Discontinued Operations

9 Months Ended

Sep. 30, 2014

Discontinued Operations and Disposal Groups [Abstract]

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

(6) Discontinued Operations –

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 (“Champps’), 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 was $39,987. On December 15, 2013, Champps filed for Chapter 11 bankruptcy reorganization. In February 2014, Champps closed the restaurant, filed a motion with the bankruptcy court to reject the lease and returned possession of the property to the owners. The owners listed the property for sale or lease with a real estate broker in the Utica area. While the property was vacant, the Partnership was responsible for its 44% share of real estate taxes and other costs associated with maintaining the property. 

Based on its long-lived asset valuation analysis, the Partnership determined the Champps property was impaired. As a result, in the fourth quarter of 2013, a charge to discontinued operations for real estate impairment of $85,000 was recognized, which was the difference between the carrying value at December 31, 2013 of $733,000 and the estimated fair value of $648,000. The charge was recorded against the cost of the land and building. In June 2014, the Partnership and the other co-owners of the Champps property entered into an agreement to sell the property to an unrelated third party. On August 25, 2014, the sale closed with the Partnership receiving net sales proceeds of $704,398, which resulted in a net gain of $56,398.

In September 2013, the Partnership decided to sell the Royal Buffet restaurant in Colorado Springs, Colorado 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 December 20, 2013, the Partnership sold the property to an unrelated third party. The Partnership received net sale proceeds of $339,514, which resulted in a net gain of $19,514.

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.

During the first nine months of 2014, the Partnership sold its 45% interest in the Applebee’s restaurant in Sandusky, Ohio, in eight separate transactions, to unrelated third parties. The Partnership received total net sale proceeds of $1,643,982, which resulted in a net gain of $638,409. The cost and related accumulated depreciation of the interests sold was $1,276,943 and $271,370, respectively. At December 31, 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 2014 and 2013, the Partnership distributed net sale proceeds of $346,197 and $97,716, respectively. The Limited Partners received distributions of $342,735 and $96,739 and the General Partners received distributions of $3,462 and $977 for the periods, respectively. The Limited Partners’ distributions represented $16.19 and $4.50 per Unit for the periods, respectively.

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
		2014		2013		2014		2013
Rental Income	$	287	$	46,732	$	51,179	$	214,053
Property Management Expenses		(7,905)		(9,215)		(22,233)		(29,482)
Depreciation		0		(13,552)		0		(60,195)
Real Estate Impairment		0		(322,868)		0		(322,868)
Gain on Disposal of Real Estate		215,696		504,826		694,807		504,826
Income from Discontinued Operations	$	208,078	$	205,923	$	723,753	$	306,334

		Three Months Ended September 30				Nine Months Ended September 30
		2014		2013		2014		2013
Cash Flows from Discontinued Operations:
Operating Activities	$	(7,618)	$	37,517	$	28,946	$	184,571
Investing Activities	$	1,117,159	$	1,869,225	$	2,348,380	$	1,869,225