Discontinued Operations

9 Months Ended

Sep. 30, 2013

Discontinued Operations and Disposal Groups [Abstract]

Disposal Groups, Including Discontinued Operations, Disclosure [Text Block]

(6) Discontinued Operations –

On February 3, 2012, the Partnership sold its remaining 1.1177% interest in the Arby’s restaurant in Smyrna, Georgia to an unrelated third party. The Partnership received net sale proceeds of $4,300, which resulted in a net loss of $4,764. The cost and related accumulated depreciation of the interest sold was $13,866 and $4,802, respectively.

In February 2012, the Partnership entered into an agreement to sell its 50% interest in the Biaggi’s restaurant in Fort Wayne, Indiana to an unrelated third party. On March 29, 2012, the sale closed with the Partnership receiving net proceeds of $1,566,807, which resulted in a net gain of $435,703. At the time of sale, the cost and related accumulated depreciation was $1,379,346 and $248,242, respectively.

During 2012, the Partnership decided to sell its 44% interest in the Champps Americana restaurant in Utica, Michigan and classified it as Real Estate Held for Sale. In February 2013, Champps Operating Corporation, the tenant of the property, approached the Partnership with a request to adjust the rent on the property to a market rental rate based on the restaurant’s performance and the current conditions in the market. In April 2013, after reviewing financial information for the restaurant and the tenant, and analyzing the local real estate market for the property, the Partnership and the property’s other co-owners entered into an agreement to reduce the annual rent for the property by 63% to $90,880. The Partnership’s share of this rent is $39,987. The owners will have the right to replace Champps with a new tenant by giving 60 days’ notice to vacate the premises. Champps will have the right to match the terms of the new lease and remain in the premises. The Partnership anticipates that it will sell the property within the next 12 months.

Based on its long-lived asset valuation analysis, the Partnership determined the Champps restaurant was impaired. As a result, in the fourth quarter of 2012, a charge to discontinued operations for real estate impairment of $413,477 was recognized, which was the difference between the carrying value at December 31, 2012 of $1,146,477 and the estimated fair value of $733,000. The charge was recorded against the cost of the land and building. At September 30, 2013 and December 31, 2012, the property was classified as Real Estate Held for Sale.

Effective June 20, 2011, the Partnership entered into an agreement to lease the former Red Robin property in Colorado Springs, Colorado, to a local restaurant operator. The Lease Agreement had a term of two years with annual rental payments of $100,000. The tenant remodeled the building and converted it into a Chinese buffet restaurant called Royal Buffet. In July 2012, the tenant closed the restaurant due to lower than expected sales. The Partnership took possession of the property and listed the property for lease or sale with a real estate broker in the Colorado Springs area. While the property is vacant, the Partnership is responsible for real estate taxes and other costs associated with maintaining the property.

In September 2013, the Partnership decided to sell the Royal Buffet restaurant and classified it as Real Estate Held for Sale.  Based on its long-lived asset valuation analysis, the Partnership determined the Royal Buffet restaurant was impaired.  As a result, in the third quarter of 2013, a charge to discontinued operations for real estate impairment of $322,868 was recognized, which was the difference between the carrying value at September 30, 2013 of $642,868 and the estimated fair value of $320,000.  The charge was recorded against the cost of the land and building.

On August 2, 2013, the Partnership sold its 40% interest in the Scott & White Clinic in College Station, Texas to an unrelated third party. The Partnership received net sale proceeds of $1,869,225, which resulted in a net gain of $504,826. At the time of sale, the cost and related accumulated depreciation was $1,470,224 and $105,825, respectively.

The Partnership is attempting to sell its 45% interest in the Applebee’s restaurant in Sandusky, Ohio. At September 30, 2013, the property was classified as Real Estate Held for Sale with a carrying value of $1,005,573.

During the first nine months of 2013 and 2012, the Partnership distributed net sale proceeds of $97,716 and $155,385 to the Limited and General Partners as part of their quarterly distributions, which represented a return of capital of $4.50 and $7.08 per Limited Partnership Unit.

The financial results for these properties are reflected as Discontinued Operations in the accompanying financial statements. The following are the results of discontinued operations:

		Three Months Ended September 30				Nine Months Ended September 30
		2013		2012		2013		2012
Rental Income	$	46,732	$	83,945	$	214,053	$	320,375
Property Management Expenses		9,215		10,383		29,482		26,999
Depreciation		13,552		31,206		60,195		93,890
Real Estate Impairment		322,868		0		322,868		0
Gain on Disposal of Real Estate		504,826		0		504,826		430,939
Income from Discontinued Operations	$	205,923	$	42,356	$	306,334	$	630,425