(4) Real Estate Investments –

The Company leases its properties to tenants under net leases, classified as operating leases. Under a net lease, the tenant is responsible for real estate taxes, insurance, maintenance, repairs and operating expenses for the property. For some leases, the Company is responsible for repairs to the structural components of the building, the roof and the parking lot. At the time the properties were acquired, the remaining primary lease terms varied from 10 to 20 years. The leases provide the tenants with three to four five-year renewal options subject to the same terms and conditions as the primary term.

The Company's properties are commercial, single-tenant buildings. The Sports Authority store was constructed in 1996, renovated in 2001 and acquired in 2006. The Advance Auto Parts store was constructed in 2004 and acquired in 2006. The Applebee’s restaurant in Crawfordsville, Indiana was constructed in 1996 and acquired in 2006. The Starbucks restaurant was constructed and acquired in 2007. The Best Buy store was constructed in 1990, renovated in 1997 and acquired in 2008. The land for the Dick’s Sporting Goods store was acquired in 2007 and construction of the store was completed in 2008. The Fresenius Medical Center was constructed in 2012 and acquired in 2014. The Zales store was constructed in 1983, renovated in 2014 and acquired in 2015. The Dollar Tree store was constructed in 2015 and acquired in 2016. There have been no costs capitalized as improvements subsequent to the acquisitions.

The cost of the properties not held for sale and related accumulated depreciation at December 31, 2016 are as follows:


Property	Land		Buildings		Total		Accumulated Depreciation

Sports Authority, Wichita, KS	$	507,489	$	1,277,436	$	1,784,925	$	639,437
Advance Auto Parts, Middletown, OH		112,315		909,974		1,022,289		385,224
Applebee’s, Crawfordsville, IN		337,353		900,418		1,237,771		360,169
Starbucks, Bluffton, IN		344,008		806,108		1,150,116		302,288
Best Buy, Eau Claire, WI		474,137		1,547,025		2,021,162		551,771
Dick’s Sporting Goods, Fredericksburg, VA		1,603,559		1,523,044		3,126,603		564,974
Fresenius Medical Center, Chicago, IL		464,400		665,142		1,129,542		53,210
Zales, Enid, OK		440,000		903,630		1,343,630		64,759
Dollar Tree, West Point, MS		270,000		1,316,232		1,586,232		48,262
	$	4,553,261	$	9,849,009	$	14,402,270	$	2,970,094

For the years ended December 31, 2016 and 2015, the Company recognized depreciation expense of $390,890 and $351,914, respectively.

On March 17, 2015, the Company purchased a Zales store in Enid, Oklahoma for $1,600,000. The Company allocated $256,370 of the purchase price to Acquired Intangible Lease Assets, representing in-place lease intangibles of $183,764 and above-market lease intangibles of $72,606. The Company incurred $48,817 of acquisition expenses related to the purchase that were expensed. The property is leased to Zale Delaware, Inc. under a Lease Agreement with a remaining primary term of 9.6 years (as of the date of purchase) and annual rent of $105,600.

On February 3, 2016, the Company purchased a Dollar Tree store in West Point, Mississippi for $1,535,714. The Company allocated $232,977 of the purchase price to Acquired Intangible Lease Assets, representing in-place lease intangibles, and allocated $283,495 to Acquired Below-Market Lease Intangibles. The Company incurred $55,479 of acquisition expenses related to the purchase that were expensed. The property is leased to Dollar Tree Stores, Inc. under a Lease Agreement with a remaining primary term of 9.7 years and annual rent of $107,500.

The following schedule presents the cost and related accumulated amortization of acquired lease intangibles not held for sale at December 31:


		2016				2015
		Cost		Accumulated Amortization		Cost		Accumulated Amortization
In-Place Lease Intangibles (weighted average life of 107 and 120 months, respectively)	$	579,419	$	80,199	$	346,442	$	27,572

Above-Market Lease Intangibles (weighted average life of 94 and 106 months, respectively)		72,606		13,258		72,606		5,682
Acquired Intangible Lease Assets	$	652,025	$	93,457	$	419,048	$	33,254

Acquired Below-Market Lease Intangibles (weighted average life of 105 and 0 months, respectively)	$	283,495	$	24,652	$	0	$	0

For the years ended December 31, 2016 and 2015, the value of in-place lease intangibles amortized to expense was $52,627 and $27,572, the decrease to rental income for above-market leases was $7,576 and $5,682, and the increase to rental income for below-market leases was $24,652 and $0, respectively. For lease intangibles not held for sale as of December 31, 2016, the estimated amortization expense is $56,680, the estimated decrease to rental income for above-market leases is $7,576 and the estimated increase to rental income for below-market leases is $29,584 for each of the next five succeeding years.

In November 2015, the Company entered into an agreement to sell its 40% interest in the Sports Authority store in Wichita, Kansas to an unrelated third party. In May 2016, the agreement was terminated by the buyer. If the sale was completed, the Company expected to receive net sale proceeds of approximately $1,190,000. Based on its long-lived asset valuation analysis, the Company determined the Sports Authority store was impaired. As a result, in the fourth quarter of 2015, a charge to operations for real estate impairment of $445,828 was recognized, which was the difference between the carrying value at December 31, 2015 of $1,635,828 and the estimated fair value of $1,190,000. The charge was recorded against the cost of the land and building.

On March 2, 2016, the tenant of the Sports Authority store, TSA Stores, Inc., and its parent company, The Sports Authority, Inc., the guarantor of the lease, filed for Chapter 11 bankruptcy reorganization. In June 2016, the tenant filed a motion with the bankruptcy court to reject the lease for this store effective June 30, 2016, at which time the tenant returned possession of the property to the owners. As of December 31, 2016, the tenant owed $19,366 of past due rent, which was not accrued for financial reporting purposes. The owners have listed the property for lease with a real estate broker in the Wichita area. While the property is vacant, the Company is responsible for its 40% share of real estate taxes and other costs associated with maintaining the property. The annual rent from this property represented approximately 19% of the total annual rent of the Company’s property portfolio. The loss of rent and increased expenses related to this property will decrease the Company’s cash flow. Consequently, beginning with the third quarter of 2016, the Company reduced its regular quarterly cash distribution rate from $0.1313 per Unit to $0.0946 per Unit.

For properties owned as of December 31, 2016, the minimum future rent payments required by the leases are as follows:

2017	$	892,532
2018		731,209
2019		481,339
2020		427,180
2021		431,623
Thereafter		1,852,327
	$	4,816,210

There were no contingent rents recognized in 2016 and 2015.