABILITIES AND PARENT’S INVESTMENT ACCOUNT
CURRENT LIABILITIES
Accounts payable and accrued liabilities	$	209,966		$	101,919
Current portion of senior debt		1,899,996			1,173,469
Total current liabilities		2,109,962			1,275,388
SENIOR DEBT, net of current portion		6,966,672			6,356,292
PARENT’S INVESTMENT ACCOUNT		(8,746,903	)		(7,330,438	)
	$	329,731		$	301,242

See independent auditor’s report and accompanying notes.

F-30

GATLINBURG SKYLIFT, LLC

STATEMENTS OF OPERATIONS

YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002

	2004			2003			2002
REVENUES	$	4,697,466		$	4,477,830		$	4,236,834
OPERATING EXPENSE
Resort operating expenses		1,616,297			1,495,584			1,397,426
Sales and marketing		7,716			10,581			2,697
Depreciation and amortization		58,130			52,523			79,088
Total operating expenses		1,682,143			1,558,688			1,479,211
OTHER EXPENSE
Interest		(335,804	)		(277,372	)		(79,168	)
NET INCOME	$	2,679,519		$	2,641,770		$	2,678,455

See independent auditor’s report and accompanying notes.

F-31

GATLINBURG SKYLIFT, LLC

STATEMENT OF PARENT’S INVESTMENT ACCOUNT

YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002

BALANCE, December 31, 2001	$	194,820
Net Income		2,678,455
Disbursements to Parent, net		(9,830,953	)
BALANCE, December 31, 2002		(6,957,678	)
Net Income		2,641,770
Disbursements to Parent, net		(3,014,530	)
BALANCE, December 31, 2003		(7,330,438	)
Net Income		2,679,519
Disbursements to Parent, net		(4,095,984	)
BALANCE, December 31, 2004	$	(8,746,903	)

See independent auditor’s report and accompanying notes.

F-32

GATLINBURG SKYLIFT, LLC

STATEMENTS OF CASH FLOWS

YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002

	2004			2003			2002
CASH FLOW FROM OPERATING ACTIVITIES
Net income	$	2,679,519		$	2,641,770		$	2,678,455
Adjustment to reconcile net income to net cash flows from operating activities
Depreciation and amortization		58,130			52,523			79,088
Change in operating assets and liabilities:
Accounts payable and accrued liabilities		108,047			58,850			(3,077	)
		2,845,696			2,753,143			2,754,466
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of facilities and equipment		(15,842	)		(14,742	)		(594	)
CASH FLOWS FROM FINANCING ACTIVITIES
Payments on senior debt		(1,415,645	)		(1,228,749	)		(267,858	)
Borrowings on senior debt		2,752,552			1,526,367			7,500,000
Loan fees		(25,828	)		(24,561	)		(175,972	)
Disbursements to Parent, net		(4,095,984	)		(3,014,530	)		(9,830,953	)
		(2,784,905	)		(2,741,473	)		(2,774,783	)
CHANGE IN CASH AND CASH EQUIVALENTS		44,949			(3,072	)		(20,911	)
CASH AND CASH EQUIVALENTS
Beginning of year		92,855			95,927			116,838
End of year	$	137,804		$	92,855		$	95,927
SUPPLEMENTAL INFORMATION
Cash paid during the year for interest	$	336,316		$	274,700		$	79,168

See independent auditor’s report and accompanying notes.

F-33

GATLINBURG SKYLIFT, LLC

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2004, 2003 AND 2002

Note 1 - Organization of Business

Gatlinburg Skylift, LLC (“Gatlinburg” or the “Company”) is an organization operating in the resort and recreation industry. Gatlinburg owns and operates a year-round sightseeing chairlift in Gatlinburg, Tennessee and its operations consist primarily of ticket sales and concessions operations. Gatlinburg is a limited liability corporation for federal income tax purposes and its year end is December 31. Gatlinburg was formed as a Michigan Limited Liability Company on January 1, 2001 and certain assets, liabilities and operations relating to the Gatlinburg operations which were previously included as a division of Boyne USA were transferred to the newly formed subsidiary. The limited liability corporation was established with an indefinite life.

Gatlinburg Skylift, LLC is a wholly owned subsidiary of Boyne USA, Inc., (“Boyne USA” or the “Parent”) and effectively continues to operate as a division for internal and external financial reporting purposes. Boyne USA, through is wholly owned subsidiaries, is a multi-dimensional organization operating in the resort and recreation industry. Boyne USA owns and operates seasonal and year-round facilities consisting of ski, golf, lodging, restaurant, retail and other property management.

The accompanying carve-out financial statements of Gatlinburg have been prepared on a historical cost basis, including such basis from the books and records of the Parent, on the basis of established accounting methods, practices, procedures and policies and the accounting judgments and estimation methodologies utilized by the Parent. These financial statements may not necessarily be indicative of the financial position, results of operations or cash flows that would have resulted if Gatlinburg had been operated as a stand alone entity. Management believes the allocation estimates and judgments made in preparing these financial statements were reasonable.

Generally, in order to reflect all of the Gatlinburg’s costs of operations and related assets and liabilities, the financial statements would reflect the pushdown of items such as assets, liabilities, expenses and costs associated with the related operations of Gatlinburg which are carried on the books of the Parent. For purposes of these financial statements, management has determined that no such allocations are necessary and all appropriate assets, liabilities, expenses and costs are properly reflected on the books and records of Gatlinburg for the periods presented. Specifically, there has been no allocation of corporate general and administrative expenses as management does not believe the operations of Gatlinburg in comparison to the Parent and its wholly owned subsidiaries should result in such allocation for the years presented. It is possible that such allocations would be made in prior years and it is possible that in the event Gatlinburg was operated as a stand alone entity certain incremental costs would be incurred.

F-34

GATLINBURG SKYLIFT, LLC

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2004, 2003 AND 2002

Note 1 - Organization of Business (Continued)

Because Gatlinburg was operated as a division of the Parent prior to January 1, 2001 and was not a distinct legal entity, there is no customary equity or capital accounts. In addition, because no allocations were recorded in prior years, a retained earnings amount is not determinable.

Note 2 - Significant Accounting Policies

Seasonality - A significant portion of Gatlinburg’s operations are seasonal in nature and, as is typical in the resort and recreation industry, results of operations can be significantly influenced by weather and general economic conditions. Abnormally cool weather or extended winter conditions can materially affect revenues and impact gross margins.

Use of Estimates - The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates.

Cash and Cash Equivalents - The Company considers all highly liquid investments purchased with a maturity of three months or less to be cash equivalents.

Resort Facilities and Equipment - Resort facilities and equipment are stated at cost. Renewals and refurbishments which extend asset useful lives are capitalized while normal repair and maintenance expenditures are charged to expense as incurred.

Depreciation - Depreciation is computed using the straight-line method over the estimated useful lives of the related assets (40 years for buildings and improvements, 12 to 40 years for machinery and equipment, 7 to 10 years for furniture and fixtures). Leasehold improvements are depreciated or amortized over the shorter of the estimated useful lives of the related assets or the lease term.

F-35

GATLINBURG SKYLIFT, LLC

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2004, 2003 AND 2002

Note 2 - Significant Accounting Policies (Continued)

Impairment of Long-Lived Assets - The Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. Recoverability of assets held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value based on the present value of estimated expected future cash flows. No such impairments have been determined to be present.

Loan Fees - Loan fees are amortized over the life of the respective loan agreements, net of accumulated amortization.

Parent’s Investment Account - Since the operations of Gatlinburg was included as a division of the Parent prior to January 1, 2001, and was not a distinct legal entity, there are no customary equity and capital accounts included in these carve-out financial statements. Instead, the Parent company investment account is maintained to account for all inter-unit transactions as described in Note 1. The Parent company investment is comprised of accumulated net income, allocations from the Parent, advances of loan proceeds to the Parent and cash distributions made to the Parent.

Revenue Recognition - Revenues are primarily derived from scenic lift ticket sales which are recognized when the related resort services are utilized, generally at the point of sale. Other revenues are recognized when earned.

Income Taxes - Gatlinburg Skylift, LLC is a Limited Liability Company. Entities treated as Limited Liability Companies (LLC’s) pass their taxable income and losses and tax credits, if any, directly to the members for inclusion in the respective tax returns. Because the Parent is a Sub-S Corporation, and therefore also not subject to federal income taxes as its taxable income and losses are also passed directly to its shareholders, no provision for income taxes is provided herein, nor has any been allocated in the periods presented.

Advertising Expenses - The costs of advertising and promotion are expensed as incurred. The Company incurred approximately $7,716, $10,581 and $2,697 in advertising costs during 2004, 2003 and 2002, respectively.

F-36

GATLINBURG SKYLIFT, LLC

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2004, 2003 AND 2002

Note 2 - Significant Accounting Policies (Continued)

Recent Accounting Pronouncements - In December 2003, the Financial Accounting Standards Board (“FASB”) issued FASB Interpretation No. 46 Revised, “Consolidation of Variable Interest Entities - an Interpretation of ARB No. 51” (“FIN 46R”), which provided, among other things, immediate deferral of the application of FIN 46 for entities that did not originally qualify as special purpose entities, and provided additional scope exceptions for joint ventures with business operations and franchises. The Company’s adoption of FIN 46R did not have an impact on its financial statements.

In December 2003, the issued Staff Accounting Bulletin No. 104, “Revenue Recognition” (“SAB 104”), rescinded the accounting guidance contained in SAB 101, “Revenue Recognition in Financial Statements,” and incorporated the body of previously issued guidance related to multiple-element revenue arrangements. The Company’s adoption of SAB 104 did not have an impact on its financial statements.

In July 2004, the FASB issued EITF Issue No. 02-14, “Whether an Investor Should Apply the Equity Method of Accounting to Investments Other Than Common Stock” (“EITF 02-14”). EITF 02-14 requires application of the equity method of accounting when an investor is able to exert significant influence over operating and financial policies of an investee through ownership of common stock or in-substance common stock. EITF 02-14 is effective for reporting periods beginning after September 15, 2004. The adoption of EITF 02-14 will not have a significant impact on the Company’s financial position or results of operations.

Note 3 - Resort Facilities and Equipment

	2004		2003
Buildings and improvements	$	97,347	$	94,372
Machinery and equipment		192,412		180,941
Furniture and fixtures		21,024		19,627
		310,783		294,940
Less accumulated depreciation		179,011		170,566
	$	131,772	$	124,374

F-37

GATLINBURG SKYLIFT, LLC

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2004, 2003 AND 2002

Note 4 - Loan Fees

In connection with its senior debt agreement the Company was required to pay certain loan fees. The loan fees are being amortized over the life of the loan. Accumulated amortization at December 31, 2004 and 2003 amounts to $104,764 and $55,078, respectively. The Company recognized loan fee amortization expense of $49,686, $45,534, $9,544 in 2004, 2003 and 2002, respectively. Amortization expense expected to be recognized during the years 2005 to 2009 will be approximately $12,000 per year.

Note 5 - Senior Debt

At December 31, 2004 the Company has a note payable to a financial institution amounting to $8,866,668. The note matures on August 20, 2009 and is due in monthly installments amounting to $158,333 of principal, plus interest at an annual rate of 5.25%. The note is secured by all of the Company’s assets and is guaranteed by the shareholders of the Parent. The current portion due as of December 31, 2004 amounts to $1,899,996.

At December 31, 2003 the Company had a note payable amounting to $7,529,761 due to the same financial institution which was amended during August 2004. Under the terms of the August 2004 amendment of the note payable, the principal amount outstanding was increased to $9,500,000, resulting in increased advances of $2,752,552. In addition, the maturity date was extended from April 2008 to August 2009 and the interest rate was changed from a variable rate equal to the prime rate, to the 5.25% fixed rate. The additional proceeds received under the note were advanced to the Company’s Parent.

During 2002 the Company entered into a $7,500,000 note payable with a financial institution. The note was amended during April 2003, which resulted in additional advances of $1,526,367 under the agreement. The additional proceeds received under the note were advanced to the Company’s Parent. This note was subsequently amended during August 2004 as noted above.

Future minimum principal payments due under the note payable are as follows for years ending December 31:

2005	$	1,899,996
2006		1,899,996
2007		1,899,996
2008		1,899,996
2009		1,266,684
	$	8,866,668

F-38

GATLINBURG SKYLIFT, LLC

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2004, 2003 AND 2002

Note 6 - Related Party Transactions

The Company, Boyne USA and related subsidiaries, advance funds and pay expenses on behalf of each other. Additionally, the Company distributes substantially all available cash, including proceeds from senior debt, to its Parent. Such advances and payments are included as components of the Parent’s Investment Account. Certain expenses paid on behalf of the Company by the Parent are offset against disbursements and advances and therefore are included in the Parent’s Investment Account balance.

During the years ended December 31, 2004, 2003 and 2002, the Company made net advances to the Parent of $4,095,984, $3,014,530, and $9,830,953, respectively.

The shareholders of the Parent have guaranteed the note payable, see Note 5.

The Company has certain casualty insurance through a captive insurance company which is a subsidiary of the Parent. During the years ended December 31, 2004, 2003 and 2002, the Company paid insurance premiums which are included in resort operating expenses of $56,993, $38,420 and $48,453, respectively.

Note 7 - Commitments, Contingencies and Other Matters

Operating Lease - The Company operates on land under an operating lease in Gatlinburg, Tennessee. The terms of the lease call for lease payments of 15% of gross sales. Rent expense under this lease for 2004, 2003 and 2002 amounted to approximately $687,202, $671,674 and $635,535, respectively.

State and Local Taxes - From time to time the Company may have certain overdue and delinquent state and local taxes which may subject the Company to increased interest and penalties during future periods or limit the use of such properties.

Litigation - From time to time the Company is involved in legal actions in the normal course of business. Liability insurance is expected to protect the Company from any potential material loss. As a result, management believes that the ultimate resolution of any known or unknown claims will not have a material adverse effect on the financial statements of the Company.

F-39

GATLINBURG SKYLIFT, LLC

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2004, 2003 AND 2002

Note 8 - Subsequent Events

In August of 2005, Boyne USA entered into a non-binding letter of intent with CNL Income Properties, Inc., “CNL,” whereby CNL will acquire the assets and leasehold interests of Gatlinburg Skylift, LLC for approximately $20.0 million. In conjunction with the transaction, Boyne USA will enter into an operating lease for the same assets acquired by CNL for a minimum term of 20-years, subject to certain early buy-out provisions and lease term extensions.

F-40

CYPRESS BOWL RECREATIONS, LP

UNAUDITED BALANCE SHEETS

	September 30, 2005		December 31, 2004
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	—	$	1,174,776
Accounts receivable		145,027		101,846
Inventories		166,570		157,458
Prepaid expenses		269,508		375,568
Total current assets		581,105		1,809,648
PROPERTY, FACILITIES, AND EQUIPMENT, net		8,166,680		8,002,697
OTHER LONG TERM ASSETS
Park use permit, net of accumulated amortization		7,760,872		7,965,345
Total assets	$	16,508,657	$	17,777,690
LIABILITIES AND STOCKHOLDER’S EQUITY
CURRENT LIABILITIES
Bank overdraft	$	11,849	$	—
Accounts payable and accrued liabilities		469,548		1,013,325
Current portion of senior debt		—		39,085
Income tax payable		275,734		151,812
Deferred revenue		129,202		2,466,144
Total current liabilities		886,333		3,670,366
DEFERRED TAX LIABILITY		142,705		142,705
SENIOR DEBT OBLIGATIONS, net of current portion		5,712,972		5,674,778
COMMITMENTS AND CONTINGENCIES
STOCKHOLDER’S EQUITY
Common stock, $1 par value, 100 shares authorized, issued, and outstanding		4,736,161		4,736,161
Retained earnings		2,470,442		1,367,508
Accumulated other comprehensive income		2,560,044		2,186,172
		9,766,647		8,289,841
	$	16,508,657	$	17,777,690

See accompanying notes to unaudited financial statements.

F-41

CYPRESS BOWL RECREATIONS, LP

UNAUDITED STATEMENTS OF OPERATIONS

	Nine Months Ended September 30,
	2005			2004
RESORT AND RETAIL REVENUES	$	5,718,495		$	6,470,585
RESORT AND RETAIL OPERATIONS EXPENSE, INCLUDING DIRECT PAYROLL		2,304,621			3,285,034
UNALLOCATED OPERATING EXPENSES
General and administrative		615,541			741,032
Selling and marketing		108,629			116,247
Depreciation and amortization		1,046,912			1,142,927
		1,771,082			2,000,206
OTHER INCOME (EXPENSE)
Interest income		(4,344	)		(11,563	)
Interest expense		(259,781	)		(376,706	)
		(264,125	)		(388,269	)
NET INCOME BEFORE INCOME TAXES		1,378,667			797,076
FOREIGN INCOME TAX EXPENSE
Current		275,734			196,212
Deferred		—			(35,845	)
		275,734			160,367
NET INCOME	$	1,102,933		$	636,709

See accompanying notes to unaudited financial statements.

F-42

CYPRESS BOWL RECREATIONS, LP

UNAUDITED STATEMENTS OF CASH FLOWS

	Nine Months Ended September 30,
	2005			2004
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	1,102,934		$	636,709
Adjustments to reconcile net income to net cash flows from operating activities
Depreciation and amortization		1,046,912			1,142,927
Deferred income taxes		—			(35,845	)
Change in operating assets and liabilities:
Accounts receivable		(38,092	)		118,508
Income taxes receivable		114,935			82,338
Inventories		(3,206	)		130,856
Prepaids		115,791			170,591
Bank overdraft		11,849			—
Accounts payable and accrued liabilities		(561,254	)		(1,146,560	)
Deferred revenue		(2,344,936	)		(1,098,226	)
		(555,067	)		1,298
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of facilities and equipment		(1,006,421	)		(467,236	)
CASH FLOWS FROM FINANCING ACTIVITIES
Payments on senior debt		(891	)		(903,910	)
		(891	)		(903,910	)
EFFECT OF EXCHANGE RATE CHANGES ON CASH		387,603			(60,305	)
CHANGE IN CASH AND CASH EQUIVALENTS		(1,174,776	)		(1,430,153	)
CASH AND CASH EQUIVALENTS
Beginning of year		1,174,776			1,533,499
End of year	$	—		$	103,346

See accompanying notes to unaudited financial statements.

F-43

CYPRESS BOWL RECREATIONS, LP

NOTES TO UNAUDITED FINANCIAL STATEMENTS

NINE MONTHS ENDED SEPTEMBER 30, 2005

1. General

The statements presented herein have been prepared in conformity with accounting principles generally accepted in the United States of America and should be read in conjunction with the audited balance sheets as of December 31, 2004 and 2003, and the related statements of income, stockholder’s equity and accumulated other comprehensive income (loss), and cash flows for the years ended December 31, 2004, 2003 and 2002. In the opinion of management, all adjustments that are deemed necessary have been made in order to fairly present the unaudited interim financial statements for the period and accounting policies have been consistently applied.

F-44

INDEPENDENT AUDITOR’S REPORT

To the Shareholders

Cypress Bowl Recreations, LP

We have audited the accompanying balance sheets of Cypress Bowl Recreations, LP (the Company) as of December 31, 2004 and 2003, and the related statements of income, stockholder’s equity and accumulated other comprehensive income (loss), and cash flows for the years ended December 31, 2004, 2003 and 2002. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing standards (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. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes 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, the financial statements referred to above present fairly, in all material respects, the financial position of Cypress Bowl Recreations, LP at December 31, 2004 and 2003, and the results of its operations and cash flows for the years ended December 31, 2004, 2003 and 2002 in conformity with accounting principles generally accepted in the United States of America.

/s/    MOSS ADAMS LLP        

Moss Adams LLP

Seattle, Washington

November 18, 2005

F-45

CYPRESS BOWL RECREATIONS, LP

BALANCE SHEETS

DECEMBER 31, 2004 AND 2003

	2004		2003
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	1,174,776	$	1,533,499
Accounts receivable		101,846		138,610
Inventories		157,458		234,795
Prepaids		375,568		252,232
Total current assets		1,809,648		2,159,136
PROPERTY, FACILITIES, AND EQUIPMENT, net		8,002,697		8,250,202
DEFERRED TAX ASSETS		—		168,598
OTHER LONG TERM ASSETS
Park use permit, net of accumulated amortization of $1,053,990 and $779,036		7,965,345		8,240,299
Total assets	$	17,777,690	$	18,818,235
LIABILITIES AND STOCKHOLDER’S EQUITY
CURRENT LIABILITIES
Accounts payable and accrued liabilities	$	1,013,325	$	1,510,524
Current portion of senior debt		39,085		105,398
Income tax payable		151,812		65,782
Due to parent		—		236,064
Deferred revenue		2,466,144		1,281,195
Total current liabilities		3,670,366		3,198,963
DEFERRED TAX LIABILITY		142,705		361,245
SENIOR DEBT OBLIGATIONS, net of current portion		5,674,778		8,672,212
COMMITMENTS AND CONTINGENCIES (Note 5)
STOCKHOLDER’S EQUITY
Common stock, $1 par value, 100 shares authorized, issued, and outstanding		4,736,161		4,736,161
Retained earnings		1,367,508		313,181
Accumulated other comprehensive income		2,186,172		1,536,473
		8,289,841		6,585,815
	$	17,777,690	$	18,818,235

See accompanying notes.

F-46

CYPRESS BOWL RECREATIONS, LP

STATEMENT OF INCOME

YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002

	2004			2003			2002
RESORT AND RETAIL REVENUES	$	9,491,104		$	8,543,432		$	7,975,897
RESORT AND RETAIL OPERATIONS EXPENSE, INCLUDING DIRECT PAYROLL		5,033,743			4,445,751			4,696,120
UNALLOCATED OPERATING EXPENSES
General and administrative		956,667			663,119			383,694
Selling and marketing		201,188			210,024			211,424
Depreciation and amortization		1,532,133			1,468,598			1,438,717
		2,689,988			2,341,741			2,033,835
OTHER INCOME (EXPENSE)
Unrealized foreign exchange gain (loss)		(202,346	)		(327,095	)		6,708
Interest income		—			12,539			11,648
Interest expense		(350,333	)		(648,978	)		(542,319	)
		(552,679	)		(963,534	)		(523,963	)
NET INCOME BEFORE INCOME TAXES		1,214,694			792,406			721,979
FOREIGN INCOME TAX EXPENSE
Current		196,212			159,917			(17,923	)
Deferred		(35,845	)		356,872			(4,373	)
		160,367			516,789			(22,296	)
NET INCOME	$	1,054,327		$	275,617		$	744,275

See accompanying notes.

F-47

CYPRESS BOWL RECREATIONS, LP

STATEMENT OF STOCKHOLDER’S EQUITY AND

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002

				Retained Earnings			Comprehensive Income				Total
	Common Stock								Accumulated Other Comprehensive Income (Loss)
	Shares	Amount							Cumulative Adjustment Translation
BALANCE, December 31, 2001	3,000	$	4,736,161	$	(706,711	)			$	38,035	$	4,067,485
Net income	—		—		744,275		$	744,275		—		744,275
Foreign currency translation adjustment	—		—		—			51,651		51,651		51,651
Comprehensive income	—		—		—		$	795,926		—		—
BALANCE, December 31, 2002	3,000		4,736,161		37,564					89,686		4,863,411
Net income	—		—		275,617		$	275,617		—		275,617
Foreign currency translation adjustment	—		—		—			1,446,787		1,446,787		1,446,787
Comprehensive income	—		—		—		$	1,722,404		—		—
BALANCE, December 31, 2003	3,000		4,736,161		313,181					1,536,473		6,585,815
Net income	—		—		1,054,327		$	1,054,327		—		1,054,327
Foreign currency translation adjustment	—		—		—			649,699		649,699		649,699
Comprehensive income	—		—		—		$	1,704,026		—		—
BALANCE, December 31, 2004	3,000	$	4,736,161	$	1,367,508				$	2,186,172	$	8,289,841

See accompanying notes.

F-48

CYPRESS BOWL RECREATIONS, LP

STATEMENT OF CASH FLOWS

YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002

	2004			2003			2002
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	1,054,327		$	275,617		$	744,275
Adjustments to reconcile net income to net cash flows from operating activities
Depreciation and amortization		1,532,133			1,468,598			1,438,717
Loss on sale of equipment		—			—			288,904
Unrealized foreign exchange loss		202,346			327,095			(6,708	)
Deferred income taxes		(35,845	)		356,872			(4,373	)
Change in operating assets and liabilities:
Accounts receivable		43,213			(98,308	)		84,323
Income taxes receivable		—			47,217			(42,094	)
Inventories		87,124			120,053			5,432
Prepaids		(97,249	)		(168,749	)		27,701
Accounts payable and accrued liabilities		(485,025	)		(351,617	)		60,623
Deferred revenue		1,010,307			(889,217	)		454,902
		3,311,331			1,087,561			3,051,702
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of facilities and equipment		(457,507	)		(822,535	)		(795,627	)
CASH FLOWS FROM FINANCING ACTIVITIES
Payments on senior debt		(3,416,606	)		(274,787	)		(2,534,395	)
Net advances (to) from Parent		(257,107	)		75,728			—
		(3,673,713	)		(199,059	)		(2,534,395	)
EFFECT OF EXCHANGE RATE CHANGES ON CASH		461,166			(127,054	)		22,252
CHANGE IN CASH AND CASH EQUIVALENTS		(358,723	)		(61,087	)		(256,068	)
CASH AND CASH EQUIVALENTS
Beginning of year		1,533,499			1,594,586			1,850,654
End of year	$	1,174,776		$	1,533,499		$	1,594,586
SUPPLEMENTAL INFORMATION
Cash paid during the year for interest	$	1,314,277		$	1,225,428		$	1,092,201

See accompanying notes.

F-49

CYPRESS BOWL RECREATIONS, LP

NOTES TO THE FINANCIAL STATEMENTS

DECEMBER 31, 2004, 2003 AND 2002

Note 1 - Operations and Principles of Combination

Operations - Cypress Bowl Recreations, LP (“Cypress” or the “Company”), a British Columbia, Canada, Limited Partnership, owns and operates a year-round mountain resort facility in Vancouver, British Columbia. Cypress’ facilities are located on land owned by the Canadian Provincial Parks and operations are carried out under a Special Use Permit subject to certain terms and limitations (Note 5).

Cypress Bowl Recreations, LP is indirectly a wholly owned subsidiary of Boyne USA, Inc. and subsidiaries (collectively “Boyne USA” or the “Parent”). Boyne USA, through is wholly owned subsidiaries, is a multi-dimensional organization operating in the resort and recreation industry. Boyne USA owns and operates seasonal and year-round facilities consisting of ski, golf, lodging, restaurant, retail and other property management.

The accompanying carve-out financial statements of Cypress have been prepared on a historical cost basis under established accounting methods, practices, procedures and policies and the accounting judgments and estimation methodologies. These financial statements may not necessarily be indicative of the financial position, results of operations or cash flows that would have resulted if Cypress had been operated as a stand alone entity separate from the consolidate group of Boyne USA and its wholly owned subsidiaries. Management believes the judgments made in preparing these financial statements were reasonable.

In order to reflect all of Cypress’s costs of operations, these financial statements reflect the pushdown of the identifiable intangible asset (Park Use Permit - Note 5) and related amortization, general and administrative costs, allocated debt, interest expense, and income taxes. The debt was allocated based on designated use of proceeds and reflects debt which is collateralized by substantially all of Cypress’s assets including cross collateralization for the debt related to other wholly owned subsidiaries of Boyne USA. Income taxes have been allocated based on net taxable income and related deferred tax assets and liabilities of Cypress subject to Canadian and provincial taxes.

Financial Statement Presentation and Foreign Currency Translation - The financial statements are presented in U.S. Dollars which is the Parent’s functional currency. Assets and liabilities denominated in local currencies (Canadian Dollars) are translated to U.S. Dollars using the year end exchange rate for assets and liabilities and the average exchange rate for the period for income and expense items. Allocated debt and certain long-term assets including the allocated Park Permit are translated at the historical exchange rate. The year end exchange rate at December 31, 2004, 2003, and 2002 was approximately $1.20, $1.29, and $1.50, respectively. The average exchange rate for the years ended December 31, 2004, 2003, and 2002 was approximately $1.30, $1.40, and $1.57, respectively.

F-50

CYPRESS BOWL RECREATIONS, LP

NOTES TO THE FINANCIAL STATEMENTS

DECEMBER 31, 2004, 2003 AND 2002

Note 2 - Summary of Significant Accounting Policies

Seasonality - The Company has two distinct seasons with skiing and other winter activities generally occurring from December through April and limited summer operations occurring from June through September. Winter activities represent substantially all revenues generated. Operations are subject to unusual seasonality and operating results are highly dependent upon weather conditions. The 2004/2005 season experienced adverse weather conditions and as a result certain resort revenues included in deferred revenue at December 31, 2004 were reclassified to accrued liabilities for refunds performed subsequent to year end.

Use of Estimates - The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.

Cash and Cash Equivalents - The Company considers all cash and short-term investments with a maturity at date of purchase of three months or less, to be cash equivalents.

Accounts Receivable - Accounts receivable are stated at an amount management expects to collect and accounts are written off on a specific identification method, which management does not believe materially differs from the allowance method required under accounting principles generally accepted in the United States of America. Based on management’s assessment of the credit history of the customers with outstanding balances, it has concluded that potential future losses on balances outstanding at year end will be immaterial.

Inventories - The Company values inventories at the lower of cost or market with cost determined on the weighted-average or first-in, first-out (FIFO) method. Inventories consist of the following at December 31:

	2004		2003
Retail and demo equipment	$	142,475	$	173,732
Food, beverage, and supplies		14,983		60,643
	$	157,458	$	234,375

F-51

CYPRESS BOWL RECREATIONS, LP

NOTES TO THE FINANCIAL STATEMENTS

DECEMBER 31, 2004, 2003 AND 2002

Note 2 - Summary of Significant Accounting Policies (Continued)

Property, Facilities, and Equipment - Property, facilities, and equipment are stated at cost. Depreciation and amortization is computed using the straight-line method over the estimated useful lives of the related assets (15 to 39 years for buildings and improvements, 3 to 20 years for machinery and equipment, and 3 to 15 years for furniture and fixtures). Leasehold improvements are depreciated or amortized over the shorter of the estimated useful lives of the related assets or the lease term. Maintenance and repair costs are charged to operations as incurred and additions, renewals, and improvements are capitalized.

Park Use Permit - The Special Use Permit represents an identified intangible. The fair value of the permit was calculated to be $8,716,000 at the time of the Cypress acquisition during 2001, based upon exchange rates at such time, and is being amortized over the remaining useful life of the permit, or approximately 30 years. Annual amortization expense amounts to approximately $274,000 per year for the years ended December 31, 2004, 2003 and 2002. Amortization expense for the next 5 years is expected to be approximately $274,000 per year.

Impairment of Long-Lived Assets - The Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. Recoverability of assets held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value based on the present value of estimated expected future cash flows. No such impairments have been determined to be present.

Revenue Recognition - Revenue derived from resort activities and merchandise sales is generally recognized at the point of sale when earned, as the facilities are used, when the services are rendered, or when the retail merchandise is sold.

The Company sells season passes and multi-week packages for various amenities, including equipment rentals and ski instructions. Revenues from season passes are recognized over the season in which the facilities are utilized, generally December 1st to April 15th. Revenues for multi-week packages and amenities are recognized as the services are performed.

Concentration of Credit Risk - Financial instruments that potentially subject the Company to a concentration of credit risk consist of cash and cash equivalents. From time to time, the Company’s cash deposits at a single institution exceed federally insured amounts. Cash and cash equivalents are deposited with high credit, quality financial institutions.

F-52

CYPRESS BOWL RECREATIONS, LP

NOTES TO THE FINANCIAL STATEMENTS

DECEMBER 31, 2004, 2003 AND 2002

Note 2 - Summary of Significant Accounting Policies (Continued)

Comprehensive Income - Comprehensive income includes all changes in equity during the period from non-owner sources such as foreign currency translation adjustments. Accumulated other comprehensive income (loss), as presented on the accompanying statement of stockholder’s equity, consists of the cumulative foreign currency translation adjustment resulting for the translation for the local currency (Canadian Dollars) to the reporting currents (U.S. Dollars).

Income Taxes - The Company is subject to Canadian Federal and Provincial taxes for which a provision has been included for earnings subject to such tax. Certain allocations from the Parent have not been included in determining the provision for income taxes as the Parent is not subject to Canadian Federal or Provincial taxes. Also, the Parent is a Sub-S Corporation, and therefore, not subject to U.S. federal income taxes as its taxable income and losses are also passed directly to its shareholders, no provision for income taxes is provided herein, nor has any been allocated in the periods presented. The Company has deferred income tax assets and liabilities due to the deferred benefits and liabilities resulting from differences in the carrying basis between book reporting and Canadian tax purposes in the park use permit and property, equipment and facilities. Changes in these deferred benefits and liabilities are reflected in the deferred tax expense (benefit) within the statement of income.

Advertising and Promotion Expense - Advertising and promotion costs are expensed when incurred or expensed ratably over the advertising or promotional campaign. During 2004, 2003, and 2002, the Company expensed $74,000, $84,000 and $63,000, for advertising and promotion costs.

Recent Accounting Pronouncements - In December 2003, the Financial Accounting Standards Board (“FASB”) issued FASB Interpretation No. 46 Revised, “Consolidation of Variable Interest Entities—an Interpretation of ARB No. 51” (“FIN 46R”), which provided, among other things, immediate deferral of the application of FIN 46 for entities that did not originally qualify as special purpose entities, and provided additional scope exceptions for joint ventures with business operations and franchises. The Company’s adoption of FIN 46R did not have an impact on its financial statements.

In December 2003, the issued Staff Accounting Bulletin No. 104, “Revenue Recognition” (“SAB 104”), rescinded the accounting guidance contained in SAB 101, “Revenue Recognition in Financial Statements,” and incorporated the body of previously issued guidance related to multiple-element revenue arrangements. The Company’s adoption of SAB 104 did not have an impact on its financial statements.

F-53

CYPRESS BOWL RECREATIONS, LP

NOTES TO THE FINANCIAL STATEMENTS

DECEMBER 31, 2004, 2003 AND 2002

Note 2 - Summary of Significant Accounting Policies (Continued)

In July 2004, the FASB issued EITF Issue No. 02-14, “Whether an Investor Should Apply the Equity Method of Accounting to Investments Other Than Common Stock” (“EITF 02-14”). EITF 02-14 requires application of the equity method of accounting when an investor is able to exert significant influence over operating and financial policies of an investee through ownership of common stock or in-substance common stock. EITF 02-14 is effective for reporting periods beginning after September 15, 2004. The adoption of EITF 02-14 will not have a significant impact on the Company’s financial position or results of operations.

Note 3 - Property, Facilities, and Equipment

Property, facilities, and equipment consist of the following at December 31:

	2004		2003
Land and improvements	$	1,904,741	$	1,763,667
Buildings and improvements		2,458,939		2,142,455
Machinery and equipment		12,564,989		11,492,451
Construction-in-progress		142,630		74,276
		17,071,299		15,472,849
Less accumulated depreciation and amortization		9,068,602		7,222,647
	$	8,002,697	$	8,250,202

The Company has capitalized equipment under capital leases totaling $393,000 at December 31, 2004, 2003 and 2002 with related accumulated amortization amounting to $243,000 and $172,000, respectively.

Note 4 - Senior Debt

Senior debt consists of balances due under a revolving credit facility, term note payable, and capital leases.

Term Notes Payable - The Company has a term note payable related to the acquisition of equipment amounting to $7,124 and $13,519, at December 31, 2004 and 2003, which expires on November 22, 2005. The term note payable calls for monthly principal and interest payments.

F-54

CYPRESS BOWL RECREATIONS, LP

NOTES TO THE FINANCIAL STATEMENTS

DECEMBER 31, 2004, 2003 AND 2002

Note 4 - Senior Debt (Continued)

Capital Leases - The Company leases certain equipment under capital leases, which expire at various dates through 2007. Capital lease obligations outstanding at December 31, 2004 and 2003 were $96,539 and $187,960, respectively. Certain capital leases require monthly payments, due in six equal monthly payments from December 1st to April 1st over the lives of the leases, with no payments being made between May to November. The total weighted average interest rate of capital lease agreements amounts to approximately 6.0%.

Revolving Credit Facility - The Company’s Parent has a long-term reducing, revolving line of credit with a bank that provided for initial maximum borrowings of $30,800,000 and expires on June 1, 2009. At December 31, 2004 and 2003, the outstanding balance under the credit facility as recorded by the Parent was $24,236,591 and $19,312,903 . Amounts recorded by the Company reflect the amount attributable to the assets and operations included within these stand alone financial statements.

Interest under the agreement payable monthly by the Parent on any outstanding borrowings at either LIBOR plus 1.5%, or at the bank’s prime rate as elected by the Company monthly. The financial statements include allocated interest at the average annual borrowing rate of the Parent based upon the allocated debt during the periods presented.

The line of credit agreement is collateralized by substantially all assets of the Company, including assignment in trust of the Company’s interest and rights under the Special Use Permit (see Note 5). The line of credit agreement is guaranteed by the Parent. The Company is subject to certain restrictive financial covenants and other matters.

Maturities of senior debt for future years ending December 31 are as follows:

	Revolving Credit Facility		Term Note Payable		Capital Leases		Total
2005	$	—	$	7,124	$	37,579	$	44,703
2006		—		—		37,579		37,579
2007		—		—		30,922		30,922
2008		—		—		—		—
Thereafter		5,610,200		—		—		5,610,200
		5,610,200		7,124		106,080		5,723,404
Less amount representing interest		—		—		9,541		9,541
	$	5,610,200	$	7,124	$	96,539	$	5,713,863

F-55

CYPRESS BOWL RECREATIONS, LP

NOTES TO THE FINANCIAL STATEMENTS

DECEMBER 31, 2004, 2003 AND 2002

Note 5 - Commitments and Contingencies

Leases - The Company leases equipment under non-cancelable operating lease agreements, which expire at various dates through 2005. Lease expense for 2004, 2003 and 2002 under the agreements and other month-to-month lease agreements amounted to $76,734, $80,102 and $50,159 respectively.

Scheduled future minimum payments under the non-cancelable lease agreements for the year ended December 31, 2005 are $42,422.

Special Park Use Permit - The Company operates on land owned by the Canadian Provincial Parks (the Provincial Government) and operations are carried out under a Special Park Use Permit subject to certain terms and limitations (see Note 2). The commencement date of the Special Use Permit was September 17, 1984 and is valid for 50 years, or until October 31, 2034. However, anytime after the 40-year anniversary of the commencement date, the Company may petition to renew the term for an additional 50 years. Under the terms of the Special Use Permit, the Company is required to pay a fee to the Provincial Government based on revenue, as defined by the Special Use Permit. Fees paid to the Provincial Government during each year amount to approximately 2.0% of revenues.

Contingencies - Injury claims are filed against the Company during the normal course of business. The Company believes the ultimate liability, if any, of such claims will not have a significant effect on the Company’s results of operations, liquidity, or financial position. The Company’s insurance policy includes provisions by which the Company is reimbursed for claims paid over $1 million, at which point stop-loss coverage is carried. There were no significant injury claims paid in 2004 or 2002. During the year ended December 31, 2003 the Company recorded approximately $80,000 for injury claims expense, representing its deductible under a policy with Lone Peak, a related party captive insurance company (Note 6).

Note 6 - Related Party Transactions

Due From and Due To Parent - The Company and its Parent, Boyne USA and Subsidiaries, advance funds and pay expenses on behalf of each other. There were no such advances at December 31, 2004. Advances resulted in a net payable at December 31, 2003.

F-56

CYPRESS BOWL RECREATIONS, LP

NOTES TO THE FINANCIAL STATEMENTS

DECEMBER 31, 2004, 2003 AND 2002

Note 6 - Related Party Transactions (Continued)

Insurance - The Company’s primary insurance provider is Lone Peak Insurance Company, LTD (“Lone Peak”), an offshore (Bermuda) captive insurance company that is a wholly owned subsidiary of Boyne USA. Its principal activity is the insurance of general liability risks of Boyne USA and subsidiaries under a claims made policy. During the years ended December 31, 2004, 2003 and 2002 the Company’s insurance premium expense included within resort operating expenses amounted to approximately $177,000, $168,000 and $147,000, respectively. Unamortized insurance premiums paid to Lone Peak included within prepaids as of December 31, 2004 and 2003 amount to approximately $398,000 and $177,000, respectively.

Note 7 - Fair Value of Financial Instruments

The following methods and assumptions were used to estimate the fair values for the Company’s financial instruments:

Cash and Cash Equivalents, Accounts Receivable, and Accounts Payable - The carrying amounts of these items approximate their fair values at December 31, 2004 and 2003.

Term Note Payable and Capital Leases - Borrowings under the term note payable and capital lease obligations are subject to terms and conditions that reflect those currently available for similar financing arrangements. The carrying amount of these items approximates their fair values at December 31, 2004.

Note 8 - 2010 Olympics and Sponsorship Agreement

In 2002, Cypress signed a Games Venue Agreement (the Agreement) with the Vancouver 2010 Bid Corporation (Bid Corp) regarding the use of existing and proposed additional facilities at Cypress during the 2010 Winter Olympic Games (the Games). The Agreement includes terms which would allow Bid Corp and its successor to host the freestyle skiing and snowboarding events of the Games at Cypress. The hosting of the Games at Cypress is expected to accrue tangible and intangible benefits to Cypress. Cypress has both fiduciary and non-fiduciary obligations as it relates to the Agreement.

F-57

CYPRESS BOWL RECREATIONS, LP

NOTES TO THE FINANCIAL STATEMENTS

DECEMBER 31, 2004, 2003 AND 2002

Note 8 - 2010 Olympics and Sponsorship Agreement (Continued)

Cypress entered into a sponsorship agreement with Bell Canada in 2004. Terms of the agreement call for annual payments in exchange for exclusivity within the “telecommunications” category as a top tier Cypress sponsor and a supplier w/ respect to products. The annual payments are due in Canadian Dollar, amounting to the following based exchange rates at December 31, 2004: $104,000 beginning in 2004 through 2007, $125,000 during 2008 and 2009; and $145,000 due during 2010 to 2011. In addition, Bell contributed $33,000 in 2004 to Cypress towards the initial costs of a snowboard terrain park. Beginning in 2005 (through 2011), Bell will contribute $21,000 per year for other agreed upon “enhancements to winter property.” Both Cypress and Bell have various other obligations under the agreement which expires April 30, 2012.

Note 9 - Subsequent Events

During August 2005 Boyne USA entered into a non-binding letter of intent with CNL Income Properties, Inc. (CNL), whereby CNL agreed to acquire the resort assets of Cypress Recreation Bowl, LP and related park use permit operating rights for approximately $27.5 million. In conjunction with the transaction, Boyne USA will enter into an operating lease for the same assets acquired by CNL for a minimum term of 20-years, subject to certain early buy-out provisions and lease term extensions.

F-58

GREAT BEAR LODGE OF WISCONSIN DELLS, LLC

AND GREAT BEAR LODGE OF SANDUSKY, LLC

UNAUDITED COMBINED BALANCE SHEET

(in thousands)

	September 30, 2005		December 20, 2004
Assets
Current Assets
Cash and cash equivalents	$	473	$	2,155
Due from Class B Member		—		385
Accounts receivable		234		555
Inventories		768		663
Prepaid expenses and other		465		159
Total Current Assets		1,940		3,917
Property and Equipment		76,572		51,956
Other Assets
Replacement reserve funds		—		1,355
Real estate tax escrow		—		205
Goodwill, net		64,516		24,457
Loan fees, net		—		527
Total Other Assets		64,516		26,544
TOTAL ASSETS	$	143,028	$	82,417
Liabilities And Members’ Equity
Current Liabilities
Current maturities of long-term debt	$	—	$	75,664
Accounts payable		3,882		1,667
Accounts payable - related party		72,160		173
Accrued interest expense		—		507
Accrued payroll		—		195
Accrued expenses		1,115		1,367
Accrued real estate taxes		1,059		1,335
Gift certificates payable		389		771
Advance deposits		1,088		2,101
Due to Class A Member		—		385
Total Current Liabilities		79,693		84,165
Long-Term Debt		—		37
Total Liabilities		79,693		84,202
Members’ Equity (Deficit)		63,335		(1,784	)
TOTAL LIABILITIES & EQUITY	$	143,028	$	82,417

See accompanying notes to unaudited combined financial statements.

F-59

GREAT BEAR LODGE OF WISCONSIN DELLS, LLC

AND GREAT BEAR LODGE OF SANDUSKY, LLC

UNAUDITED COMBINED STATEMENT OF OPERATIONS

(in thousands)

	Nine Months Ended September 30,
	2005			2004
Revenues
Rooms	$	20,602		$	23,702
Food and beverage		4,812			5,274
Other hotel operations		4,193			3,965
Total Revenues		29,607			32,941
Departmental Expenses
Rooms		3,393			3,342
Food and beverage		3,988			3,902
Other		3,511			3,433
Total Departmental Expenses		10,892			10,677
Operating Expenses
Selling, general and administrative		6,620			4,423
Property operating costs		4,144			3,939
Management fees		—			534
Geographic development fee		—			591
Depreciation and amortization		5,772			5,552
Other		—			634
Total Operating Expense		16,536			15,673
Income From Operations		2,179			6,591
Other Income (Expense)
Interest Income		10			105
Interest Expense		(1	)		(3,529	)
Total Other Income (Expense)		9			(3,424	)
Net Income	$	2,188		$	3,167

.See accompanying notes to unaudited combined financial statements.

F-60

GREAT BEAR LODGE OF WISCONSIN DELLS, LLC

AND GREAT BEAR LODGE OF SANDUSKY, LLC

UNAUDITED COMBINED STATEMENT OF CASH FLOWS

(in thousands)

	Nine Months Ended September 30,
	2005			2004
Cash Flows From Operating Activities
Net income (loss)	$	2,188		$	3,167
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization		5,772			5,552
Changes in operating assets and liabilities:
Receivables, prepaid expenses and other assets		2,094			(381	)
Accounts payable, accrued expenses and other liabilities		(9,146	)		(1,789	)
Net Cash Provided By Operating Activities		908			6,549
Cash Flows From Investing Activities
Capital expenditures for property and equipment		(5,530	)		(2,311	)
Net withdrawals from real estate tax escrow		—			95
Net deposits from certificates of deposit		—			935
Net deposits from replacement reserve fund		—			623
Net Cash Used In Investing Activities		(5,530	)		(658	)
Cash Flows From Financing Activities
Principal payments on long-term debt		—			(1,793	)
Proceeds (repayment) from note payable - related party		—			(50	)
Payment for loan fees		—			(225	)
Distributions to members		—			(3,900	)
Net Cash Used In Financing Activities		—			(5,968	)
Net Decrease In Cash and Cash Equivalents		(4,622	)		(77	)
Cash And Cash Equivalents - Beginning Of Period		5,095			1,181
Cash And Cash Equivalents - End Of Period	$	473		$	1,104

See accompanying notes to unaudited combined financial statements.

F-61

GREAT BEAR LODGE OF WISCONSIN DELLS, LLC

AND GREAT BEAR LODGE OF SANDUSKY, LLC

NOTES TO UNAUDITED COMBINED STATEMENT OF OPERATIONS

1. General

The statements presented herein have been prepared in conformity with accounting principles generally accepted in the United States of America and should be read in conjunction with the audited combined financial statements for the period ended December 20, 2004. In the opinion of management, all adjustments that are deemed necessary have been made in order to fairly present the unaudited combined financial statements for the period and accounting policies have been consistently applied.

F-62

Independent Auditors’ Report

Members and Boards of Directors

Great Bear Lodge of Wisconsin Dells, LLC and

Great Bear Lodge of Sandusky, LLC

Madison, Wisconsin

We have audited the accompanying combined balance sheet of Great Bear Lodge of Wisconsin Dells, LLC and Great Bear Lodge of Sandusky, LLC as of December 20, 2004 and December 31, 2003 and 2002, and the related combined statements of operations, members’ equity (deficit) and cash flows for the period ended December 20, 2004 and for the years ended December 31, 2003 and 2002. These combined financial statements are the responsibility of the management of Great Bear Lodge of Wisconsin Dells, LLC and Great Bear Lodge of Sandusky, LLC. Our responsibility is to express an opinion on these combined financial statements based on our audits.

We conducted our audits 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 combined financial statements are free of material misstatement. An audit includes 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 Company’s 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 combined financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall combined financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the combined financial statements referred to above present fairly, in all material respects, the combined financial position of Great Bear Lodge of Wisconsin Dells, LLC and Great Bear Lodge of Sandusky, LLC as of December 20, 2004 and December 31, 2003 and 2002, and the results of their combined operations and their cash flows for the period ended December 20, 2004 and for the years ended December 31, 2003 and 2002, in conformity with accounting principles generally accepted in the United States of America.

St. Louis, Missouri

May 5, 2005 (except for note 12 which is dated January 20, 2006)

F-63

GREAT BEAR LODGE OF WISCONSIN DELLS, LLC

AND GREAT BEAR LODGE OF SANDUSKY, LLC

COMBINED BALANCE SHEET

	December 20, 2004			December 31,
Assets				2003		2002
Current Assets
Cash and cash equivalents	$	2,155,348		$	1,181,318	$	1,459,604
Certificates of deposit		—			2,991,810		3,165,434
Due from Class B Member		385,000			385,000		385,000
Accounts receivable (Note 5)		555,285			210,737		232,037
Inventories		662,653			648,159		558,008
Prepaid expenses		158,876			214,885		186,644
Total Current Assets		3,917,162			5,631,909		5,986,727
Property And Equipment (Notes 3 And 4)		51,956,429			57,135,713		61,287,118
Other Assets
Replacement reserve fund (Note 4)		1,354,908			2,386,852		1,053,790
Real estate tax escrow		205,036			186,465		261,900
Goodwill, net		24,456,689			24,456,689		24,456,689
Loan fees, net (Note 11)		527,177			567,297		591,501
Total Other Assets		26,543,810			27,597,303		26,363,880
TOTAL ASSETS	$	82,417,401		$	90,364,925	$	93,637,725
Liabilities And Members’ Equity (Deficit)
Current Liabilities
Current maturities of long-term debt (Notes 4 and 11)	$	75,663,531		$	2,394,410	$	1,711,428
Accounts payable		1,666,765			1,425,915		1,093,871
Accrued expenses		1,367,489			1,302,262		1,183,929
Gift certificates payable		770,984			700,640		738,852
Accrued interest expense		506,777			279,103		276,675
Accrued payroll		195,405			618,864		407,199
Accrued real estate taxes		1,334,639			1,103,938		1,003,640
Accounts payable - related party (Note 5)		173,190			264,986		379,612
Advance deposits		2,100,879			1,796,352		1,649,912
Note payable - related party (Note 5)		—			50,000		—
Due to Class A Member		385,000			385,000		385,000
Total Current Liabilities		84,164,659			10,321,470		8,830,118
Long-Term Debt (Notes 4 And 11)		36,510			75,433,543		76,339,066
Total Liabilities		84,201,169			85,755,013		85,169,184
Members’ Equity (Deficit)		(1,783,768	)		4,609,912		8,468,541
TOTAL LIABILITIES & EQUITY	$	82,417,401		$	90,364,925	$	93,637,725

See the accompanying notes to combined financial statements.

F-64

GREAT BEAR LODGE OF WISCONSIN DELLS, LLC

AND GREAT BEAR LODGE OF SANDUSKY, LLC

COMBINED STATEMENT OF OPERATIONS

	For the Period Beginning January 1, 2004 And Ended December 20,			For The Years Ended December 31,
	2004			2003			2002
Revenues
Rooms	$	27,596,922		$	29,172,346		$	28,995,017
Food and beverage		6,446,933			6,601,604			6,341,744
Other		4,861,169			4,944,122			5,090,895
Total Revenues		38,905,024			40,718,072			40,427,656
Departmental Expenses
Rooms		4,093,952			4,311,459			4,453,222
Food and beverage		5,380,278			4,925,076			4,861,466
Other		4,028,170			4,083,573			4,181,499
Total Departmental Expenses		13,502,400			13,320,108			13,496,187
Operating Expenses
Administrative and general		5,940,826			5,538,261			4,642,379
Property taxes, insurance and other		5,594,317			4,968,364			4,256,672
Management fees (Note 5)		1,327,834			1,030,268			1,417,918
Geographic development fee (Note 6)		694,519			989,222			432,348
Depreciation and amortization		8,000,986			8,089,757			8,414,284
Other		—			—			49,735
Total Operating Expenses		21,558,482			20,615,872			19,213,336
Income From Operations		3,844,142			6,782,092			7,718,133
Other Income (Expense)
Interest income		32,061			152,037			159,129
Interest expense		(4,549,132	)		(4,817,758	)		(5,054,850	)
Total Other Income (Expense)		(4,517,071	)		(4,665,721	)		(4,895,721	)
Net Income (Loss)	$	(672,929	)	$	2,116,371		$	2,822,412

See the accompanying notes to combined financial statements.

F-65

GREAT BEAR LODGE OF WISCONSIN DELLS, LLC

AND GREAT BEAR LODGE OF SANDUSKY, LLC

COMBINED STATEMENT OF MEMBERS’ EQUITY (DEFICIT)

For The Period Beginning January 1, 2004 And Ended December 20, 2004

And For The Years Ended December 31, 2003 And 2002

	Great Bear Lodge Of Wisconsin Dells, LLC									Great Bear Lodge Of Sandusky, LLC												Combined
	GLGB Manager II, LLC (30%)			SunAmerica Housing Fund 815, LP (70%)			Total Members’ Equity (Deficit)			GLGB Manager I, LLC (20%)			GLGB Investor I, LLC (30%)			SunAmerica Housing Fund 726, LP (50%)			Total Members’ Equity (Deficit)			Total Members’ Equity (Deficit)
Balance (Deficit) - January 1, 2002	$	(2,785,371	)	$	9,695,840		$	6,910,469		$	4,038		$	3,016,833		$	4,513,975		$	7,534,846		$	14,445,315
Net Income (Loss)		(27,145	)		(63,337	)		(90,482	)		582,579			873,868			1,456,447			2,912,894			2,822,412
Contributions		—			—			—			—			—			814			814			814
Distributions		(440,000	)		(2,310,000	)		(2,750,000	)		(1,989,347	)		(1,356,506	)		(2,704,147	)		(6,050,000	)		(8,800,000	)
Balance (Deficit) - December 31, 2002		(3,252,516	)		7,322,503			4,069,987			(1,402,730	)		2,534,195			3,267,089			4,398,554			8,468,541
Net Income (Loss)		(382,638	)		(892,821	)		(1,275,459	)		678,366			1,017,549			1,695,915			3,391,830			2,116,371
Distributions		—			—			—			(2,092,356	)		(1,296,985	)		(2,585,659	)		(5,975,000	)		(5,975,000	)
Balance (Deficit) - December 31, 2003		(3,635,154	)		6,429,682			2,794,528			(2,816,720	)		2,254,759			2,377,345			1,815,384			4,609,912
Net Income (Loss)		(929,421	)		(2,168,650	)		(3,098,071	)		485,028			727,543			1,212,571			2,425,142			(672,929	)
Distributions		—			(682,987	)		(682,987	)		(1,750,280	)		(1,099,704	)		(2,187,780	)		(5,037,764	)		(5,720,751	)
Balance (Deficit) - December 20, 2004	$	(4,564,575	)	$	3,578,045		$	(986,530	)	$	(4,081,972	)	$	1,882,598		$	1,402,136		$	(797,238	)	$	(1,783,768	)

See the accompanying notes to combined financial statements.

F-66

GREAT BEAR LODGE OF WISCONSIN DELLS, LLC

AND GREAT BEAR LODGE OF SANDUSKY, LLC

COMBINED STATEMENT OF CASH FLOWS

	For The Period Beginning January 1, 2004 And Ended December 20, 2004			For The Years Ended December 31,
				2003			2002
Cash Flows From Operating Activities
Net income (loss)	$	(672,929	)	$	2,116,371		$	2,822,412
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization		8,000,986			8,089,757			8,414,284
Bad debt expense		—			3,742			1,750
Gain on asset disposal		—			(867	)		—
Change in operating assets and liabilities:
Accounts receivable		(344,548	)		17,558			61,393
Inventories		(14,494	)		(90,151	)		(100,006	)
Prepaid expenses		56,009			(28,241	)		(63,661	)
Accounts payable		240,850			332,045			207,455
Accrued expenses		100,143			432,722			134,564
Gift certificates payable		70,344			(38,212	)		17,009
Accounts payable - related party		(91,796	)		(114,626	)		288,776
Advance deposits		304,527			146,440			(423,162	)
Net Cash Provided By Operating Activities		7,649,092			10,866,538			11,360,814
Cash Flows From Investing Activities
Capital expenditures		(2,597,077	)		(3,695,161	)		(4,167,960	)
Net withdrawals from (contributions to) real estate tax escrow		(18,571	)		75,435			4,784
Proceeds from sale of assets		—			26,000			—
Net deposits (to) from certificates of deposit		2,991,810			173,624			(1,804,949	)
Net deposits (to) from replacement reserve fund		1,031,944			(1,333,062	)		644,461
Net Cash Provided By (Used In) Investing Activities		1,408,106			(4,753,164	)		(5,323,664	)
Cash Flows From Financing Activities
Proceeds from line of credit		—			—			314,293
Principal payments on long-term debt		(2,127,912	)		(1,191,975	)		(49,170,665	)
Proceeds from (payment on ) note payable - related party		(50,000	)		50,000			—
Proceeds from issuance of debt		—			969,434			50,547,036
Payments for loan fees		(184,505	)		(244,119	)		(47,379	)
Distributions to members		(5,720,751	)		(5,975,000	)		(8,800,000	)
Capital contributions from members		—			—			814
Net Cash Used In Financing Activities		(8,083,168	)		(6,391,660	)		(7,155,901	)
Net Increase (Decrease) In Cash and Cash Equivalents		974,030			(278,286	)		(1,118,751	)
Cash And Cash Equivalents - Beginning Of Period		1,181,318			1,459,604			2,578,355
Cash And Cash Equivalents - End Of Period	$	2,155,348			1,181,318			1,459,604
Supplemental Disclosure Of Cash Flow Information
Interest paid	$	4,321,458			4,815,330			4,781,755

See the accompanying notes to combined financial statements.

F-67

GREAT BEAR LODGE OF WISCONSIN DELLS, LLC

AND GREAT BEAR LODGE OF SANDUSKY, LLC

NOTES TO COMBINED FINANCIAL STATEMENTS

December 20, 2004, December 31, 2003 And 2002

1. Summary Of Significant Accounting Policies

Principles Of Combination

The combined financial statements include the accounts of Great Bear Lodge of Wisconsin Dells, LLC and Great Bear Lodge of Sandusky, LLC (the Companies). The Companies have common ownership by entities related to AIG SunAmerica Housing Funds and the Great Lakes Companies, Inc. All material intercompany account balances and transactions have been eliminated in combination. The Companies’ operations are described in Note 2.

Estimates And Assumptions

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Cash And Cash Equivalents

The Companies define cash and cash equivalents as highly liquid, short-term investments with a maturity at the date of acquisition of three months or less. The Companies maintain cash accounts which, at various times, exceed the Federal Deposit Insurance Corporation insured limits of $100,000 per bank.

Certificates Of Deposit

Certificates of deposit are valued at cost plus accrued interest which approximates fair value.

Accounts Receivable

Accounts receivable are reported at the amount management expects to collect on balances outstanding at year end. Management closely monitors outstanding balances and writes off, as of year end, all balances that have not been collected by the time the financial statements are issued.

Advertising

The Companies expense nonspecific and daily advertising costs to operations when incurred. Advertising expense was $2,557,868, $2,075,687 and $1,531,234 for the period ended December 20, 2004 and for the years ended December 31, 2003 and 2002, respectively, and is included in general and administrative expenses in the accompanying combined statement of operations. Expenditures incurred related to advertising in travel guides over a specific period of time are capitalized, and amortized over the life of the travel guide. Expenditures related to travel guide advertising were capitalized in the amount of $190,734 and $57,802 at December 20, 2004 and December 31, 2003, respectively, and are included in prepaid expenses.

Inventories

Inventories consist primarily of food, beverage, arcade and gift shop merchandise and are valued at lower of cost, using the first-in, first-out (FIFO) method or market.

F-68

GREAT BEAR LODGE OF WISCONSIN DELLS, LLC

AND GREAT BEAR LODGE OF SANDUSKY, LLC

NOTES TO COMBINED FINANCIAL STATEMENTS

December 20, 2004, December 31, 2003 And 2002

Property And Equipment

Property and equipment are stated at cost and depreciated using the straight-line method over their estimated useful lives. Major expenditures for property and equipment are capitalized. Maintenance, repairs and minor renewals are expensed as incurred. When assets are retired or otherwise disposed of, their costs and related accumulated depreciation are removed from the accounts and resulting gains or losses are included in income.

Buildings and improvements	40 years
Land improvements	15 years
Fixtures and equipment	3 -7 years

Interest on borrowings directly related to construction in process balances are capitalized during the construction period

Goodwill

Great Bear Lodge of Wisconsin Dells, LLC has allocated $28,585,740 of the original purchase price of the resort acquired to goodwill.

Goodwill was being amortized using the straight-line method over 15 years through December 31, 2001. Accumulated amortization at December 20, 2004 and December 31, 2003 and 2002 was $4,129,051.

Effective for years beginning January 1, 2002, Financial Accounting Standards Board (FASB) Statement No. 142 states that goodwill shall not be amortized. Instead, goodwill is tested for impairment, and adjusted if applicable. Impairment is the condition that exists when the carrying amount of goodwill exceeds its implied fair value. If fair value exceeds the carrying cost, there is no impairment. FASB 142 does not change the tax method reporting for goodwill amortization.

At December 20, 2004, fair value exceeds the carrying cost and therefore no impairment has been recognized.

Loan Fees

At December 20, 2004, loan fees of $1,864,307 have been capitalized and are being amortized on a straight-line basis over the terms of the loans. Accumulated amortization was $1,337,130, $1,112,503 and $844,180 at December 20, 2004 and December 31, 2003 and 2002, respectively. Amortization of loan fees charged against income amounted to $224,625 for the period ended December 20, 2004 and $268,324 and $1,279,579 for the years ended December 31, 2003 and 2002, respectively.

Intangible And Long-Lived Assets

The Companies review the recoverability of intangible (other than goodwill) and long-lived assets whenever events or changes in circumstances indicate that the carrying value of such assets may not be recoverable. If the expected future cash flows from the use of such assets (undiscounted and without interest charges) are less than the carrying value, the Companies’ policies are to record a write-down, which is determined based on the difference between the carrying value of the asset and the estimated fair value. At December 20, 2004 and December 31, 2003 and 2002, no provision for impairment was considered necessary.

Revenue Recognition

The Companies recognize revenue from their resorts as earned on the close of business each day.

F-69

GREAT BEAR LODGE OF WISCONSIN DELLS, LLC

AND GREAT BEAR LODGE OF SANDUSKY, LLC

NOTES TO COMBINED FINANCIAL STATEMENTS

December 20, 2004, December 31, 2003 And 2002

Advance Deposits

Advance deposits are deposits made by the customers when reservations are made. The Companies’ policies are to charge a cancellation fee if reservations are canceled prior to 72 hours before the reserved date, with the remainder of the advance deposit refunded. Cancellations within 72 hours of the reserved date result in no refund of the advance deposit. The Companies invest cash received from advance deposits in interest bearing certificates of deposit. There are no specific requirements on investment of advance deposits.

Fair Value Of Financial Instruments

The carrying amounts of cash and cash equivalents, certificates of deposit, accounts receivable, accounts payable and accrued expenses approximate fair value because of the short maturity of those instruments. At December 20, 2004, and December 31, 2003 and 2002, the Companies estimate that the fair value of their long-term debt is not materially different from their financial statement carrying value because either the stated interest rates fluctuate with current rates or the interest rates approximate the current rates at which the Companies borrow funds.

Income Taxes

The Companies are organized as separate limited liability companies. They are not taxpaying entities for federal or state income tax purposes and thus no provision for income taxes has been recorded in these combined financial statements. The Companies’ income, losses and credits are included in the income tax returns of their members.

Operating Agreements

Certain defined terms contained in the Operating Agreements are denoted with initial capital letters throughout the combined financial statements.

2. Operations

Great Bear Lodge of Wisconsin Dells, LLC (the Dells) was formed between SunAmerica Housing Fund 815, LP, a Nevada limited partnership (Class A Member) and GLGB Manager II, LLC, a Delaware limited liability company (Class B Member), on October 7, 1999 in the State of Delaware. The Dells was established to purchase and operate a resort hotel, the Great Wolf Lodge in Wisconsin Dells, Wisconsin. The resort offers an indoor and outdoor waterpark, redemption arcade, themed restaurant, gift shop and fitness facility.

Great Bear Lodge of Sandusky, LLC (Sandusky) was formed between the Class A Member, the Class B Member and GLGB Manager I, LLC, a Delaware limited liability company (Class C Member) on May 20, 1999 in the State of Delaware. Sandusky was established to construct and operate a resort hotel, the Great Bear Lodge in Sandusky, Ohio. The resort, which opened March 2001, offers an indoor and outdoor waterpark, redemption arcade, themed restaurant, gift shops and fitness facility.

F-70

GREAT BEAR LODGE OF WISCONSIN DELLS, LLC

AND GREAT BEAR LODGE OF SANDUSKY, LLC

NOTES TO COMBINED FINANCIAL STATEMENTS

December 20, 2004, December 31, 2003 And 2002

3. Property And Equipment

Property and equipment consist of:

	2004		2003		2002
Land and improvements	$	9,082,849	$	9,047,654	$	8,952,472
Buildings and improvements		33,671,124		32,064,960		31,411,005
Fixtures and equipment		42,119,734		41,178,400		36,267,303
Construction in progress		—		2,650		1,993,723
		84,873,707		82,293,664		78,624,503
Less: Accumulated depreciation		32,917,278		25,157,951		17,337,385
	$	51,956,429	$	57,135,713	$	61,287,118

Depreciation charged against income amounted to $7,776,361, $7,821,433 and $7,134,705 for the period ended December 20, 2004 and the years ended December 31, 2003 and 2002, respectively.

F-71

GREAT BEAR LODGE OF WISCONSIN DELLS, LLC

AND GREAT BEAR LODGE OF SANDUSKY, LLC

NOTES TO COMBINED FINANCIAL STATEMENTS

December 20, 2004, December 31, 2003 And 2002

4. Long-Term Debt

Long-term debt consists of:

	2004		2003		2002
Dells
Note payable to a bank, payable in monthly installments of $375,973 including interest at the two-year Treasury note index rate plus 1.675% based on a 25-year amortization. The interest rate was adjusted on November 10, 2002 and will be adjusted once every 24 months thereafter. During the term of the loan, the rate cannot be less that 7% per year and cannot be greater that 8.375% per year. The effective rate was 7% at December 20, 2004. The note is collateralized by the property, security interest of the membership interest, and a security interest in the replacement reserve account. In connection with the IPO (Note 11), the balance of the note was repaid in full subsequent to December 20, 2004.	$	50,097,910	$	50,930,563	$	49,961,129
Note payable to Alliant Energy, payable in monthly installments of $1,635 including interest at 3%. The note is collateralized by equipment and is due in December 2007.		54,737		64,057		89,365
Sandusky
Notes payable to a bank, payable in monthly installments of interest only for the first 24 months and in equal monthly payments of principal and interest based on a 20-year amortization with principal and unpaid interest due on March 1, 2006. The Company has a one-year option to extend the maturity date. Interest is charged at the LIBOR rate plus 3% during the first 24 months and adjusted to a fixed rate of 4.65% for the subsequent 12 months. The note is secured by the property, unconditional guarantees of individual investors, guarantee of corporate guarantor (up to $6,000,000) and the Company’s replacement reserve, real estate tax escrow and operating cash accounts. In connection with the IPO (Note 11), the balance of the note was repaid in full subsequent to December 20, 2004.		25,547,394		26,833,333		28,000,000
		75,700,041		77,827,953		78,050,494
Less: Current maturities		75,663,531		2,394,410		1,711,428
	$	36,510	$	75,433,543	$	76,339,066

F-72

GREAT BEAR LODGE OF WISCONSIN DELLS, LLC

AND GREAT BEAR LODGE OF SANDUSKY, LLC

NOTES TO COMBINED FINANCIAL STATEMENTS

December 20, 2004, December 31, 2003 And 2002

Interest expense charged against operations amounted to $4,549,132, $4,817,758 and $5,054,850 for the period ended December 20, 2004 and for the years ended December 31, 2003 and 2002, respectively.

In connection with the loan agreements, the Companies must maintain replacement reserve funds. The agreements require monthly deposits of 4% of gross operating revenues for the Dells and monthly amounts not below $41,666 for Sandusky to fund capital improvements and replacements. The replacement reserve funds are pledged as collateral for the notes payable. The Dells’ December 2004 and 2003 replacement reserve deposit was not funded timely in accordance with the loan agreement. The bank waived the 2004 violation, as the entire balance of the loan was repaid after December 20, 2004 (Note 11) without a penalty. The bank waived the 2003 violation in a letter dated May 10, 2004.

In addition, Sandusky’s Operating Agreement provides for a monthly deposit of 4% of gross operating revenues to fund capital improvements and replacements. This amount was under funded by approximately $681,000 and $364,000 at December 20, 2004 and December 31, 2003, respectively, both of which were approved by the Class A Member as required by the Operating Agreement.

During 2003, Sandusky entered into an agreement with the bank to extend the note payable for an additional 36 months. The interest rate will be reduced to the LIBOR rate plus 2.75%. All other terms and conditions of the current note will remain unchanged.

5. Related Party Transactions

Dells

The Dells resort and facility is managed by The Great Lakes Companies, Inc., a company affiliated through common ownership with GLGB Manager II, LLC, the Class B Member. The management agreement requires a fee of 3% of the Company’s adjusted gross revenue for each fiscal year. Management fees of $297,941, $155,420 and $589,399 were expensed for the period ended December 20, 2004 and for the years ended December 31, 2003 and 2002, respectively. Management fees of $220,593 were unpaid as of December 31, 2002 and are included in accounts payable - related party (see Note 8 regarding management fees during 2003).

The management agreement also provides for a central office services fee in an amount allocated among sharing hotels. Central office service fees amounted to $37,080 for the period ended December 20, 2004 and for the years ended December 31, 2003 and 2002. Central office fees of $9,720, $3,090 and $6,180 were unpaid as of December 20, 2004, December 31, 2003 and 2002, respectively, and are included in accounts payable - related party.

During 2003 and a portion of 2002, an affiliate of The Great Lakes Companies, Inc. received a central reservation fee of 1-1/2% of gross room revenues. Reservation fees of $188,935, $203,290 and $10,000 were expensed for the period ended December 20, 2004 and for the years ended December 31, 2003 and 2002, respectively. Reservation fees of $9,644 were unpaid as of December 20, 2004 and are included in accounts payable - related party.

The Operating Agreement (the Agreement) provides an annual property asset management fee of $10,000 per year to SunAmerica Affordable Housing Partners, Inc., an affiliate of the Class A Member. Asset management fees of $1,667 and $10,000 were unpaid as of December 31, 2003 and 2002, respectively, and are included in accounts payable - related party.

Amounts due from The Great Lakes Companies, Inc. and affiliated entities amounted to $14,719, $21,278 and $44,675 and are included in accounts receivable at December 20, 2004 and December 31, 2003 and 2002, respectively.

F-73

GREAT BEAR LODGE OF WISCONSIN DELLS, LLC

AND GREAT BEAR LODGE OF SANDUSKY, LLC

NOTES TO COMBINED FINANCIAL STATEMENTS

December 20, 2004, December 31, 2003 And 2002

Sandusky

The Sandusky resort and facility is managed by The Great Lakes Companies, Inc., a company affiliated through common ownership with GLGB Manager I, LLC, the Class C Member. The management agreement requires a fee of 3% of the Company’s adjusted gross revenue for each fiscal year. Management fees of $630,802, $656,217 and $621,411 and were expensed for the period ended December 20, 2004 and for the years ended December 31, 2003 and 2002, respectively. Management fees of $105,261, $152,740 and $83,480 were unpaid as of December 20, 2004, December 31, 2003 and 2002, respectively, and are included in accounts payable - related party. In addition, beginning in 2002, the management agreement requires a subordinated management fee of 1% of the Company’s adjusted gross revenue for each full fiscal year. Subordinated management fees of $218,631 and $207,108 were expensed for the period ended December 20, 2004 and for the years ended December 31, 2003 and 2002, respectively. The management agreement also provides for a central office services fee in an amount allocated among sharing hotels. Central office service fees amounted to $32,520 for the period ended December 20, 2004 and for the years ended December 31, 2003 and 2002, respectively. Central office fees of $2,710 and $2,710 were unpaid as of December 31, 2003 and 2002 and are included in accounts payable - related party.

Beginning in 2002, an affiliate of The Great Lakes Companies, Inc. received a central reservation fee of 2% of gross room revenues. Reservation fees of $223,397, $233,267 and $21,698 were expensed for the period ended December 20, 2004 and for the years ended December 31, 2003 and 2002, respectively. Central reservation fees of $32,587, $51,411 and $13,856 were unpaid as of December 20, 2004, December 31, 2003 and 2002, respectively.

The Operating Agreement (the Agreement) provides an annual property asset management fee of $10,000 per year to SunAmerica Affordable Housing Partners, Inc., an affiliate of the Class A Member. Asset management fees of $10,000 were unpaid as of December 31, 2002, and are included in accounts payable - related party.

As noted above, accounts payable - related party includes management fees, central office service fees, asset management fees and miscellaneous expenses totaling $137,848, $257,146 and $97,671 as of December 20, 2004, December 31, 2003 and 2002, respectively.

During the year ended December 31, 2003, The Great Lakes Companies, Inc. funded amounts to Sandusky for operating expenses. As stated in the management agreement, the Great Lakes Companies, Inc. was not required to make such a payment and the amounts are due on demand. The unpaid balance as of December 31, 2003 was $50,000. The balance was repaid in January 2004, including interest of $3,781.

6. Geographic Development Fee

Sandusky entered into a Geographic Development Agreement which provides for Tall Pines Development Corporation (Tall Pines) to be paid the following development fees for ten years ending March 2011: (1) Base Development Fee which represents a fee of 2% of the Company’s adjusted gross revenue for each fiscal year (2) Tier One Incentive Development Fee and/or (3) Tier Two Incentive Development Fee.

Tier One Incentive Development Fee is an amount equal to 1% of revenues if the following conditions are met: (1) Revenue per available room is greater than $100 and (2) Gross Operating Profit is greater than 45% and (3) the Company earns a minimum cash-on-cash return on equity of 10%. If only the third criteria is met for the fiscal year, Tall Pines shall be entitled to payment of  ¹/2 of the Tier One Incentive Development Fee.

Tier Two Incentive Development Fee is an amount equal to 1% of Revenue over and above the Base Development Fee and Tier One Incentive Development Fee. The following are the conditions: (1) Revenue per available room is greater than $125 and (2) Gross Operating Profit is greater than 45% and (3) the Company earns a minimum cash-on-cash return on equity of 10%.

F-74

GREAT BEAR LODGE OF WISCONSIN DELLS, LLC

AND GREAT BEAR LODGE OF SANDUSKY, LLC

NOTES TO COMBINED FINANCIAL STATEMENTS

December 20, 2004, December 31, 2003 And 2002

The Base Development Fee, which is required to be paid on a monthly basis, of $347,800, $364,821 and $346,180 was expensed for the period ended December 20, 2004 and for the years ended December 31, 2003 and 2002, respectively. The base development fee of $47,000 and $23,814 was unpaid as of December 31, 2003 and 2002, respectively, and is included in accrued expenses.

For the years ended December 31, 2003 and 2002, only the third criteria of the Tier One Incentive Development Fee was met, which entitles Tall Pines to .5% of adjusted revenues. In addition, for the years ended December 31, 2003 and 2002, the criteria for the Tier Two Incentive Development Fee were not met. However, in 2003, an agreement was made with Tall Pines Development to waive the criteria described above as the nature of the agreement was not being upheld. Therefore, the fee associated with Tier One and Two were paid for 2004 and 2003, amounting to $347,260 and $364,821, respectively. Additional expenses of $259,580 were paid in 2003 which related to additional 2002 expenses.

7. Profit Sharing Plan

The Companies maintain a 401(k) profit sharing plan covering all eligible employees. Employees become eligible after completing one year of service with at least 1,000 hours. Company contributions are discretionary. Currently, the Companies match 50% of the first 4% of each eligible employee’s contributions. The plan is sponsored by The Great Lakes Companies, covering multiple entities. The Companies combined contributions to the plan amounted to $72,072, $70,813 and $34,319 in 2004, 2003 and 2002, respectively.

8. Allocation Of Profits, Losses And Cash Distributions

Dells

As defined in Dells’ Operating Agreement, net profits and losses are generally allocated 70% to SunAmerica Housing Fund 815, LP and 30% to GLGB Manager II, LLC, except that the Agreement specifies allocation limitations and special allocations in certain situations, including, “Capital Transactions.” The Agreement defines Capital Transactions as sale, refinance, exchange, transfer, assignment, or other disposition of all or any portion of the Dells resort.

The agreement also provides for priority distributions from Net Cash Flow, as defined in the Agreement, to be distributed in the following priority:

1. First priority is a “Class A Senior Priority Return,” of 14% on its original capital contribution of $16,500,000 which calls for a cumulative return of $577,500 per calendar quarter to the Class A Member, payable 45 days after the end of the calendar quarter. Distributions under the Class A Senior Priority Requirements of $2,310,000 were made to the Class A Member during the year ended December 31, 2002. At December 31, 2003 and 2002, $385,000 was due to the Class A Member (see note below regarding 2004 and 2003 distributions and management fees).

2. Second priority is payment of 12% interest per annum, or any optional capital contributions (OCC) to the Class A Member to fund operating deficits or other reasonable and necessary obligations of the Company.

3. Third priority is repayment of “Class A Net OCC.”

4. Fourth priority is payment of “Class B OCC Priority Return” at 12% interest per annum.

5. Fifth priority is payment of “Class B Net OCC.”

F-75

GREAT BEAR LODGE OF WISCONSIN DELLS, LLC

AND GREAT BEAR LODGE OF SANDUSKY, LLC

NOTES TO COMBINED FINANCIAL STATEMENTS

December 20, 2004, December 31, 2003 And 2002

6. Sixth priority is distribution to the Class B Member equal to the “Catch-Up Amount,” which is defined as “Catch-Up Percentage,” Class B Percentage divided by Class A Percentage, multiplied by Class A Senior Priority Return for the calendar quarter preceding the “Payment Date,” as defined in the Agreement. Distributions under the sixth priority distribution requirements of $440,000 were made to the Class B Member for the years ended December 31, 2002.

7. Seventh priority is distributions to the Class A Member until the Class A Net Mandatory Capital Contribution has been reduced to zero, in the ratio of Class A Percentage to the Class A Member, either as repayment of the “Equity Bridge Loans,” as defined, or in reduction of its Class A Net Mandatory Capital Contribution, or both, and the Class B Percentage to the Class B Member as distribution.

8. Thereafter, as a distribution in the ratio of the Class A percentage to the Class A Member and the Class B percentage to the Class B Member. No distributions were required under this category during 2004, 2003 or 2002.

The Agreement provides for revisions to the above mentioned priorities upon the contribution of any additional capital by either the Class A or Class B Members.

During 2003, the Class A and Class B Members agreed in principle to limit “Class A Senior Priority Return” payments and the Class B Member’s management fees to support the Company’s current cash flow needs. The “Class A Senior Priority Return” will continue to be paid in the future as cash flow improves. The Class B Member’s management fees (3% of revenues) for the period ended December 20, 2004 and from April 2003 to December 2003 will not be funded and have been “waived” by the Class B Member. Management fees for 2004 and from April 2003 through December 2003 have not been accrued as of December 20, 2004 and December 31, 2003, respectively.

Sandusky

As defined in Sandusky’s Operating Agreement, net profits and losses are generally allocated 50% to SunAmerica Housing Fund 726, LP, 30% to GLGB Investor I, LLC, and 20% to GLGB Manager I, LLC, except that the Agreement specifies allocation limitations and special allocations in certain situations, including, “Capital Transactions.” The Agreement defines Capital Transactions as sale, refinance, exchange, transfer, assignment, or other disposition of all or any portion of the Sandusky resort.

The Agreement also provides for priority distributions from Net Cash Flow, as defined in the Agreement, to be distributed in the following priority:

1. First priority is a “Class A Senior Priority Return,” of 12% on its original capital contribution of $8,000,000. Distributions under the Class A Senior Priority Requirements of $475,266, $503,047 and $692,245 were made to the Class A Member during the period ended December 20, 2004 and the years ended December 31, 2003 and 2002, respectively.

2. Second priority is repayment of 12% interest per annum to the Class A Member for “Loan Returns.”

3. Third priority is repayment of “Class A Net Term Loan Capital Contribution.”

4. Fourth priority is payment of “Class C Net OCC Priority Return” at 12% interest per annum.

5. Fifth priority is repayment of “Class A Net OCC.”

6. Sixth priority is a “Class B Senior Priority Return,” of 12% on its original capital contribution of $4,000,000. Distributions under the Class B Senior Priority Requirement of $243,460, $255,678 and $350,555 were made to the Class B Member during the period ended December 20, 2004 and the years ended December 31, 2003 and 2002, respectively.

F-76

GREAT BEAR LODGE OF WISCONSIN DELLS, LLC

AND GREAT BEAR LODGE OF SANDUSKY, LLC

NOTES TO COMBINED FINANCIAL STATEMENTS

December 20, 2004, December 31, 2003 And 2002

7. Seventh priority is payment of accrued “Class C Term Loan Priority Return.”

8. Eighth priority is repayment of “Class C Net Term Loan Capital Contribution.”

9. Ninth priority is payment of accrued “Class C Net OCC Priority Return.”

10. Tenth priority is repayment “Class C Net OCC.”

11. Eleventh priority is payment of “Class A Net Development Capital Contribution” until reduced to the Target Amount. Distributions after the Target Amount was reached were $1,712,514, $2,086,510 and $2,002,880 to the Class A Member, $856,257, $1,043,255 and $1,001,440 to the Class B Member and $1,712,514, $2,086,510 and $2,002,880 to the Class C Member for the period ended December 20, 2004 and the years ended December 31, 2003 and 2002, respectively.

12. Twelfth priority is repayment of “Class A Net Development Capital Contribution.”

13. Thereafter, as a distribution in the ratio of the Class A percentage to the Class A Member, the Class B percentage to the Class B Member and the Class C percentage to the Class C Member.

The Agreement provides for revisions to the above mentioned priorities upon the contribution of any additional capital by any of the members.

9. Commitment

During 2003, the Dells obtained a loan commitment with a lender in an amount not to exceed the lesser of $21,000,000 or 75% of the appraised value of the pending condominium development and water park expansion project adjacent to the existing “Dells” facility to fund the construction of condominiums. In connection with the loan commitment, the Company paid approximately $158,000 to the lender which has been capitalized as of December 31, 2003 and will be amortized over the term of the two year agreement. The commitment is for 24 months, bears interest at either an annual fixed rate of 7.25% or a variable annual rate of the prime rate plus 1.625% (not to be below 6.75% per year) and is secured by a first deed of trust on the condominium development, assignment of all condominium rents, construction commitment deposits and personal guarantees of certain officers of the Great Lakes Companies, Inc. As of December 20, 2004, no amounts have been borrowed against this commitment.

10. Legal Matters

During the normal course of business, the Dells and Sandusky are involved in various legal matters that, in the opinion of management, are not expected to have a material effect on either the financial position or the operating results of the Dells and Sandusky.

11. Subsequent Events

Great Wolf Resorts, Inc. (GWR) was incorporated in May 2004 in anticipation of the initial public offering of its common stock (the IPO). The IPO closed on December 20, 2004, concurrently with the completion of various formation transactions (the Formation Transactions). Pursuant to the Formation Transactions, GWR acquired the Companies. The owners of the Companies received cash, unregistered shares of GWR’s common stock or a combination of cash and unregistered shares of GWR’s common stock. GWR issued 1,319,543 shares of its common stock and paid approximately $38,938,000 in cash in connection with these acquisitions.

F-77

GREAT BEAR LODGE OF WISCONSIN DELLS, LLC

AND GREAT BEAR LODGE OF SANDUSKY, LLC

NOTES TO COMBINED FINANCIAL STATEMENTS

December 20, 2004, December 31, 2003 And 2002

In conjunction with the transaction, notes payable by the Great Bear Lodge of Wisconsin Dells, LLC and the Great Bear Lodge of Sandusky, LLC of $50,097,911 and $25,547,394, respectively, were paid in full with a portion of the proceeds from the IPO. In addition, a former member’s ownership (held by entities related to AIG SunAmerica Housing Funds) of the Great Bear Lodge of Wisconsin Dells, LLC and the Great Bear Lodge of Sandusky, LLC was purchased by GWR as a part of the formation transactions. Although the funding of the agreed-upon purchase of AIG SunAmerica Housing Funds’ interests was completed at the closing of the IPO, GWR and AIG SunAmerica Housing Funds are currently negotiating final settlement of the purchase. The final amount for GWR due to or from AIG SunAmerica Housing Funds, if any, has not been determined and in the opinion of management will not have a material effect on either the financial position or operating results of the Dells and Sandusky.

12. Securities Class Action Litigation

On November 21, 2005, a purchaser of Great Wolf Resorts, Inc. (The Company) securities filed a lawsuit against Great Wolf Resorts and certain of its officers and directors in the United States District Court for the Western District of Wisconsin. The complaint alleges that the defendants violated federal securities laws by making false or misleading statements regarding the internal controls of the Company and the ability to provide financial guidance and forecasts in registration statements filed in connection with the December 2004 initial public offering and in press releases issued in 2005. Additional complaints alleging substantially similar claims were filed by other purchasers of the Company’s securities in the Western District of Wisconsin during 2005 and 2006. Such lawsuits purport to be filed on behalf of a class of shareholders who purchased our common stock between certain specified dates and seek unspecified compensatory damages, attorneys’ fees, costs, and other relief. The Company intends to defend these lawsuits vigorously. While the ultimate resolution of the aforementioned cases cannot presently be determined, an unfavorable outcome in these cases could have a material adverse effect on our financial condition or results of operations of Great Wolf Resorts, Inc. and its affiliates.

F-78

DMC PROPERTIES

COMBINED STATEMENT OF REVENUES AND CERTAIN EXPENSES

(UNAUDITED)

FOR THE QUARTER ENDED APRIL 30, 2005

Revenues:
Permanent showroom rentals	$	13,400,696
Market time shows		1,017,337
Nonmarket time shows		64,788
Consumer shows		562,976
Food and beverage revenue, net		81,063
Other revenue		454,421
Total revenues		15,581,281
Certain expenses:
Employee compensation and benefits		3,896,215
Public relations and advertising		884,320
Operations		453,558
Utilities		1,492,244
Exhibitors		257,456
Administration		736,276
Ad valorem taxes		891,960
Insurance		226,535
Management fee		46,421
Other operating expenses		22,123
Total certain expenses		8,907,108
Excess of revenues over certain expenses	$	6,674,173

See accompanying notes to combined statement of revenue and certain expenses.

F-79

DMC PROPERTIES

UNAUDITED NOTES TO COMBINED STATEMENT OF REVENUES AND CERTAIN EXPENSES

APRIL 30, 2005

1. General

The statement presented herein has been prepared in accordance with the accounting policies described in the DMC Properties Combined Statement of Revenues and Certain Expenses for the year ended January 31, 2005 and should be read in conjunction with the Notes which appear in that report.

The statement for the quarter ended April 30, 2005 is unaudited; however, in the opinion of management, all adjustments (which include only normal recurring accruals) have been made which are considered necessary to present fairly the combined revenues and certain expenses for the unaudited period.

F-80

Report of Independent Auditors

The Partners

DMC Properties

We have audited the accompanying Combined Statement of Revenue and Certain Expenses of DMC Properties for the year ended January 31, 2005. This Combined Statement of Revenue and Certain Expenses is the responsibility of the Partnership’s management. Our responsibility is to express an opinion on the Combined Statement of Revenue and Certain Expenses 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 Combined Statement of Revenue and Certain Expenses is free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the Statement of Revenues and Certain Expenses. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the Combined Statement of Revenue and Certain Expenses. We believe that our audit provides a reasonable basis for our opinion.

The accompanying Combined Statement of Revenue and Certain Expenses was prepared for purposes of complying with the rules and regulations of the Securities and Exchange Commission as described in Note 1 and is not intended to be a complete presentation of DMC Properties’ revenues and expenses.

In our opinion, the Combined Statement of Revenue and Certain Expenses referred to above presents fairly, in all material respects, the revenues and certain expenses described in Note 1 of DMC Properties for the year ended January 31, 2005, in conformity with accounting principles generally accepted in the United States of America.

/s/ PricewaterhouseCoopers LLP

April 4, 2005

Dallas, Texas

F-81

DMC Properties

Combined Statement of Revenues and Certain Expenses

For the Year Ended January 31, 2005

Revenues:
Permanent showroom rentals	$	53,506,739
Market time shows		9,618,295
Nonmarket time shows		1,760,757
Consumer shows		1,677,631
Food and beverage revenue, net		144,572
Other revenue		3,369,146
	$	70,077,140
Certain Expenses:
Employee compensation and benefits		16,804,027
Public relations and advertising		6,577,532
Operations		8,634,974
Exhibitors		1,681,284
Administration		3,101,091
Ad valorem taxes		3,460,583
Insurance		1,008,592
Other operating expenses		2,469,576
Total certain expenses		43,737,659
Excess of revenues over certain expenses	$	26,339,481

F-82

DMC Properties

Combined Statement of Revenues and Certain Expenses

For the Year Ended January 31, 2005

1. Organization and Basis of Presentation

On January 14, 2005, CNL Income Properties, Inc. (the “REIT”) entered into a partnership interest purchase agreement (the Agreement) with Dallas Market Center Company, Ltd. (“DMC”). Pursuant to the Agreement, the REIT and DMC will form a partnership (the “Partnership”), in which the REIT will acquire a majority interest. The Partnership will acquire from DMC and affiliates their interests in certain real estate and related assets at the Dallas Market Center, including: the World Trade Center, the Dallas Trade Mart, International Floral and Gift Center, and a leasehold interest in Market Hall (collectively the “DMC Properties”). The DMC Properties consist of approximately 4.8 million square feet (unaudited) of wholesale merchandising and exhibition space.

On February 14, 2005, the Partnership was formed and acquired certain of the DMC Properties for approximately $218,000,000, excluding transaction costs, and assumed approximately $142,364,000 of existing debt. In addition, the Partnership has committed to acquire the remaining DMC Properties for approximately $31,000,000 and assume $16,467,000 in existing debt. It is anticipated that the acquisition of the remaining DMC Properties will close by June 30, 2005.

The accompanying combined statement of revenues and certain expenses relates to the operations of the DMC Properties. This statement is prepared for the purpose of complying with Rule 3-14 of Regulation S-X promulgated under the Securities Act of 1933, as amended. Accordingly, the statement includes the operations of the DMC Properties for the year ended January 31, 2005. Further, the statement is not representative of the actual operations for the period presented as certain expenses, expected to be incurred in future operations of DMC Properties, have been excluded. Such items include interest expense, depreciation and amortization expense, and interest income. Except as noted above, management is not aware of any material factors that would cause the information included herein to not be indicative of future operating results.

2. Summary of Significant Accounting Policies

The accompanying Combined Statements of Revenues and Certain Expenses have been prepared on the accrual basis of accounting.

Revenue Recognition

The tenant leases are accounted for as operating leases. Rental revenue is recognized as income using the straight-line method considering scheduled rent increases in the terms of the lease agreements. Rental income earned in excess of rental payments received pursuant to the terms of the lease agreements is recorded as deferred rent receivable.

Advertising Costs

Advertising costs are expensed as incurred and totaled $2,042,816.

F-83

DMC Properties

Combined Statement of Revenues and Certain Expenses

For the Year Ended January 31, 2005

Ground Lease Expense

The ground leases are accounted for as operating leases. Lease expense is recognized using the straight-line method considering scheduled rent increases in the terms of the lease agreements. Rental expense in excess of rental payments pursuant to the terms of the lease agreements is recorded as deferred rent payable.

Income Taxes

The DMC Properties are held by partnerships and are not subject to federal or state income taxes. Accordingly, no recognition has been given to income taxes in the accompanying combined statement of revenues and certain expenses.

Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions about the reported amounts of revenues and certain expenses during the reporting periods. Actual results may differ from those estimates.

3. Future Minimum Rentals

Future minimum rentals include amounts expected to be received from tenants who have entered into various noncancelable operating leases with an initial term greater than one year. These leases are for office and showroom space in buildings owned by DMC Properties. Minimum future lease rentals to be received as of January 31, 2005, are as follows:

2006	$	51,768,317
2007		45,221,047
2008		32,605,081
2009		22,293,945
2010		9,182,393
Thereafter		4,309,524
Total	$	165,380,307

4. Major Tenants

No single tenant individually represents more than 10% of total revenue for the year ended January 31, 2005.

F-84

DMC Properties

Combined Statement of Revenues and Certain Expenses

For the Year Ended January 31, 2005

5. Management Agreement

Market Center Management Company

DMC has a management and leasing agreement with an affiliated company, Market Center Management Company, Ltd. (the “Management Company”). The Management Company performs administrative services for DMC, including all matters pertaining to employment, supervision and compensation of employees. During the period February 1, 2004 through August 2, 2004 DMC Properties paid a monthly management fee to the Management Company equal to 1% of gross revenues, as defined. The agreement also provided for an annual management fee of 50% of net cash flow (as defined) from the DMC properties excluding International Floral and Gift Center in excess of $20,000,000 and in excess of $3,000,000 for International Floral and Gift Center. Management fees in the amount of $72,375 were paid in respect to the excess cash flow agreement during the year ending January 31, 2005.

Effective August 2, 2004 the management agreement with the Management Company for all DMC Properties, excluding International Floral and Gift Center, was terminated. Effective the same date, a new agreement was executed with the Management Company which increased the management fee to 1.5% of gross revenue, as defined. The management contract terms for International Floral and Gift Center continued without change. Management fees for the year ended January 31, 2005 were $949,886 and included $72,375 relating to the excess cash flows provisions of the management agreement. In addition, under the terms of the Management Agreement, the Management Company is entitled to reimbursement of certain expenses it incurs on behalf of DMC. The expenses for which the Management Company is reimbursed are primarily salaries and employee benefits and amounted to $16,804,027 for the year ended January 31, 2005.

George Little Management

DMC also has a management contract with George Little Management (“GLM”) for management of the temporary gift shows held during the year. GLM receives a management fee equal to $1.25 per net square foot of exhibit space leased at each show. GLM also receives reimbursement for travel costs, compensation for use by DMC of GLM’s trademark, and an annual fee of 25% of pro forma net income (as defined) in excess of a specified base year amount for each calendar year, beginning in calendar year 1998. DMC has terminated the GLM management contract effective September 30, 2005. Management fees including a $250,000 contract termination payment paid to GLM for the year ended January 31, 2005 were $784,980.

F-85

DMC Properties

Combined Statement of Revenues and Certain Expenses

For the Year Ended January 31, 2005

6. Commitments and Contingencies

The DMC Properties commitments under land leases expire on various dates ranging from 2055 to 2066. In addition to rent, these leases require payment of property taxes and insurance. Rent expense amounted to $290,272 for the year ended January 31, 2005 and is included in other operating expenses in the accompanying combined statement of revenues and certain expenses.

The total minimum rental commitment under these land leases at January 31, 2005, was as follows:

2006	$	293,489
2007		295,829
2008		298,215
2009		300,649
2010		303,131
Thereafter		21,703,116
Total minimum payments required	$	23,194,429

DMC entered into a contract (expires January 2009) to outsource its food and beverage services to ARAMARK Business Dining Services of Texas, Inc. (“ARAMARK”). Under the agreement, ARAMARK is obligated to pay minimum rent of $50,000 per month plus percentage rent over certain sales thresholds. This amount is reduced for food service equipment repairs and maintenance costs incurred and discounts provided to employees. In the fiscal year ended January 31, 2005, the net amount received from ARAMARK was approximately $144,572 related to this agreement.

The Management Company has in place an Occupational Injury Benefit Plan (“Plan”) to cover employees injured at work. The Plan is indemnified under a policy for which DMC is responsible for a $200,000 deductible per occurrence up to $10,000,000 in claims per occurrence with a combined single limit of $1,000,000 per any one person. Additionally, the Plan has an accidental death and dismemberment policy that provides benefits of up to $200,000 for loss of life or limb. Payments for claims and lost wages made under the Plan were approximately $26,002 for the year ended January 31, 2005.

An environmental assessment was performed in 1997 that indicated an existence of some level of asbestos in all buildings of the DMC Properties, excluding the World Trade Center. A systematic program for asbestos removal is in progress and management is of the opinion that the cost to abate the asbestos will not have a material effect on the financial position of DMC. DMC incurred approximately $3,425 in asbestos removal costs during the year ended January 31, 2005.

F-86

APPENDIX B

PRIOR PERFORMANCE TABLES

APPENDIX B

PRIOR PERFORMANCE TABLES

The information in this Appendix B contains certain relevant summary information concerning certain prior public programs (the “Prior Public Programs”) sponsored by two of the Company’s principals and their Affiliates (collectively, the “Sponsor”) which were formed to invest in restaurant properties leased on a triple-net basis to operators of national and regional fast-food and family-style restaurant chains, or in the case of CNL Hotels & Resorts, Inc. (formerly, CNL Hospitality Properties, Inc.) and CNL Retirement Properties, Inc., to invest in hotel properties and retirement properties, respectively. No Prior Public Programs sponsored by the Company’s Affiliates have invested in properties leased on a triple-net basis in which the Company expects to invest.

A more detailed description of the acquisitions by the Prior Public Programs is set forth in Part II of the registration statement filed with the Securities and Exchange Commission for this offering and is available from the Company upon request, without charge. In addition, upon request to the Company, the Company will provide, without charge, a copy of the most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission for CNL Income Fund, Ltd., CNL Income Fund II, Ltd., CNL Income Fund III, Ltd., CNL Income Fund IV, Ltd., CNL Income Fund V, Ltd., CNL Income Fund VI, Ltd., CNL Income Fund VII, Ltd., CNL Income Fund VIII, Ltd., CNL Income Fund IX, Ltd., CNL Income Fund X, Ltd., CNL Income Fund XI, Ltd., CNL Income Fund XII, Ltd., CNL Income Fund XIII, Ltd., CNL Income Fund XIV, Ltd., CNL Income Fund XV, Ltd., CNL Income Fund XVI, Ltd., CNL Income Fund XVII, Ltd., CNL Income Fund XVIII, Ltd., CNL Restaurant Properties, Inc., CNL Hotels & Resorts, Inc., and CNL Retirement Properties, Inc., as well as a copy, for a reasonable fee, of the exhibits filed with such reports.

The investment objectives of the Prior Public Programs generally include preservation and protection of capital, the potential for increased income and protection against inflation, and potential for capital appreciation, all through investment in properties.

Stockholders should not construe inclusion of the following tables as implying that the Company will have results comparable to those reflected in such tables. Distributable cash flow, federal income tax deductions, or other factors could be substantially different. Stockholders should note that, by acquiring shares in the Company, they will not be acquiring any interest in any Prior Public Programs.

Description of Tables

The following Tables are included herein:

Table I - Experience in Raising and Investing Funds

Table II - Compensation to Sponsor

Table III - Operating Results of Prior Programs

Table V - Sales or Disposals of Properties

Unless otherwise indicated in the Tables, all information contained in the Tables is as of December 31, 2004. The following is a brief description of the Tables:

Table I - Experience in Raising and Investing Funds

Table I presents information on a percentage basis showing the experience of the Sponsor in raising and investing funds for the Prior Public Programs, which had offerings that became fully subscribed between January 2002 and December 2004.

Past performance is not necessarily indicative of future performance

B-1

The Table sets forth information on the offering expenses incurred and amounts available for investment expressed as a percentage of total dollars raised. The Table also shows the percentage of property acquisition cost leveraged, the date the offering commenced, and the time required to raise funds for investment.

Table II - Compensation to Sponsor

Table II provides information, on a total dollar basis, regarding amounts and types of compensation paid to the Sponsors of the Prior Public Programs.

The Table indicates the total offering proceeds and the portion of such offering proceeds paid or to be paid to the Sponsor through December 31, 2004, in connection with each Prior Public Program which had offerings that became fully subscribed between January 2002 and December 2004. The Table also shows the amounts paid to the Sponsor from cash generated from operations and from cash generated from sales or refinancing by each of these Prior Public Programs on a cumulative basis commencing with inception and ending December 31, 2004.

Table III - Operating Results of Prior Programs

Table III presents a summary of operating results for the period from inception through December 31, 2004, of the Prior Public Programs, the offerings of which became fully subscribed between January 2000 and December 2004.

The Table includes a summary of income or loss of the Prior Public Programs, which are presented on the basis of generally accepted accounting principles (“GAAP”), except for those Prior Public Programs that have identified properties as held for sale and not yet filed updated audited financial statements to reclassify these properties to discontinued operations. The Table also shows cash generated from operations, which represents the cash generated from operations of the properties of the Prior Public Programs, as distinguished from cash generated from other sources (special items). The section of the Table entitled “Special Items” provides information relating to cash generated from or used by items which are not directly related to the operations of the properties of the Prior Public Programs, but rather are related to items of an investing or financing nature. These items include proceeds from capital contributions of investors and disbursements made from these sources of funds, such as stock issuance and organizational costs, acquisition of the properties and other costs which are related more to the organization of the entity and the acquisition of properties than to the actual operations of the entities.

The Table also presents information pertaining to investment income, returns of capital on a GAAP basis, cash distributions from operations, sales and refinancing proceeds expressed in total dollar amounts as well as distributions and tax results on a per $1,000 investment basis.

Table IV - Results of Completed Programs

Table IV is omitted from this Appendix B because none of the Prior Public Programs have completed operations (meaning they no longer hold properties).

Table V - Sales or Disposals of Properties

Table V provides information regarding the sale or disposal of properties owned by the Prior Public Programs between January 2002 and December 2004.

The Table includes the selling price of the property, the cost of the property, the date acquired and the date of sale.

Subsequent Events

Please note that on February 25, 2005, CNL Restaurant Properties, Inc. merged with and into U.S. Restaurant Properties, Inc. The surviving entity of the merger is Trustreet Properties, Inc. In addition, on February 25, 2005, each of the CNL Income Funds merged with a separate wholly owned subsidiary of Trustreet Properties, Inc.’s operating partnership. As a result, each of the CNL Income Funds is a wholly owned subsidiary of Trustreet Properties, Inc.

Past performance is not necessarily indicative of future performance

B-2

TABLE I

EXPERIENCE IN RAISING AND INVESTING FUNDS

	CNL Hotels & Resorts, Inc.			CNL Retirement Properties, Inc.
	(Note 1)			(Notes 2, 3 and 4)
Dollar amount offered	$	3,090,000,000		$	2,510,000,000
Dollar amount raised		99.2	%		(Note 3 and 4	)
Less offering expenses:
Selling commissions and discounts		(7.5	)		(7.5	)
Organizational expenses		(2.0) to (4.0	)		(2.0) to (3.0	)
Marketing support and due diligence expense reimbursement fees (includes amounts reallowed to unaffiliated entities)		(0.5	)		(0.5	)
		(11.0	)		(10.0) to (11.0	)
Reserve for operations		—			—
Percent available for investment		88.0 to 90.0	%		89.0 to 90.0	%
Acquisition costs:
Cash down payment		83.0 to 85.0	%		84.0 to 85.0	%
Acquisition fees paid to affiliates		4.5			4.5
Acquisition expenses		0.5			0.5
Total acquisition costs		88.0 to 90.0	%		89.0 to 90.0	%
Percent leveraged (mortgage financing divided by total acquisition costs)		53.3	%		31.9	%
Date offering began		7/09/97, 6/17/99, 9/15/00, 4/23/02 and 2/05/03			9/18/98, 9/19/00, 5/24/02 and 4/04/03
Length of offering (in months)		23, 15, 20, 9 and 13 respectively			24, 20, 11 and 13, respectively
Months to invest 90% of amount available for investment measured from date of offering		29, 16, 22, 12 and 1 respectively			19, 24, 15 and 17, respectively

Note 1:	CNL Hotels & Resorts, Inc. (the “Hotels & Resorts REIT”) offered securities for sale in five public offerings since 1997. Of the amount shown $36,642,514 reflects dollars raised pursuant to its reinvestment plan.
Note 2:	CNL Retirement Properties, Inc. (the “Retirement Properties REIT”) offered securities for sale in five public offerings since 1998. Of the funds raised as of December 31, 2004, $58,681,071 was raised pursuant to its reinvestment plan.
Note 3:	During its first four offerings, the Retirement Properties REIT raised $9,718,974 or 6.3%, $155,000,000 or 100%, $450,000,000 or 100% and $1,568,000,000 or 89.6%, respectively, of the dollar amount offered.
Note 4:	The amounts shown represent the combined results of the Retirement Properties REIT’s Initial Offering, 2000 Offering, 2002 Offering and 2003 Offering only, due to the fact that the 2004 Offering was not yet fully subscribed at December 31, 2004.

Past performance is not necessarily indicative of future performance

B-3

TABLE II

COMPENSATION TO SPONSOR

	CNL Hotels & Resorts, Inc.		CNL Retirement Properties, Inc.
	(Notes 1)		(Note 2)
Date offering commenced		7/9/97, 6/17/99, 9/15/00, 4/23/02 and 02/5/03		9/18/98, 9/19/00, 5/24/02, 4/3/03 and 5/14/04
Dollar amount raised	$	3,066,534,832	$	2,384,658,206
Amount paid to sponsor from proceeds of offering:
Selling commissions and discounts		229,990,112		174,504,552
Real estate commissions		—		—
Acquisition fees		137,994,067		105,818,412
Marketing support and due diligence expense reimbursement fees (includes amounts reallowed to unaffiliated entities)		15,332,674		14,159,637
Total amount paid to sponsor		383,316,853		294,482,601
Dollar amount of cash generated from (used in) operations before deducting payments to sponsor:
2004 (Note 3)		244,573,472		154,893,290
2003 (Note 3)		127,948,000		66,752,844
2002 (Note 3)		84,484,672		18,339,364
Amount paid to sponsor from operations (administrative, accounting and management fees):
2004		30,832,972		15,495,290
2003		15,061,000		6,094,844
2002		7,824,672		1,554,601
Dollar amount of property sales and refinancing before deducting payments to sponsor:
Cash (Note 4)		16,810,000		—
Notes		—		—
Amount paid to sponsors from property sales and refinancing:
Real estate commissions		—		—
Incentive fees		—		—
Other (Notes 5, 6 and 7)		79,854,706		44,520,409

Note 1:	CNL Hotels & Resorts, Inc. (the “Hotels & Resorts REIT”) offered securities for sale in five public offerings since 1997. Of the funds raised, $36,642,514 were pursuant to its reinvestment plan.
Note 2:	CNL Retirement Properties, Inc. (the “Retirement Properties REIT”) offered securities for sale in five public offerings since 1998. Of the funds raised as of December 31, 2004, $58,681,071 was raised pursuant to its reinvestment plan.
Note 3:	During the years ended December 31, 2004, 2003, 2002 and 2001, the Hotels & Resorts REIT incurred approximately $2.1 million, $1.2 million, $293,000 and $293,002, respectively, in soliciting dealer servicing fees payable to the sponsor. In addition, during each of the years ended December 31, 2003 and 2004, the Retirement Properties REIT incurred approximately $310,000 in soliciting dealer servicing fees payable to the sponsor.

Past performance is not necessarily indicative of future performance

B-4

TABLE II – COMPENSATION TO SPONSOR - CONTINUED

Note 4:	Prior to April 1, 2005, CNL Hospitality Corp., the advisor of the Hotels & Resorts REIT, was entitled to receive acquisition fees for services relating to identifying the properties, structuring the terms of the acquisition and leases of the properties and structuring the terms of the mortgage loans equal to 4.5% of the gross proceeds of the offerings, loan proceeds from permanent financing and the line of credit that are used to acquire properties, but excluding amounts used to finance secured equipment leases. On December 30, 2005, the Hotels & Resorts REIT and CNL Hospitality Corp. entered into an amended and restated renewal agreement which reduced the rate of acquisition fees from 4.5% to 3.0%, retroactive to April 1, 2005. During the years ended December 31, 2004, 2003, 2002, 2001 and 2000, the Hotels & Resorts REIT paid the advisor approximately $2.7 million, $42.2 million, $7.5 million, $8.8 million and $8.0 million, respectively, related to the permanent financing for properties directly or indirectly owned by the Hotels & Resorts REIT. These acquisition fees were not paid using proceeds from the offerings. The advisor of the Hotels & Resorts REIT is also entitled to receive fees in connection with the development, construction or renovation of a property, generally equal to 4% of project costs. During the years ended December 31, 2004, 2003, 2002 and 2001, the Hotels & Resorts REIT paid the advisor $2.2 million, $2.6 million, $1.9 million and $2.1 million, respectively, relating to these fees.
Note 5:	In addition to acquisition fees paid on gross proceeds from the offerings, the advisor of the Retirement Properties REIT is entitled to receive acquisition fees for services related to obtaining permanent financing that is used to acquire properties. The acquisition fees are equal to a percentage of the loan proceeds from the permanent financing. For the Initial Offering through the 2003 Offering, this percentage was equal to 4.5%. For the 2004 Offering, this percentage is equal to 4.0%. During the years ended December 31, 2004, 2003 and 2002, the Retirement Properties REIT paid the advisor $29,951,684, $11,276,577 and $2,051,748, respectively, in acquisition fees relating to permanent financing for properties owned by the Retirement Properties REIT. These acquisition fees were not paid using proceeds from the offerings.
Note 6:	CNL Capital Corp., an affiliate of the Sponsor, is a non-voting Class C member of Century Capital Markets, LLC (“CCM”). CCM made the arrangements for a $23.5 million loan for the Retirement Properties REIT, for which it was paid a $470,400 structuring fee in 2002. During 2003, the Retirement Properties REIT also paid CCM a $150,000 finder’s fee related to the acquisition of two properties.
Note 7:	Excludes properties sold and substituted with replacement properties, as permitted under the terms of the lease agreements.

Past performance is not necessarily indicative of future performance

B-5

TABLE III

OPERATING RESULTS OF PRIOR PROGRAMS

CNL HOTELS & RESORTS, INC.

	1996 (Note 1)			1997 (Note 1)			1998			1999 (Notes 2 and 12)
Gross revenue	$	—		$	—		$	1,316,599		$	4,230,995
Dividend income (Note 10)		—			—			—			2,753,506
Interest and other income		—			46,071			638,862			3,693,004
Less: Operating expenses		—			(22,386	)		(257,646	)		(802,755	)
Interest expense		—			—			(350,322	)		(248,094	)
Depreciation and amortization		—			(833	)		(388,554	)		(1,267,868	)
Equity in loss of unconsolidated subsidiary after deduction of preferred stock dividends (Note 10)		—			—			—			(778,466	)
Minority interest		—			—			—			(64,334	)
Benefit (Expense) from Income Taxes		—			—			—			—
Income (Loss) from Discontinued Operations		—			—			—			—
Net income (loss) - GAAP basis		—			22,852			958,939			7,515,988
Taxable income
- from operations (Note 6)		—			46,071			609,304			7,613,284
- from gain (loss) on sale		—			—			—			—
Cash generated from operations (Notes 3 and 4)		—			22,469			2,776,965			12,890,161
Less: Cash distributions to investors (Note 7)
- from operating cash flow		—			(22,469	)		(1,168,145	)		(10,765,881	)
- from sale of properties		—			—			—			—
- from cash flow from prior period		—			—			—			—
- from return of capital (Note 8)		—			(7,307	)		—			—
Cash generated (deficiency) after cash distributions		—			(7,307	)		1,608,820			2,124,280
Special items (not including sales of real estate and refinancing):
Subscriptions received from stockholders		—			11,325,402			31,693,678			245,938,907
Sale of common stock to CNL Hospitality Corp. (formerly CNL Hospitality Advisors, Inc.)		200,000			—			—			—
Proceeds from mortgage loans and other notes payable		—			—			—			—
Distributions to holders of minority Interest, net of contributions		—			—			—			—
Stock issuance costs		(197,916	)		(1,979,371	)		(3,948,669	)		(19,322,318	)
Acquisition of land, buildings and equipment		—			—			(28,752,549	)		(85,089,887	)
Acquisition of RFS in 2003 and KSL in 2004		—			—			—			—
Investment in unconsolidated subsidiary		—			—			—			(39,879,638	)
Deposit on property and other investments		—			—			—			—
Acquisition of additional interest CNL Hotel Investors, Inc.		—			—			—			—
Sale of land, buildings and equipment		—			—			—			—
Sale of investment in equity securities		—			—			—			—
Redemption of (investment in) certificate of deposit		—			—			(5,000,000	)		—
Increase in restricted cash		—			—			(82,407	)		(193,223	)
Proceeds of borrowing on line of credit		—			—			9,600,000			—
Payment on mortgage loans and line of credit		—			—			—			(9,600,000	)
Payment of other notes		—			—			—			—
Payment of loan costs		—			—			(91,262	)		(47,334	)
Payment of capital lease obligation		—			—			—			—
Payment to acquire cash flow hedges		—			—			—			—
Decrease (increase) in intangibles and other assets		—			(463,470	)		(676,026	)		(5,068,727	)
Retirement of shares of common stock		—			—			—			(118,542	)
Due from related parties - offering expenses		—			—			—			—
Other		—			(7,500	)		7,500			—
Cash generated (deficiency) after cash distributions and special items		2,084			8,867,754			4,359,085			88,743,518
TAX AND DISTRIBUTION DATA PER $1,000 INVESTED (Note 5)
Federal income tax results:
Ordinary income (loss) (Note 9)
- from operations (Note 6)		—			7			25			48
- from recapture		—			—			—			—
Capital gain (loss) (Note 7)		—			—			—			—

Past performance is not necessarily indicative of future performance

B-6

	2000 (Notes 2 and 12)			2001 (Notes 2 and 12)			2002 (Notes 2 and 12)			2003 (Notes 2 and 12)			2004 (Notes 2 and 12)
Gross revenue	$	26,681,838		$	79,728,000		$	217,742,000		$	525,411,000		$	1,335,297,000
Dividend income (Note 10)		2,780,063			—			—			—			—
Interest and other income		6,637,318			9,289,000			7,784,000			6,966,000			6,941,000
Less: Operating expenses		(3,311,988)			(22,514,000	)		(130,886,000	)		(392,582,000	)		(1,016,667,000	)
Interest expense		(2,383,449	)		(15,635,000	)		(23,125,000	)		(58,040,000	)		(166,463,000	)
Depreciation and amortization		(7,830,456	)		(22,281,000	)		(37,810,000	)		(79,876,000	)		(191,764,000	)
Equity in loss of unconsolidated subsidiary after deduction of preferred stock dividends (Note 10)		(386,627	)		(7,968,000	)		(17,256,000	)		(23,970,000	)		(18,469,000	)
Minority interest		(1,516,237	)		(1,291,000	)		(639,000	)		778,000			(8,403,000	)
Benefit (Expense) from Income Taxes		––			––			––			864,000			(28,539,000	)
Income (Loss) from Discontinued Operations		––			––			––			1,222,000			(2,820,000	)
Net income (loss) - GAAP basis		20,670,462			19,328,000			15,810,000			5,993,000			(87,113,000	)
Taxable income
- from operations (Note 6)		14,507,032			16,938,386			24,804,256			24,674,829			5,312,846
- from gain (loss) on sale		—			—			—			—			(645,000	)
Cash generated from operations (Notes 3 and 4)		43,650,561			58,408,000			76,660,000			112,887,000			213,741,000
Less: Cash distributions to investors (Note 7)
- from operating cash flow		(28,082,275	)		(48,410,000	)		(74,217,000	)		(112,887,000	)		(213,741,000	)
- from sale of properties		—			—			—			—			—
- from cash flow from prior period		—			—			—			—			—
- from return of capital (Note 8)		—			—			—			(17,074,000	)		(4,602,000	)
Cash generated (deficiency) after cash distributions		15,568,286			9,998,000			2,443,000			(17,074,000	)		(4,602,000	)
Special items (not including sales of real estate and refinancing):		203,684,044			286,069,000			489,111,000			1,169,496,000			658,578,000
Subscriptions received from stockholders		—			—			—			—			—
Sale of common stock to CNL Hospitality Corp. (formerly CNL Hospitality Advisors, Inc.)		102,081,950			137,990,000			118,720,000			866,912,000			1,922,508,000
Proceeds from mortgage loans and other notes payable		(10,217,828	)		(2,896,000	)		14,040,000			106,853,000			(13,213,000	)
Distributions to holders of minority Interest, net of contributions		(24,808,156	)		(34,723,000	)		(51,640,000	)		(113,211,000	)		(59,430,000	)
Stock issuance costs		(310,711,912	)		(351,621,000	)		(446,520,000	)		(1,307,313,000	)		(118,213,000	)
Acquisition of land, buildings and equipment		—			—			—			(450,350,000	)		(1,426,309,000	)
Acquisition of RFS in 2003 and KSL in 2004		(10,174,209	)		(30,804,000	)		(53,099,000	)		(727,000	)		(2,192,000	)
Investment in unconsolidated subsidiary		—			—			(10,300,000	)		(24,985,000	)		—
Deposit on property and other investments		(17,872,573	)		—			—			—			—
Acquisition of additional interest CNL Hotel Investors, Inc.		—			—			—			—			16,810,000
Sale of land, buildings and equipment		—			—			—			—			28,295,000
Sale of investment in equity securities		5,000,000			—			—			—			—
Redemption of (investment in) certificate of deposit		(2,988,082	)		(6,106,000	)		(12,425,000	)		(29,241,000	)		(37,778,000	)
Increase in restricted cash		—			7,500,000			16,579,000			(6,000	)		(24,073,000	)
Proceeds of borrowing on line of credit		—			(1,184,000	)		(1,748,000	)		(4,730,000	)		(802,812,000	)
Payment on mortgage loans and line of credit		—			—			(26,790,000	)		(2,533,000	)		(63,593,000	)
Payment of other notes		(1,342,713	)		(4,932,000	)		(2,395,000	)		(9,751,000	)		(43,979,000	)
Payment of loan costs		—			—			—			—			(1,823,000	)
Payment of capital lease obligation		—			—			—			—			(4,899,000	)
Payment to acquire cash flow hedges		2,510,090			(11,611,000	)		(29,643,000	)		(81,996,000	)		(37,655,000	)
Decrease (increase) in intangibles and other assets		(2,503,484	)		(2,313,000	)		(2,391,000	)		(6,591,000	)		(24,636,000	)
Retirement of shares of common stock		—			(1,411,000	)		—			—			—
Due from related parties - offering expenses		—			—			—			—			—
Cash generated (deficiency) after cash distributions and special items		(51,774,587)			(6,044,000	)		3,942,000			94,753,000			39,016,000
TAX AND DISTRIBUTION DATA PER $1,000 INVESTED (Note 5)
Federal income tax results:
Ordinary income (loss) (Note 9)
- from operations (Note 6)		38			26			25			14			2
- from recapture		—			—			—			—			—
Capital gain (loss) (Note 7)		—			—			—			—			—

Past performance is not necessarily indicative of future performance

B-7

TABLE III - CNL HOTELS & RESORTS, INC. - CONTINUED

	1996 (Note 1)	1997 (Note 1)		1998		1999 (Note 2)		2000 (Note 2)		2001 (Note 2)		2002 (Note 2)		2003 (Note 2)		2004 (Note 2)
Cash distributions to investors
Source (on GAAP basis)
- from investment income	—	3		40		47		53		30		16		3		—
- from capital gain	—	—		—		—		—		—		—		—		—
- from investment income from prior period	—	—		—		—		—		—		—		—		—
- from return of capital (Note 8)	—	1		9		21		20		45		60		72		74
Total distributions on GAAP basis (Note 9)	—	4		49		68		73		75		76		75		74
Source (on cash basis)
- from sales	—	—		—		—		—		—		—		—		—
- from refinancing	—	—		—		—		—		—		—		—		—
- from operations	—	3		49		68		73		75		76		65		72
- from cash flow from prior period	—	—		—		—		—		—		—		—		—
- from return of capital (Note 8)	—	1		—		—		—		—		—		10		2
Total distributions on cash basis (Note 9)	—	4		49		68		73		75		76		75		74
Total cash distributions as a percentage of original $1,000 investment (Notes 5 and 11)	N/A	3.00	%	4.67	%	7.19	%	7.38	%	7.688	%	7.75	%	7.75	%	7.45	%
Total cumulative cash distributions per $1,000 investment from inception	N/A	4		53		121		194		269		345		420		494
Amount (in percentage terms) remaining invested in program properties at the end of each year (period) presented (original total acquisition cost of properties retained, divided by original total acquisition cost of all properties in program)	N/A	N/A		100	%	100	%	100	%	100	%	100	%	100	%	100	%

Note 1:	CNL Hotels & Resorts, Inc. (the “Hotels & Resorts REIT”) offered securities for sale in five public offerings since 1997. Of the funds raised, $36,642,514 were pursuant to its reinvestment plan.
Note 2:	The amounts shown represent the combined results of the Initial Offering, the 1999 Offering, the 2000 Offering, 2002 Offering and the 2003 Offering, as applicable. For the years ended December 31, 2001, 2002 and 2003 the amounts were restated in connection with the adoption of FIN 46R and have been rounded to thousands.
Note 3:	Cash generated from operations includes cash received from tenants and dividend, interest and other income, less cash paid for operating expenses.
Note 4:	Cash generated from operations per this table agrees to cash generated from operations per the statement of cash flows included in the consolidated financial statements of the Hotels & Resorts REIT.
Note 5:	Total cash distributions as a percentage of original $1,000 investment are calculated based on actual distributions declared for the period.
Note 6:	Taxableincome presented is before the dividends paid deduction.
Note 7:	For the years ended December 31, 2004, 2003, 2002, 2001, 2000, 1999, 1998 and 1997, approximately 23%, 39%, 51%, 52%, 63%, 75%, 76% and 100%, respectively, of the distributions received by stockholders were considered to be ordinary income and approximately 77%, 61%, 49%, 48%, 37%, 25%, 24% and 0%, respectively, were considered a return of capital for federal income tax purposes. No amounts distributed to stockholders for the years ended December 31, 2004, 2003, 2002, 2001, 2000, 1999, 1998 and 1997 are required to be or have been treated by the company as a return of capital for purposes of calculating the stockholders’ return on their invested capital.
Note 8:	Cash distributions presented above as a return of capital on a GAAP basis represent the amount of cash distributions in excess of accumulated net income on a GAAP basis. Accumulated net income includes deductions for depreciation and amortization expense and income from certain non-cash items. In addition, cash distributions presented as a return of capital on a cash basis represents the amount of cash distributions in excess of cash generated from operating cash flow and excess cash flows from prior periods. These amounts have not been treated as a return of capital for purposes of calculating the amount of stockholders’ invested capital.
Note 9:	Tax and distribution data and total distributions on GAAP basis were computed based on the weighted average shares outstanding during each period presented.

Past performance is not necessarily indicative of future performance

B-8

Note 10:	In February 1999, the company executed a series of agreements with Five Arrows Realty Securities II, L.L.C. to jointly own a real estate investment trust, CNL Hotel Investors, Inc., for the purpose of acquiring seven hotels. During the years ended December 31, 2000 and 1999, the company recorded $2,780,063 and $2,753,506, respectively, in dividend income and $386,627 and $778,466, respectively, in an equity in loss after deduction of preferred stock dividends, resulting in net earnings of $2,393,436 and $1,975,040, respectively, attributable to this investment. In October 2000, the company purchased an additional interest in CNL Hotel Investors, Inc., which resulted in a majority ownership interest and the consolidation of CNL Hotel Investors, Inc. As such, no dividend income was recognized for the years ended after December 31, 2001.
Note 11:	Certain data for columns representing less than 12 months have been annualized.
Note 12:	On November 18, 2005, CNL Hotels & Resorts, Inc. filed a Form 8-K/A regarding the sale of five hotel properties. The Company had previously filed a report on Form 8-K/A regarding the sale of 30 other hotel properties. These 35 properties were identified as held for sale in the unaudited financial statements of the Company as of September 30, 2005, and were acquired by the Company at various dates beginning in 1999. Statements of Financial Accounting Standards No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, and the Securities and Exchange Commission require that when a Property is identified as held for sale in a financial statement, previously issued annual financial statements included in a registration statement be reclassified to show the operating results of the property in discontinued operations for all periods presented. As of the date of this filing, CNL Hotels & Resorts, Inc. has not filed an 8-K to reclassify its previously issued audited financial statements for any of the periods presented. The following information presented in the Form 8-K/A illustrates the pro-forma effect of the reclassification of the operating results of these properties from continuing operations to discontinued operations for the year ended December 31, 2004:

Gross revenue	$	1,205,137,000
Interest and other income		6,147,000
Less: Operating expenses		(898,133,000	)
Interest and loan cost amortization		(162,144,000	)
Depreciation and amortization		(158,246,000	)
Equity in loss of unconsolidated subsidiary after deduction of Preferred stock dividends		(18,469,000	)
Minority interest		(8,403,000	)
Benefit (expense) from Income taxes		(32,448,000	)
Income (loss) from continuing operations		(91,938,000	)

Past performance is not necessarily indicative of future performance

B-9

TABLE III

OPERATING RESULTS OF PRIOR PROGRAMS

CNL RETIREMENT PROPERTIES, INC.

	1997 (Note 1)		1998 (Note 1)			1999 (Note 1)			2000 (Note 2)
Gross revenue	$	—	$	—		$	—		$	981,672
Interest and other income		—		—			86,231			103,058
Equity in earnings of unconsolidated subsidiary		—		—			—			—
Less: Operating expenses		—		—			(79,621	)		(181,596	)
Interest and loan cost amortization expense		—		—			—			(367,374	)
Provision for doubtful accounts		—		—			—			—
Depreciation and amortization		—		—			—			(310,982	)
Organizational costs		—		—			(35,000	)		—
Minority interest in earnings of consolidated joint ventures		—		—			—			—
Income (loss) from continuing operations - GAAP basis		—		—			(28,390	)		224,778
Income (loss) from discontinued operations - GAAP basis		—		—			—			—
Net income (loss) - GAAP basis		—		—			(28,390	)		224,778
Taxable income
- from operations (Note 9)		—		—			86,231			93,269
- from gain (loss) on sale		—		—			—			—
Cash generated from operations (Note 6)		—					12,851			1,096,019
Less: Cash distributions to investors (Note 10)
- from operating cash flow		—		—			(12,851	)		(502,078	)
- from sale of properties		—		—			—			—
- from cash flow from prior period		—		—			—			—
- from return of capital (Note 11)		—		—			(37,553	)		—
Cash generated (deficiency) after cash Distributions		—		—			(37,553	)		593,941
Special items (not including sales of real estate and refinancing):
Subscriptions received from stockholders		—		—			5,200,283			6,491,310
Sale of common stock to CNL Retirement Corp.		200,000		—			—			—
Stock issuance costs		—		(199,908	)		(418,600	)		(931,461	)
Acquisition of land, building and equipment on operating leases		—		—			—			(13,848,900	)
Investment in direct financing leases		—		—			—			—
Investment in lease intangibles		—		—			—			—
DASCO acquisition		—		—			—			—
Investment in notes receivable		—		—			—			—
Collection of notes receivable		—		—			—			—
Investment in unconsolidated subsidiary		—		—			—			—
Distributions received from unconsolidated Subsidiary		—		—			—			—
Contributions from minority interests		—		—			—			—
Distributions to minority interests		—		—			—			—
Payment of acquisition costs		—		—			—			(562,491	)
Payment of deferred leasing costs		—		—			—			—
Increase in restricted cash		—		—			—			(17,312	)
Proceeds from borrowings on line of credit		—		—			—			8,100,000
Payment on line of credit		—		—			—			(4,305,000	)
Proceeds from borrowings on mortgages payable		—		—			—			—
Principal payments on mortgages payable		—		—			—			—
Proceeds from construction financing		—		—			—			—
Proceeds from term loan		—		—			—			—
Proceeds from issuance of life care bonds		—		—			—			—
Retirement of life care bonds		—		—			—			—
Payment of loan costs		—		—			—			(55,917	)
Retirement of shares of common stock		—		—			—			(30,508	)
Cash generated (deficiency) after cash distributions and special items		200,000		(199,908	)		4,744,130			(4,566,338	)
TAX AND DISTRIBUTION DATA PER $1,000 INVESTED (Note 8)
Federal income tax results:
Ordinary income (Note 10)
- from operations (Note 9)		—		—			12			32
- from recapture		—		—			—			—
Capital gain (Note 10)		—		—			—			—

Past performance is not necessarily indicative of future performance

B-10

	2001 (Note 2)		2002 (Note 3)			2003 (Note 4)			2004 (Note 5)
Gross revenue	$1,764,217		$	16,416,000		$	93,007,000		$	262,770,000
Interest and other income	135,402			1,913,000			1,626,000			4,768,000
Equity in earnings of unconsolidated subsidiary	—			6,000			11,000			178,000
Less: Operating expenses	(343,472)			(2,137,000	)		(9,916,000	)		(40,078,000	)
Interest and loan cost amortization expense	(105,056	)		(1,534,000	)		(9,588,000	)		(42,783,000	)
Provision for doubtful accounts	—			—			—			(3,900,000	)
Depreciation and amortization	(535,126	)		(3,190,000	)		(17,277,000	)		(62,512,000	)
Organizational costs	—			—			—			—
Minority interest in earnings of consolidated joint ventures	—			(433,000	)		—			(93,000	)
Income (loss) from continuing operations - GAAP basis	915,965			11,041,000			57,863,000			118,350,000
Income (loss) from discontinued operations - GAAP basis	—			331,000			597,000			(432,000	)
Net income (loss) - GAAP basis	915,965			11,372,000			58,460,000			117,918,000
Taxable income	600,447			7,792,000			27,477,000			56,155,000
- from operations (Note 9)	—			—			—			—
- from gain (loss) on sale	2,173,379			16,785,000			60,658,000			139,398,000
Cash generated from operations (Note 6)	(1,507,322)			(14,379,000	)		(59,784,000	)		(139,398,000	)
Less: Cash distributions to investors (Note 10)	—			—			—			—
- from operating cash flow	—			—			—			(4,502,000	)
- from sale of properties	—			—			—			(3,238,000	)
- from cash flow from prior period	666,057			2,406,000			874,000			(7,740,000	)
- from return of capital (Note 11)	59,519,751			371,135,000			1,059,981,000			880,268,000
Cash generated (deficiency) after cash Distributions	—			—			—			—
Special items (not including sales of real estate and refinancing):	(6,903,096)			(40,232,000	)		(99,309,000	)		(89,039,000	)
Subscriptions received from stockholders	(20,269,138	)		(193,176,000	)		(661,946,000	)		(921,698,000	)
Sale of common stock to CNL Retirement Corp.	—			(128,065,000	)		(263,330,000	)		(50,230,000	)
Stock issuance costs	—			(8,408,000	)		(23,220,000	)		(50,064,000	)
Acquisition of land, building and equipment on operating leases	—			—			—			(204,441,000	)
Investment in direct financing leases	—			(2,000,000	)		—			—
Investment in lease intangibles	—			—			2,000,000			—
DASCO acquisition	—			(350,000	)		—			—
Investment in notes receivable	—			191,000			149,000			175,000
Collection of notes receivable	—			—			—			997,000
Investment in unconsolidated subsidiary	—			(509,000	)		—			(45,000	)
Distributions received from unconsolidated Subsidiary	(2,644,534	)		(16,132,000	)		(53,126,000	)		(73,124,000	)
Contributions from minority interests	—			—			—			(864,000	)
Distributions to minority interests	(17,797	)		(1,650,000	)		(13,127,000	)		(9,448,000	)
Payment of acquisition costs	—			—			71,370,000			—
Payment of deferred leasing costs	(3,795,000	)		—			(51,370,000	)		—
Increase in restricted cash	—			32,620,000			170,800,000			315,045,000
Proceeds from borrowings on line of credit	—			(268,000	)		(13,832,000	)		(28,964,000	)
Payment on line of credit	—			—			7,402,000			73,618,000
Proceeds from borrowings on mortgages payable	—			—			—			60,000,000
Principal payments on mortgages payable	—			—			8,203,000			12,063,000
Proceeds from construction financing	—			—			(6,589,000	)		(7,736,000	)
Proceeds from term loan	—			(1,309,000	)		(7,523,000	)		(10,149,000	)
Proceeds from issuance of life care bonds	(13,020	)		(174,000	)		(1,117,000	)		(3,933,000	)
Retirement of life care bonds	26,543,223			14,079,000			126,290,000			(115,309,000	)
TAX AND DISTRIBUTION DATA PER $1,000 INVESTED (Note 8)
Federal income tax results:
Ordinary income (Note 10)
- from operations (Note 9)	41			42			48			42
- from recapture	—			—			—			—
Capital gain (Note 10)	—			—			—			—

Past performance is not necessarily indicative of future performance

B-11

TABLE III - CNL RETIREMENT PROPERTIES, INC. – CONTINUED

	1997 (Note 1)	1998 (Note 1)	1999 (Note 1)		2000 (Note 2)		2001 (Note 2)	2002 (Note 3)		2003 (Note 4)		2004 (Note 5)
Cash distributions to investors
Source (on GAAP basis)
- from investment income	—	—	—		27		38	52		66		56
- from capital gain	—	—	—		—		—	—		—		—
- from investment income from prior period	—	—	—		—		—	—		—		—
- from return of capital (Note 11)	—	—	12		32		25	13		1		14
Total distributions on GAAP basis (Note 12)	—	—	12		59		63	65		67		70
Source (on cash basis)
- from sales	—	—	—		—		—	—		—		—
- from refinancing	—	—	—		—		—	—		—		—
- from operations (Note 6)	—	—	3		59		63	65		67		66
- from cash flow from prior period	—	—	—		—		—	—		—		2
- from return of capital (Note 11)	—	—	9		—		—	—		—		2
Total distributions on cash basis (Note12)	—	—	12		59		63	65		67		70
Total cash distributions as a percentage of original $1,000 investment (Note 8)	N/A	N/A	3.0	%	5.79	%	7.0%	7.0	%	7.1	%	7.1	%
Total cumulative cash distributions per $1,000 investment from inception	N/A	N/A	12		71		134	199		266		336
Amount (in percentage terms) remaining invested in program properties at the end of each year presented (original total acquisition cost of properties retained, divided by original total acquisition cost of all properties in program)	N/A	N/A	N/A		100	%	100%	100	%	100	%	100	%

Note 1:	CNL Retirement Properties, Inc. (the “Retirement Properties REIT”) offered securities for sale in five public offerings since 1998. Of the funds raised as of December 31, 2004, $58,681,071 was raised pursuant to its reinvestment plan.
Note 2:	The amounts shown represent the combined results of the Initial Offering and the 2000 Offering.
Note 3:	The amounts shown represent the combined results of the Initial Offering, the 2000 Offering and the 2002 Offering.
Note 4:	The amounts shown represent the combined results of the Initial Offering, the 2000 Offering, the 2002 Offering and the 2003 Offering.
Note 5:	The amounts shown represent the combined results of the Initial Offering, the 2000 Offering, the 2002 Offering, the 2003 Offering and the 2004 Offering.

Past performance is not necessarily indicative of future performance

B-12

Note 6:	Cash generated from operations includes cash received from tenants, interest and other income, less cash paid for operating expenses.
Note 7:	Cash generated from operations per this table agrees to cash generated from operations per the statement of cash flows included in the consolidated financial statements of the Retirement Properties REIT.
Note 8:	Total cash distributions as a percentage of original $1,000 investment are calculated based on actual distributions declared for the period.
Note 9:	Taxable income presented is before the dividends paid deduction.
Note 10:	For the years ended December 31, 2004, 2003, 2002, 2001, 2000 and 1999, approximately 60%, 71%, 65%, 65%, 54% and 100%, respectively, of the distributions received by stockholders were considered to be ordinary income for federal income tax purposes. For the years ended December 31, 2004, 2003, 2002, 2001, 2000 and 1999, approximately 40%, 29%, 35%, 35%, 46% and 0%, respectively, of distributions received by stockholders were considered a return of capital for federal income tax purposes. No amounts distributed to stockholders for the years ended December 31, 2004, 2003, 2002, 2001, 2000 and 1999, are required to be or have been treated by the company as a return of capital for purposes of calculating the stockholders’ return on their invested capital.
Note 11:	Cash distributions presented above as a return of capital on a GAAP basis represent the amount of cash distributions in excess of accumulated net income on a GAAP basis. Accumulated net income includes deductions for depreciation and amortization expense and income from certain non-cash items. In addition, cash distributions presented as a return of capital on a cash basis represents the amount of cash distributions in excess of cash generated from operating cash flow and excess cash flows from prior periods. These amounts have not been treated as a return of capital for purposes of calculating the amount of stockholders’ invested capital.
Note 12:	Tax and distribution data and total distributions on GAAP basis were computed based on the weighted average shares outstanding during each period presented. The taxability of distributions of a REIT is based on the annual earnings and profits split of the REIT. Therefore, federal income tax results per $1,000 invested presented above has been calculated using the annual earnings and profits split as described in Note 10.
Note 13:	Certain data for columns representing less than 12 months have been annualized.

Past performance is not necessarily indicative of future performance

B-13

TABLE V

SALES OR DISPOSALS OF PROPERTIES

	Date Acquired	Date of Sale	Selling Price, Net of Closing Costs and GAAP Adjustments					Cost of Properties Including Closing And Soft Costs			Excess (deficiency) of property operating cash receipts over cash expenditures (19)
Property			Cash received net of closing costs	Mortgage balance at time of sale	Purchase money mortgage taken back by program	Adjustments resulting from application of GAAP	Total	Original mortgage financing (7)	Total acquisition cost, capital improvements closing and soft costs (1)	Total
CNL Income Fund, Ltd.:
Wendy’s - Mesquite, TX (2)	09/29/86	02/20/02	1,064,259	—	—	—	1,064,259	—	848,000	848,000	1,351,586
Burger King - Orlando, FL (30)	11/12/86	06/18/02	613,553	—	—	—	613,553	—	487,500	487,500	911,938
Jade Hunan - Angleton, TX (2)	09/11/86	01/17/03	297,888	—	—	—	297,888	—	575,000	575,000	568,404
Wendy’s - Oklahoma City, OK (2)	08/20/86	02/19/04	447,550	—	—	—	447,550	—	634,500	634,500	1,241,866
CNL Income Fund II, Ltd.:
Burger King - San Antonio, TX (2)	05/15/87	06/26/02	747,510	—	—	—	747,510	—	703,500	703,500	1,251,201
Denny’s - Casper, WY (2) (38)	09/15/87	08/09/02	346,252	—	—	—	346,252	—	566,700	566,700	872,849
Denny’s - Rock Springs, WY (2)	09/18/87	08/09/02	204,659	—	—	—	204,659	—	667,900	667,900	928,587
Golden Corral - Tomball, TX	05/13/87	10/10/02	458,175	—	—	—	458,175	—	807,583	807,583	1,434,457
Golden Corral - Pineville, LA	06/18/97	12/18/02	262,425	—	—	—	262,425	—	645,400	645,400	1,115,813
Darryl’s - Greensboro, NC (11)	06/11/97	09/26/03	300,118	—	—	—	300,118	—	501,778	501,778	233,002
Burger King - Holland, MI (39)	04/29/88	06/11/04	685,802	—	—	—	685,802	—	517,083	517,083	922,558
Checker’s - Atlanta, GA (41)	12/08/94	09/10/04	282,000	—	—	—	282,000	—	314,926	314,926	341,261
CNL Income Fund III, Ltd.:
Po’ Folks - Titusville, FL (28)	10/30/87	01/09/02	121,558	—	—	—	121,558	—	714,117	714,117	166,684
Burger King - Montgomery, AL (2)(36)	01/28/99	05/17/02	78,294	—	320,000	—	398,294	—	941,358	941,358	261,836
Golden Corral - Altus, OK (2)	10/14/87	09/27/02	307,785	—	—	—	307,785	—	557,900	557,900	920,131
Red Oak Steakhouse - Canton Township, MI (2) (37)	08/18/88	09/30/02	106,315	—	640,000	—	746,315	—	924,921	924,921	1,309,270
Darryl’s - Fayetteville, NC (2)	06/11/97	02/10/03	383,338	—	—	—	383,338	—	1,276,324	1,276,324	602,726

Past performance is not necessarily indicative of future performance.

B-14

TABLE V

SALES OR DISPOSALS OF PROPERTIES

	Date Acquired	Date of Sale	Selling Price, Net of Closing Costs and GAAP Adjustments					Cost of Properties Including Closing And Soft Costs			Excess (deficiency) of property operating cash receipts over cash expenditures (19)
Property			Cash received net of closing costs	Mortgage balance at time of sale	Purchase money mortgage taken back by program	Adjustments resulting from application of GAAP	Total	Original mortgage financing (7)	Total acquisition cost, capital improvements closing and soft costs (1)	Total
CNL Income Fund IV, Ltd.:
Po’ Folks - Titusville, FL (28)	10/30/87	01/09/02	44,052	—	—	—	44,052	—	258,795	258,795	60,406
Arby’s - Portland, IN (2)	11/15/88	02/28/03	776,081	—	—	—	776,081	—	806,121	806,121	912,778
The Vitamin Shoppe - Richmond, VA (2)	12/31/96	03/27/03	922,652	—	—	—	922,652	—	1,035,417	1,035,417	541,155
Dunkin Donuts/Holsum Bread - Maywood, IL (2)	09/28/88	07/30/03	345,977	—	—	—	345,977	—	681,525	681,525	520,525
Captain D’s - Oak Ridge, TN (2)	12/22/88	04/30/04	438,090	—	—	—	438,090	—	422,300	422,300	736,063
Burger King - Holland, MI (39)	04/29/88	06/11/04	713,794	—	—	—	713,794	—	538,189	538,189	960,213
CNL Income Fund V, Ltd.:
Denny’s - Huron, OH (2) (6)	05/19/89	01/15/02	260,956	—	—	—	260,956	—	448,100	448,100	764,529
Market Street Buffet and Bakery - West Lebanon, NH (2)	07/10/89	01/17/02	654,530	—	—	—	654,530	—	1,159,990	1,159,990	(29,353	)
Taco Bell - Bountiful, UT (2)	08/17/89	01/28/02	1,039,998	—	—	—	1,039,998	—	614,249	614,249	1,053,833
Burger King - Lawrenceville, GA (2)	06/27/89	06/20/02	847,000	—	—	—	847,000	—	797,778	797,778	1,290,366
CNL Income Fund VI, Ltd.:
KFC - Caro, MI (35)	04/02/90	11/15/02	396,840	—	—	—	396,840	—	348,855	348,855	651,265
Denny’s - Broken Arrow, OK	08/31/98	06/24/03	472,425	—	—	—	472,425	—	729,440	729,440	472,549
Darryl’s - Greensboro, NC (11)	06/11/97	09/26/03	168,817	—	—	—	168,817	—	282,250	282,250	131,063
Branch Bank & Trust - Marietta, GA	02/24/97	03/31/04	1,588,927	—	—	—	1,588,927	—	1,100,000	1,100,000	651,913
Loco Lupes Mexican Restaurant - Hermitage, TN	06/18/90	08/05/04	831,050	—	—	—	831,050	—	1,023,287	1,023,287	1,000,149
Golden Corral - Lawton, OK	12/26/89	08/13/04	942,505	—	—	—	942,505	—	1,300,000	1,300,000	2,317,830

Past performance is not necessarily indicative of future performance.

B-15

TABLE V

SALES OR DISPOSALS OF PROPERTIES

			Selling Price, Net of Closing Costs and GAAP Adjustments					Cost of Properties Including Closing And Soft Costs			Excess (deficiency) of property operating cash receipts over cash expenditures (19)
Property	Date Acquired	Date of Sale	Cash received net of closing costs	Mortgage balance at time of sale	Purchase money mortgage taken back by program	Adjustments resulting from application of GAAP	Total	Original mortgage financing (7)	Total acquisition cost, capital improvements closing and soft costs (1)	Total
CNL Income Fund VII, Ltd.:							`
Burger King - Columbus, OH (31)	09/27/91	06/03/02	218,833	—	—	—	218,833	—	167,259	167,259	190,438
Burger King - Pontiac, MI (31)	09/27/91	06/27/02	130,073	—	—	—	130,073	—	211,050	211,050	238,235
Jack in the Box - Mansfield, TX (34)	03/20/97	08/23/02	799,084	—	—	—	799,084	—	617,155	617,155	351,952
Sonny’s Real Pit Bar-B-Q - Columbus, GA (40)	12/19/01	08/27/04	1,100,000	—	—	—	1,100,000	—	1,100,000	1,100,000	330,454
CNL Income Fund VIII, Ltd.:
Burger King - Baseball City, FL	06/18/91	05/02/02	1,184,559	—	—	—	1,184,559	—	873,857	873,857	1,096,005
Burger King - Columbus, OH (31)	09/27/91	06/03/02	447,392	—	—	—	447,392	—	341,952	341,952	389,340
Burger King - Pontiac, MI (31)	09/27/91	06/27/02	265,926	—	—	—	265,926	—	431,480	431,480	487,058
Bakers Square - Libertyville, IL (33)	08/31/00	09/05/02	1,076,041	—	—	—	1,076,041	—	960,000	960,000	187,961
Denny’s - Tiffin, OH	03/22/91	03/30/04	791,062	—	—	—	791,062	—	457,698	457,698	836,474
Burger King - Brandon, FL	02/16/91	09/28/04	1,056,928	—	—	—	1,056,928	—	915,000	915,000	1,736,767
CNL Income Fund IX, Ltd.:
Hardee’s - Greenville, SC	10/21/91	05/03/02	976,798	—	—	—	976,798	—	760,405	760,405	957,261
Burger King - Greensboro, NC (29)	03/30/92	05/16/02	571,744	—	—	—	571,744	—	460,989	460,989	479,360
Burger King - Columbus, OH (31)	09/27/91	06/03/02	549,515	—	—	—	549,515	—	420,008	420,008	478,210
Burger King - Ashland, NH (32)	06/29/92	06/03/02	402,545	—	—	—	402,545	—	325,018	325,018	322,154
Burger King - Pontiac, MI (31)	09/27/91	06/27/02	326,626	—	—	—	326,626	—	529,969	529,969	598,234
Shoney’s - Huntsville, AL	10/04/91	08/20/02	951,528	—	—	—	951,528	—	763,901	763,901	1,050,434
Bakers Square - Libertyville, IL (33)	08/31/00	09/05/02	554,324	—	—	—	554,324	—	494,545	494,545	96,829

Past performance is not necessarily indicative of future performance.

B-16

TABLE V

SALES OR DISPOSALS OF PROPERTIES

			Selling Price, Net of Closing Costs and GAAP Adjustments					Cost of Properties Including Closing And Soft Costs			Excess (deficiency) of property operating cash receipts over cash expenditures (19)
Property	Date Acquired	Date of Sale	Cash received net of closing costs	Mortgage balance at time of sale	Purchase money mortgage taken back by program	Adjustments resulting from application of GAAP	Total	Original mortgage financing (7)	Total acquisition cost, capital improvements closing and soft costs (1)	Total
CNL Income Fund IX, Ltd. (Continued):
Hardee’s - Farragut, TN	10/09/91	12/18/02	886,300	—	—	—	886,300	—	707,025	707,025	940,825
Denny’s - Grand Prairie, TX	08/20/91	02/28/03	286,543	—	—	—	286,543	—	495,874	495,874	423,298
Johnnies - Wildwood, FL	08/01/91	02/20/04	526,388	—	—	—	526,388	—	1,153,856	1,153,856	1,293,325
Hardee’s - Greenville, TN	10/09/91	05/06/04	712,148	—	—	—	712,148	—	493,007	493,007	829,856
CNL Income Fund X, Ltd.:
Jack in the Box - San Marcos, TX	03/03/99	04/23/02	1,161,055	—	—	—	1,161,055	—	1,020,829	1,020,829	288,292
Burger King - Greensboro, NC (29)	03/30/92	05/16/02	571,744	—	—	—	571,744	—	460,989	460,989	479,360
Burger King - Ashland, NH (32)	06/29/92	06/03/02	154,802	—	—	—	154,802	—	124,989	124,989	123,887
Perkins - Ft. Pierce, FL	02/04/92	12/20/02	329,175	—	—	—	329,175	—	1,002,337	1,002,337	623,996
Burger King - Ocean Shores, WA (16)	01/28/99	09/18/03	543,986	—	—	—	543,986	—	803,568	803,568	149,991
Denny’s - Romulus, MI	02/11/92	07/16/04	1,461,287	—	—	—	1,461,287	—	962,028	962,028	1,460,350
CNL Income Fund XI, Ltd.:
Burger King - Columbus, OH	09/01/92	06/03/02	901,125	—	—	—	901,125	—	714,413	714,413	798,711
Burger King - Ashland, NH (32)	06/29/92	06/03/02	915,559	—	—	—	915,559	—	739,228	739,228	732,715
Burger King - East Detroit, MI	06/29/92	06/20/02	833,247	—	—	—	833,247	—	761,501	761,501	779,593
Denny’s - Abilene, TX	11/17/92	03/04/03	931,858	—	—	—	931,858	—	763,284	763,284	1,004,895
Sagebrush - Lynchburg, VA	09/30/92	01/20/04	960,000	—	—	—	960,000	—	934,642	934,642	1,264,235
Denny’s - Cullman, AL	09/30/92	02/11/04	1,045,580	—	—	—	1,045,580	—	712,893	712,893	982,892
Hardee’s - Huntersville, NC	09/28/92	03/09/04	1,035,600	—	—	—	1,035,600	—	719,345	719,345	982,513

Past performance is not necessarily indicative of future performance.

B-17

TABLE V

SALES OR DISPOSALS OF PROPERTIES

	Date Acquired	Date of Sale	Selling Price, Net of Closing Costs and GAAP Adjustments					Cost of Properties Including Closing And Soft Costs			Excess (deficiency) of property operating cash receipts over cash expenditures (19)
Property			Cash received net of closing costs	Mortgage balance at time of sale	Purchase money mortgage taken back by program	Adjustments resulting from application of GAAP	Total	Original mortgage financing (7)	Total acquisition cost, capital improvements closing and soft costs (1)	Total
CNL Income Fund XI, Ltd. (Continued):
Jack in the Box - Arlington, TX	01/15/93	04/23/02	1,248,205	—	—	—	1,248,205	—	966,466	966,466	937,794
Burger King - Valdosta, GA	08/24/93	08/30/02	623,661	—	—	—	623,661	—	510,432	510,432	648,558
The Knight Club - Tempe, AZ	04/05/93	12/19/03	673,300	—	—	—	673,300	—	710,000	710,000	603,945
Hardee’s - Toccoa, GA	12/28/92	03/03/04	853,225	—	—	—	853,225	—	602,020	602,020	799,449
Denny’s - Blue Springs, MO	04/01/93	03/17/04	1,420,634	—	—	—	1,420,634	—	939,795	939,795	1,244,848
Hardee’s - Fultondale, AL	04/23/93	03/26/04	1,083,525	—	—	—	1,083,525	—	756,992	756,992	970,132
Hardee’s - Columbia, MS	01/04/93	10/04/04	646,592	—	—	—	646,592	—	467,322	467,322	657,006
Hardee’s - Simpsonville, SC	06/03/93	12/30/04	1,012,848	—	—	—	1,012,848	—	702,998	702,998	966,078
CNL Income Fund XIII, Ltd.:
Burger King - Dayton, OH	07/30/93	06/03/02	1,049,863	—	—	—	1,049,863	—	905,717	905,717	1,032,534
Lion’s Choice - Overland Park, KS (5)	12/16/93	08/12/02	1,242,050	—	—	—	1,242,050	—	1,029,449	1,029,449	964,561
Hardee’s - Blytheville, AR	07/30/93	05/20/04	639,960	—	—	—	639,960	—	571,557	571,557	652,766
CNL Income Fund XIV, Ltd.:
Razzleberries - Las Vegas, NV	07/08/94	02/01/02	1,143,753	—	—	—	1,143,753	—	1,006,514	1,006,514	631,310
Long John Silver’s - Laurens, SC	03/25/94	08/05/02	155,249	—	—	—	155,249	—	448,796	448,796	257,444
Golden Corral - Greeley, CO	12/13/94	09/25/02	1,306,595	—	—	—	1,306,595	—	1,184,810	1,184,810	1,015,365
Checker’s - Merriam, KS	03/31/94	11/07/02	323,175	—	—	—	323,175	—	284,609	284,609	269,328
Denny’s - Bullhead City, AZ	09/28/93	02/06/04	1,348,866	—	—	—	1,420,634	—	984,118	984,118	1,053,795
Hardee’s - Franklin, TN	11/10/93	03/01/04	675,343	—	—	—	675,343	—	576,104	576,104	626,901
Denny’s - Winslow, AZ	09/28/93	03/26/04	1,242,179	—	—	—	1,242,179	—	918,019	918,019	1,013,767

Past performance is not necessarily indicative of future performance.

B-18

TABLE V

SALES OR DISPOSALS OF PROPERTIES

			Selling Price, Net of Closing Costs and GAAP Adjustments					Cost of Properties Including Closing And Soft Costs			Excess (deficiency) of property operating cash receipts over cash expenditures (19)
Property	Date Acquired	Date of Sale	Cash received net of closing costs	Mortgage balance at time of sale	Purchase money mortgage taken back by program	Adjustments resulting from application of GAAP	Total	Original mortgage financing (7)	Total acquisition cost, capital improvements closing and soft costs (1)	Total
CNL Income Fund XIV, Ltd. (Continued):
Denny’s - Topeka, KS	01/23/94	05/24/04	1,199,166	—	—	—	1,199,166	—	851,096	851,096	1,032,717
Hardee’s - Antioch, TN	11/10/93	12/30/04	865,616	—	—	—	865,616	—	722,986	722,986	855,582
CNL Income Fund XV, Ltd.:
Jack in the Box - Redlands, CA	07/29/94	02/15/02	1,300,882	—	—	—	1,300,882	—	973,020	973,020	758,150
Long John Silver’s - Medina, OH	10/05/94	09/30/02	395,205	—	—	—	395,205	—	812,056	812,056	285,620
Checker’s - Stratford, NJ	05/27/94	12/27/02	350,802	—	—	—	350,802	—	287,391	287,391	271,787
Denny’s - Bartlesville, OK	08/31/95	06/24/03	558,990	—	—	—	558,990	—	935,365	935,365	610,214
Denny’s - Huntsville, TX	11/23/94	03/12/04	1,292,405	—	—	—	1,292,405	—	902,012	902,012	983,879
Hardee’s - Piney Flats, TN	04/28/94	03/23/04	743,383	—	—	—	743,383	—	599,205	599,205	637,150
Hardee’s - Cookeville, TN	04/28/94	04/02/04	909,797	—	—	—	909,797	—	733,373	733,373	781,886
Hardee’s - Columbia, SC	04/28/94	08/03/04	811,528	—	—	—	811,528	—	674,178	674,178	745,708
Sonny’s Real Pit Bar-B-Q - Columbus, GA (40)	12/19/01	08/27/04	500,000	—	—	—	500,000	—	500,000	500,000	150,206
Checker’s - Marietta, GA (42)	05/27/94	09/10/04	398,000	—	—	—	398,000	—	401,403	401,403	460,758
Checker’s - Norcross, GA (43)	05/27/94	09/10/04	310,000	—	—	—	310,000	—	376,146	376,146	432,864
CNL Income Fund XVI,Ltd.:
Denny’s - Mesquite, TX	08/31/95	03/28/02	448,675	—	—	—	448,675	—	987,353	987,353	480,530
Jack in the Box - Rancho Cordova, CA	10/31/94	06/04/02	1,325,054	—	—	—	1,325,054	—	900,290	900,290	705,521
Denny’s - Bucyrus, OH (26)	06/08/95	08/07/02	144,915	—	—	—	144,915	—	540,000	540,000	385,051

Past performance is not necessarily indicative of future performance.

B-19

TABLE V

SALES OR DISPOSALS OF PROPERTIES

			Selling Price, Net of Closing Costs and GAAP Adjustments					Cost of Properties Including Closing And Soft Costs			Excess (deficiency) of property operating cash receipts over cash expenditures (19)
Property	Date Acquired	Date of Sale	Cash received net of closing costs	Mortgage balance at time of sale	Purchase money mortgage taken back by program	Adjustments resulting from application of GAAP	Total	Original mortgage financing (7)	Total acquisition cost, capital improvements closing and soft costs (1)	Total
CNL Income Fund XVI, Ltd. (Continued):
Denny’s - Salina, KS	12/12/95	02/04/03	154,492	—	—	—	154,492	—	897,358	897,358	329,827
Golden Corral - Independence, MO	12/31/94	11/21/03	1,947,899	—	—	—	1,947,899	—	1,793,974	1,793,974	1,712,444
Golden Corral - Ft. Collins, CO	03/13/95	03/26/04	1,898,000	—	—	—	1,898,000	—	1,582,753	1,582,753	1,544,895
CNL Income Fund XVII, Ltd.:
Denny’s - Mesquite, NV	04/25/96	03/29/02	771,800	—	—	—	771,800	—	1,186,460	1,186,460	494,461
Wendy’s - Knoxville, TN	07/30/96	05/31/02	1,045,425	—	—	—	1,045,425	—	783,748	783,748	484,686
Bakers Square - Wilmette, IL	01/31/00	06/27/02	1,682,371	—	—	—	1,682,371	—	1,627,273	1,627,273	380,572
Jack in the Box - Mansfield, TX (34)	03/20/97	08/23/02	212,415	—	—	—	212,415	—	164,054	164,054	93,557
Burger King - Ocean Shores, WA (16)	01/28/99	09/18/03	243,714	—	—	—	243,714	—	360,012	360,012	67,199
CNL Income Fund XVIII, Ltd.:
On the Border - San Antonio, TX	09/02/97	05/08/02	470,304	—	—	—	470,304	—	1,225,163	1,225,163	190,705
Boston Market - San Antonio, TX	08/18/97	05/29/02	481,325	—	—	—	481,325	—	857,595	857,595	9,631
Boston Market - Raleigh, NC (27)	01/23/97	08/07/02	714,050	—	—	—	714,050	—	1,225,686	1,225,686	511,581
Golden Corral - Destin, FL (2)	02/05/98	06/27/03	1,742,825	—	—	—	1,742,825	—	1,528,391	1,528,391	878,717
NI’s International Buffet - Stow, OH (2)	04/02/97	08/30/04	1,000,000	—	—	—	1,000,000	—	1,686,119	1,686,119	1,127,270
CNL APF Partners, LP:
Boston Market - Jessup, MD	05/06/97	02/19/02	324,343	—	—	—	324,343	—	1,243,060	1,243,060	107,266
Black-eyed Pea - Herndon, VA	07/14/98	02/22/02	815,875	—	—	—	815,875	—	1,279,118	1,279,118	354,530
TGI Friday’s - El Paso, TX	08/14/98	03/19/02	1,594,729	—	—	—	1,549,729	—	1,602,944	1,602,944	577,055

Past performance is not necessarily indicative of future performance.

B-20

TABLE V

SALES OR DISPOSALS OF PROPERTIES

			Selling Price, Net of Closing Costs and GAAP Adjustments					Cost of Properties Including Closing And Soft Costs			Excess (deficiency) of property operating cash receipts over cash expenditures (19)
Property	Date Acquired	Date of Sale	Cash received net of closing costs	Mortgage balance at time of sale	Purchase money mortgage taken back by program	Adjustments resulting from application of GAAP	Total	Original mortgage financing (7)	Total acquisition cost, capital improvements closing and soft costs (1)	Total
CNL APF Partners, LP (Continued):
Big Boy - Las Vegas, NV	08/20/97	04/19/02	981,540	—	—	—	981,540	—	1,658,000	1,658,000	114,934
Big Boy - Overland Park, KS	02/26/99	04/26/02	577,580	—	—	—	577,580	—	1,037,383	1,037,383	(7,476	)
Burger King - Tappahannock, VA	03/16/99	05/16/02	1,089,779	—	—	—	1,089,779	—	857,826	857,826	285,470
Burger King - Prattville, AL	01/28/99	05/17/02	497,867	—	—	—	497,867	—	1,018,519	1,018,519	285,895
Burger King - Tuskegee, AL	01/28/99	05/17/02	397,867	—	—	—	397,867	—	972,222	972,222	267,501
Burger King - Montgomery, AL	01/28/99	05/17/02	797,867	—	—	—	797,867	—	1,296,296	1,296,296	362,395
Burger King - Montgomery, AL	01/28/99	05/17/02	397,867	—	—	—	397,867	—	1,018,519	1,018,519	289,495
Black-eyed Pea - McKinney, TX	12/30/98	05/31/02	1,149,064	—	—	—	1,149,064	—	1,644,856	1,644,856	304,736
Black-eyed Pea - Forestville, MD (10)	10/01/97	06/01/02	—	—	—	—	—	—	643,925	643,925	477,253
Burger King - Coon Rapids, MN	03/16/99	06/03/02	1,078,973	—	—	—	1,078,973	—	844,815	844,815	288,892
Burger King - Rochester, NH	03/16/99	06/03/02	1,193,284	—	—	—	1,193,284	—	963,499	963,499	318,314
Burger King - Columbus, OH	03/16/99	06/03/02	950,938	—	—	—	950,938	—	744,585	744,585	257,877
Burger King - Asheboro, NC	03/16/99	06/03/02	1,513,213	—	—	—	1,513,213	—	1,228,831	1,228,831	436,666
Hardee’s - Gulf Shores, AL	03/16/99	06/13/02	904,861	—	—	—	904,861	—	914,337	914,337	320,113
Burger King - Lancaster, OH	03/16/99	06/14/02	1,321,822	—	—	—	1,321,822	—	799,195	799,195	364,070
Burger King - John’s Island, SC	03/16/99	06/14/02	1,289,282	—	—	—	1,289,282	—	1,077,802	1,077,802	367,639
IHOP - Elk Grove, CA	08/20/97	06/17/02	2,085,346	—	—	—	2,085,346	—	1,540,356	1,540,356	751,308
Hardee’s - Tusculum, TN	03/16/99	06/17/02	653,460	—	—	—	653,460	—	666,045	666,045	233,604
Pollo Tropical - Miami, FL	09/22/98	06/20/02	1,302,936	—	—	—	1,302,936	—	1,318,182	1,318,182	392,816

Past performance is not necessarily indicative of future performance.

B-21

TABLE V

SALES OR DISPOSALS OF PROPERTIES

			Selling Price, Net of Closing Costs and GAAP Adjustments					Cost of Properties Including Closing And Soft Costs			Excess (deficiency) of property operating cash receipts over cash expenditures (19)
Property	Date Acquired	Date of Sale	Cash received net of closing costs	Mortgage balance at time of sale	Purchase money mortgage taken back by program	Adjustments resulting from application of GAAP	Total	Original mortgage financing (7)	Total acquisition cost, capital improvements closing and soft costs (1)	Total
CNL APF Partners, LP (Continued):
Burger King - St. Paul, MN	03/16/99	06/26/02	849,273	—	—	—	849,273	—	747,713	747,713	271,528
Texas Roadhouse - Joilet, IL	02/25/00	06/27/02	1,940,745	—	—	—	1,940,745	—	1,745,014	1,745,014	384,473
Black-eyed Pea - Phoenix, AZ	09/30/97	06/28/02	281,000	—	—	—	281,000	—	641,371	641,371	265,557
Black-eyed Pea - Mesa, AZ	09/30/97	06/28/02	1,710,000	—	—	—	1,710,000	—	1,600,000	1,600,000	522,239
Black-eyed Pea Phoenix, AZ	09/30/97	06/28/02	425,000	—	—	—	425,000	—	641,254	641,254	282,585
Black-eyed Pea Tucson, AZ	09/30/97	06/28/02	234,000	—	—	—	234,000	—	641,871	641,871	251,809
Jack in the Box - Fresno, CA	05/22/98	07/18/02	1,244,289	—	—	—	1,244,289	—	972,841	972,841	394,246
Black-eyed Pea Phoenix, AZ	09/30/97	07/19/02	580,000	—	—	—	580,000	—	645,471	645,471	207,379
Jack in the Box - Austin, TX	10/05/99	07/22/02	1,384,759	—	—	—	1,384,759	—	1,289,945	1,289,945	299,499
Black-eyed Pea - Albuquerque, NM (10)	01/00/00	07/26/02	—	—	—	—	—	—	666,355	666,355	238,206
Big Boy - St. Clairsville, OH	12/18/98	07/29/02	339,300	—	—	—	339,300	—	1,144,209	1,144,209	169,976
Jack in the Box - Fort Worth, TX	01/11/00	08/05/02	1,141,653	—	—	—	1,141,653	—	1,062,145	1,062,145	223,450
Jack in the Box - Menlo Park, CA	12/30/99	08/22/02	1,772,360	—	—	—	1,772,360	—	1,546,740	1,546,740	368,611
Arby’s - Lawrenceville, GA	02/08/00	08/26/02	1,422,750	—	—	—	1,422,750	—	1,374,986	1,374,986	314,054
Darryl’s - Louisville, KY	06/11/97	08/28/02	1,840,800	—	—	—	1,840,800	—	1,481,448	1,481,448	514,069
Black-eyed Pea - Killeen, TX	12/18/98	09/05/02	1,133,800	—	—	—	1,133,800	—	1,386,948	1,386,948	257,250
IHOP - Fairfax, VA	06/18/97	09/06/02	2,268,911	—	—	—	2,268,911	—	1,709,091	1,709,091	906,669
Black eyed Pea - Oklahoma City, OK	03/26/97	09/10/02	475,000	—	—	—	475,000	—	617,022	617,022	268,734
Arby’s - Circleville, OH	09/09/99	09/10/02	993,900	—	—	—	993,900	—	925,329	925,329	237,321
Black eyed Pea - Waco, TX (10)	10/01/97	09/13/02	70,000	—	—	—	70,000	—	661,682	661,682	280,179

Past performance is not necessarily indicative of future performance.

B-22

TABLE V

SALES OR DISPOSALS OF PROPERTIES

			Selling Price, Net of Closing Costs and GAAP Adjustments					Cost of Properties Including Closing And Soft Costs			Excess (deficiency) of property operating cash receipts over cash expenditures (19)
Property	Date Acquired	Date of Sale	Cash received net of closing costs	Mortgage balance at time of sale	Purchase money mortgage taken back by program	Adjustments resulting from application of GAAP	Total	Original mortgage financing (7)	Total acquisition cost, capital improvements closing and soft costs (1)	Total
CNL APF Partners, LP (Continued):
Hardee’s - Iuka, MS	03/16/99	09/18/02	594,413	—	—	—	594,413	—	616,476	616,476	233,121
Hardee’s - Warrior, AL	03/16/99	09/18/02	667,050	—	—	—	667,050	—	627,937	627,937	238,440
Hardee’s - Horn Lake, MS	03/16/99	09/20/02	818,263	—	—	—	818,263	—	833,058	833,058	319,101
Jack in the Box - Corning, CA	09/17/99	09/24/02	1,266,556	—	—	—	1,266,556	—	1,158,524	1,158,524	314,769
Bennigan’s - Batavia, IL	10/21/99	09/25/02	2,595,121	—	—	—	2,595,121	—	2,429,907	2,429,907	729,536
Shoney’s - Titusville, FL	03/31/02	09/26/02	686,200	—	—	—	686,200	—	—	—	(82,318	)
Pollo Tropical - Sunrise, FL	09/30/98	09/26/02	1,457,533	—	—	—	1,457,533	—	1,454,545	1,454,545	527,258
Hardee’s - Biscoe, NC	03/16/99	09/27/02	564,984	—	—	—	564,984	—	522,853	522,853	199,708
Black -eyed Pea - Bedford, TX	03/26/97	09/30/02	921,175	—	—	—	921,175	—	620,336	620,336	224,003
Black-eyed Pea - Norman, OK	11/09/98	09/30/02	1,091,708	—	—	—	1,091,708	—	1,429,799	1,429,799	335,124
Black-eyed Pea - Mesa, AZ	11/30/98	09/30/02	1,325,500	—	—	—	1,325,000	—	1,677,152	1,677,152	228,704
Hardee’s - Aynor, SC	03/16/99	09/30/02	586,189	—	—	—	586,189	—	546,022	546,022	209,884
Denny’s McKinney, TX	06/05/96	10/02/02	600,000	—	—	—	600,000	—	1,014,221	1,014,221	484,416
Black-eyed Pea - Scottsdale, AZ (10)	04/17/97	10/02/02	—	—	—	—	—	—	769,863	769,863	(31,203	)
Arby’s Renton, WA	09/14/99	10/18/02	1,406,197	—	—	—	1,406,197	—	1,286,545	1,286,545	261,304
Pizza-Hut - Belle, WV	05/17/96	10/21/02	47,500	—	—	—	47,500	—	47,485	47,485	13,301
Pizza Hut - Collinsville, IL	04/02/97	10/25/02	801,953	—	—	—	801,953	—	795,476	795,476	(55,653	)
Burger King - Tampa, FL	08/19/99	10/28/02	770,306	—	—	—	770,306	—	1,057,404	1,057,404	5,224
Big Boy - O’Fallon, MO	01/19/99	10/31/02	679,925	—	—	—	679,925	—	1,017,250	1,017,250	(54,647	)
Golden Corral - Hopkinsville, KY	02/19/97	11/07/02	924,057	—	—	—	924,057	—	1,260,576	1,260,576	255,379

Past performance is not necessarily indicative of future performance.

B-23

TABLE V

SALES OR DISPOSALS OF PROPERTIES

			Selling Price, Net of Closing Costs and GAAP Adjustments					Cost of Properties Including Closing And Soft Costs			Excess (deficiency) of property operating cash receipts over cash expenditures (19)
Property	Date Acquired	Date of Sale	Cash received net of closing costs	Mortgage balance at time of sale	Purchase money mortgage taken back by program	Adjustments resulting from application of GAAP	Total	Original mortgage financing (7)	Total acquisition cost, capital improvements closing and soft costs (1)	Total
CNL APF Partners, LP (Continued):
Jack in the Box - Los Angeles, CA	01/04/99	12/10/02	1,793,802	—	—	—	1,793,802	—	1,575,414	1,575,414	591,448
Hardee’s Columbia, TN	03/16/99	12/12/02	859,259	—	—	—	859,259	—	787,764	787,764	319,094
Golden Corral - Olathe, KS	10/02/97	12/19/02	1,751,760	—	—	—	1,751,760	—	1,577,340	1,577,340	791,627
Darryl’s - Hampton, VA	06/11/97	12/19/02	871,290	—	—	—	871,290	—	1,203,391	1,203,391	595,216
Jack in the Box - Humble, TX	02/03/97	12/20/02	1,265,506	—	—	—	1,265,506	—	932,112	932,112	566,284
Hardee’s - Chalkville, AL	03/16/99	12/20/02	680,428	—	—	—	680,428	—	608,445	608,445	248,876
TGI Friday’s - Lakeland, FL	07/20/99	12/20/02	834,234	—	—	—	834,234	—	1,711,517	1,711,517	85,755
Pollo Tropical - Miami, FL	09/22/98	12/23/02	1,079,144	—	—	—	1,079,144	—	1,227,273	1,227,273	402,650
Golden Corral - Universal City, TX	08/04/95	12/30/02	959,975	—	—	—	959,975	—	994,152	994,152	747,387
Darryl’s - Nashville, TN	06/11/97	01/15/03	684,800	—	—	—	684,800	—	1,185,158	1,185,158	574,421
Darryl’s - Huntsville, AL	06/11/97	01/29/03	312,205	—	—	—	312,205	—	1,367,490	1,367,490	(676,144	)
Jack in the Box - Humble, TX	11/04/99	01/31/03	1,228,066	—	—	—	1,228,066	—	1,119,706	1,119,706	350,984
Darryl’s - Knoxville, TN	06/11/97	02/18/03	381,800	—	—	—	381,800	—	1,231,653	1,231,653	568,874
Darryl’s - Evansville, IN	06/11/97	02/21/03	455,458	—	—	—	455,458	—	1,458,656	1,458,656	685,272
Sophia’s House of Pancakes - Benton Harbor, MI	02/06/99	02/24/03	447,550	—	—	—	447,550	—	1,144,209	1,144,209	149,874
Big Boy - Mansfield, OH	01/27/99	02/28/03	379,791	—	—	—	379,791	—	1,085,571	1,085,571	151,051
Hardee’s - Petal, MS	03/16/99	03/17/03	751,320	—	—	—	751,320	—	671,514	671,514	282,741
Kentucky Fried Chicken - Gretna, LA	05/11/99	04/21/03	497,300	—	—	—	497,300	—	749,106	749,106	155,564
Black Eyed Pea - Albuquerque, NM	10/01/97	04/25/03	380,752	—	—	—	380,752	—	667,290	667,290	216,972
Golden Corral - Liberty, MO	10/23/97	06/16/03	1,463,800	—	—	—	1,463,800	—	1,290,325	1,290,325	781,468

Past performance is not necessarily indicative of future performance.

B-24

TABLE V

SALES OR DISPOSALS OF PROPERTIES

			Selling Price, Net of Closing Costs and GAAP Adjustments					Cost of Properties Including Closing And Soft Costs			Excess (deficiency) of property operating cash receipts over cash expenditures (19)
Property	Date Acquired	Date of Sale	Cash received net of closing costs	Mortgage balance at time of sale	Purchase money mortgage taken back by program	Adjustments resulting from application of GAAP	Total	Original mortgage financing (7)	Total acquisition cost, capital improvements closing and soft costs (1)	Total
CNL APF Partners, LP (Continued):
Denny’s - Shawnee, OK	09/06/95	06/24/03	691,325	—	—	—	691,325	—	1,095,244	1,095,244	876,351
Shoney’s - Cocoa Beach, FL	02/28/02	07/02/03	846,413	—	—	—	846,413	—	1,200,000	1,200,000	(71,331	)
Hardee’s - Johnson City, TN	03/16/99	07/15/03	965,117	—	—	—	965,117	—	759,531	759,531	362,827
Roadhouse Grill - Roswell, GA	03/29/00	08/15/03	949,800	—	—	—	949,800	—	1,849,940	1,849,940	218,627
Darryl’s - Raleigh, NC	06/11/97	08/21/03	1,275,700	—	—	—	1,275,700	—	1,754,946	1,754,946	932,657
Darryl’s - Pensacola, FL	06/11/97	09/24/03	1,314,713	—	—	—	1,314,713	—	1,057,526	1,057,526	479,075
Golden Corral - Columbia, TN	12/03/96	09/29/03	802,600	—	—	—	802,600	—	1,308,074	1,308,074	527,864
Boston Market - Newport News, VA	07/16/97	09/30/03	751,018	—	—	—	751,018	—	1,011,492	1,011,492	358,243
Randy’s Steak and Seafood - Murfreesboro, TN	08/05/97	09/30/03	826,125	—	—	—	826,125	—	1,425,234	1,425,234	455,622
Golden Corral - Winchester, KY	06/05/97	10/01/03	1,784,192	—	—	—	1,784,192	—	1,216,826	1,216,826	903,531
Hardee’s - Rock Hill, SC	03/16/99	10/03/03	767,702	—	—	—	767,702	—	660,104	660,104	332,232
Golden Corral - Mobile, AL	12/30/97	10/16/03	1,808,386	—	—	—	1,808,386	—	1,379,370	1,379,370	1,037,100
Golden Corral - Enid, OK	11/24/97	11/04/03	1,387,130	—	—	—	1,387,130	—	1,172,141	1,172,141	762,928
Golden Corral - Muskogee, OK	04/27/98	11/04/03	1,567,218	—	—	—	1,567,218	—	1,219,036	1,219,036	(766,217	)
Golden Corral - Edmond, OK	07/20/98	11/04/03	1,625,782	—	—	—	1,625,782	—	1,516,169	1,516,169	898,804
Roadhouse Grill - Columbus, OH	11/16/99	12/08/03	889,069	—	—	—	889,069	—	1,754,536	1,754,536	200,097
Darryl’s - Winston-Salem, NC	06/11/97	01/16/04	393,383	—	—	—	393,383	—	1,185,158	1,185,158	547,814
Hardee’s - West Point, MS	03/16/99	03/06/04	746,609	—	—	—	746,609	—	670,045	670,045	369,592
Golden Corral - Corsicana, TX	08/18/95	02/11/04	895,300	—	—	—	895,300	—	997,401	997,401	923,054

Past performance is not necessarily indicative of future performance.

B-25

TABLE V

SALES OR DISPOSALS OF PROPERTIES

			Selling Price, Net of Closing Costs and GAAP Adjustments					Cost of Properties Including Closing And Soft Costs			Excess (deficiency) of property operating cash receipts over cash expenditures (19)
Property	Date Acquired	Date of Sale	Cash received net of closing costs	Mortgage balance at time of sale	Purchase money mortgage taken back by program	Adjustments resulting from application of GAAP	Total	Original mortgage financing (7)	Total acquisition cost, capital improvements closing and soft costs (1)	Total
CNL APF Partners, LP (Continued):
Darryl’s (sold to related party for re-development) Raleigh, NC	06/11/97	03/01/04	1,073,922	—	—	—	1,073,922	—	1,276,324	1,276,324	572,431
Tiffany’s Restaurant - Woodson Terrace, MO	01/19/99	03/03/04	795,800	—	—	—	795,800	—	1,834,950	1,834,950	320,680
Hardee’s - Mobile, AL	03/16/99	03/18/04	926,283	—	—	—	926,283	—	790,584	790,584	413,326
Houlihan’s - Bethel Park, PA	06/11/97	03/30/04	2,487,300	—	—	—	2,487,300	—	1,367,490	1,367,490	965,214
Roadhouse Grill - Pineville, NC	04/22/99	04/21/04	1,268,800	—	—	—	1,268,800	—	2,139,323	2,139,323	471,075
Burger King - Portland, OR	09/20/01	04/29/04	496,208	—	—	—	496,208	—	500,000	500,000	158,888
Pizza Hut - Bowling Green, OH	12/05/96	05/14/04	136,835	—	—	—	136,835	—	130,097	130,097	(19,591	)
Shoney’s - Debary, FL	02/08/02	06/15/04	593,575	—	—	—	593,575	—	900,000	900,000	(54,559	)
Roadhouse Grill - Rock Hill, SC	10/2899	06/18/04	527,942	—	—	—	527,942	—	1,386,328	1,386,328	128,152
Denny’s - Tampa, FL	02/11/97	06/25/04	459,400	—	—	—	459,400	—	1,038,037	1,038,037	469,063
Burger King - Port Angeles, WA	01/28/99	09/27/04	—	—	—	—	—	—	659,259	659,259	290,902
Bank of America - Lynnwood, WA	01/28/99	09/30/04	2,024,520	—	—	—	2,024,520	—	1,018,519	1,018,519	324,319
Roadhouse Grill - Centerville, OH	10/04/99	12/20/04	824,917	—	—	—	824,917	—	1,930,434	1,930,434	220,430
Steak & Ale - Birmingham, AL	06/16/98	12/23/04	1,543,617	—	—	—	1,543,617	—	1,320,930	1,320,930	905,433
Steak & Ale - Jacksonville, FL	06/16/98	12/30/04	1,712,157	—	—	—	1,712,157	—	1,465,116	1,465,116	1,047,918
CNL Funding 2000-A, LP:
Steak & Ale - Palm Harbor, FL	06/16/98	06/14/02	1,241,943	—	—	—	1,241,943	—	1,232,558	1,232,558	504,926
Steak & Ale Restaurant - Austin, TX	06/16/98	07/02/02	1,437,468	—	—	—	1,437,468	—	1,372,093	1,372,093	568,339
Denny’s - Santee, SC	03/16/99	11/21/02	583,000	—	—	—	583,000	—	678,340	678,340	251,554

Past performance is not necessarily indicative of future performance.

B-26

TABLE V

SALES OR DISPOSALS OF PROPERTIES

			Selling Price, Net of Closing Costs and GAAP Adjustments					Cost of Properties Including Closing And Soft Costs			Excess (deficiency) of property operating cash receipts over cash expenditures (19)
Property	Date Acquired	Date of Sale	Cash received net of closing costs	Mortgage balance at time of sale	Purchase money mortgage taken back by program	Adjustments resulting from application of GAAP	Total	Original mortgage financing (7)	Total acquisition cost, capital improvements closing and soft costs (1)	Total
CNL Funding 2000-A, LP (Continued):
Roadhouse Grill - Pensacola, FL	07/24/98	01/15/04	282,238	—	—	—	282,238	—	1,517,561	1,517,561	445,940
Rio Bravo - Auburn Hills, MI	04/12/99	03/26/04	1,555,000	—	—	—	1,555,000	—	2,968,508	2,968,508	1,257,717
Chevy’s Fresh Mex - Olathe, KS	04/12/99	04/07/04	1,024,119	—	—	—	1,024,119	—	1,901,730	1,901,730	806,151
Chevy’s Fresh Mex - Altamonte Springs, FL	04/12/99	05/28/04	2,610,535	—	—	—	2,610,535	—	2,725,812	2,725,812	1,129,654
Ground Round - Cincinnati, OH	10/20/97	12/16/04	637,583	—	—	—	637,583	—	772,727	772,727	513,109
CNL Net Lease Funding 2001, LP:
Chevy’s Fresh Mex - Independence, MO	04/29/99	04/30/04	977,300	—	—	—	977,300	—	2,580,918	2,580,918	1,045,500
Maple & Main Orlando, LLC (18):
Exxon - Punta Gorda, FL	11/0203	11/05/03	807,432	—	—	—	807,432	—	754,450	754,450	—
Checker’s - Tampa, FL	09/16/03	12/31/03	1,193,775	—	—	—	1,193,775	—	756,039	756,039	—
BB&T - Virginia Beach, VA	05/25/04	06/21/04	1,680,900	—	—	—	1,680,900	—	1,446,734	1,446,734	—
Rally’s - Newark, OH	03/29/04	09/08/04	936,551	—	—	—	936,551	—	750,000	750,000	18,881
Jiffy Lube - Fredericksburg, VA	10/24/03	10/25/04	1,005,058	—	—	—	1,005,058	—	686,437	686,437	—
Rally’s - West Carrolton, OH	03/29/04	12/16/04	1,112,072	—	—	—	1,112,072	—	734,994	734,994	—
CNL RAI Restaurants, Inc. (18):
Denny’s - Orlando, FL	12/01/02	06/27/03	1,329,635	—	—	—	1,329,635	—	859,437	859,437	65,356
Denny’s - Brooksville, FL	12/01/02	08/29/03	1,041,192	—	—	—	1,041,192	—	910,000	910,000	66,305
Denny’s - Orange City, FL	12/01/02	09/30/03	1,281,012	—	—	—	1,281,012	—	1,175,000	1,175,000	89,408
Denny’s - Palm Coast, FL	12/01/02	12/23/03	999,951	—	—	—	999,951	—	889,549	889,549	91,267
Sweet Tomatoes - Albuquerque, NM	03/10/04	05/14/04	1,115,838	—	—	—	1,115,838	—	900,000	900,000	17,615

Past performance is not necessarily indicative of future performance.

B-27

TABLE V

SALES OR DISPOSALS OF PROPERTIES

			Selling Price, Net of Closing Costs and GAAP Adjustments					Cost of Properties Including Closing And Soft Costs			Excess (deficiency) of property operating cash receipts over cash expenditures (19)
Property	Date Acquired	Date of Sale	Cash received net of closing costs	Mortgage balance at time of sale	Purchase money mortgage taken back by program	Adjustments resulting from application of GAAP	Total	Original mortgage financing (7)	Total acquisition cost, capital improvements closing and soft costs (1)	Total
CNL RAI Restaurants, Inc. (18) (Continued):
Walgreen’s (former Darryl’s) - Raleigh, NC	03/01/04	07/14/04	4,793,736	—	—	—	4,793,736	—	3,289,578	3,289,578	—
Flat Rock Grill - Roanoke, VA	09/15/03	12/16/04	2,032,160	—	—	—	2,032,160	—	1,698,457	1,698,457	191,737
JP Morgan Chase Bank - Carrollton, TX	03/31/04	12/29/04	1,797,170	—	—	—	1,797,170	—	886,572	886,572	(20,298	)
South Street Investments, Inc. (18):
Denny’s - Apopka, FL	11/20/02	09/26/03	508,538	—	—	—	508,538	—	467,800	467,800	—
CNL Restaurant Investors Properties, LLC (18):
Arby’s - Oak Park Heights, MN	02/20/01	02/08/02	108,400	860,199	—	—	968,599	870,487	—	870,487	10,593
Arby’s - Greenwood, IN	09/07/01	02/21/02	106,134	1,051,402	—	—	1,157,535	1,051,402	—	1,051,402	330
Arby’s - Hudson, WI	02/20/01	03/06/02	141,804	949,356	—	—	1,091,160	963,121	—	963,121	15,707
Arby’s - Wauseon, OH	04/10/01	03/11/02	101,408	700,080	—	—	801,488	704,249	—	704,249	7,174
Arby’s - St. Paul, MN	02/20/01	03/21/02	87,658	713,993	—	—	801,651	724,346	—	724,346	9,604
Arby’s - Richfield, MN	02/20/01	04/03/02	120,587	1,035,063	—	—	1,155,650	1,051,406	—	1,051,406	16,798
Arby’s - Crystal, MN	02/20/01	04/17/02	113,810	945,740	—	—	1,059,550	960,672	—	960,672	15,913
Arby’s - Hopkins, MN	02/20/01	04/26/02	90,927	829,399	—	—	920,326	842,495	—	842,495	14,275
Arby’s - Rochester, MN	02/20/01	05/02/02	101,643	817,845	—	—	919,488	831,824	—	831,824	15,757
Arby’s - Apple Valley, MN	02/20/01	05/17/02	178,105	1,315,159	—	—	1,493,264	1,337,639	—	1,337,639	23,636
Arby’s - Pell City, AL	09/18/01	06/21/02	102,875	936,662	—	—	1,039,537	938,824	—	938,824	2,860
Arby’s - East Huntington, PA	09/01/01	07/15/02	153,028	1,103,332	—	—	1,256,360	1,115,401	—	1,115,401	18,068
Arby’s - Florence, AL	10/01/01	08/22/02	176,044	1,182,056	—	—	1,358,100	1,196,262	—	1,196,262	17,628

Past performance is not necessarily indicative of future performance.

B-28

TABLE V

SALES OR DISPOSALS OF PROPERTIES

			Selling Price, Net of Closing Costs and GAAP Adjustments					Cost of Properties Including Closing And Soft Costs			Excess (deficiency) of property operating cash receipts over cash expenditures (19)
Property	Date Acquired	Date of Sale	Cash received net of closing costs	Mortgage balance at time of sale	Purchase money mortgage taken back by program	Adjustments resulting from application of GAAP	Total	Original mortgage financing (7)	Total acquisition cost, capital improvements closing and soft costs (1)	Total
CNL Restaurant Investors Properties, LLC (18) (Continued):
Arby’s - Troy, AL	09/21/01	08/22/02	134,632	920,681	—	—	1,055,313	931,745	—	931,745	10,910
Arby’s - Muskegon, MI	11/15/01	08/29/02	183,565	1,255,825	—	—	1,439,390	1,261,682	—	1,261,682	6,545
Arby’s - Greenville, MI	07/25/02	10/31/02	196,093	1,074,766	—	—	1,270,860	1,074,766	—	1,074,766	(198	)
Arby’s - Cullman, AL	09/05/01	11/13/02	175,467	993,620	—	—	1,169,087	1,001,853	—	1,001,853	8,373
Arby’s - Evansville, IN	04/01/02	11/15/02	166,901	1,080,328	—	—	1,247,229	1,089,280	—	1,089,280	26,999
Arby’s - Youngstown, OH	04/10/02	11/27/02	109,192	903,118	—	—	1,012,310	909,500	—	909,500	8,019
Arby’s - Union City, TN	09/04/02	12/30/02	207,127	1,158,879	—	—	1,366,005	1,158,879	—	1,158,879	(2,918	)
Arby’s - Northwood, OH	08/30/02	01/06/03	176,585	1,028,037	—	—	1,204,623	1,028,037	—	1,028,037	(124	)
Arby’s - Winston-Salem, NC	09/06/02	01/27/03	253,741	1,098,131	—	—	1,351,872	1,098,131	—	1,098,131	(132	)
Arby’s - Sikeston, MO	10/15/02	02/05/03	244,103	1,168,224	—	—	1,412,328	1,168,224	—	1,168,224	24
Arby’s - Bowling Green, OH	09/23/02	02/12/03	288,402	1,261,682	—	—	1,550,084	1,261,682	—	1,261,682	177
Arby’s - Norcross, GA	09/10/02	02/13/03	229,246	1,028,037	—	—	1,257,283	1,028,037	—	1,028,037	372
Arby’s - Montgomery, AL	09/12/02	02/13/03	193,702	1,121,495	—	—	1,315,197	1,121,495	—	1,121,495	165
Arby’s - Buffalo, MN	12/13/02	04/11/03	180,594	943,925	—	—	1,124,519	943,925	—	943,925	2,623
Arby’s - Bellevue, PA	07/30/02	04/11/03	165,264	731,856	—	—	897,120	734,403	—	734,403	2,706
Arby’s - Toledo, OH	09/30/02	04/15/03	217,636	1,074,766	—	—	1,292,402	1,074,766	—	1,074,766	243
Arby’s - Frankfort, IN	08/08/02	05/19/03	266,795	986,104	—	—	1,252,899	989,536	—	989,536	3,532
Arby’s - Cullman, AL	10/01/02	06/12/03	243,834	1,095,601	—	—	1,339,435	1,098,131	—	1,098,131	2,505

Past performance is not necessarily indicative of future performance.

B-29

TABLE V

SALES OR DISPOSALS OF PROPERTIES

			Selling Price, Net of Closing Costs and GAAP Adjustments					Cost of Properties Including Closing And Soft Costs			Excess (deficiency) of property operating cash receipts over cash expenditures (19)
Property	Date Acquired	Date of Sale	Cash received net of closing costs	Mortgage balance at time of sale	Purchase money mortgage taken back by program	Adjustments resulting from application of GAAP	Total	Original mortgage financing (7)	Total acquisition cost, capital improvements closing and soft costs (1)	Total
CNL Restaurant Investors Properties, LLC (18) (Continued):
Arby’s - Albany, OR	06/30/03	10/23/03	263,501	697,045	—	—	960,546	699,498	—	699,498	2,963
Arby’s - Birmingham, AL	06/18/03	12/31/03	545,151	1,247,573	—	—	1,792,724	1,247,573	—	1,247,573	(164	)
Arby’s - Hutchinson, MN	10/17/03	02/20/04	353,040	1,213,801	—	—	1,566,841	1,213,801	—	1,213,801	363
Arby’s - Nashville, TN	10/21/03	02/24/04	455,330	1,270,774	—	—	1,726,104	1,270,774	—	1,270,774	544
Arby’s - Franklin, IN	12/02/03	03/23/04	351,859	890,807	—	—	1,242,666	892,887	—	892,887	3,623
Arby’s - Hastings, MN	06/30/03	04/08/04	512,521	1,463,545	—	—	1,976,066	1,466,019	—	1,466,019	1,480
Arby’s - Murfreesboro, TN	08/08/03	04/23/04	467,068	1,278,444	—	—	1,745,512	1,282,945	—	1,282,945	4,768
Arby’s - Zainesville, OH	09/30/03	04/23/04	376,278	1,042,283	—	—	1,418,561	1,043,494	—	1,043,494	1,537
Arby’s - Aliquippa, PA	10/08/03	05/17/04	360,646	999,343	—	—	1,359,989	1,000,917	—	1,000,917	1,921
Arby’s - Blaine, MN	09/22/03	06/25/04	436,824	1,451,202	—	—	1,888,026	1,456,311	—	1,456,311	6,050
Arby’s - Champin, MN	08/11/03	08/31/04	526,363	1,444,208	—	—	1,970,571	1,456,311	—	1,456,311	12,597
Arby’s - Boonville, IN	03/05/04	10/08/04	357,449	978,540	—	—	1,335,989	980,081	—	980,081	743
Arby’s - Kentwood, MI	03/05/04	10/14/04	431,678	1,141,107	—	—	1,572,785	1,142,904	—	1,142,904	1,723
Arby’s - Pittsburgh, PA	10/23/03	10/22/04	342,687	968,860	—	—	1,311,547	980,182	—	980,182	9,377
Arby’s - Austin, MN	05/25/04	11/30/04	400,131	1,113,277	—	—	1,513,408	1,113,277	—	1,113,277	262
Arby’s - Pleasant Hills, PA	03/04/04	12/30/04	331,192	958,361	—	—	1,289,553	962,936	—	962,936	5,459
CNL Funding 2001-A, LP (18) :
Taco Cabana - Houston, TX	12/29/00	01/04/02	26,785	1,153,066	—	—	1,179,851	1,179,852	—	1,179,852	26,766

Past performance is not necessarily indicative of future performance.

B-30

TABLE V

SALES OR DISPOSALS OF PROPERTIES

			Selling Price, Net of Closing Costs and GAAP Adjustments					Cost of Properties Including Closing And Soft Costs			Excess (deficiency) of property operating cash receipts over cash expenditures (19)
Property	Date Acquired	Date of Sale	Cash received net of closing costs	Mortgage balance at time of sale	Purchase money mortgage taken back by program	Adjustments resulting from application of GAAP	Total	Original mortgage financing (7)	Total acquisition cost, capital improvements closing and soft costs (1)	Total
CNL Funding 2001-A, LP (18) (Continued):
Taco Cabana - Austin, TX	12/29/00	01/04/02	25,137	1,082,108	—	—	1,107,245	1,107,246	—	1,107,246	25,119
Bakers Square - Normal, IL	05/14/01	01/09/02	188,577	1,469,683	—	—	1,658,260	1,477,273	—	1,477,273	6,796
IHOP - Nacogdoches, TX	12/28/00	01/18/02	105,773	1,388,437	—	—	1,494,210	1,401,869	—	1,401,869	15,380
IHOP - McAllen, TX	12/28/00	02/15/02	120,708	1,427,813	—	—	1,548,521	1,443,318	—	1,443,318	18,025
Pizza Hut - Dania, FL	10/06/00	02/19/02	40,920	292,892	—	—	333,812	295,455	—	295,455	5,279
Jack in the Box - Plano, TX	09/25/01	02/26/02	147,787	1,719,706	—	—	1,867,493	1,728,972	—	1,728,972	14,854
IHOP - Kennewick, WA	12/20/01	02/27/02	152,934	1,626,400	—	—	1,779,334	1,627,500	—	1,627,500	2,842
Jack in the Box - Stephenville, TX	03/28/01	02/28/02	164,069	1,344,498	—	—	1,508,567	1,361,617	—	1,361,617	19,729
Village Inn - Coralville, IA	05/14/01	02/28/02	159,126	1,070,921	—	—	1,230,046	1,077,273	—	1,077,273	8,156
Taco Cabana - San Antonio, TX	12/29/00	03/05/02	33,261	1,214,659	—	—	1,247,920	1,247,920	—	1,247,920	34,289
Jack in the Box - San Antonio, TX	09/26/01	03/06/02	135,343	1,442,978	—	—	1,578,322	1,456,085	—	1,456,085	11,979
Krystal - Rincon, GA	09/15/00	03/11/02	57,088	1,015,712	—	—	1,072,800	1,028,215	—	1,028,215	21,369
Village Inn - Davenport, IA	05/14/01	03/15/02	182,384	1,219,097	—	—	1,401,481	1,227,273	—	1,227,273	8,905
Jack in the Box - Katy, TX	09/25/01	03/18/02	123,072	1,376,098	—	—	1,499,170	1,385,410	—	1,385,410	12,373
IHOP - Albuquerque, NM	10/29/01	03/19/02	161,229	1,660,447	—	—	1,821,676	1,664,998	—	1,664,998	4,653
IHOP - Lafayette, LA	12/28/00	03/19/02	87,911	1,548,629	—	—	1,636,540	1,566,820	—	1,566,820	20,424
Jack in the Box - Round Rock, TX	09/19/00	03/20/02	134,634	1,226,470	—	—	1,361,104	1,257,009	—	1,257,009	40,447
Jack in the Box - Concord, NC	07/07/00	03/22/02	126,308	1,296,102	—	—	1,422,410	1,331,738	—	1,331,738	46,935
Jack in the Box - Cedar Hill, TX	12/20/01	03/22/02	120,438	1,388,773	—	—	1,509,211	1,392,479	—	1,392,479	5,497

Past performance is not necessarily indicative of future performance.

B-31

TABLE V

SALES OR DISPOSALS OF PROPERTIES

			Selling Price, Net of Closing Costs and GAAP Adjustments					Cost of Properties Including Closing And Soft Costs			Excess (deficiency) of property operating cash receipts over cash expenditures (19)
Property	Date Acquired	Date of Sale	Cash received net of closing costs	Mortgage balance at time of sale	Purchase money mortgage taken back by program	Adjustments resulting from application of GAAP	Total	Original mortgage financing (7)	Total acquisition cost, capital improvements closing and soft costs (1)	Total
CNL Funding 2001-A, LP (18) (Continued):
IHOP - Brownsville, TX	12/28/00	03/28/02	88,052	1,456,628	—	—	1,544,680	1,471,963	—	1,471,963	18,921
IHOP - San Marco, TX	12/20/01	03/28/02	156,600	1,509,200	—	—	1,665,800	1,511,250	—	1,511,250	2,990
Bakers Square - Maple Grove, MN	05/14/01	03/29/02	200,077	1,354,552	—	—	1,554,629	1,363,636	—	1,363,636	10,198
IHOP - Ammon, ID	12/28/00	04/05/02	83,477	1,433,491	—	—	1,516,968	1,451,613	—	1,451,613	19,833
Home Town Buffet - Visalia, CA	12/28/01	04/10/02	329,510	2,409,694	—	—	2,739,205	2,409,000	—	2,409,000	(773	)
TB/KFC - Gun Barrel City, TX	10/31/00	04/19/02	29,711	922,295	—	—	952,006	931,818	—	931,818	17,313
Tahoe Joes - Roseville, CA	12/28/01	04/23/02	414,477	2,965,855	—	—	3,380,332	2,965,000	—	2,965,000	(1,077	)
Old Country Buffet - Glendale, AZ	12/28/01	04/25/02	246,584	1,818,524	—	—	2,065,108	1,818,000	—	1,818,000	(1,856	)
Home Town Buffet - Temecula, CA	12/28/01	04/26/02	298,731	2,000,577	—	—	2,299,308	2,000,000	—	2,000,000	(746	)
Village Inn - Johnston, IA	05/14/01	04/29/02	121,465	812,100	—	—	933,565	818,182	—	818,182	6,761
Old Country Buffet - Woodbury, MN	12/28/01	04/29/02	191,917	1,600,461	—	—	1,792,378	1,600,000	—	1,600,000	(612	)
Bakers Square - Orland Park, IL	05/14/01	04/30/02	292,465	1,940,017	—	—	2,232,482	1,954,545	—	1,954,545	16,742
Pizza-Hut - Oakland Park, FL	10/06/00	05/03/02	83,765	652,145	—	—	735,910	659,091	—	659,091	6,512
Jack in the Box - Magnolia, TX	08/30/01	05/03/02	101,729	1,245,406	—	—	1,347,135	1,260,198	—	1,260,198	13,660
IHOP - Westminister, CO	12/20/01	05/03/02	229,223	1,831,730	—	—	2,060,953	1,836,750	—	1,836,750	5,100
Jack in the Box - Baton Rouge, LA	12/20/01	05/03/02	185,925	1,405,359	—	—	1,591,284	1,412,154	—	1,412,154	7,539
Village Inn - Roy, UT	05/14/01	05/06/02	142,392	933,183	—	—	1,075,575	940,909	—	940,909	8,152
Home Town Buffet - Loma Linda, CA	12/28/01	05/07/02	447,446	3,046,175	—	—	3,493,621	3,045,000	—	3,045,000	(619	)
Home Town Buffet - Champaign, IL	12/28/01	05/08/02	195,577	1,768,682	—	—	1,964,259	1,768,000	—	1,768,000	(848	)
Jack in the Box - Baytown, TX	09/19/00	05/10/02	108,115	1,141,081	—	—	1,249,196	1,173,149	—	1,173,149	40,830

Past performance is not necessarily indicative of future performance.

B-32

TABLE V

SALES OR DISPOSALS OF PROPERTIES

			Selling Price, Net of Closing Costs and GAAP Adjustments					Cost of Properties Including Closing And Soft Costs			Excess (deficiency) of property operating cash receipts over cash expenditures (19)
Property	Date Acquired	Date of Sale	Cash received net of closing costs	Mortgage balance at time of sale	Purchase money mortgage taken back by program	Adjustments resulting from application of GAAP	Total	Original mortgage financing (7)	Total acquisition cost, capital improvements closing and soft costs (1)	Total
CNL Funding 2001-A, LP (18) (Continued):
IHOP - Norman, OK	10/12/00	05/13/02	219,316	1,554,570	—	—	1,773,886	1,577,745	—	1,577,745	51,274
IHOP - Rockford, IL	12/20/01	05/15/02	148,323	1,646,238	—	—	1,794,561	1,650,750	—	1,650,750	5,243
Rio Bravo - Fayetteville, AR	06/29/00	05/17/02	147,141	1,171,240	—	—	1,318,381	1,200,000	—	1,200,000	39,827
Bakers Square - Onalaska, WI	05/14/01	05/17/02	119,693	924,167	—	—	1,043,860	931,818	—	931,818	8,241
Ruby Tuesday - University Place, WA	08/23/00	05/31/02	133,340	1,574,504	—	—	1,707,844	1,590,909	—	1,590,909	40,555
Pizza Hut - Pembroke Pines, FL	10/06/00	05/31/02	20,692	359,803	—	—	380,495	363,636	—	363,636	13,021
Pizza Hut - N. Miami, FL	10/06/00	05/31/02	15,365	267,154	—	—	282,519	270,000	—	270,000	5,191
Bakers Square - Rochester, MN	05/14/01	05/31/02	172,761	1,352,440	—	—	1,525,200	1,363,636	—	1,363,636	12,750
Bakers Square - Stillwater, MN	05/14/01	05/31/02	141,347	991,789	—	—	1,133,136	1,000,000	—	1,000,000	9,350
Home Town Buffet - Louisville, KY	12/28/01	05/31/02	199,891	1,500,579	—	—	1,700,470	1,500,000	—	1,500,000	(726	)
Old Country Buffet - Mesa, AZ	12/28/01	06/03/02	306,624	2,115,024	—	—	2,421,648	2,114,000	—	2,1114,000	(1,045	)
IHOP - Shreveport, LA	10/12/00	06/04/02	207,681	1,643,127	—	—	1,850,808	1,663,150	—	1,663,150	33,799
IHOP - Jonesboro, AR	10/12/00	06/05/02	152,295	1,328,505	—	—	1,480,800	1,348,500	—	1,348,500	56,238
Taco Cabana - Dallas, Texas	12/29/00	06/06/02	33,359	987,667	—	—	1,021,026	1,021,026	—	1,021,026	27,228
HomeTown Buffet - Oklahoma City, OK #737	12/28/01	06/13/02	204,563	1,455,705	—	—	1,592,205	1,455,000	—	1,455,000	(1,031	)
HomeTown Buffet - Oklahoma City, OK	12/28/01	06/13/02	136,500	1,955,947	—	—	2,160,510	1,955,000	—	1,955,000	(767	)
Jack in the Box - Corsicana, TX	06/30/00	06/14/02	69,849	1,083,639	—	—	1,153,488	1,118,650	—	1,118,650	52,045
Ruby Tuesday - Port Lucie, FL	06/06/00	06/14/02	119,187	1,583,384	—	—	1,702,571	1,607,399	—	1,607,399	12,328
Bakers Square - Bradley, IL	05/14/01	06/20/02	256,960	1,509,030	—	—	1,765,990	1,522,727	—	1,522,727	15,133
IHOP - Evansville, IN	03/29/02	06/20/02	166,194	1,469,696	—	—	1,635,890	1,471,963	—	1,471,963	2,753

Past performance is not necessarily indicative of future performance.

B-33

TABLE V

SALES OR DISPOSALS OF PROPERTIES

			Selling Price, Net of Closing Costs and GAAP Adjustments						Cost of Properties Including Closing And Soft Costs			Excess (deficiency) of property operating cash receipts over cash expenditures (19)
Property	Date Acquired	Date of Sale	Cash received net of closing costs		Mortgage balance at time of sale	Purchase money mortgage taken back by program	Adjustments resulting from application of GAAP	Total	Original mortgage financing (7)	Total acquisition cost, capital improvements closing and soft costs (1)	Total
CNL Funding 2001-A, LP (18) (Continued):
IHOP - Buford, GA	03/29/02	06/20/02	212,950		1,679,961	—	—	1,892,911	1,682,243	—	1,682,243	2,729
Taco Cabana - San Antonio, TX #107	12/29/00	06/26/02	(34,711	)	921,822	—	—	887,111	952,957	—	952,957	33,569
Taco Cabana - Universal City, TX	12/29/00	06/26/02	(40,496	)	1,075,459	—	—	1,034,963	1,111,783	—	1,111,783	39,164
Taco Cabana - Austin, TX	12/29/00	06/26/02	(54,547	)	1,448,578	—	—	1,394,031	1,497,504	—	1,497,504	52,752
Taco Cabana - San Antonio, TX #130	12/29/00	06/26/02	(52,067	)	1,382,733	—	—	1,330,666	1,429,436	—	1,429,436	50,354
Taco Cabana - Dallas, TX #136	12/29/00	06/26/02	(44,463	)	1,180,810	—	—	1,136,347	1,220,693	—	1,220,693	38,129
Taco Cabana - Houston, TX #143	12/29/00	06/26/02	(47,108	)	1,251,044	—	—	1,203,936	1,293,299	—	1,293,299	45,558
Taco Cabana - San Antonio, TX #158	12/29/00	06/26/02	(49,918	)	1,325,668	—	—	1,275,750	1,370,443	—	1,370,443	76,694
Taco Cabana - Schertz, TX	12/29/00	06/26/02	(40,331	)	1,071,069	—	—	1,030,738	1,107,246	—	1,107,246	39,004
Taco Cabana - Houston, TX	12/29/00	06/26/02	(52,933	)	1,404,681	—	—	1,351,748	1,452,125	—	1,452,125	51,153
Taco Cabana - Houston, TX #174	12/29/00	06/26/02	(35,537	)	943,770	—	—	908,233	975,647	—	975,647	34,369
Taco Cabana - Katy, TX	12/29/00	06/26/02	(40,331	)	1,071,069	—	—	1,030,738	1,107,246	—	1,107,246	21,178
Taco Cabana - Arlington, TX	12/29/00	06/26/02	(38,843	)	1,031,563	—	—	992,719	1,066,404	—	1,066,404	28,981
Taco Cabana - Houston, TX #241	12/29/00	06/26/02	(49,670	)	1,319,084	—	—	1,269,414	1,363,637	—	1,363,637	48,036
Taco Cabana - Denton, TX	12/29/00	06/26/02	(44,463	)	1,180,810	—	—	1,136,347	1,220,693	—	1,220,693	43,001
Baker Square - Bolingbrook, IL	05/14/01	06/28/02	289,661		1,621,644	—	—	1,911,305	1,636,364	—	1,636,364	16,147
IHOP - Harlingen, TX	09/28/01	06/28/02	169,260		1,611,009	—	—	1,780,269	1,619,998	—	1,619,998	(1,134	)
Old Country Buffet - Madison, WI	12/28/01	06/28/02	233,107		2,092,013	—	—	2,325,120	2,091,000	—	2,091,000	(1,199	)
HomeTown Buffet - Wichita, KS	12/28/01	06/28/02	224,736		2,000,969	—	—	2,225,704	2,000,000	—	2,000,000	(1,147	)
Old Country Buffet - Mechanicsburg, PA	12/28/01	06/28/02	153,548		1,818,880	—	—	1,972,429	1,818,000	—	1,818,000	(1,523	)

Past performance is not necessarily indicative of future performance.

B-34

TABLE V

SALES OR DISPOSALS OF PROPERTIES

			Selling Price, Net of Closing Costs and GAAP Adjustments					Cost of Properties Including Closing And Soft Costs			Excess (deficiency) of property operating cash receipts over cash expenditures (19)
Property	Date Acquired	Date of Sale	Cash received net of closing costs	Mortgage balance at time of sale	Purchase money mortgage taken back by program	Adjustments resulting from application of GAAP	Total	Original mortgage financing (7)	Total acquisition cost, capital improvements closing and soft costs (1)	Total
CNL Funding 2001-A, LP (18) (Continued):
IHOP - Rocky Mount, NC	10/12/00	06/28/02	73,833	1,504,517	—	—	1,578,350	1,528,300	—	1,528,300	33,625
JIB- Hickory, NC	03/28/01	06/28/02	196,658	1,455,112	—	—	1,651,770	1,481,564	—	1,481,564	28,329
HomeTown Buffet - Louisville, KY	12/28/01	06/28/02	113,298	1,145,554	—	—	1,258,853	1,145,000	—	1,145,000	(660	)
Old Country Buffet - Franklin, OH	12/28/01	06/28/02	129,930	1,318,638	—	—	1,448,568	1,318,000	—	1,318,000	(760	)
Pizza Hut - El Reno, OK	01/18/02	06/28/02	51,697	367,573	—	—	419,270	368,764	—	368,764	1,591
Bakers Square - Mt. Prospect, IL	05/14/01	07/02/02	278,538	1,914,440	—	—	2,192,978	1,931,818	—	1,931,818	19,310
Old Country Buffet - Onalaska, WI	12/28/01	07/10/02	146,806	1,455,705	—	—	1,602,511	1,455,000	—	1,455,000	(1,020	)
Pizza Hut - Taylor, TX	01/25/02	07/11/02	44,204	251,186	—	—	295,390	252,000	—	252,000	1,112
IHOP - Cathedral City, CA	03/29/02	07/18/02	255,633	1,506,263	—	—	1,759,896	1,509,346	—	1,509,346	3,182
Jack in the Box - Shelby, NC	09/19/00	07/19/02	130,680	1,282,602	—	—	1,413,282	1,322,836	—	1,322,836	50,638
Jack in the Box - Simpsonville, SC	09/26/01	07/19/02	102,456	1,485,174	—	—	1,587,630	1,503,608	—	1,503,608	21,487
Old Country Buffet - Cincinnati, OH	12/28/01	07/22/02	140,678	975,569	—	—	1,116,247	975,000	—	975,000	(821	)
OCB - Bourbonnais, IL	12/28/01	07/23/02	128,046	1,273,743	—	—	1,401,789	1,273,000	—	1,273,000	(1,087	)
HomeTown Buffet - Rockford, IL	12/28/01	07/23/02	260,488	2,274,326	—	—	2,534,814	2,273,000	—	2,273,000	(1,941	)
Pizza-Hut - Belton, TX	01/25/02	07/24/02	109,036	615,776	—	—	724,812	618,282	—	618,282	2,875
IHOP - Covington, LA	03/29/02	07/26/02	222,517	1,716,670	—	—	1,939,187	1,720,183	—	1,720,183	2,971
IHOP - Flourissant, MO	03/29/02	07/30/02	151,617	1,548,233	—	—	1,699,850	1,551,402	—	1,551,402	3,922
Jack in the Box - Rock Hill, SC	09/15/00	08/05/02	106,828	1,143,510	—	—	1,250,338	1,181,275	—	1,181,275	46,288
Jack in the Box - Greer, SC	09/25/01	08/05/02	111,253	1,454,109	—	—	1,565,361	1,474,257	—	1,474,257	22,417
Jack in the Box - Conroe, TX	09/15/00	08/09/02	143,657	1,412,719	—	—	1,556,376	1,459,375	—	1,459,375	57,750

Past performance is not necessarily indicative of future performance.

B-35

TABLE V

SALES OR DISPOSALS OF PROPERTIES

			Selling Price, Net of Closing Costs and GAAP Adjustments					Cost of Properties Including Closing And Soft Costs			Excess (deficiency) of property operating cash receipts over cash expenditures (19)
Property	Date Acquired	Date of Sale	Cash received net of closing costs	Mortgage balance at time of sale	Purchase money mortgage taken back by program	Adjustments resulting from application of GAAP	Total	Original mortgage financing (7)	Total acquisition cost, capital improvements closing and soft costs (1)	Total
CNL Funding 2001-A, LP (18) (Continued):
Pizza Hut - Waco, TX (Baylor)	01/18/02	08/13/02	98,648	550,444	—	—	649,092	553,145	—	553,145	3,009
Jack in the Box - Greenville, SC	09/25/01	08/16/02	117,001	1,530,054	—	—	1,647,054	1,551,255	—	1,551,255	24,584
Bakers Square - Eau Claire, WI	05/14/01	08/20/02	190,268	1,169,094	—	—	1,359,362	1,181,818	—	1,181,818	13,617
Bakers Square - Springfield, IL	05/14/01	08/20/02	151,166	1,079,164	—	—	1,230,330	1,090,909	—	1,090,909	12,569
Old Country Buffet - Mankato, MN	12/28/01	08/20/02	179,487	1,637,118	—	—	1,816,605	1,636,000	—	1,636,000	(1,503	)
Jack in the Box - Baton Rouge, LA	08/23/00	08/22/02	79,926	1,127,994	—	—	1,207,920	1,167,135	—	1,167,135	48,323
TB/KFC - Center, TX	10/31/00	08/30/02	15,631	852,554	—	—	868,185	863,636	—	863,636	10,412
IHOP - Shawnee, OK	12/20/01	08/30/02	144,543	1,434,527	—	—	1,579,070	1,441,500	—	1,441,500	7,947
HomeTown Buffet - Medford, OR	02/15/02	09/05/02	390,166	2,410,406	—	—	2,800,571	2,409,000	—	2,409,000	(2,071	)
HomeTown Buffet - Manchester, CT	12/28/01	09/13/02	171,290	1,774,390	—	—	1,945,681	1,773,000	—	1,773,000	(1,469	)
Jack in the Box - Kilgore, TX	06/27/02	09/18/02	95,181	1,093,811	—	—	1,188,992	1,097,200	—	1,097,200	4,625
IHOP - Bristol, VA	12/28/00	09/20/02	82,611	1,350,001	—	—	1,432,612	1,373,272	—	1,373,272	25,525
Bakers Square - Akron, OH	05/14/01	09/27/02	243,619	1,257,883	—	—	1,501,502	1,272,727	—	1,272,727	16,331
Texas Roadhouse - Peoria, IL	06/25/02	09/30/02	422,739	2,127,261	—	—	2,550,000	2,134,177	—	2,134,177	10,527
Jack in the Box - Mesa, AZ	06/27/02	10/04/02	202,549	1,475,706	—	—	1,678,254	1,482,598	—	1,482,598	7,435
Pizza Hut - Rockmart, GA	01/18/02	11/06/02	66,876	366,030	—	—	432,906	368,764	—	368,764	2,914
Ruby Tuesday - Angola, IN	07/01/01	11/08/02	83,924	1,415,770	—	—	1,499,694	1,426,713	—	1,426,713	29,521
Krystals - Pelham, AL	09/15/00	11/14/02	103,023	910,619	—	—	1,013,642	928,108	—	928,108	26,012
HomeTown Buffets - Hilliard, OH	12/28/01	11/22/02	200,829	1,615,595	—	—	1,816,424	1,614,000	—	1,614,000	(1,717	)

Past performance is not necessarily indicative of future performance.

B-36

TABLE V

SALES OR DISPOSALS OF PROPERTIES

			Selling Price, Net of Closing Costs and GAAP Adjustments						Cost of Properties Including Closing And Soft Costs			Excess (deficiency) of property operating cash receipts over cash expenditures (19)
Property	Date Acquired	Date of Sale	Cash received net of closing costs		Mortgage balance at time of sale	Purchase money mortgage taken back by program	Adjustments resulting from application of GAAP	Total	Original mortgage financing (7)	Total acquisition cost, capital improvements closing and soft costs (1)	Total
CNL Funding 2001-A, LP (18) (Continued):
IHOP - Enid, OK	09/28/01	12/05/02	213,823		1,323,224	—	—	1,537,046	1,336,499	—	1,336,499	4,742
IHOP - Kansas City, MO	03/29/02	12/05/02	218,978		1,500,970	—	—	1,719,949	1,509,346	—	1,509,346	8,575
Perkins - Millington, TN	05/24/02	12/06/02	163,718		1,111,111	—	—	1,274,829	1,111,111	—	1,111,111	756
Perkins - Mankato, MN	09/13/02	12/10/02	180,448		1,193,299	—	—	1,373,747	1,193,299	—	1,193,299	1,108
Ruby Tuesday - Island Park, NY	02/27/01	12/18/02	100,483		1,782,108	—	—	1,882,592	1,800,000	—	1,800,000	21,046
Pizza Hut - Woodville, TX	01/18/02	12/19/02	41,310		351,085	—	—	392,396	354,013	—	354,013	3,077
Krystals - Trenton, GA	09/15/00	12/20/02	130,970		896,970	—	—	1,027,940	915,294	—	915,294	26,769
Pizza Hut - Bethany, OK	01/18/02	01/10/03	87,368		475,014	—	—	562,382	479,393	—	479,393	4,624
Jack in the Box - Las Vegas, NV	09/26/02	02/13/03	415,356		1,650,496	—	—	2,065,852	1,660,823	—	1,660,823	12,266
TGIF - Springfield, OH	12/22/00	02/13/03	230,344		1,977,911	—	—	2,208,255	2,039,614	—	2,039,614	69,637
Pizza Hut - 19th Street - Waco, TX	01/18/02	03/11/03	68,010		401,190	—	—	469,200	405,640	—	405,640	4,680
Captain D’s - Gadsden, AL	12/26/02	03/13/03	78,361		709,219	—	—	787,580	709,905	—	709,905	801
Jack in the Box - San Antonio, TX	09/26/02	03/14/03	290,469		1,158,678	—	—	1,449,147	1,167,783	—	1,167,783	10,111
Jack in the Box - Round Rock, TX	08/28/02	03/20/03	343,381		1,213,042	—	—	1,556,423	1,244,536	—	1,244,536	12,825
Captain D’s - Dothan, AL	12/26/02	04/17/03	123,815		811,417	—	—	935,232	812,600	—	812,600	1,469
Captain D’s - Hopkinsville, KY	12/26/02	04/10/03	179,825		931,252	—	—	1,111,078	932,610	—	932,610	1,578
Captain D’s - Arab, AL	12/26/02	04/30/03	87,733		596,217	—	—	683,950	597,086	—	597,086	1,207
Captain D’s - Crosslanes, WV	12/26/02	04/21/03	56,254		464,941	—	—	521,195	465,619	—	465,619	744
Taco Bell/KFC - Kaufman, TX	10/31/00	05/06/03	(5,471	)	1,025,569	—	—	1,020,098	1,045,455	—	1,045,455	36,878

Past performance is not necessarily indicative of future performance.

B-37

TABLE V

SALES OR DISPOSALS OF PROPERTIES

			Selling Price, Net of Closing Costs and GAAP Adjustments					Cost of Properties Including Closing And Soft Costs			Excess (deficiency) of property operating cash receipts over cash expenditures (19)
Property	Date Acquired	Date of Sale	Cash received net of closing costs	Mortgage balance at time of sale	Purchase money mortgage taken back by program	Adjustments resulting from application of GAAP	Total	Original mortgage financing (7)	Total acquisition cost, capital improvements closing and soft costs (1)	Total
CNL Funding 2001-A, LP (18) (Continued):
Jack in the Box - Yermo, CA	08/26/02	05/06/03	353,295	1,602,027	—	—	1,995,322	1,622,463	—	1,622,463	21,343
Captain D’s - Montgomery, AL	12/26/02	05/05/03	122,218	803,925	—	—	926,143	805,495	—	805,495	1,657
Captain D’s - Louisville, KY	12/26/02	05/16/03	156,801	874,967	—	—	1,031,768	876,676	—	876,676	1,873
Jack in the Box - Houston, TX	09/26/02	05/20/03	277,860	1,030,231	—	—	1,308,091	1,041,674	—	1,041,674	12,633
Jack in the Box - Paris, TX	12/30/02	05/16/03	256,226	1,100,586	—	—	1,356,812	1,107,472	—	1,107,472	7,774
Captain D’s - Nashville, TN	12/26/02	05/07/03	59,917	755,657	—	—	815,574	757,133	—	757,133	1,568
Jack in the Box - Killeen, TX	09/26/02	05/01/03	254,498	1,167,552	—	—	1,422,050	1,180,521	—	1,180,521	13,303
Ground Round - Maple Grove, MN	04/01/01	05/09/03	66,423	2,021,281	—	—	2,087,704	2,045,454	—	2,045,454	43,003
Captain D’s - Greenville, AL	12/26/02	06/11/03	120,046	707,627	—	—	827,673	709,362	—	709,362	1,917
Captain D’s - Russellville, AL	12/26/02	06/27/03	71,941	658,889	—	—	730,830	660,505	—	660,505	1,962
Captain D’s - Madison, AL	12/26/02	06/27/03	79,858	555,438	—	—	635,296	556,800	—	556,800	1,654
Captain D’s - Crossville, TN	12/26/02	06/27/03	59,996	539,752	—	—	599,748	541,076	—	541,076	1,607
Captain D’s - Clinton, MS	12/26/02	06/12/03	69,788	558,725	—	—	628,513	560,095	—	560,095	1,523
Captain D’s - Louisville, KY	12/26/02	06/17/03	93,048	583,512	—	—	676,560	584,943	—	584,943	1,640
Captain D’s - Eufaula, AL	12/26/02	06/25/03	75,941	540,684	—	—	616,625	542,010	—	542,010	1,592
Captain D’s - Alabaster, AL	12/26/02	06/13/03	160,117	897,029	—	—	1,057,147	899,229	—	899,229	2,460
Jack in the Box - Greenville, SC	01/16/03	06/13/03	274,469	1,317,214	—	—	1,591,684	1,326,457	—	1,326,457	11,407
Jack in the Box - Marble Falls, TX	01/16/03	06/19/03	192,889	1,042,342	—	—	1,235,231	1,049,655	—	1,049,655	9,398
Jack in the Box - San Diego, CA	01/16/03	06/18/03	394,649	2,104,372	—	—	2,499,021	2,119,137	—	2,119,137	18,848
Arby’s - Fraser, MI	09/11/01	06/20/03	185,909	1,042,073	—	—	1,227,982	1,045,546	—	1,045,546	17,829

Past performance is not necessarily indicative of future performance.

B-38

TABLE V

SALES OR DISPOSALS OF PROPERTIES

			Selling Price, Net of Closing Costs and GAAP Adjustments					Cost of Properties Including Closing And Soft Costs			Excess (deficiency) of property operating cash receipts over cash expenditures (19)
Property	Date Acquired	Date of Sale	Cash received net of closing costs	Mortgage balance at time of sale	Purchase money mortgage taken back by program	Adjustments resulting from application of GAAP	Total	Original mortgage financing (7)	Total acquisition cost, capital improvements closing and soft costs (1)	Total
CNL Funding 2001-A, LP (18) (Continued):
Arby’s - Waterbury, CT	07/21/00	06/18/03	137,156	788,538	—	—	925,694	795,455	—	795,455	43,701
Arby’s - Orange, CT	07/21/00	06/18/03	87,401	518,182	—	—	605,583	522,727	—	522,727	68,944
Captain D’s - Laurel, MS	12/26/02	07/28/03	84,051	539,415	—	—	623,466	541,010	—	541,010	1,747
Captain D’s - Columbia, SC	12/26/02	07/17/03	83,877	606,787	—	—	690,664	608,581	—	608,581	1,915
Texas Roadhouse - Roseville, MI	10/31/02	07/23/03	406,111	2,039,884	—	—	2,445,995	2,066,730	—	2,066,730	29,148
Texas Roadhouse - Christianburg, VA	09/30/02	07/31/03	322,112	1,385,329	—	—	1,707,441	1,405,951	—	1,405,951	22,386
Jack in the Box - Cookeville, TN	01/16/03	07/10/03	316,102	1,795,328	—	—	2,111,430	1,811,148	—	1,811,148	18,316
Captain D’s - Tupelo, MS	12/26/02	07/31/03	127,363	776,694	—	—	904,057	778,990	—	778,990	2,746
Captain D’s - Andalusia, AL	12/26/02	08/06/03	104,171	681,695	—	—	785,866	684,057	—	684,057	2,443
Captain D’s - Princeton, KY	12/26/02	08/07/03	74,770	555,446	—	—	630,216	557,371	—	557,371	1,842
Ruby Tuesday - Tampa, FL	03/12/03	08/11/03	269,583	2,090,743	—	—	2,360,326	2,096,898	—	2,096,898	6,904
Burger King - Wichita, KS	04/01/03	08/15/03	248,142	1,337,789	—	—	1,585,931	1,340,909	—	1,340,909	2,751
Jack in the Box - Conover, NC	01/16/03	08/21/03	201,282	1,267,189	—	—	1,468,471	1,280,651	—	1,280,651	15,714
Jack in the Box - Salinas, CA	12/30/02	08/29/03	490,183	1,493,196	—	—	1,983,379	1,509,782	—	1,509,782	18,707
Captain D’s - Franklin, KY	12/26/02	08/29/03	157,118	1,007,252	—	—	1,164,370	1,010,743	—	1,010,743	3,786
Jack in the Box - Simpsonville, SC	01/16/03	08/29/03	207,480	1,194,139	—	—	1,401,619	1,206,826	—	1,206,826	15,535
Jack in the Box - Anderson, SC	01/16/03	09/16/03	261,828	1,296,208	—	—	1,558,036	1,312,350	—	1,312,350	18,287
Casa Ole - Conroe, TX	04/16/03	09/15/03	119,734	771,309	—	—	891,043	775,000	—	775,000	4,395
Captain D’s - Warrensburg, CO	12/26/02	09/23/03	86,915	553,996	—	—	640,911	556,200	—	556,200	2,464
Black Angus - Lone Tree, CO	05/16/02	09/19/03	274,517	2,685,785	—	—	2,960,302	2,702,533	—	2,702,533	48,363

Past performance is not necessarily indicative of future performance.

B-39

TABLE V

SALES OR DISPOSALS OF PROPERTIES

			Selling Price, Net of Closing Costs and GAAP Adjustments					Cost of Properties Including Closing And Soft Costs			Excess (deficiency) of property operating cash receipts over cash expenditures (19)
Property	Date Acquired	Date of Sale	Cash received net of closing costs	Mortgage balance at time of sale	Purchase money mortgage taken back by program	Adjustments resulting from application of GAAP	Total	Original mortgage financing (7)	Total acquisition cost, capital improvements closing and soft costs (1)	Total
CNL Funding 2001-A, LP (18) (Continued):
Captain D’s - Bluefield, WV	12/26/02	09/05/03	146,431	959,496	—	—	1,105,927	963,314	—	963,314	3,970
Captain D’s - Ozark, AL	12/26/02	09/15/03	86,262	551,785	—	—	638,047	553,981	—	553,981	2,378
Captain D’s - Pearl, MS	12/26/02	09/11/03	103,074	656,502	—	—	759,576	659,114	—	659,114	2,400
Jack in the Box - Austin, TX	09/26/02	09/15/03	355,976	1,338,759	—	—	1,694,735	1,362,587	—	1,362,587	25,277
Village Inn - Virginia Beach, VA	06/16/03	09/26/03	453,559	1,894,510	—	—	2,348,069	1,900,000	—	1,900,000	8,997
Captain D’s - Cahokia, IL	12/26/02	09/24/03	97,626	625,492	—	—	723,118	627,981	—	627,981	2,792
Captain D’s - Birmingham, AL	12/26/02	09/24/03	89,973	577,550	—	—	667,523	579,848	—	579,848	2,578
Jack in the Box - Simpsonville, SC	01/16/03	09/30/03	180,793	1,185,093	—	—	1,365,886	1,199,851	—	1,199,851	18,183
Jack in the Box - Charlotte, NC	01/16/03	09/30/03	323,819	1,571,639	—	—	1,895,458	1,591,210	—	1,591,210	24,113
Village Inn - Rio Rancho, NM	06/16/03	10/10/03	181,556	776,610	—	—	958,166	780,000	—	780,000	3,299
Wendy’s - Knoxville, TN	06/13/03	10/22/03	211,061	1,001,097	—	—	1,212,158	996,669	—	996,669	4,877
Wendy’s - Dayton, TN	06/13/03	10/28/03	115,511	814,846	—	—	930,357	811,242	—	811,242	4,143
Jack in the Box - Uvalde, TX	01/16/03	10/31/03	208,018	1,075,470	—	—	1,283,488	1,090,848	—	1,090,848	17,468
Baker’s Square - St. Paul, MN	06/16/03	10/31/03	218,930	1,369,024	—	—	1,587,954	1,375,000	—	1,375,000	8,657
Baker’s Square - Dearborn, MI	06/16/03	11/06/03	141,169	1,282,503	—	—	1,423,672	1,290,000	—	1,290,000	7,815
Baker’s Square - Taylor, MI	06/16/03	11/07/03	235,315	1,153,258	—	—	1,388,573	1,160,000	—	1,160,000	7,327
Baker’s Square - Fresno, CA	06/16/03	11/20/03	302,249	1,133,375	—	—	1,435,624	1,140,000	—	1,140,000	8,258
Village Inn - St. Petersburg, FL	06/16/03	12/16/03	269,803	1,141,622	—	—	1,411,425	1,150,000	—	1,150,000	9,548
Johnny Carino’s - Houston, TX	01/21/03	12/22/03	359,788	1,962,475	—	—	2,322,263	2,000,000	—	2,000,000	40,760
Wendy’s - Clinton, TN	06/13/03	12/30/03	222,804	998,671	—	—	1,221,475	996,669	—	996,669	7,376

Past performance is not necessarily indicative of future performance.

B-40

TABLE V

SALES OR DISPOSALS OF PROPERTIES

			Selling Price, Net of Closing Costs and GAAP Adjustments					Cost of Properties Including Closing And Soft Costs			Excess (deficiency) of property operating cash receipts over cash expenditures (19)
Property	Date Acquired	Date of Sale	Cash received net of closing costs	Mortgage balance at time of sale	Purchase money mortgage taken back by program	Adjustments resulting from application of GAAP	Total	Original mortgage financing (7)	Total acquisition cost, capital improvements closing and soft costs (1)	Total
CNL Funding 2001-A, LP (18) (Continued):
O’Charley’s - Plainville (Avon), IN	10/17/03	12/30/03	275,191	2,697,512	—	—	2,972,703	2,704,545	—	2,704,545	17,164
Johnny Carino’s - Austin, TX	12/30/02	12/31/03	446,723	1,958,587	—	—	2,405,310	2,000,000	—	2,000,000	44,704
Jack in the Box - Rock Hill, SC	01/16/03	12/31/03	231,483	1,046,466	—	—	1,277,949	1,065,349	—	1,065,349	21,553
Max and Erma’s - Cincinnati (Union Township), OH	09/24/03	01/09/04	311,940	2,446,965	—	—	2,758,905	2,458,972	—	2,458,972	13,897
Wendy’s - Knoxville, TN	06/13/03	01/14/04	243,731	866,439	—	—	1,110,170	865,764	—	865,764	10,010
O’Charley’s - Murfreesboro, TN	10/17/03	01/16/04	207,762	2,362,782	—	—	2,570,544	2,375,154	—	2,375,154	17,164
Whataburger - Dallas, TX	06/25/00	01/29/04	584,800	—	—	—	584,800	683,125	—	683,125	(51,281	)
Bakers Square - St. Anthony Village, MN	08/04/03	02/13/04	291,925	1,293,069	—	—	1,584,994	1,300,000	—	1,300,000	8,784
O’Charley’s - Lexington, KY	10/17/03	02/18/04	219,044	1,891,440	—	—	2,110,484	1,906,359	—	1,906,359	19,788
O’Charley’s - Smyrna, TN	10/17/03	03/03/04	241,849	2,516,284	—	—	2,758,133	2,542,859	—	2,542,859	30,671
O’Charley’s - Cary, NC	10/17/03	03/04/04	247,119	2,060,349	—	—	2,307,468	2,082,109	—	2,082,109	25,067
Bakers Square - Dekalb, IL	06/16/03	03/08/04	299,246	1,571,309	—	—	1,870,555	1,590,000	—	1,590,000	19,219
O’Charley’s - Cincinnati, OH	11/07/03	03/12/04	181,745	1,560,419	—	—	1,742,164	1,572,727	—	1,572,727	15,730
O’Charley’s - Burlington, NC	10/17/03	03/31/04	183,302	2,018,046	—	—	2,201,348	2,039,359	—	2,039,359	29,257
Ruby Tuesday - Cape Coral, FL	01/13/04	03/31/04	412,252	1,942,922	—	—	2,355,174	1,943,948	—	1,943,948	3,012
O’Charley’s - Marietta, GA	10/17/03	04/08/04	287,790	2,153,311	—	—	2,441,101	2,181,859	—	2,181,859	30,932
RDHSE - Fredricksburg, VA	02/09/01	04/15/04	1,019,800	—	—	—	1,019,800	1,742,001	—	1,742,001	(209,127	)
O’Charley’s - Bloomington, IN	10/17/03	04/29/04	245,124	2,040,803	—	—	2,285,927	2,067,859	—	2,067,859	35,283
O’Charley’s - Chattanooga, TN	10/17/03	05/03/04	253,599	2,509,899	—	—	2,763,498	2,550,000	—	2,550,000	44,212
Max and Emma’s - Auburn Hills, MI	05/05/03	05/04/04	296,794	2,897,527	—	—	3,194,321	2,930,000	—	2,930,000	35,055

Past performance is not necessarily indicative of future performance.

B-41

TABLE V

SALES OR DISPOSALS OF PROPERTIES

			Selling Price, Net of Closing Costs and GAAP Adjustments					Cost of Properties Including Closing And Soft Costs			Excess (deficiency) of property operating cash receipts over cash expenditures (19)
Property	Date Acquired	Date of Sale	Cash received net of closing costs	Mortgage balance at time of sale	Purchase money mortgage taken back by program	Adjustments resulting from application of GAAP	Total	Original mortgage financing (7)	Total acquisition cost, capital improvements closing and soft costs (1)	Total
CNL Funding 2001-A, LP (18) (Continued):
O’Charley’s - Mobile, AL	10/17/03	05/12/04	189,318	2,017,762	—	—	2,207,080	2,050,000	—	2,050,000	35,172
O’Charley’s - Louisville, KY	10/17/03	05/21/04	286,513	2,506,653	—	—	2,793,166	2,546,702	—	2,546,702	46,825
O’Charley’s - O’Fallon, IL	12/30/03	06/08/04	265,991	1,836,709	—	—	2,102,700	1,858,735	—	1,858,735	21,914
O’Charley’s - Paducah, KY	12/30/03	06/18/04	218,344	1,612,481	—	—	1,830,825	1,631,818	—	1,631,818	21,268
O’Charley’s - Hermitage, TN	12/30/03	06/22/04	338,121	2,569,190	—	—	2,907,311	2,600,000	—	2,600,000	35,180
Casa Ole - Port Arthur, TX	01/07/04	06/25/04	305,132	1,630,881	—	—	1,936,013	1,635,729	—	1,635,729	7,094
O’Charley’s - Monroe, NC	10/17/03	06/28/04	185,754	1,940,627	—	—	2,126,381	1,976,955	—	1,976,955	43,758
O’Charley’s - Dothan, AL	10/17/03	06/30/04	180,735	1,866,665	—	—	2,047,400	1,901,609	—	1,901,609	42,596
O’Charley’s - Evansville, IN	11/07/03	06/30/04	104,997	1,786,724	—	—	1,891,721	1,815,271	—	1,815,271	37,019
O’Charley’s - Franklin, TN	11/07/03	06/30/04	282,605	2,236,986	—	—	2,519,591	2,272,727	—	2,272,727	46,583
Casa Ole - Jasper, TX	01/07/04	06/30/04	140,640	1,339,039	—	—	1,479,679	1,343,020	—	1,343,020	6,021
O’Charley’s - Asheville, NC	10/17/03	07/13/04	205,543	1,658,902	—	—	1,864,445	1,694,545	—	1,694,545	38,294
Casa Ole - Sulphur, LA	01/07/04	08/10/04	159,164	1,486,989	—	—	1,646,153	1,493,679	—	1,493,679	7,960
Captain D’s - Byram, MS	08/29/03	08/17/04	141,988	849,812	—	—	991,800	852,273	—	852,273	2,536
Captain D’s - Richland, MS	08/29/03	08/17/04	164,615	875,989	—	—	1,040,604	878,526	—	878,526	2,623
O’Charley’s - Oxford, AL	10/17/03	08/23/04	140,274	1,779,527	—	—	1,919,801	1,822,727	—	1,822,727	48,355
O’Charley’s - Richmond, VA	10/17/03	08/30/04	221,054	2,081,306	—	—	2,302,360	2,131,832	—	2,131,832	58,653
O’Charley’s - Hopkinsville, KY	10/17/03	09/02/04	199,357	1,876,440	—	—	2,075,797	1,927,273	—	1,927,273	53,810
Tumbleweed SW Grill - Louisville, KY	12/23/03	09/13/04	252,537	1,686,839	—	—	1,939,376	1,619,425	—	1,619,425	15,759
O’Charley’s - Johnson City, TN	12/30/03	09/17/04	289,319	1,850,393	—	—	2,139,712	1,886,364	—	1,886,364	37,998

Past performance is not necessarily indicative of future performance.

B-42

TABLE V

SALES OR DISPOSALS OF PROPERTIES

			Selling Price, Net of Closing Costs and GAAP Adjustments					Cost of Properties Including Closing And Soft Costs			Excess (deficiency) of property operating cash receipts over cash expenditures (19)
Property	Date Acquired	Date of Sale	Cash received net of closing costs	Mortgage balance at time of sale	Purchase money mortgage taken back by program	Adjustments resulting from application of GAAP	Total	Original mortgage financing (7)	Total acquisition cost, capital improvements closing and soft costs (1)	Total
CNL Funding 2001-A, LP (18) (Continued):
O’Charley’s - Bristol, VA	10/17/03	09/28/04	130,942	1,934,697	—	—	2,065,639	1,987,109	—	1,987,109	59,926
O’Charley’s - Greenwood, SC	12/30/03	09/28/04	224,631	1,605,160	—	—	1,829,791	1,636,364	—	1,636,364	35,013
O’Charley’s - Mobile, AL	10/17/03	09/29/04	247,312	2,411,043	—	—	2,658,355	2,476,359	—	2,476,359	75,012
Bakers Square - West St. Paul, MN	06/16/03	09/30/04	298,650	2,202,661	—	—	2,501,311	2,250,000	—	2,250,000	56,190
Casa Ole - Orange, TX	01/07/04	09/30/04	187,322	1,413,051	—	—	1,600,373	1,420,502	—	1,420,502	9,632
O’Charley’s - Indianapolis, IN	10/17/03	10/14/04	165,089	2,123,068	—	—	2,288,157	2,186,609	—	2,186,609	67,264
O’Charley’s - Florence, KY	10/17/03	11/09/04	338,318	3,142,408	—	—	3,480,726	3,245,455	—	3,245,455	108,162
Casa Ole - Silsbee, TX	01/07/04	11/16/04	64,725	1,261,215	—	—	1,325,940	1,269,842	—	1,269,842	10,056
Casa Ole - Vidor, TX	01/07/04	12/16/04	80,653	1,154,333	—	—	1,234,986	1,162,229	—	1,162,229	9,668
O’Charley’s - Centerville, GA	10/17/03	12/21/04	248,480	1,742,334	—	—	1,990,814	1,804,545	—	1,804,545	68,249
CNL Funding 2002-A, LP (18):
Black Angus - Phoenix, AZ	08/02/01	03/29/02	308,838	1,962,499	—	—	2,271,337	1,967,245	—	1,967,245	13,445
Black Angus - Goodyear, AZ	07/23/01	05/01/02	305,468	1,855,849	—	—	2,161,317	1,862,193	—	1,862,193	11,485
Jack in the Box - Charlotte, NC	08/30/01	06/14/02	152,691	1,450,809	—	—	1,603,500	1,467,708	—	1,467,708	17,149
Jack in the Box - Baton Rouge, LA	08/30/01	07/12/02	80,374	1,145,280	—	—	1,225,654	1,160,007	—	1,160,007	16,487
Jack in the Box - Lake Zurich, IL	09/26/01	12/20/02	440,278	2,215,642	—	—	2,655,920	2,246,512	—	2,246,512	39,380
Bennigans - Killeen, TX	08/07/01	12/30/02	285,025	1,897,117	—	—	2,182,142	1,925,583	—	1,925,583	31,785
CNL Net Lease Investors, LP (18):
JIB - Arlington, TX (8)	09/25/02	09/25/02	1,096,799	—	—	—	1,096,799	—	1,096,799	1,096,799	—
Burger King - Jackson, MI (8)	09/25/02	09/25/02	958,464	—	—	—	958,464	—	958,464	958,464	—

Past performance is not necessarily indicative of future performance.

B-43

TABLE V

SALES OR DISPOSALS OF PROPERTIES

			Selling Price, Net of Closing Costs and GAAP Adjustments					Cost of Properties Including Closing And Soft Costs			Excess (deficiency) of property operating cash receipts over cash expenditures (19)
Property	Date Acquired	Date of Sale	Cash received net of closing costs	Mortgage balance at time of sale	Purchase money mortgage taken back by program	Adjustments resulting from application of GAAP	Total	Original mortgage financing (7)	Total acquisition cost, capital improvements closing and soft costs (1)	Total
CNL Net Lease Investors, LP (18) (Continued):
IHOP - Buffalo Grove, IL (8)	09/25/02	09/25/02	1,591,656	—	—	—	1,591,656	—	1,591,656	1,591,656	—
Arby’s-Lee’s - Summit, MO (8)	09/25/02	09/25/02	956,778	—	—	—	956,778	—	956,778	956,778	—
Krispy Kreme - Clive, IA (8)	09/25/02	09/25/02	719,193	—	—	—	719,193	—	719,193	719,193	—
Boston Market - Eden Prairie, MN (8)	09/25/02	09/25/02	1,096,256	—	—	—	1,096,256	—	1,096,256	1,096,256	—
Denny’s - Glenwood Springs, CO	09/25/02	09/30/02	71,421	724,289	—	—	795,710	724,289	—	724,289	(2,560	)
JIB - Apple Valley, CA	09/25/02	10/29/02	195,846	1,125,979	—	—	1,321,825	1,125,979	—	1,125,979	(390	)
Jack in the Box - Calexico, CA	09/25/02	11/08/02	267,747	1,380,933	—	—	1,648,680	1,380,873	—	1,380,873	(431	)
IHOP - Smyrna, GA	09/25/02	11/15/02	258,136	1,487,570	—	—	1,745,706	1,487,640	—	1,487,640	(255	)
IHOP - Las Vegas, NV	09/25/02	11/19/02	224,805	1,532,903	—	—	1,757,708	1,533,114	—	1,533,114	4
Arby’s - Lafayette, IN	09/25/02	11/21/02	142,253	1,233,489	—	—	1,375,742	1,234,521	—	1,234,521	1,632
JIB - Pomona, CA	09/25/02	12/06/02	230,597	1,256,692	—	—	1,487,290	1,256,583	—	1,256,583	(501	)
IHOP - Bend, OR	09/25/02	12/10/02	196,621	1,335,109	—	—	1,531,730	1,334,916	—	1,334,916	(674	)
JIB - Woodinville, WA	09/25/02	12/12/02	238,915	1,416,445	—	—	1,655,360	1,416,512	—	1,416,512	(421	)
IHOP - Chico, CA	09/25/02	12/16/02	237,578	1,704,094	—	—	1,941,672	1,706,088	—	1,706,088	2,084
IHOP - Phoenix, AZ	09/25/02	12/16/02	257,508	1,421,205	—	—	1,678,713	1,422,679	—	1,422,679	1,492
Denny’s - Grand Prairie, TX	09/25/02	12/18/02	166,695	641,605	—	—	808,300	643,812	—	643,812	(17,570	)
JIB - Stockton, CA	09/25/02	12/19/02	123,370	1,194,990	—	—	1,318,360	1,195,358	—	1,195,358	44
JIB - Altadena, CA	09/25/02	12/19/02	238,359	1,568,973	—	—	1,807,332	1,569,349	—	1,569,349	(104	)
IHOP - Madera, CA	09/25/02	12/20/02	221,369	1,517,381	—	—	1,738,750	1,517,799	—	1,517,799	(23	)
JIB - Los Angeles, CA	09/25/02	12/20/02	281,609	1,440,875	—	—	1,722,484	1,441,506	—	1,441,506	319

Past performance is not necessarily indicative of future performance.

B-44

TABLE V

SALES OR DISPOSALS OF PROPERTIES

			Selling Price, Net of Closing Costs and GAAP Adjustments					Cost of Properties Including Closing And Soft Costs			Excess (deficiency) of property operating cash receipts over cash expenditures (19)
Property	Date Acquired	Date of Sale	Cash received net of closing costs	Mortgage balance at time of sale	Purchase money mortgage taken back by program	Adjustments resulting from application of GAAP	Total	Original mortgage financing (7)	Total acquisition cost, capital improvements closing and soft costs (1)	Total
CNL Net Lease Investors, LP (18) (Continued):
Stone Grill - Henderson, NV	09/25/02	12/20/02	129,187	315,790	—	—	444,977	316,876	—	316,876	(501	)
JIB - Veradale, WA	09/25/02	12/20/02	152,024	1,432,938	—	—	1,584,962	1,434,470	—	1,434,470	1,591
Denny’s - Tulsa, OK	09/25/02	12/23/02	111,276	87,719	—	—	198,995	88,021	—	88,021	(8,056	)
Chipolte Mexican Grill - Redlands, CA	09/25/02	12/26/02	184,168	947,782	—	—	1,131,950	948,249	—	948,249	229
Arby’s - Boise, ID	09/25/02	12/27/02	144,299	880,157	—	—	1,024,456	879,752	—	879,752	(1,105	)
IHOP - Las Vegas, NV - 752	09/25/02	12/30/02	301,535	1,654,627	—	—	1,956,162	1,654,674	—	1,654,674	(737	)
IHOP - Chesapeake, VA	09/25/02	12/30/02	224,282	1,596,258	—	—	1,820,540	1,595,915	—	1,595,915	(1,328	)
JIB - Sacramento, CA	09/25/02	12/31/02	121,340	1,230,480	—	—	1,351,820	1,230,859	—	1,230,859	(85	)
JIB - Delano, CA	09/25/02	12/31/02	218,259	1,193,558	—	—	1,411,817	1,193,846	—	1,193,846	(125	)
LJS - Pasadena, TX	09/25/02	01/10/03	84,314	653,823	—	—	738,137	653,146	—	653,146	(1,059	)
Jack in the Box - Caldwell, ID	09/25/02	01/14/03	249,924	1,249,841	—	—	1,499,765	1,249,541	—	1,249,541	(933	)
IHOP - Addison, TX	09/25/02	01/14/03	280,886	1,469,922	—	—	1,750,808	1,469,295	—	1,469,295	(1,299	)
IHOP - Arlington, TX	09/25/02	01/15/03	239,534	1,338,182	—	—	1,577,716	1,338,259	—	1,338,259	(392	)
Jack in the Box - Centralia, WA	09/25/02	01/17/03	176,522	1,108,218	—	—	1,284,740	1,109,947	—	1,109,947	1,738
Denny’s - Fort Worth, TX	09/25/02	01/17/03	5,513	75,058	—	—	80,571	75,447	—	75,447	(1,895	)
IHOP - Merced, CA	09/25/02	01/24/03	258,486	1,669,950	—	—	1,928,436	1,670,946	—	1,670,946	586
Denny’s - Port Charlotte, FL	09/25/02	01/29/03	254,391	1,260,009	—	—	1,514,400	1,261,536	—	1,261,536	6,452
KFC - Virginia Beach, VA	09/25/02	01/30/03	151,884	861,262	—	—	1,013,146	862,729	—	862,729	1,631
Checkers - Orlando, FL	09/25/02	02/04/03	33,051	479,392	—	—	512,443	479,298	—	479,298	(171	)
IHOP - Vernon Hills, IL	09/25/02	02/05/03	142,285	1,677,299	—	—	1,819,584	1,678,249	—	1,678,249	749

Past performance is not necessarily indicative of future performance.

B-45

TABLE V

SALES OR DISPOSALS OF PROPERTIES

			Selling Price, Net of Closing Costs and GAAP Adjustments					Cost of Properties Including Closing And Soft Costs			Excess (deficiency) of property operating cash receipts over cash expenditures (19)
Property	Date Acquired	Date of Sale	Cash received net of closing costs	Mortgage balance at time of sale	Purchase money mortgage taken back by program	Adjustments resulting from application of GAAP	Total	Original mortgage financing (7)	Total acquisition cost, capital improvements closing and soft costs (1)	Total
CNL Net Lease Investors, LP (18) (Continued):
IHOP - Pasadena, TX	09/25/02	02/07/03	189,401	1,238,542	—	—	1,427,943	1,237,835	—	1,237,835	(927	)
Denny’s - Surfside Beach, SC	09/25/02	02/10/03	191,178	973,222	—	—	1,164,400	973,354	—	973,354	80
Blackbear BBQ & Grill - Clinton, MO	09/25/02	02/11/03	111,135	149,853	—	—	260,988	150,894	—	150,894	4,808
El Ranchito - Cheraw, SC	09/25/02	02/12/03	74,238	119,882	—	—	194,120	120,715	—	120,715	(3,748	)
IHOP - Orland Park, IL	09/25/02	02/12/03	237,989	1,496,687	—	—	1,734,676	1,497,535	—	1,497,535	131
JIB - Phoenix, AZ	09/25/02	02/19/03	318,477	1,369,163	—	—	1,687,640	1,368,852	—	1,368,852	(235	)
JIB - Fontana, CA	09/25/02	02/19/03	354,596	1,617,580	—	—	1,972,176	1,621,168	—	1,621,168	4,515
Jack in the Box - Puyallup, WA	09/25/02	02/20/03	208,776	1,442,584	—	—	1,651,360	1,442,429	—	1,442,429	(11	)
JIB - Nampa, ID	09/25/02	02/28/03	133,479	1,182,901	—	—	1,316,380	1,185,224	—	1,185,224	3,311
Arby’s - Indianapolis, IN	09/25/02	03/07/03	146,983	1,290,641	—	—	1,437,624	1,289,765	—	1,289,765	(1,240	)
Golden Corral - Sherman, TX	09/25/02	03/14/03	144,018	1,334,643	—	—	1,478,661	1,344,925	—	1,344,925	11,110
Denny’s - Independence, MO	09/25/02	03/18/03	75,774	879,026	—	—	954,800	878,925	—	878,925	(531	)
Jack in the Box - New Caney, TX	09/25/02	03/26/03	235,592	1,081,827	—	—	1,317,419	1,084,227	—	1,084,227	2,136
IHOP - Columbia, SC	09/25/02	03/27/03	199,074	1,421,913	—	—	1,620,987	1,421,690	—	1,421,690	(939	)
Golden Corral - Longmont, CO	09/25/02	03/28/03	102,544	1,129,798	—	—	1,232,342	1,138,018	—	1,138,018	9,457
IHOP - Coeur D’Alene, ID	09/25/02	03/28/03	194,492	1,371,918	—	—	1,566,410	1,372,193	—	1,372,193	(296	)
IHOP - Hoffman Estates, IL	09/25/02	03/31/03	220,665	1,620,411	—	—	1,841,076	1,621,562	—	1,621,562	650
Hardee’s - Hattiesburg, MS	09/25/02	04/04/03	112,845	952,123	—	—	1,064,968	951,381	—	951,381	(1,090	)
Arby’s - Greenville, AL	09/25/02	04/04/03	42,568	347,029	—	—	389,597	348,619	—	348,619	1,586
Jack in the Box - Peoria, AZ	09/25/02	04/04/03	276,589	1,286,205	—	—	1,562,794	1,287,666	—	1,287,666	1,232

Past performance is not necessarily indicative of future performance.

B-46

TABLE V

SALES OR DISPOSALS OF PROPERTIES

			Selling Price, Net of Closing Costs and GAAP Adjustments						Cost of Properties Including Closing And Soft Costs
Property	Date Acquired	Date of Sale	Cash received net of closing costs		Mortgage balance at time of sale	Purchase money mortgage taken back by program	Adjustments resulting from application of GAAP	Total	Original mortgage financing (7)	Total acquisition cost, capital improvements closing and soft costs (1)	Total	Excess (deficiency) of property operating cash receipts over cash expenditures (19)
CNL Net Lease Investors, LP (18) (Continued):
Denny’s - Goodyear, AZ	09/25/02	04/08/03	104,888		1,234,312	—	—	1,339,200	1,233,526	—	1,233,526	(11,939	)
Long John Silvers - Olathe, KS	09/25/02	04/17/03	113,541		687,429	—	—	800,970	690,258	—	690,258	2,995
Wendy’s - Escondido, CA	09/25/02	05/09/03	230,220		1,602,354	—	—	1,832,574	1,614,754	—	1,614,754	12,790
Golden Corral - Jacksonville, FL	09/25/02	05/15/03	199,967		1,673,863	—	—	1,873,830	1,691,381	—	1,691,381	18,292
Jack in the Box - Santa Maria, CA	09/25/02	05/20/03	246,072		1,345,328	—	—	1,591,400	1,346,677	—	1,346,677	994
Jack in the Box - Post Falls, ID	09/25/02	05/22/03	(311,305	)	1,256,355	—	—	945,050	1,256,928	—	1,256,928	(225	)
Golden Corral - Garden City, KS	09/25/02	05/30/03	201,188		964,009	—	—	1,165,197	974,016	—	974,016	11,189
IHOP - Lithia Springs, GA	09/25/02	06/02/03	221,383		1,352,517	—	—	1,573,900	1,357,533	—	1,357,533	4,861
Japan Express - Lincolnton, NC	09/25/02	06/11/03	16,243		460,557	—	—	476,800	458,047	—	458,047	(2,852	)
Denny’s - McAlester, OK	09/25/02	06/24/03	122,576		608,549	—	—	731,125	603,793	—	603,793	(5,996	)
Denny’s - Yukon, OK	09/25/02	06/24/03	(467,777	)	950,152	—	—	482,375	948,836	—	948,836	(2,101	)
Golden Corral - Bartlesville, OK	09/25/02	06/26/03	107,249		806,482	—	—	913,731	799,214	—	799,214	(8,512	)
Jack in the Box - Beaumont, TX	09/25/02	07/11/03	221,438		1,201,362	—	—	1,422,800	1,202,905	—	1,202,905	1,243
Jack in the Box - Decatur, TX	09/25/02	07/16/03	191,779		1,147,023	—	—	1,338,802	1,146,569	—	1,146,569	(925	)
Denny’s - Enid, OK	09/25/02	08/11/03	25,602		88,942	—	—	114,544	90,536	—	90,536	(6,326	)
Jack in the Box - Irving, TX	09/25/02	08/15/03	277,222		1,514,638	—	—	1,791,860	1,514,477	—	1,514,477	(712	)
Long John Silvers - Independence, MO	09/25/02	09/17/03	184,834		936,247	—	—	1,121,081	932,101	—	932,101	(5,004	)
Remington Grill - Sanford, NC	09/25/02	09/22/03	15,420		420,129	—	—	435,549	417,044	—	417,044	(3,635	)
Golden Corral - Weslaco, TX	09/25/02	09/26/03	367,183		952,057	—	—	1,319,240	968,060	—	968,060	17,334
Golden Corral - Ada, OK	09/25/02	09/30/03	107,394		933,094	—	—	1,040,488	947,919	—	947,919	16,153

Past performance is not necessarily indicative of future performance.

B-47

TABLE V

SALES OR DISPOSALS OF PROPERTIES

			Selling Price, Net of Closing Costs and GAAP Adjustments					Cost of Properties Including Closing And Soft Costs			Excess (deficiency) of property operating cash receipts over cash expenditures (19)
Property	Date Acquired	Date of Sale	Cash received net of closing costs	Mortgage balance at time of sale	Purchase money mortgage taken back by program	Adjustments resulting from application of GAAP	Total	Original mortgage financing (7)	Total acquisition cost, capital improvements closing and soft costs (1)	Total
CNL Net Lease Investors, LP (18) (Continued):
Golden Corral - Abilene, TX	09/25/02	10/14/03	514,520	1,426,972	—	—	1,941,492	1,451,948	—	1,451,948	26,636
Golden Corral - Shawnee, OK	09/25/02	11/04/03	399,131	967,722	—	—	1,366,853	986,246	—	986,246	16,502
Jack in the Box - Ontario, OR	09/25/02	12/31/03	198,809	1,010,637	—	—	1,209,446	1,008,829	—	1,008,829	(2,471	)
Jack in the Box - Mojave, CA	09/25/02	01/08/04	364,908	1,241,898	—	—	1,606,806	1,241,457	—	1,241,457	(1,908	)
Burger King - Bowling Green, OH	09/25/02	01/16/04	107,489	818,684	—	—	926,173	823,270	—	823,270	4,207
Burger King - Wauseon, OH	09/25/02	01/29/04	79,691	818,684	—	—	898,375	823,270	—	823,270	4,287
Burger King - Columbia, SC	09/25/02	02/04/04	226,574	269,666	—	—	496,240	277,644	—	277,644	(20,771	)
Jack in the Box - San Benito, TX	09/25/02	03/25/04	185,477	1,260,437	—	—	1,445,914	1,257,183	—	1,257,183	(4,011	)
Schlotzsky’s - Louisville, KY	09/25/02	03/30/04	272,684	1,039,491	—	—	1,312,175	1,043,169	—	1,043,169	3,001
Boston Market - Carrolton, TX	09/25/02	03/31/04	44,215	821,960	—	—	866,175	823,321	—	823,321	(6,043	)
Golden Corral - Augusta, GA	09/25/02	03/31/04	155,640	1,129,629	—	—	1,285,269	1,159,728	—	1,159,728	31,727
Burger King - Bradford, PA	09/25/02	04/02/04	53,936	815,644	—	—	869,580	823,151	—	823,151	7,125
Denny’s - Raytown, MD	09/25/02	04/27/04	125,030	798,970	—	—	924,000	798,617	—	798,617	(825	)
Boston Market - Kansas City, MO	09/25/02	08/20/04	200,500	1,136,300	—	—	1,336,800	1,157,285	—	1,157,285	21,185
Boston Market - Houston, TX	09/25/02	09/21/04	171,942	840,790	—	—	1,012,732	842,675	—	842,675	1,384
Boston Market - Orlando, FL	09/25/02	09/27/04	196,913	919,171	—	—	1,116,084	923,154	—	923,154	4,007
Boston Market - Vero, FL	09/25/02	09/28/04	151,991	818,569	—	—	970,560	821,769	—	821,769	3,206
Denny’s - Corpus Christi, TX	09/25/02	09/30/04	202,524	1,168,469	—	—	1,370,993	1,161,563	—	1,161,563	(4,617	)
Jack in the Box - Campbell, CA	06/30/04	10/05/04	478,151	1,752,877	—	—	2,231,028	1,764,874	—	1,764,874	12,734

Past performance is not necessarily indicative of future performance.

B-48

TABLE V

SALES OR DISPOSALS OF PROPERTIES

			Selling Price, Net of Closing Costs and GAAP Adjustments					Cost of Properties Including Closing And Soft Costs			Excess (deficiency) of property operating cash receipts over cash expenditures (19)
Property	Date Acquired	Date of Sale	Cash received net of closing costs	Mortgage balance at time of sale	Purchase money mortgage taken back by program	Adjustments resulting from application of GAAP	Total	Original mortgage financing (7)	Total acquisition cost, capital improvements closing and soft costs (1)	Total
CNL Net Lease Investors, LP (18) (Continued):
Jack in the Box - Castro Valley, CA	06/30/04	10/22/04	384,195	1,441,985	—	—	1,826,180	1,451,854	—	1,451,854	12,183
Jack in the Box - Cucamonga, CA	06/30/04	10/27/04	386,869	1,422,008	—	—	1,808,877	1,431,740	—	1,431,740	12,308
Jack in the Box - Chula Vista, CA	06/30/04	10/29/04	360,260	1,327,863	—	—	1,688,123	1,336,951	—	1,336,951	11,866
Golden Corral - Newman, GA	05/25/04	11/04/04	544,547	2,897,159	—	—	3,441,706	2,912,000	—	2,912,000	16,324
Golden Corral - Conyers, GA	05/25/04	11/04/04	599,484	3,188,213	—	—	3,787,697	3,204,545	—	3,204,545	17,964
Jack in the Box - Palmdale, CA	06/30/04	11/08/04	320,326	984,602	—	—	1,304,928	993,627	—	993,627	9,704
IHOP - Spring, TX	07/22/04	11/08/04	649,693	2,453,010	—	—	3,102,703	2,456,940	—	2,456,940	2,527
Jack in the Box - Los Angeles, CA	06/30/04	11/10/04	367,116	1,457,564	—	—	1,824,680	1,470,924	—	1,470,924	14,590
IHOP - Hillsboro, TX	07/22/04	11/18/04	311,512	1,193,219	—	—	1,504,731	1,195,130	—	1,195,130	1,909
Jack in the Box - Dallas, TX	09/30/04	11/24/04	233,333	889,082	—	—	1,122,415	891,093	—	891,093	3,690
Golden Corral - Lawrenceville, GA	05/25/04	11/29/04	477,075	2,735,984	—	—	3,213,059	2,750,000	—	2,750,000	17,988
Jack in the Box - San Rafael, CA	06/30/04	12/10/04	253,890	891,638	—	—	1,145,528	901,900	—	901,900	10,956
Applebee’s - Gaffney, SC	06/28/04	12/15/04	117,965	1,123,037	—	—	1,241,002	1,125,000	—	1,125,000	1,240
Sweet Tomatoes - Orlando, FL	03/10/04	12/17/04	559,838	3,372,581	—	—	3,932,419	3,384,700	—	3,384,700	12,104
Golden Corral - Alpharetta, GA	05/25/04	12/22/04	727,979	3,836,308	—	—	4,564,287	3,860,000	—	3,860,000	36,725
Jack in the Box - Berkely, CA	09/30/04	12/30/04	337,670	1,285,577	—	—	1,623,247	1,291,417	—	1,291,417	8,871
CNL Net Lease Funding, LLC (18):
Sweet Tomatoes - Atlanta, GA	03/10/04	06/03/04	605,000	2,735,217	—	—	3,340,217	2,737,625	—	2,737,625	3,232
Sweet Tomatoes - Westminister, CO	03/10/04	06/09/04	428,345	2,132,123	—	—	2,560,468	2,134,000	—	2,134,000	1,136
Souplantation - Lake Forest, CA	03/10/04	06/09/04	522,416	1,958,839	—	—	2,481,255	1,960,000	—	1,960,000	207

Past performance is not necessarily indicative of future performance.

B-49

TABLE V

SALES OR DISPOSALS OF PROPERTIES

			Selling Price, Net of Closing Costs and GAAP Adjustments					Cost of Properties Including Closing And Soft Costs			Excess (deficiency) of property operating cash receipts over cash expenditures (19)
Property	Date Acquired	Date of Sale	Cash received net of closing costs	Mortgage balance at time of sale	Purchase money mortgage taken back by program	Adjustments resulting from application of GAAP	Total	Original mortgage financing (7)	Total acquisition cost, capital improvements closing and soft costs (1)	Total
CNL Net Lease Funding, LLC (18) (Continued):
Sweet Tomatoes - Raleigh, NC	03/10/04	06/17/04	316,054	1,578,611	—	—	1,894,665	1,580,000	—	1,580,000	1,590
Sweet Tomatoes - Alpharetta, GA	03/10/04	06/18/04	324,261	2,287,636	—	—	2,611,897	2,289,650	—	2,289,650	2,439
Sweet Tomatoes - St. Charles, IL	03/10/04	06/30/04	393,303	1,939,518	—	—	2,332,821	1,941,225	—	1,941,225	3,448
Sweet Tomatoes - Albuquerque, NM	03/10/04	06/30/04	312,047	1,737,970	—	—	2,050,017	1,739,500	—	1,739,500	2,748
Sweet Tomatoes - Sarasota, FL	03/10/04	07/07/04	553,874	2,734,003	—	—	3,287,877	2,737,625	—	2,737,625	1,653
Jack in the Box - Palo Alto, CA	06/30/04	07/29/04	359,407	1,273,509	—	—	1,632,916	1,273,509	—	1,273,509	2,611
Jack in the Box - Bakersfield, CA	06/30/04	08/12/04	173,097	1,002,048	—	—	1,175,145	1,004,314	—	1,004,314	3,164
Golden Corral - Buford, GA	05/25/04	08/17/04	588,738	3,491,943	—	—	4,080,681	3,499,000	—	3,499,000	9,973
Jack in the Box - Riverside, CA	06/30/04	08/17/04	419,820	1,575,670	—	—	1,995,490	1,579,233	—	1,579,233	5,516
Jack in the Box - Phoenix, AZ	06/30/04	08/18/04	176,947	1,049,261	—	—	1,226,208	1,051,634	—	1,051,634	3,597
Sweet Tomatoes - Peoria, AZ	03/10/04	08/19/04	580,946	2,881,842	—	—	3,462,788	2,886,950	—	2,886,950	5,373
Jack in the Box - Marysville, CA	06/30/04	08/20/04	399,446	1,351,870	—	—	1,751,316	1,354,927	—	1,354,927	5,011
Golden Corral - Snellville, GA	05/25/04	08/30/04	499,488	2,864,211	—	—	3,363,699	2,870,000	—	2,870,000	9,219
Sweet Tomatoes - Tampa, FL	03/10/04	08/30/04	419,149	2,033,396	—	—	2,452,545	2,037,000	—	2,037,000	6,136
Golden Corral - Kennesaw, GA	05/25/04	09/02/04	536,093	3,133,208	—	—	3,669,301	3,142,750	—	3,142,750	10,904
Jack in the Box - Orcutt, CA	06/30/04	09/08/04	309,329	1,156,105	—	—	1,465,434	1,161,357	—	1,161,357	5,876
Sweet Tomatoes - Aurora, CO	03/10/04	09/09/04	438,437	2,100,331	—	—	2,538,768	2,105,000	—	2,105,000	3,943
Jack in the Box - Woodland, CA	06/30/04	09/10/04	327,824	1,214,742	—	—	1,542,566	1,220,260	—	1,220,260	6,531
Jack in the Box - Santa Ana, CA	06/30/04	09/17/04	269,268	1,001,356	—	—	1,270,624	1,005,905	—	1,005,905	5,918

Past performance is not necessarily indicative of future performance.

B-50

TABLE V

SALES OR DISPOSALS OF PROPERTIES

			Selling Price, Net of Closing Costs and GAAP Adjustments					Cost of Properties Including Closing And Soft Costs			Excess (deficiency) of property operating cash receipts over cash expenditures (19)
Property	Date Acquired	Date of Sale	Cash received net of closing costs	Mortgage balance at time of sale	Purchase money mortgage taken back by program	Adjustments resulting from application of GAAP	Total	Original mortgage financing (7)	Total acquisition cost, capital improvements closing and soft costs (1)	Total
CNL Net Lease Funding, LLC (18) (Continued):
Sweet Tomatoes - Fort Myers, FL	03/10/04	09/17/04	424,602	3,178,534	—	—	3,603,136	3,185,600	—	3,185,600	7,484
Sweet Tomatoes - Tampa, FL	03/10/04	09/22/04	422,150	2,508,063	—	—	2,930,213	2,513,638	—	2,513,638	6,653
Jack in the Box - Houston, TX	06/30/04	09/24/04	172,456	1,207,144	—	—	1,379,600	1,212,627	—	1,212,627	7,778
Jack in the Box - Antioch, CA	06/30/04	09/28/04	253,778	785,367	—	—	1,039,145	788,934	—	788,934	5,522
Jack in the Box - Auburn, WA	06/30/04	09/28/04	249,965	1,304,766	—	—	1,554,731	1,310,693	—	1,310,693	8,804
Jack in the Box - Mesa, AZ	06/30/04	09/28/04	198,453	957,998	—	—	1,156,451	962,350	—	962,350	6,465
Jack in the Box - Chico, CA	06/30/04	09/29/04	204,705	841,893	—	—	1,046,598	845,717	—	845,717	5,745
Applebee’s - Greenville, SC	06/28/04	09/30/04	259,610	1,873,702	—	—	2,133,312	1,875,000	—	1,875,000	2,001
Jack in the Box - Irving, TX	06/30/04	09/30/04	241,103	1,120,097	—	—	1,361,200	1,125,185	—	1,125,185	7,729
CNL Restaurant Capital, LP (24):
Applebee’s - Salinas, CA	02/10/97	04/26/02	449,350	1,600,000	—	—	2,049,350	—	1,496,871	1,496,871	—
Fazoli’s - Cordova, TN (25)	12/28/01	06/28/02	638,052	—	—	—	638,052	—	501,969	501,969	—
Fazoli’s - Collierville, TN (25)	12/23/99	08/08/02	667,882	—	—	—	667,882	—	621,070	621,070	—
CFD Holdings, LLC:
Denny’s - Plant City, FL (25)	09/30/02	05/23/03	1,182,921	—	—	—	1,182,921	—	1,059,831	1,059,831	15,227
Denny’s - Fort Pierce, FL (25)	09/30/02	11/14/03	846,101	—	—	—	846,101	—	793,145	793,145	46,896
Denny’s - Orlando, FL (25)	09/30/02	12/03/03	1,072,542	—	—	—	1,072,542	—	949,611	949,611	62,823
CFD Holdings II, LLC:
Fazoli’s - Oregon, OH (25)	05/08/03	06/24/04	383,988	—	—	—	383,988	—	740,459	740,459	27,852

Past performance is not necessarily indicative of future performance.

B-51

TABLE V

SALES OR DISPOSALS OF PROPERTIES

			Selling Price, Net of Closing Costs and GAAP Adjustments					Cost of Properties Including Closing And Soft Costs			Excess (deficiency) of property operating cash receipts over cash expenditures (19)
Property	Date Acquired	Date of Sale	Cash received net of closing costs	Mortgage balance at time of sale	Purchase money mortgage taken back by program	Adjustments resulting from application of GAAP	Total	Original mortgage financing (7)	Total acquisition cost, capital improvements closing and soft costs (1)	Total
CNL Funding 2001-4, LP:
Burger King - Boynton Beach, FL (25)	07/21/03	03/12/04	999,217	—	—	—	999,217	—	709,380.	709,380	28,932
Burger King - West Palm Beach, FL (25)	07/21/03	06/23/04	834,264	—	—	—	834,264	—	725,000	725,000	24,352
Burger King - Coral Springs, FL (25)	05/05/03	08/31/04	885,163	—	—	—	885,163	—	1,036,190	1,036,190	(40,339	)
CNL Hotels & Resorts, Inc.:
Residence Inn - Charlotte, NC	7/10/03	12/17/04	3,763,810	—	—	—	3,763,810	—	3,177,789	3,177,789	460,146
Hampton Inn - Denver, CO	7/10/03	11/15/04	2,639,686	—	—	—	2,639,686	—	2,554,787	2,554,787	358,791
Comfort Inn - Marietta, GA	7/10/03	07/15/04	5,119,961	—	—	—	5,119,961	—	5,023,017	5,023,017	168,741
Hampton Inn - Omaha, NE	7/10/03	07/07/04	5,840,562	—	—	—	5,840,562	—	5,408,607	5,408,607	562,970

(1) Amounts shown do not include pro rata share of original offering costs or acquisition fees.

(2) Closing costs deducted from net sales proceeds do not include deferred, subordinated real estate disposition fees payable to CNL Fund Advisors, Inc. or its affiliates.

(3) Reserved for future use.

(4) Reserved for future use.

(5) Cash received net of closing costs includes $147,750 of lease termination income.

(6) Excess (deficiency) of property operating cash receipts over cash expenditures includes $52,676 of lease termination income.

(7) Original mortgage financing was obtained for less than 100 percent of the total cost of the properties.

(8) Each property was sold to one of the CNL Income Funds, which are Prior Public Programs and affiliates of the Chairman and Vice Chairman of the Board of Directors of CNL Restaurant Properties, Inc. The CNL Net Lease Investors, LP sold the properties at the net carrying value of the property, therefore, no gain or loss was recognized on the sale.

(9) This property was being constructed and was sold prior to completion of construction.

(10) CNL APF Partners LP did not own the land related to this property. The tenant defaulted under the terms of the lease with the landlord of the land lease and CNL APF Partners LP, the landlord of the building lease. CNL APF Partners, LP was not successful at finding a replacement tenant and would have been obligated to pay rent to the landlord of the land in order to preserve its interest in the building. CNL APF Partners, LP decided to abandon the rights to the building to eliminate the obligation to pay rent to the landlord of the land parcel.

(11) CNL Income Fund II, Ltd. owned a 64 percent interest and CNL Income Fund VI, Ltd. owned a 36 percent interest in this joint venture. The amounts presented for CNL Income Fund II, Ltd. and CNL Income Fund VI, Ltd. represent each partnership’s percentage interest in the property owned by Show Low Joint Venture.

(12) Reserved for future use.

(13) Reserved for future use.

(14) Reserved for future use.

(15) Reserved for future use.

(16) CNL Income Fund X, Ltd. owned a 69.06 percent interest and CNL Income Fund XVII, Ltd. owned a 30.94 percent interest in this joint venture. The amounts presented for CNL Income Fund X,. Ltd. and CNL Income Fund XVII, Ltd. represent each partnership’s percentage interest in the property owned by CNL Ocean Shores Joint Venture.

B-52

TABLE V

SALES OR DISPOSALS OF PROPERTIES

(17) Reserved for future use.

(18) Information in this table includes properties sold by Maple & Main Orlando, LLC; RAI Restaurants, Inc.; South Street Investments, Inc.; CNL Restaurant Investors Properties, LLC; CNL Funding 2001-A, LP; CNL Funding 2002-A LP; CNL Net Lease Investors LP and CNL Net Lease Funding 2003, LLC, subsidiaries of CNL Restaurant Properties, Inc., which were formed for the purpose of originating long-term triple net leases on real estate with the intent of selling these properties to third parties.

(19) Amounts in this table do not include costs incurred in the administration of the partnership or company, as applicable, not related to the operation of properties.

(20) Reserved for future use.

(21) Reserved for future use.

(22) Reserved for future use.

(23) Reserved for future use.

(24) Information in this table includes properties sold by CNL Financial Services, LP and CNL Restaurant Capital, LP, subsidiaries of CNL Restaurant Properties, Inc.

(25) The property was obtained through foreclosure of a loan and the basis of the property was the net realizable value of the foreclosed loan.

(26) Excess (deficiency) of property operating cash receipts over cash expenditures includes $33,979 of lease termination income.

(27) Excess (deficiency) of property operating cash receipts over cash expenditures includes $100,000 of lease termination income.

(28) CNL Income Fund III, Ltd. owned a 73.4 percent interest and CNL Income Fund IV, Ltd. owned a 26.6 percent interest in this joint venture. The amounts presented for CNL Income Fund III, Ltd. and CNL Income Fund, IV, Ltd. represent each partnership’s percentage interest in the property owned by Titusville Joint Venture.

(29) CNL Income Fund IX, Ltd. and CNL Income Fund, X, Ltd. each owned a 50 percent interest in this joint venture. The amounts presented for CNL Income Fund IX, Ltd. and CNL Income Fund X, Ltd. represent each partnership’s percentage interest in the property owned by CNL Restaurant Investments III.

(30) CNL Income Fund, Ltd. owned a 50 percent interest in this joint venture. The amounts presented represent the partnership’s percentage interest in the property owned by Sand Lake Road Joint Venture. A third party owned the remaining 50 percent interest in this joint venture.

(31) CNL Income Fund VII, Ltd. owned an 18 percent interest, CNL Income Fund VIII, Ltd. owned a 36.8 percent interest and CNL Income Fund IX, Ltd. owned a 45.2 percent interest in this joint venture. The amounts presented for CNL Income Fund VII, Ltd., CNL Income Fund, VIII, Ltd. and CNL Income Fund IX, Ltd. represent each partnership’s percentage interest in the property owned by CNL Restaurant Investments II.

(32) CNL Income Fund IX, Ltd. owned a 27.33 percent interest, CNL Income Fund X, Ltd. owned a 10.51 percent interest and CNL Income fund XI, Ltd. owned a 62.16 percent interest in this joint venture. The amounts presented for CNL Income Fund IX, Ltd., CNL Income Fund, X, Ltd. and CNL Income Fund XI, Ltd. represent each partnership’s percentage interest in the property owned by Ashland Joint Venture.

(33) CNL Income Fund VIII, Ltd. owned a 66 percent interest and CNL Income Fund IX, Ltd. owned a 34 percent interest in the property owned by this tenancy in common. The amounts presented for CNL Income Fund VIII, Ltd. and CNL Income Fund, IX, Ltd. represent each partnership’s percentage interest in the property owned by CNL VIII & IX Tenants in Common.

(34) CNL Income Fund VII, Ltd. owned a 79 percent interest and CNL Income Fund XVII, Ltd. owned a 21 percent interest in this joint venture. The amounts presented for CNL Income Fund VII, Ltd. and CNL Income Fund, XVII, Ltd. represent each partnership’s percentage interest in the property owned by CNL Mansfield Joint Venture.

(35) CNL Income Fund VI, Ltd. owned a 66.14 percent interest in this joint venture. The amounts presented represent the partnership’s percentage interest in the property owned by Caro Joint Venture. A third party owned the remaining 33.86 percent interest in this joint venture.

(36) Amount shown is face value and does not represent discounted current value. The mortgage note bore interest at a rate of 10 percent per annum and provided for 35 equal monthly payments of principal and interest. The borrower prepaid the mortgage note in full in August 2002.

(37) Amount shown is face value and does not represent discounted current value. The mortgage note bore interest at a rate of 10.5 percent per annum. In December 2002, the Partnership negotiated for an early payoff at a reduced amount and received a balloon payment which included $606,800 of the outstanding principal balance.

(38) Cash received net of closing costs includes $227,579 of insurance proceeds received after the building was destroyed by fire.

(39) CNL Income Fund II, Ltd. owned a 49 percent interest and CNL Income Fund IV, Ltd. owned a 51 percent interest in this joint venture. The amounts presented for CNL Income Fund II, Ltd. and CNL Income Fund IV, Ltd. represent each partnership’s percentage interest in the property owned by Holland Joint Venture.

(40) CNL Income Fund VII, Ltd. owned a 68.75 percent interest and CNL Income Fund XV, Ltd. owned a 31.25 percent interest in this joint venture. The amounts presented for CNL Income Fund VII, Ltd. and CNL Income Fund XV, Ltd. represent each partnership’s percentage interest in the property owned by CNL VII, XV Columbus Joint Venture.

(41) The Checker’s property in Atlanta, GA was exchanged on September 10, 2004 for a Checker’s property in Clearwater, FL at the option of the tenant as permitted under the terms of the lease agreement. Due to the exchange, the Checker’s property in Clearwater, FL is being leased under the same lease as the Checker’s property in Atlanta, GA with a five year lease extension.

(42) The Checker’s property in Marietta, GA was exchanged on September 10, 2004 for a Checker’s property in Tampa, FL at the option of the tenant as permitted under the terms of the lease agreement. Due to the exchange, the Checker’s property in Tampa, FL is being leased under the same lease as the Checker’s property in Marietta, GA, with a five year lease extension.

(43) The Checker’s property in Norcross, GA was exchanged on September 10, 2004 for a Checker’s property in Ruskin, FL at the option of the tenant as permitted under the terms of the lease agreement. Due to the exchange, the Checker’s property in Ruskin, FL is being leased under the same lease as the Checker’s property in Norcross, GA, with a five year lease extension.

B-53