UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 FORM 10-K (Mark One) [x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2000 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 0-12989 COMMERCIAL NET LEASE REALTY, INC. (Exact name of registrant as specified in its charter) Maryland 56-1431377 (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 450 South Orange Avenue, Suite 900 Orlando, Florida 32801 (Address of principal executive offices, including zip code) Registrant's telephone number, including area code: (407) 265-7348 Securities registered pursuant to Section 12(b)(6) of the Act: Title of each class Name of exchange on which registered: Common Stock, $0.01 par value New York Stock Exchange 7.125% Notes due 2008 None 8.125% Notes due 2004 None 8.500% Notes due 2010 None Securities registered pursuant to section 12(g) of the Act: None (Title of class) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days: Yes X No ______. Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X] The aggregate market value of voting stock held by non-affiliates of the registrant as of March 15, 2001 was $315,592,555. The number of shares of common stock outstanding as of March 15, 2001 was 30,502,374. DOCUMENTS INCORPORATED BY REFERENCE: 1. Registrant incorporates by reference portions of the Commercial Net Lease Realty, Inc. Annual Report to Shareholders for the year ended December 31, 2000 (Items 5, 6, 7, 7A and 8 of Part II). 2. Registrant incorporates by reference portions of the Commercial Net Lease Realty, Inc. Proxy Statement for the 2001 Annual Meeting of Shareholders (Items 10, 11, 12 and 13 of Part III). PART I Item 1. Business Commercial Net Lease Realty, Inc., a Maryland corporation (the "Registrant" or the "Company"), is a fully integrated, self-administered real estate investment trust ("REIT") formed in 1984 that acquires, owns manages and indirectly develops a diversified portfolio of high-quality, freestanding properties that are generally leased to major retail businesses under full-credit, long-term commercial net leases. The Company's strategy is to invest in single-tenant, freestanding retail properties with purchase prices of generally up to $7.5 million, which typically are located along intensive commercial corridors near traffic generators, such as regional malls, business developments and major thoroughfares. Management believes that these types of properties when leased to high-quality tenants with significant market presence provide attractive opportunities for a stable current return and the potential for capital appreciation. In management's view, these types of properties also provide the Company with flexibility in use and tenant selection when the properties are re-let. The Company will hold its properties until it determines that the sale or other disposition of the properties is advantageous in view of the Company's investment objectives. In deciding whether to sell properties, the Company will consider factors such as potential capital appreciation, net cash flow and federal income tax considerations. Properties During the year ended December 31, 2000, the Company invested $3,500,000 to complete construction of two buildings by the Company on previously acquired land parcels. As of December 31, 2000, the Company owned 259 properties (the "Properties") that are leased to major businesses, including Academy, Barnes & Noble, Bed Bath & Beyond, Best Buy, Borders, Eckerd, Food 4 Less, Good Guys, Hi-Lo Automotive, OfficeMax, Sears Homelife Centers and The Sports Authority. The Company's Property portfolio was 99 percent leased at December 31, 2000. The Properties are generally leased under net leases pursuant to which the tenant typically will bear responsibility for substantially all property costs and expenses associated with ongoing maintenance and operation. The leases of each of the Company's Properties require payment of base rent plus, generally, either percentage rent based on the tenant's gross sales or contractual increases in base rent. During 2000, one of the Company's lessees, Eckerd Corporation, accounted for more than ten percent of the Company's total rental income (including the Company's share of rental income from nine properties owned by the Company's unconsolidated partnership). As of December 31, 2000, Eckerd Corporation leased 50 properties (including four properties under leases with the Company's unconsolidated partnership). It is anticipated that, based on the minimum rental payments required by the leases, Eckerd Corporation will continue to account for more than ten percent of the Company's total rental income in 2001. Any failure of this lessee to make its lease payments when they are due could materially affect the Company's income. Investment in Consolidated Subsidiaries During its course of business, the Company has formed seven wholly-owned subsidiaries: Net Lease Realty I, Inc. (November 1995), Net Lease Realty II, Inc. (November 1995), Net Lease Realty III, Inc. (June 1997), Net Lease Realty IV, Inc. (June 1997), Net Lease Funding, Inc. (August 1998), CNLR GP Corp. (April 2000) and CNLR LP Corp. (April 2000). Net Lease Realty I, Inc., Net Lease Realty IV, Inc. and Net Lease Funding. Inc. were formed to facilitate the acquisition and development of certain properties. Net Lease Realty II, Inc. was utilized to facilitate the acquisition of CNL Realty Advisors, Inc., the Company's advisor. CNLR GP Corp. and CNLR LP Corp. were formed for future business considerations, and Net Lease Realty III, Inc. is the general partner of and holds a 20 percent interest in Net Lease Institutional Realty, L.P. Each of the wholly-owned subsidiaries is a qualified real estate investment trust subsidiary as defined under the internal Revenue Code Section 856(i)(2). Investment in Unconsolidated Affiliates In May 1999, the Company transferred its build-to-suit development operation to a 95 percent owned, taxable unconsolidated subsidiary ("Services"). The Company contributed $5.7 million of real estate and other assets to Services in exchange for 5,700 shares of non-voting common stock. The Company has also entered into a secured line of credit agreement with Services for a $65,000,000 revolving credit facility. The credit facility is secured by a first mortgage on Services' properties. In addition, the Company entered into a line of credit agreement with a wholly-owned subsidiary of Services for a $35,000,000 revolving credit facility. Services acquires, develops, leases and sells freestanding retail properties. In September 1997, Net Lease Realty III, Inc., a wholly-owned subsidiary of the Company, formed a limited partnership, Net Lease Institutional Realty L.P. (the "Partnership"), with The Northern Trust Company, as Trustee of the Retirement Plan for the Chicago Transit Authority Employees ("CTA") to acquire, own and manage nine properties. Net Lease Realty III, Inc. is the sole general partner (the "General Partner") with a 20 percent interest in the Partnership, and CTA is the sole limited partner with an 80 percent interest in the Partnership. Pursuant to the Partnership agreement, the General Partner is responsible for the management of the Partnership's properties. Net income and losses of the Partnership are to be allocated to the partners in accordance with their respective percentage interest in the Partnership. The Partnership secured a $12,000,000 non-recourse mortgage on the Partnership's nine properties in September 1997 at a 7.37% interest rate. As of December 31, 2000, the Partnership owned nine properties (the "Partnership Properties") leased to six major retail tenants. Generally, the leases of the Partnership Properties provide for initial terms of 15 to 20 years with annual base rent ranging from $183,000 to $730,000 and building sites ranging from 11,000 to 54,000 square feet. All of the Partnership Properties are leased under net leases pursuant to which the tenant typically will bear the responsibility for substantially all property costs and expenses related to ongoing maintenance and operation, including utilities, property taxes and insurance. Advisory Services On January 1, 1998, the Company acquired its external advisor, CNL Realty Advisors, Inc. (the "Advisor"), which resulted in the Company becoming a self-administered and self-managed REIT (the "Advisor Transaction"). Pursuant to an agreement and plan of merger, the Advisor was merged into a wholly owned subsidiary of the Company pursuant to which all of the outstanding common stock of the Advisor was exchanged for 220,000 shares of common stock of the Company and the right, based upon the Company's completed property acquisitions and completed development projects in accordance with the Merger agreement, to receive up to 1,980,000 additional shares (the "Share Balance") of the Company's common stock, for a period of up to five years. Since the effective date of the Advisor Transaction, the Company has issued 1,006,080 shares of the Share Balance. On January 1, 2001, in connection with the completed development projects during the quarter ended December 31, 2000, an additional 32,542 shares of the Share Balance became issuable to the stockholders of the Advisor. Upon the consummation of the Advisor Transaction, all personnel employed by the Advisor became employees of the Company. Following consummation of the Advisor Transaction, the Advisory Agreement (as defined above) and the obligation of the Company to pay any fees thereunder was terminated. For a complete description of the Advisor Transaction, see the Company's Proxy Statement dated November 13, 1997 for the Company's 1997 annual meeting of stockholders. Competition The Company generally competes with other REIT's, commercial developers, real estate limited partnerships and other investors, including but not limited to, insurance companies, pension funds and financial institutions, in the acquisition, leasing, financing, development and disposition of investments in net-leased retail properties. Approximately 50 other publicly traded REIT's own, manage or develop retail properties. Employees As of December 31, 2000, the Company employed 29 full-time persons including executive, administrative and field personnel. Reference is made to "Item 10. Directors and Executive Officers of the Registrant" for a listing of the Company's Executive Officers. Item 2. Properties As of December 31, 2000, the Company owned 259 Properties located in 35 states that are leased to 56 major retail tenants. Reference is made to the Schedule of Real Estate and Accumulated Depreciation and Amortization filed with this Report for a listing of the Properties and their respective carrying costs. Description of Properties Land. The Company's Property sites range from approximately 17,000 to 583,000 square feet depending upon building size and local demographic factors. Sites purchased by the Company are in locations zoned for commercial use which have been reviewed for traffic patterns and volume. Land costs range from approximately $37,000 to $6,300,000. Buildings. The buildings generally are rectangular, single-story structures constructed from various combinations of stucco, steel, wood, brick and tile. Building sizes range from approximately 1,000 to 110,000 square feet. Building costs range from $258,000 to $7,082,000 for each Property, depending upon the size of the building and the site and the area in which the Property is located. Generally, the Properties owned by the Company are freestanding, with paved parking areas. Leases. Although there are variations in the specific terms of the leases, the following is a summarized description of the general structure of the Company's leases. Generally, the leases of the Properties owned by the Company provide for initial terms of 10 to 20 years. As of December 31, 2000, the weighted average remaining lease term was approximately 13 years. The Properties are generally leased under net leases pursuant to which the tenant typically will bear responsibility for substantially all property costs and expenses associated with ongoing maintenance and operation, including utilities, property taxes and insurance. In addition, the majority of the Company's leases provide that the tenant is responsible for roof and structural repairs. The leases of the Properties provide for annual base rental payments (payable in monthly installments) ranging from $21,000 to $1,032,000. Generally, the leases provide for either percentage rent or contractual increases in annual rent. Leases which provide for contractual increases in annual rent generally have increases which range from six to 12 percent after every five years of the lease term. In addition, for those leases which provide for the payment of percentage rent, such rent is generally one to eight percent of the tenants' annual gross sales, less the amount of annual base rent payable in that lease year. As of December 31, 2000, leases representing approximately 83 percent of annual base rent include contractual increases, leases representing approximately 31 percent of annual base rent include percentage rent provisions and leases representing approximately 21 percent of annual base rent include both contractual and percentage rent provisions. Generally, the leases of the Properties provide for two, three or four five-year renewal options subject to the same terms and conditions as the initial lease. Some of the leases also provide that, in the event the Company wishes to sell the Property subject to that lease, the Company first must offer the lessee the right to purchase the Property on the same terms and conditions, and for the same price, as any offer which the Company has received for the sale of the Property. During 2000, one of the Company's lessees, Eckerd Corporation (drugstore) accounted for more than ten percent of the Company's total rental income (including the Company's share of rental income from the Partnership Properties). As of December 31, 2000, Eckerd Corporation leased 50 properties (including four properties under leases with the Partnership). As of December 31, 2000, one of the Company's lessees, Eckerd Corporation (a wholly-owned subsidiary of the J.C. Penney Company, Inc.), leased Properties representing 10.7% of total assets. For information regarding the results of operations and financial condition of this entity, refer to the Annual Report on Form 10-K of the J.C. Penney Company, Inc., Note 18 (Segment Reporting) of the Notes to the Financial Statements, as filed with the Securities and Exchange Commission for the year ended January 30, 2000. The Company generally competes with other REIT's, commercial developers, real estate limited partnerships and other investors, including but not limited to, insurance companies, pension funds and financial institutions in the acquisition, leasing, financing, development and disposition of investments in net-leased retail properties. Investments in real property create a potential for environmental liability on the part of the owner of such property from the presence or discharge of hazardous substances on the property. It is the Company's policy, as a part of its acquisition due diligence process, to obtain a Phase I environmental site assessment for each property and where warranted, a Phase II environmental site assessment. Phase I assessments involve site reconnaissance and review of regulatory files identifying potential areas of concern, whereas Phase II assessments involve some degree of soil and/or groundwater testing. The Company may acquire a property whose environmental site assessment indicates that a problem or potential problem exists, subject to a determination of the level of risk and potential cost of remediation. In such cases, the Company requires the seller and/or tenant to (i) remediate the problem prior to the Company's acquiring the property, (ii) indemnify the Company for environmental liabilities or (iii) agree to other arrangements deemed appropriate by the Company to address environmental conditions at the property. The Company has 13 properties currently under some level of environmental remediation. The seller or the tenant is contractually responsible for the cost of the environmental remediation for each of these properties. The Company's principal executive offices are located at 450 South Orange Avenue, Suite 900, Orlando, Florida 32801. The Company's telephone number is (407) 265-7348. Item 3. Legal Proceedings The Company is a co-defendant in a lawsuit filed on December 10, 1998 in the United States District Court for the District of Puerto Rico. The plaintiff, Ysiem Corporation, is alleging that the Company is in breach of a ground lease agreement with the plaintiff regarding a land parcel owned by the plaintiff and is seeking damages of $7,500,000 and/or specific performance of the execution of the ground lease. The Company believes, in the unlikely event that the Company were to be held liable, the relief granted by the court would be specific performance of the ground lease or damages in an amount far less than the amount sought by the plaintiff and would not materially affect the Company's operations or financial condition. The Company is not a party to any other pending legal proceedings which, in the opinion of the Company and its general counsel, is likely to have a material adverse effect upon the Company's business or financial condition. Item 4. Submission of Matters to a Vote of Security Holders None. PART II Item 5. Market for Registrant's Common Equity and Related Stockholder Matters Information responsive to this Item is contained in the section captioned "Share Price and Dividend Data" on page 54 of the Registrant's Annual Report to Shareholders for the year ended December 31, 2000; the information in such section is filed as an exhibit to this report and the cited portion of which is incorporated herein by reference. Item 6. Selected Financial Data Information responsive to this Item is contained in the section captioned "Historical Financial Highlights" on page 4 of the Registrant's Annual Report to Shareholders for the year ended December 31, 2000; the information in such section is filed as an exhibit to this report and the cited portion of which is incorporated herein by reference. Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations Information responsive to this Item is contained in the section captioned "Management's Discussion and Analysis of Financial Condition and Results of Operations" on pages 17 through 26 of the Registrant's Annual Report to Shareholders for the year ended December 31, 2000; the information in such section is filed as an exhibit to this report and the cited portion of which is incorporated herein by reference. Item 7A. Quantitative and Qualitative Disclosures About Market Risk Information responsive to this Item is contained in the section captioned "Management's Discussion and Analysis of Financial Condition and Results of Operations", subsection "Quantitative and Qualitative Disclosures About Market Risk", on pages 25 and 26 of the Registrant's Annual Report to Shareholders for the year ended December 31, 2000; the information in such section is filed as an exhibit to this report and the cited portion of which is incorporated herein by reference. Item 8. Financial Statements and Supplementary Data Certain information responsive to this Item is contained in the section captioned "Consolidated Quarterly Financial Data" on page 53 of the Registrant's Annual Report to Shareholders for the year ended December 31, 2000; the information in such section is filed as an exhibit to this report and the cited portion of which is incorporated herein by reference. The financial statements of the Registrant, together with the report thereon of KPMG LLP, appearing in the Annual Report to Shareholders for the year ended December 31, 2000, are incorporated herein by reference. Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None. PART III Item 10. Directors and Executive Officers of the Registrant Reference is made to the Registrant's definitive proxy statement to be filed with the Commission pursuant to Regulation 14(a); information responsive to this Item is contained in the sections thereof captioned "Proposal I: Election of Directors - Nominees" and "Proposal I: Election of Directors - Executive Officers" and "Security Ownership," and the information in such sections is incorporated herein by reference. Item 11. Executive Compensation Reference is made to the Registrant's definitive proxy statement to be filed with the Commission pursuant to Regulation 14(a); information responsive to this Item is contained in the section thereof captioned "Proposal I: Election of Directors - Compensation of Directors" and "Executive Compensation - Annual Compensation," and the information in such sections is incorporated herein by reference. Item 12. Security Ownership of Certain Beneficial Owners and Management Reference is made to the Registrant's definitive proxy statement to be filed with the Commission pursuant to Regulation 14(a); information responsive to this Item is contained in the section thereof captioned "Security Ownership," and the information in such section is incorporated herein by reference. Item 13. Certain Relationships and Related Transactions Reference is made to the Registrant's definitive proxy statement to be filed with the Commission pursuant to Regulation 14(a); information responsive to this Item is contained in the section thereof captioned "Certain Transactions," and the information in such section is incorporated herein by reference. PART IV Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K (a) The following documents are filed as part of this report. (1) Financial Statements Independent Auditors' Report Consolidated Balance Sheets as of December 31, 2000 and 1999 Consolidated Statements of Earnings for the years ended December 31, 2000, 1999 and 1998 Consolidated Statements of Stockholders' Equity for the years ended December 31, 2000, 1999 and 1998 Consolidated Statements of Cash Flows for the years ended December 31, 2000, 1999 and 1998 Notes to Consolidated Financial Statements (2) Financial Statement Schedules Report of Independent Auditors' on Supplementary Information Schedule III - Real Estate and Accumulated Depreciation and Amortization as of December 31, 2000 Notes to Schedule III - Real Estate and Accumulated Depreciation and Amortization as of December 31, 2000 Schedule IV - Mortgage Loans on Real Estate as of December 31, 2000 Notes to Schedule IV - Mortgage Loans on Real Estate as of December 31, 2000 All other schedules are omitted because they are not applicable or because the required information is shown in the financial statements or the notes thereto. (3) Exhibits 3. Articles of Incorporation and By-laws 3.1 Articles of Incorporation of the Registrant (filed as Exhibit 3.3(i) to the Registrant's Registration Statement No. 1-11290 on Form 8-B, and incorporated herein by reference). 3.2 Bylaws of the Registrant, (filed as Exhibit 3(ii) to Amendment No. 2 to the Registrant's Registration No. 33-83110 on Form S-3, and incorporated herein by reference). 3.3 Articles of Amendment to the Articles of Incorporation of the Registrant (filed as Exhibit 3.3 to the Registrant's Form 10-Q for the quarter ended June 30, 1996, and incorporated herein by reference). 3.4 Articles of Amendment to the Articles of Incorporation of the Registrant (filed as Exhibit 3.4 to the Registrant's Current Report on Form 8-K dated February 18, 1998, and filed with the Securities and Exchange Commission on February 19, 1998, and incorporated herein by reference). 3.5 First Amended and Restated Articles of Incorporation of the Registrant (filed as Exhibit 3.1 to the Registrant's Registration Statement No. 333-64511 on Form S-3, and incorporated herein by reference). 4. Instruments defining the rights of security holders, including indentures 4.1 Specimen Certificate of Common Stock, par value $0.01 per share, of the Registrant (filed as Exhibit 3.4 to the Registrant's Registration Statement No. 1-11290 on Form 8-B and incorporated herein by reference). 4.2 Form of Indenture dated March 25, 1998, by and among Registrant and First Union National Bank, Trustee, relating to $100,000,00 of 7.125% Notes due 2008 (filed as Exhibit 4.1 to the Registrant's Current Report on Form 8-K dated March 20, 1998, and incorporated herein by reference.) 4.3 Form of Supplement Indenture No. 1 dated March 25, 1998, by and among Registrant and First Union National Bank, Trustee, relating to $100,000,000 of 7.125% Notes due 2008 (filed as Exhibit 4.2 to the Registrant's Current Report on Form 8-K dated March 20, 1998, and incorporated herein by reference.) 4.4 Form of 7.125% Note due 2008 (filed as Exhibit 4.3 to the Registrant's Current Report on Form 8-K dated March 20, 1998, and incorporated herein by reference.) 4.5 Form of Supplemental Indenture No. 2 dated June 21, 1999, by and among Registrant and First Union National Bank, Trustee, relating to $100,000,000 of 8.125% Notes due 2004 (filed as Exhibit 4.2 to the Registrant's Current Report on Form 8-K dated June 17, 1999, and incorporated herein by reference). 4.6 Form of 8.125% Notes due 2004 (filed as Exhibit 4.3 to the Registrant's Current Report on Form 8-K dated June 17, 1999, and incorporated herein by reference). 4.7 Form of Supplemental Indenture No. 3 dated September 20, 2000, by and among Registrant and First Union National Bank, Trustee, relating to $20,000,000 of 8.5% Notes due 2010 (filed as Exhibit 4.2 to the Registrant's Current Report on Form 8-K dated September 20, 2000, and incorporated herein by reference). 4.8 Form of 8.5% Notes due 2010 (filed as Exhibit 4.3 to the Registrant's Current Report on Form 8-K dated September 20, 2000, and incorporated herein by reference). 10. Material Contracts 10.1 Letter Agreement dated July 10, 1992, amending Stock Purchase Agreement dated January 23, 1992 (filed as Exhibit 10.34 to the Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 1992, and incorporated herein by reference). 10.2 Advisory Agreement between Registrant and CNL Realty Advisors, Inc. effective as of April 1, 1993 and renewed January 1, 1997 (filed as Exhibit 10.04 to Amendment No. 1 to the Registrant's Registration Statement No. 33-61214 on Form S-2, and incorporated herein by reference). 10.3 1992 Commercial Net Lease Realty, Inc. Stock Option Plan (filed as Exhibit No. 10(x) to the Registrant's Registration Statement No. 33-83110 on Form S-3, and incorporated herein by reference). 10.4 Secured Promissory Note, dated December 14, 1995, among Registrant and Principal Mutual Life Insurance Company relating to a $13,150,000 loan (filed as Exhibit 10.15 to the Registrant's Current Report on Form 8-K dated January 18, 1996, and incorporated herein by reference). 10.5 Mortgage and Security Agreement, dated December 14, 1995, among Registrant and Principal Mutual Life Insurance Company relating to a $13,150,000 loan (filed as Exhibit 10.16 to the Registrant's Current Report on Form 8-K dated January 18, 1996, and incorporated herein by reference). 10.6 Loan Agreement, dated January 19, 1996, among Registrant and Principal Mutual Life Insurance Company relating to a $39,450,000 loan (filed as Exhibit 10.12 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 1995, and incorporated herein by reference). 10.7 Secured Promissory Note, dated January 19, 1996, among Registrant and Principal Mutual Life Insurance Company relating to a $39,450,000 loan (filed as Exhibit 10.13 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 1995, and incorporated herein by reference). 10.8 Agreement and Plan of Merger dated May 15, 1997, by and among Commercial Net Lease Realty, Inc. and Net Lease Realty II, Inc. and CNL Realty Advisors, Inc. and the Stockholders of CNL Realty Advisors, Inc. (filed as Exhibit 10.1 to the Registrant's Current Report on Form 8-K dated May 16, 1997, and incorporated herein by reference). 10.9 Fourth Amended and Restated Line of Credit and Security Agreement, dated August 6, 1997, by and among Registrant, certain lenders and First Union National Bank, as the Agent, relating to a $200,000,000 loan (filed as Exhibit 10 to the Registrant's Current Report on Form 8-K dated September 12, 1997, and incorporated herein by reference). 10.10 Fifth Amended and Restated Line of Credit and Security Agreement, dated September 23, 1999, by and among Registrant, certain lenders and First Union National Bank, as the Agent, relating to a $200,000,000 loan (filed as Exhibit 10.13 to the Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 1999 and incorporated herein by reference). 10.11 Sixth Amended and Restated Line of Credit and Security Agreement, dated October 26, 2000, by and among Registrant, certain lenders and First Union National Bank, as the Agent, relating to a $200,000,000 loan (filed as Exhibit 10.11 to the Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 2000 and incorporated herein by reference). 12. Statement of Computation of Ratios of Earnings to Fixed Charges (filed herewith). 13. Annual Report to Shareholders for the year ended December 31, 2000 (filed herewith). 23. Consent of Independent Accountants dated March 30, 2001 (filed herewith). (b) No reports on Form 8-K were filed during the quarter ended December 31, 2000. SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on the 30th of March, 2001. COMMERCIAL NET LEASE REALTY, INC. By: /s/ James M. Seneff, Jr. ------------------------ JAMES M. SENEFF, JR. Chairman of the Board of Directors Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated. Signature Title Date /s/ James M. Seneff, Jr. Chairman of the Board of Directors, March 30, 2001 - ------------------------ Chief Executive Officer, (Principal James M. Seneff, Jr. Executive Officer) /s/ Robert A. Bourne Vice Chairman of the Board of March 30, 2001 - ------------------------ Directors Robert A. Bourne /s/ Edward Clark Director March 30, 2001 - ------------------------ Edward Clark /s/ Clifford R. Hinkle Director March 30, 2001 - ------------------------ Clifford R. Hinkle /s/ Richard B. Jennings Director March 30, 2001 - ------------------------ Richard B. Jennings /s/ Ted B. Lanier Director March 30, 2001 - ------------------------ Ted B. Lanier /s/ Gary M. Ralston Director and President March 30, 2001 - ------------------------ Gary M. Ralston /s/ Kevin B. Habicht Director, Chief Financial Officer, March 30, 2001 - ------------------------ Principal Financial and Accounting Kevin B. Habicht Officer), Secretary and Treasurer <TABLE> Report of Independent Auditors' on Supplementary Information The Board of Directors Commercial Net Lease Realty, Inc.: Under date of January 12, 2001, except as to Note 19 to the financial statements, which is as of January 16, 2001, we reported on the consolidated balance sheets of Commercial Net Lease Realty, Inc. as of December 31, 2000 and 1999, and the related consolidated statements of earnings, stockholders' equity and cash flows for each of the years in the three-year period ended December 31, 2000. These consolidated financial statements and our report thereon are both included in Item 14(a)1 of Form 10-K and incorporated by reference in the annual report on Form 10-K for the year 2000. In connection with our audits of the aforementioned consolidated financial statements, we also audited the related consolidated financial statement schedules as of December 31, 2000. These consolidated financial statement schedules are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statement schedules based on our audits. In our opinion, such consolidated financial statement schedules, when considered in relation to the basic consolidated financial statements taken as a whole, present fairly, in all material respects, the information set forth therein. /s/KPMG LLP - ------------- Orlando, Florida January 12, 2001, except as to Note 19, which is as of January 16, 2001. COMMERCIAL NET LEASE REALTY, INC. AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION AND AMORTIZATION December 31, 2000 <CAPTION> Initial Cost to Company ------------------------------- Building, Improvements and Encumbrances Leasehold (m) Land Interests - ----------------------- ------------ ------------ ----------- <S> <C> <C> <C> Real Estate the Company has Invested in Under Operating Leases: Academy: Houston, TX $ - $ 1,074,232 $ - Houston, TX - 699,165 - N. Richland Hills, TX - 1,307,655 - Houston, TX - 3,086,610 - Houston, TX - 795,005 - Baton Rouge, LA - 1,547,501 - Houston, TX - 2,310,845 1,627,872 Pasadena, TX - 899,768 2,180,574 Beaumont, TX - 1,423,700 2,449,261 Adjacent Excess Space: Memphis, TN - 549,309 539,643 Babies "R" Us: Arlington, TX - 830,689 2,611,867 Barnes & Noble: Lakeland, FL - 1,070,902 1,516,983 Brandon, FL 1,375,199 (l) 1,476,407 1,527,150 Denver, CO - 3,244,785 2,722,087 Houston, TX - 3,307,562 2,396,024 Plantation, FL - 3,616,357 - Lafayette, LA - 1,204,279 2,301,983 Daytona, FL - 2,587,451 2,052,643 Freehold, NJ - 2,917,219 2,260,663 Dayton, OH - 1,412,614 3,223,467 Redding, CA - 497,179 1,625,702 Marlton, NJ - 2,831,370 4,318,554 Bed Bath & Beyond: Richmond, VA - 1,184,144 3,154,970 Los Angeles, CA - 6,318,023 3,089,396 Glendale, AZ - 1,082,092 - Best Buy: Brandon, FL - 2,985,156 2,772,137 Evanston, IL - 1,850,996 - Cuyahoga Falls, OH - 3,708,980 2,359,377 Rockville, MD - 6,233,342 3,418,783 Fairfax, VA - 3,052,477 3,218,018 St. Petersburg, FL - 4,031,744 2,959,316 North Fayette, PA - 2,330,847 2,292,932 Blockbuster: Conyers, GA - 320,029 556,282 Borders Books & Music: Wilmington, DE 4,163,464 (l) 3,030,769 6,061,538 Richmond, VA 2,187,392 (l) 2,177,310 2,599,587 Ft. Lauderdale, FL - 3,164,984 3,934,577 Bangor, ME - 1,546,915 2,486,761 Altamonte Spgs, FL - 1,947,198 - Boxley Enterprises: Orlando, FL - 220,632 258,483 Checkers: Orlando, FL - 256,568 - CompUSA: Miami, FL 2,097,170 (l) 2,713,192 1,866,676 Computer City: Baton Rouge, LA - 609,069 913,603 Dave & Buster's: Utica, MI - 3,776,169 - Dick's Clothing: Taylor, MI - 1,920,032 3,526,868 White Marsh, MD - 2,680,532 3,916,889 Eckerd: San Antonio, TX 560,922 (l) 440,985 - Dallas, TX 540,415 (l) 541,493 - Garland, TX 434,854 (l) 239,014 - Arlington, TX 460,216 (l) 368,964 - Millville, NJ 570,806 (l) 417,603 - Atlanta, GA 510,105 (l) 445,593 - Mantua, NJ 593,415 (l) 344,022 - Amarillo, TX 528,033 (l) 329,231 - Amarillo, TX 686,265 (l) 650,864 - Glassboro, NJ 651,030 (l) 534,243 - Kissimmee, FL 758,417 (l) 715,480 - Tampa, FL - 604,682 - Douglasville, GA - 413,439 995,209 Lafayette, LA - 967,528 - Moore, OK - 414,738 - Midwest City, OK - 673,369 1,103,351 Irving, TX - 1,000,222 - Jasper, FL - 291,147 - Williston, FL - 622,403 - Pantego, TX - 1,016,062 1,448,911 Conyers, GA - 574,666 998,900 Norman, OK - 1,065,562 - Chattanooga, TN - 474,267 - Stone Mountain, GA - 638,643 1,111,064 Arlington, TX - 2,078,542 - Leavenworth, KS - 726,438 - Augusta, GA - 568,606 1,326,748 Riverdale, GA - 1,088,896 1,707,448 Warner Robins, GA - 707,488 - Lewisville, TX - 789,237 - Forest Hill, TX - 692,165 - Del City, OK - 1,387,362 - Arlington, TX - 414,568 - Garland, TX - 522,461 - Garland, TX - 1,476,838 - Oklahoma City, OK - 1,581,480 - Vineland, NJ 617,892 (l) 2,068,089 - Richardson, TX - 2,553,094 - Gladstone, MO 324,487 1,851,374 - Food 4 Less: Lemon Grove, CA - 3,695,816 - Chula Vista, CA - 3,568,862 - Gateway: Glendale, AZ - 341,713 982,429 Golden Corral: Edenton, NC - 36,578 318,481 Rockledge, FL (e) - 120,593 340,889 Gilmer, TX - 116,815 296,454 Bonham, TX (e) - 128,451 344,170 Leitchfield, KY - 73,660 306,642 Marietta, GA (e) - 156,190 346,509 Atlanta, TX - 88,457 368,317 Vernon, TX - 105,798 328,943 Abbeville, LA - 98,577 362,416 Clanton, AL (e) - 113,017 296,921 Pleasanton, TX - 139,694 316,070 Lake Placid, FL - 115,113 305,074 Melbourne, FL (e) - 193,447 341,351 Franklin, LA (e) - 105,840 396,831 Good Guys, The: Foothill Ranch, CA - 1,456,113 2,505,022 Riverside, CA - 1,718,892 2,755,059 Clackamas, OR - 1,639,995 1,446,764 Bellingham, WA - 1,732,378 1,764,549 Federal Way, WA - 2,037,392 1,661,577 East Palo Alto, CA - 2,271,634 3,404,843 Heilig-Meyers: Baltimore, MD - 469,782 813,074 Glen Burnie, MD - 631,712 931,931 Lima, OH - 344,742 1,097,694 Copperas Cove, TX - 445,558 943,339 Nacogdoches, TX - 397,074 1,257,402 Hi-Lo Automotive: Mesquite, TX - 233,420 513,523 Arlington, TX - 295,331 571,609 Ft. Worth, TX - 197,037 512,296 Garland, TX - 239,570 512,023 Houston, TX - 261,318 531,968 Dallas, TX - 281,347 543,937 Bastrop, TX - 197,905 383,144 Eagle Pass, TX - 256,745 455,841 Lake Worth, TX - 252,141 539,510 McAllen, TX - 265,177 605,397 Nacogdoches, TX - 190,324 522,232 San Antonio, TX - 200,510 643,741 Temple, TX - 177,451 587,755 Universal City, TX - 247,264 570,677 HomePlace: Altamonte Spgs, FL - 2,906,409 4,877,225 Ft. Myers, FL - 1,956,579 4,045,196 Bowie, MD - 1,965,508 4,221,074 International House of Pancakes: Stafford, TX 436,808 (l) 382,084 - Sunset Hills, MO 461,664 (l) 271,853 - Las Vegas, NV 519,055 (l) 519,947 - Ft. Worth, TX 482,884 (l) 430,896 - Arlington, TX 463,700 (l) 404,512 - Matthews, NC 474,263 (l) 380,043 - Phoenix, AZ 477,454 (l) 483,374 - Midwest City, OK - 407,268 - Just for Feet: Albuquerque, NM - 1,441,777 2,335,475 Jo-Ann etc: Corpus Christi, TX - 818,448 896,395 Kash N' Karry: Palm Harbor, FL - 335,851 - Gainesville, FL - 317,386 - Brandon, FL - 322,476 - Sarasota, FL - 470,600 - Kroger: Columbus, OH - 780,838 520,559 Lucky: Watsonville, CA - 805,056 - Lodi, CA - 613,710 - Sonora, CA - 587,782 - Michaels: Grapevine, TX - 1,017,934 2,066,715 Office Depot: Arlington, TX 919,235 (l) 596,024 1,411,432 Richmond, VA - 888,772 1,948,036 OfficeMax: Corpus Christi, TX - 893,270 978,344 Dallas, TX 1,295,150 (l) 1,118,500 1,709,891 Cincinnati, OH 969,873 (l) 543,489 1,574,551 Evanston, IL 1,660,132 (l) 1,867,831 1,757,618 Altamonte Spgs, FL - 1,689,793 3,050,160 Pompano Beach, FL - 2,266,908 1,904,803 Cutler Ridge, FL - 989,370 1,479,119 Sacramento, CA - 1,144,167 2,961,206 Salinas, CA - 1,353,217 1,829,325 Redding, CA - 667,174 2,181,563 Kelso, WA - 868,003 - Lynchburg, VA - 561,509 - Leesburg, FL - 640,019 - Plymouth Meeting, PA - 2,911,111 - Tigard, OR - 1,539,873 2,247,321 Dover, NJ - 1,138,296 3,238,083 Griffin, GA - 685,470 - Oshman's Sporting Goods: Dallas, TX - 1,311,440 - Party City: Memphis, TN - 266,383 - Petco: Grand Forks, ND - 306,629 909,671 PETsMART: Chicago, IL - 2,724,138 3,565,721 Pier 1 Imports: Anchorage, AK - 928,321 1,662,584 Memphis, TN - 713,319 821,770 Sanford, FL - 738,051 803,082 Knoxville, TN - 467,169 734,833 Mason, OH - 593,571 885,047 Harlingen, TX - 316,640 756,406 Valdosta, GA - 390,838 805,912 Rally's: Toledo, OH - 125,882 319,770 Riser Foods: Maple Heights, OH - 1,034,758 2,874,414 Robb & Stucky: Ft. Myers, FL - 2,188,440 6,225,401 Roger & Marv's: Kenosha, WI - 1,917,607 3,431,363 Ross Dress For Less: Coral Gables, FL - 1,782,346 1,661,174 Scotty's: Orlando, FL - 1,157,268 2,077,131 Orlando, FL - 521,489 1,004,226 Sears Homelife: Clearwater, FL - 1,184,438 2,526,207 Orlando, FL 1,376,075 (l) 820,397 2,184,721 Pensacola, FL 1,530,468 633,125 1,595,405 Raleigh, NC 1,998,019 1,848,026 1,753,635 Tampa, FL 1,963,511 1,454,908 2,045,833 7-Eleven: Land 'O Lakes, FL - 1,076,572 - Tampa Palms, FL - 1,080,670 - Shop & Save: Homestead, PA - 1,139,419 - Penn Hills, PA - 1,043,297 1,243,131 Silk City: Arlington, TX - 752,840 3,980,309 Sports Authority: Tampa, FL - 2,127,503 1,521,730 Memphis, TN - 820,340 - Little Rock, AR - 2,879,781 2,660,206 Staples: Orlando, FL - 523,307 1,007,726 SuperValu: Huntington, WV - 1,254,238 760,602 Warwick, RI - 1,699,330 - Target: Chico, CA - 1,269,272 - Victorville, CA - 1,908,815 - San Diego, CA - 2,672,390 - Top's: Lacey, WA - 2,777,449 7,082,150 Waccamaw: Fairfax, VA - 2,156,801 - White Marsh, MD - 3,762,030 - Waremart: Eureka, CA - 3,135,036 5,470,607 Wal-Mart: Sealy, TX - 1,344,244 1,483,362 Aransas Pass, TX - 190,505 2,640,175 Winfield, AL - 419,811 1,684,505 Corpus Christi, TX - 223,998 2,158,955 Beeville, TX - 507,231 2,315,424 Corpus Christi, TX - 630,043 3,131,407 Texarkana, AR - 1,038,451 3,681,781 Wendy's Old Fashioned Hamburger: Fenton, MO - 307,068 496,410 Sacramento, CA - 585,872 - Vacant Land: Little Rock, AR - 539,094 - Vons: Moreno Valley, CA - 759,052 1,652,162 Leasehold Interests: - 2,090,797 - ------------ ------------ ------------ $ 32,088,377 $257,885,662 $252,007,738 ============ ============ ============ Real Estate the Company has Invested in Under Direct Financing Leases: Academy: Houston, TX $ - $ - $ 1,924,740 Houston, TX - - 1,867,519 N. Richland Hills, TX - - 2,253,408 Houston, TX - - 2,112,335 Houston, TX - - 1,910,697 Baton Rouge, LA - - 2,405,466 Barnes & Noble: Plantation, FL - - 3,498,559 Best Buy: Evanston, IL - - 3,400,057 Borders Books & Music: Altamonte Spgs, FL - - 3,267,579 Checkers: Orlando, FL - - 286,910 Dave & Buster's: Utica, MI - - 4,888,743 Eckerd: San Antonio, TX - - 783,974 Dallas, TX - - 638,684 Garland, TX - - 710,634 Arlington, TX - - 636,070 Millville, NJ - - 828,942 Atlanta, GA - - 668,390 Mantua, NJ - - 951,795 Vineland, NJ - - - Amarillo, TX - - 849,071 Amarillo, TX - - 869,846 Amarillo, TX 448,494 (l) 158,851 855,348 Glassboro, NJ - - 887,497 Kissimmee, FL - - 933,852 Alice, TX 455,085 (l) 189,187 804,963 Tampa, FL - - 1,090,532 Lafayette, LA - - 949,128 Moore, OK - - 879,296 East Point, GA - 336,610 1,173,529 Irving, TX - - 1,228,436 Ft. Worth, TX - 399,592 2,529,969 Williston, FL - - 355,757 Jasper, FL - - 347,474 Oklahoma City, OK - (n) 1,365,125 Oklahoma City, OK - (n) 1,419,093 Norman, OK - - 1,225,477 Chattanooga, TN - - 1,344,240 Del City, OK - - - Arlington, TX - - - Kennett Square, PA - (n) - Food 4 Less: Lemon Grove, CA - - 4,068,179 Chula Vista, CA - - 4,266,181 Food Lion: Keystone Hts, FL 885,870 (l) 88,604 1,845,988 Chattanooga, TN 933,020 (l) 336,488 1,701,072 Lynchburg, VA - 128,216 1,674,167 Martinsburg, WV 912,259 (l) 448,648 1,543,573 Good Guys, The: Stockton, CA 1,628,091 (l) 580,609 2,974,868 Portland, OR - 817,574 2,630,652 Heilig-Meyers: Rincon, GA - 254,320 1,212,349 Bourbonnais, IL - 309,769 1,381,112 Mount Vernon, IL - 235,675 1,128,976 Muskogee, OK - 250,932 1,209,673 Stillwater, OK - 262,779 1,126,116 Everett, PA - 235,548 1,206,879 Lebanon, PA - 220,282 1,168,636 York, PA - 279,312 1,109,609 Marlow Heights, MD - 415,926 1,397,178 Clovis, NM - 237,362 1,151,531 Middletown, OH - 250,284 1,138,639 Conway, SC - 256,893 1,185,517 Hi-Lo Automotive: Copperas Cove, TX - 116,637 476,331 Ft. Worth, TX - 92,779 607,971 Baton Rouge, LA - 89,954 508,146 Lake Jackson, TX - 120,313 609,300 Edinberg, TX - 97,056 418,926 Pantego, TX - 154,368 505,323 Ft. Worth, TX - 91,373 548,238 Pharr, TX - 94,576 472,880 Baton Rouge, LA - 122,349 527,930 Houston, TX - 37,508 596,069 International House of Pancakes: Stafford, TX - - 571,832 Sunset Hills, MO - - 736,345 Las Vegas, NV - - 613,582 Ft. Worth, TX - - 623,641 Arlington, TX - - 608,132 Matthews, NC - - 655,668 Phoenix, AZ - - 559,307 Kash N' Karry: Brandon, FL - 1,234,519 3,255,257 Levitz: Tempe, AZ - 634,444 2,225,991 Oshman's Sporting Goods: Dallas, TX - - 2,658,976 Shop & Save: Homestead, PA - - 2,578,098 SuperValu: Warwick, RI - - 2,978,154 Waccamaw: Fairfax, VA - - 3,356,493 ------------ ------------ ------------ $ 5,262,819 $ 9,579,337 $113,956,620 ============ ============ ============ </TABLE> <TABLE> <CAPTION> Costs Capitalized Gross Amount at Which Subsequent to Acquisition Carried at Close of Period (b) --------------------------- ------------------------------------------------- Building Improvements and Carrying Leasehold Improvements Costs Land Interests Total - ----------------------- ------------ -------- ------------ ------------ ------------ <S> <C> <C> <C> <C> <C> Real Estate the Company has Invested in Under Operating Leases: Academy: Houston, TX $ - $ - $ 1,074,232 $ (c) $ 1,074,232 Houston, TX - - 699,165 (c) 699,165 N. Richland Hills, TX - - 1,307,655 (c) 1,307,655 Houston, TX - - 2,098,895 (c) 2,098,895 Houston, TX - - 795,005 (c) 795,005 Baton Rouge, LA - - 1,547,501 (c) 1,547,501 Houston, TX - - 2,310,845 1,627,872 3,938,717 Pasadena, TX - - 899,768 2,180,574 3,080,342 Beaumont, TX - - 1,423,700 2,449,261 3,872,961 Adjacent Excess Space: Memphis, TN - - 549,309 539,643 1,088,952 Babies "R" Us: Arlington, TX - - 830,689 2,611,867 3,442,556 Barnes & Noble: Lakeland, FL - - 1,070,902 1,516,983 2,587,885 Brandon, FL - - 1,476,407 1,527,150 3,003,557 Denver, CO - - 3,244,785 2,722,087 5,966,872 Houston, TX - - 3,307,562 2,396,024 5,703,586 Plantation, FL - - 3,616,357 (c) 3,616,357 Lafayette, LA - - 1,204,279 2,301,983 3,506,262 Daytona, FL - - 2,587,451 2,052,643 4,640,094 Freehold, NJ - - 2,917,219 2,260,663 5,177,882 Dayton, OH - - 1,412,614 3,223,467 4,636,081 Redding, CA - - 497,179 1,625,702 2,122,881 Marlton, NJ - - 2,831,370 4,318,554 7,149,924 Bed Bath & Beyond: Richmond, VA - - 1,184,144 3,154,970 4,339,114 Los Angeles, CA - - 6,318,023 3,089,396 9,407,419 Glendale, AZ 2,758,452 - 1,082,092 2,758,452 3,840,544 Best Buy: Brandon, FL - - 2,985,156 2,772,137 5,757,293 Evanston, IL - - 1,850,996 (c) 1,850,996 Cuyahoga Falls, OH - - 3,708,980 2,359,377 6,068,357 Rockville, MD - - 6,233,342 3,418,783 9,652,125 Fairfax, VA - - 3,052,477 3,218,018 6,270,495 St. Petersburg, FL - - 4,031,744 2,959,316 6,991,060 North Fayette, PA - - 2,330,847 2,292,932 4,623,779 Blockbuster: Conyers, GA - - 320,029 556,282 876,311 Borders Books & Music: Wilmington, DE - - 2,994,400 6,061,538 9,055,938 Richmond, VA - - 2,177,310 2,599,587 4,776,897 Ft. Lauderdale, FL - - 3,164,984 3,934,577 7,099,561 Bangor, ME - - 1,546,915 2,486,761 4,033,676 Altamonte Spgs, FL - - 1,947,198 (c) 1,947,198 Boxley Enterprises: Orlando, FL - - 220,632 258,483 479,115 Checkers: Orlando, FL - - 256,568 (c) 256,568 CompUSA: Miami, FL - - 2,713,192 1,866,676 4,579,868 Computer City: Baton Rouge, LA - - 609,069 913,603 1,522,672 Dave & Buster's: Utica, MI - - 3,776,169 (c) 3,776,169 Dick's Clothing: Taylor, MI - - 1,920,032 3,526,868 5,446,900 White Marsh, MD - - 2,680,532 3,916,889 6,597,421 Eckerd: San Antonio, TX - - 440,985 (c) 440,985 Dallas, TX - - 541,493 (c) 541,493 Garland, TX - - 239,014 (c) 239,014 Arlington, TX - - 368,964 (c) 368,964 Millville, NJ - - 417,603 (c) 417,603 Atlanta, GA - - 445,593 (c) 445,593 Mantua, NJ - - 344,022 (c) 344,022 Amarillo, TX - - 329,231 (c) 329,231 Amarillo, TX - - 650,864 (c) 650,864 Glassboro, NJ - - 534,243 (c) 534,243 Kissimmee, FL - - 715,480 (c) 715,480 Tampa, FL - - 604,682 (c) 604,682 Douglasville, GA - - 413,439 995,209 1,408,648 Lafayette, LA - - 967,528 (c) 967,528 Moore, OK - - 414,738 (c) 414,738 Midwest City, OK - - 673,369 1,103,351 1,776,720 Irving, TX - - 1,000,222 (c) 1,000,222 Jasper, FL - - 291,147 (c) 291,147 Williston, FL - - 622,403 (c) 622,403 Pantego, TX - - 1,016,062 1,448,911 2,464,973 Conyers, GA - - 574,666 998,900 1,573,566 Norman, OK - - 1,065,562 (c) 1,065,562 Chattanooga, TN - - 474,267 (c) 474,267 Stone Mountain, GA - - 638,643 1,111,064 1,749,707 Arlington, TX 1,396,508 - 2,078,542 1,396,508 3,475,050 Leavenworth, KS 1,330,830 - 726,438 1,330,830 2,057,268 Augusta, GA - - 568,606 1,326,748 1,895,354 Riverdale, GA - - 1,088,896 1,707,448 2,796,344 Warner Robins, GA 1,227,330 - 707,488 1,227,330 1,934,818 Lewisville, TX 1,335,426 - 789,237 1,335,426 2,124,663 Forest Hill, TX 1,174,549 - 692,165 1,174,549 1,866,714 Del City, OK - - 1,387,362 (c) 1,387,362 Arlington, TX - - 414,568 (c) 414,568 Garland, TX 1,418,531 - 522,461 1,418,531 1,940,992 Garland, TX 1,400,278 - 1,476,838 1,400,278 2,877,116 Oklahoma City, OK 1,471,105 - 1,581,480 1,471,105 3,052,585 Vineland, NJ - - 2,068,089 (c) 2,068,089 Richardson, TX 140,748 - 2,553,094 (g) 2,553,094 Gladstone, MO 1,739,568 - 1,851,374 1,739,568 3,590,942 Food 4 Less: Lemon Grove, CA - - 3,695,816 (c) 3,695,816 Chula Vista, CA - - 3,568,862 (c) 3,568,862 Gateway: Glendale, AZ - - 341,713 982,429 1,324,142 Golden Corral: Edenton, NC - - 36,578 318,481 355,059 Rockledge, FL (e) - - 120,593 340,889 461,482 Gilmer, TX - - 116,815 296,454 413,269 Bonham, TX (e) - - 128,451 344,170 472,621 Leitchfield, KY - - 73,660 306,642 380,302 Marietta, GA (e) - - 156,190 346,509 502,699 Atlanta, TX - - 88,457 368,317 456,774 Vernon, TX - - 105,798 328,943 434,741 Abbeville, LA - - 98,577 362,416 460,993 Clanton, AL (e) - - 113,017 296,921 409,938 Pleasanton, TX - - 139,694 316,070 455,764 Lake Placid, FL - - 115,113 305,074 420,187 Melbourne, FL (e) - - 193,447 341,351 534,798 Franklin, LA (e) - - 105,840 396,831 502,671 Good Guys, The: Foothill Ranch, CA - - 1,456,113 2,505,022 3,961,135 Riverside, CA - - 1,718,892 2,755,059 4,473,951 Clackamas, OR - - 1,639,995 1,446,764 3,086,759 Bellingham, WA - - 1,732,378 1,764,549 3,496,927 Federal Way, WA - - 2,037,392 1,661,577 3,698,969 East Palo Alto, CA - - 2,271,634 3,404,843 5,676,477 Heilig-Meyers: Baltimore, MD - - 469,782 813,074 1,282,856 Glen Burnie, MD - - 631,712 931,931 1,563,643 Lima, OH - - 344,742 1,097,694 1,442,436 Copperas Cove, TX - - 445,558 943,339 1,388,897 Nacogdoches, TX - - 397,074 1,257,402 1,654,476 Hi-Lo Automotive: Mesquite, TX - - 233,420 513,523 746,943 Arlington, TX - - 295,331 571,609 866,940 Ft. Worth, TX - - 197,037 512,296 709,333 Garland, TX - - 239,570 512,023 751,593 Houston, TX - - 261,318 531,968 793,286 Dallas, TX - - 281,347 543,937 825,284 Bastrop, TX - - 197,905 383,144 581,049 Eagle Pass, TX - - 256,745 455,841 712,586 Lake Worth, TX - - 252,141 539,510 791,651 McAllen, TX - - 265,177 605,397 870,574 Nacogdoches, TX - - 190,324 522,232 712,556 San Antonio, TX - - 200,510 643,741 844,251 Temple, TX - - 177,451 587,755 765,206 Universal City, TX - - 247,264 570,677 817,941 HomePlace: Altamonte Spgs, FL - - 2,906,409 4,877,225 7,783,634 Ft. Myers, FL - - 1,956,579 4,045,196 6,001,775 Bowie, MD - - 1,965,508 4,221,074 6,186,582 International House of Pancakes: Stafford, TX - - 331,756 (c) 331,756 Sunset Hills, MO - - 271,853 (c) 271,853 Las Vegas, NV - - 519,947 (c) 519,947 Ft. Worth, TX - - 430,896 (c) 430,896 Arlington, TX - - 404,512 (c) 404,512 Matthews, NC - - 380,043 (c) 380,043 Phoenix, AZ - - 483,374 (c) 483,374 Midwest City, OK - - 407,268 - 407,268 Just for Feet: Albuquerque, NM - - 1,441,777 2,335,475 3,777,252 Jo-Ann etc: Corpus Christi, TX 12,222 - 818,448 908,617 1,727,065 Kash N' Karry: Palm Harbor, FL - - 335,851 - 335,851 Gainesville, FL - - 317,386 - 317,386 Brandon, FL - - 322,476 - 322,476 Sarasota, FL - - 470,600 - 470,600 Kroger: Columbus, OH - - 780,838 520,559 1,301,397 Lucky: Watsonville, CA - - 805,056 - 805,056 Lodi, CA - - 613,710 - 613,710 Sonora, CA - - 587,782 - 587,782 Michaels: Grapevine, TX - - 1,017,934 2,066,715 3,084,649 Office Depot: Arlington, TX - - 596,024 1,411,432 2,007,456 Richmond, VA - - 888,772 1,948,036 2,836,808 OfficeMax: Corpus Christi, TX 76,664 - 893,270 1,055,008 1,948,278 Dallas, TX - - 1,118,500 1,709,891 2,828,391 Cincinnati, OH - - 543,489 1,574,551 2,118,040 Evanston, IL - - 1,867,831 1,757,618 3,625,449 Altamonte Spgs, FL - - 1,689,793 3,050,160 4,739,953 Pompano Beach, FL - - 2,266,908 1,904,803 4,171,711 Cutler Ridge, FL - - 989,370 1,479,119 2,468,489 Sacramento, CA - - 1,144,167 2,961,206 4,105,373 Salinas, CA - - 1,353,217 1,829,325 3,182,542 Redding, CA - - 667,174 2,181,563 2,848,737 Kelso, WA 1,805,539 - 868,003 1,805,539 2,673,542 Lynchburg, VA 1,851,326 - 561,509 1,851,326 2,412,835 Leesburg, FL 1,929,028 - 640,019 1,929,028 2,569,047 Plymouth Meeting, PA 2,250,620 - 2,911,111 2,250,620 5,161,731 Tigard, OR - - 1,539,873 2,247,321 3,787,194 Dover, NJ - - 1,138,296 3,238,083 4,376,379 Griffin, GA 1,801,905 - 685,470 1,801,905 2,487,375 Oshman's Sporting Goods: Dallas, TX - - 1,311,440 (c) 1,311,440 Party City: Memphis, TN 1,136,334 - 266,383 1,136,334 1,402,717 Petco: Grand Forks, ND - - 306,629 909,671 1,216,300 PETsMART: Chicago, IL - - 2,724,138 3,565,721 6,289,859 Pier 1 Imports: Anchorage, AK - - 928,321 1,662,584 2,590,905 Memphis, TN - - 713,319 821,770 1,535,089 Sanford, FL - - 738,051 803,082 1,541,133 Knoxville, TN - - 467,169 734,833 1,202,002 Mason, OH - - 593,571 885,047 1,478,618 Harlingen, TX - - 316,640 756,406 1,073,046 Valdosta, GA - - 390,838 805,912 1,196,750 Rally's: Toledo, OH - - 125,882 319,770 445,652 Riser Foods: Maple Heights, OH - - 1,034,758 2,874,414 3,909,172 Robb & Stucky: Ft. Myers, FL - - 2,188,440 6,225,401 8,413,841 Roger & Marv's: Kenosha, WI - - 1,917,607 3,431,363 5,348,970 Ross Dress For Less: Coral Gables, FL - - 1,782,346 1,661,174 3,443,520 Scotty's: Orlando, FL - - 1,157,268 2,077,131 3,234,399 Orlando, FL - - 521,489 1,004,226 1,525,715 Sears Homelife: Clearwater, FL 10,555 - 1,184,438 2,536,762 3,721,200 Orlando, FL - - 820,397 2,184,721 3,005,118 Pensacola, FL - - 633,125 1,595,405 2,228,530 Raleigh, NC - - 1,848,026 1,753,635 3,601,661 Tampa, FL - - 1,454,908 2,045,833 3,500,741 7-Eleven: Land 'O Lakes, FL 816,944 - 1,076,572 816,944 1,893,516 Tampa Palms, FL 917,432 - 1,080,670 917,432 1,998,102 Shop & Save: Homestead, PA - - 1,139,419 (c) 1,139,419 Penn Hills, PA - - 1,043,297 1,243,131 2,286,428 Silk City: Arlington, TX - - 752,840 3,980,309 4,733,149 Sports Authority: Tampa, FL - - 2,127,503 1,521,730 3,649,233 Memphis, TN 2,573,264 - 820,340 2,573,264 3,393,604 Little Rock, AR - - 2,879,781 2,660,206 5,539,987 Staples: Orlando, FL - - 523,307 1,007,726 1,531,033 SuperValu: Huntington, WV - - 1,254,238 760,602 2,014,840 Warwick, RI - - 1,699,330 (c) 1,699,330 Target: Chico, CA - - 1,269,272 - 1,269,272 Victorville, CA - - 1,908,815 - 1,908,815 San Diego, CA - - 2,672,390 - 2,672,390 Top's: Lacey, WA - - 2,777,449 7,082,150 9,859,599 Waccamaw: Fairfax, VA - - 2,156,801 (c) 2,156,801 White Marsh, MD 3,006,391 - 3,762,030 3,006,391 6,768,421 Waremart: Eureka, CA - - 3,135,036 5,470,607 8,605,643 Wal-Mart: Sealy, TX - - 1,344,244 1,483,362 2,827,606 Aransas Pass, TX - - 190,505 2,640,175 2,830,680 Winfield, AL - - 419,811 1,684,505 2,104,316 Corpus Christi, TX - - 223,998 2,158,955 2,382,953 Beeville, TX - - 507,231 2,315,424 2,822,655 Corpus Christi, TX - - 630,043 3,131,407 3,761,450 Texarkana, AR - - 1,038,451 3,681,781 4,720,232 Wendy's Old Fashioned Hamburger: Fenton, MO - - 307,068 496,410 803,478 Sacramento, CA - - 585,872 - 585,872 Vacant Land: Little Rock, AR - - 539,094 - 539,094 Vons: Moreno Valley, CA - - 759,052 1,652,162 2,411,214 Leasehold Interests: - - 2,090,797 - 2,090,797 ------------ ------- ------------ ------------ ------------ $ 33,581,550 $ - $256,811,251 $285,448,538 $542,259,789 ============ ======= ============ ============ ============ Real Estate the Company has Invested in Under Direct Financing Leases: Academy: Houston, TX $ - $ - $ - $ (c) $ (c) Houston, TX - - - (c) (c) N. Richland Hills, TX - - - (c) (c) Houston, TX - - - (c) (c) Houston, TX - - - (c) (c) Baton Rouge, LA - - - (c) (c) Barnes & Noble: Plantation, FL - - - (c) (c) Best Buy: Evanston, IL - - - (c) (c) Borders Books & Music: Altamonte Spgs, FL - - - (c) (c) Checkers: Orlando, FL - - - (c) (c) Dave & Buster's: Utica, MI - - - (c) (c) Eckerd: San Antonio, TX - - - (c) (c) Dallas, TX - - - (c) (c) Garland, TX - - - (c) (c) Arlington, TX - - - (c) (c) Millville, NJ - - - (c) (c) Atlanta, GA - - - (c) (c) Mantua, NJ - - - (c) (c) Vineland, NJ 1,901,335 - - (c) (c) Amarillo, TX - - - (c) (c) Amarillo, TX - - - (c) (c) Amarillo, TX - - (d) (d) (d) Glassboro, NJ - - - (c) (c) Kissimmee, FL - - - (c) (c) Alice, TX - - (d) (d) (d) Tampa, FL - - - (c) (c) Lafayette, LA - - - (c) (c) Moore, OK - - - (c) (c) East Point, GA - - (d) (d) (d) Irving, TX - - - (c) (c) Ft. Worth, TX 78,461 - (d) (d) (d) Williston, FL - - - (c) (c) Jasper, FL - - - (c) (c) Oklahoma City, OK - - (n) (c) (c) Oklahoma City, OK - - (n) (c) (c) Norman, OK - - - (c) (c) Chattanooga, TN - - - (c) (c) Del City, OK 1,376,025 - - (c) (c) Arlington, TX 1,416,071 - - (c) (c) Kennett Square, PA 1,984,435 - (n) (c) (c) Food 4 Less: Lemon Grove, CA - - - (c) (c) Chula Vista, CA - - - (c) (c) Food Lion: Keystone Hts, FL - - (d) (d) (d) Chattanooga, TN - - (d) (d) (d) Lynchburg, VA - - (d) (d) (d) Martinsburg, WV - - (d) (d) (d) Good Guys, The: Stockton, CA - - (d) (d) (d) Portland, OR - - (d) (d) (d) Heilig-Meyers: Rincon, GA - - (d) (d) (d) Bourbonnais, IL - - (d) (d) (d) Mount Vernon, IL - - (d) (d) (d) Muskogee, OK - - (d) (d) (d) Stillwater, OK - - (d) (d) (d) Everett, PA - - (d) (d) (d) Lebanon, PA - - (d) (d) (d) York, PA - - (d) (d) (d) Marlow Heights, MD - - (d) (d) (d) Clovis, NM - - (d) (d) (d) Middletown, OH - - (d) (d) (d) Conway, SC - - (d) (d) (d) Hi-Lo Automotive: Copperas Cove, TX - - (d) (d) (d) Ft. Worth, TX - - (d) (d) (d) Baton Rouge, LA - - (d) (d) (d) Lake Jackson, TX - - (d) (d) (d) Edinberg, TX - - (d) (d) (d) Pantego, TX - - (d) (d) (d) Ft. Worth, TX - - (d) (d) (d) Pharr, TX - - (d) (d) (d) Baton Rouge, LA - - (d) (d) (d) Houston, TX - - (d) (d) (d) International House of Pancakes: Stafford, TX - - - (c) (c) Sunset Hills, MO - - - (c) (c) Las Vegas, NV - - - (c) (c) Ft. Worth, TX - - - (c) (c) Arlington, TX - - - (c) (c) Matthews, NC - - - (c) (c) Phoenix, AZ - - - (c) (c) Kash N' Karry: Brandon, FL - - (d) (d) (d) Levitz: Tempe, AZ - - (d) (d) (d) Oshman's Sporting Goods: Dallas, TX - - - (c) (c) Shop & Save: Homestead, PA - - - (c) (c) SuperValu: Warwick, RI - - - (c) (c) Waccamaw: Fairfax, VA - - - (c) (c) ------------ ------- ------------ ------------ ------------ $ 6,756,327 $ - $ - $ - $ - ============ ======= ============ ============ ============ </TABLE> <TABLE> <CAPTION> Life On Which Depreciation and Amortization in Latest Accumulated Income Depreciation Date of Statement and Con- Date is Amortization struction Acquired Computed - ----------------------- ------------ --------- -------- ------------ <S> <C> <C> <C> <C> Real Estate the Company has Invested in Under Operating Leases: Academy: Houston, TX - 1994 05/95 (c) Houston, TX - 1995 06/95 (c) N. Richland Hills, TX - 1996 08/95 (h) (c) Houston, TX - 1996 02/96 (h) (c) Houston, TX - 1996 06/96 (h) (c) Baton Rouge, LA - 1997 08/96 (h) (c) Houston, TX 72,915 1976 03/99 40 years Pasadena, TX 97,672 1994 03/99 40 years Beaumont, TX 109,706 1992 03/99 40 years Adjacent Excess Space: Memphis, TN 28,669 1998 11/98 40 years Babies "R" Us: Arlington, TX 294,379 1996 06/96 40 years Barnes & Noble: Lakeland, FL 226,507 1995 07/94 (h) 40 years Brandon, FL 228,235 1995 08/94 (h) 40 years Denver, CO 425,438 1994 09/94 40 years Houston, TX 314,486 1995 10/94 (h) 40 years Plantation, FL - 1996 05/95 (h) (c) Lafayette, LA 270,483 1996 06/95 (h) 40 years Daytona, FL 253,132 1996 09/95 (h) 40 years Freehold, NJ 278,187 1995 01/96 40 years Dayton, OH 292,127 1996 05/97 40 years Redding, CA 143,942 1997 06/97 40 years Marlton, NJ 229,423 1998 11/98 40 years Bed Bath & Beyond: Richmond, VA 200,472 1997 06/98 40 years Los Angeles, CA 164,124 1975 11/98 40 years Glendale, AZ 100,569 1999 12/98 (i) 40 years Best Buy: Brandon, FL 268,551 1996 02/97 40 years Evanston, IL - 1994 02/97 (c) Cuyahoga Falls, OH 208,903 1970 06/97 40 years Rockville, MD 295,582 1995 07/97 40 years Fairfax, VA 271,520 1995 08/97 40 years St. Petersburg, FL 243,527 1997 09/97 40 years North Fayette, PA 145,697 1997 06/98 40 years Blockbuster: Conyers, GA 49,254 1997 06/97 40 years Borders Books & Music: Wilmington, DE 913,304 1994 12/94 40 years Richmond, VA 361,415 1995 06/95 40 years Ft. Lauderdale, FL 475,993 1995 02/96 40 years Bangor, ME 281,488 1996 06/96 40 years Altamonte Spgs, FL - 1997 09/97 (c) Boxley Enterprises: Orlando, FL 91,625 1974 08/93 20.9 years Checkers: Orlando, FL - 1988 07/92 (c) CompUSA: Miami, FL 312,796 1994 04/94 40 years Computer City: Baton Rouge, LA 114,262 1995 12/95 40 years Dave & Buster's: Utica, MI - 1998 06/98 (c) Dick's Clothing: Taylor, MI 378,759 1996 08/96 40 years White Marsh, MD 420,644 1996 08/96 40 years Eckerd: San Antonio, TX - 1993 12/93 (c) Dallas, TX - 1994 01/94 (c) Garland, TX - 1994 02/94 (c) Arlington, TX - 1994 02/94 (c) Millville, NJ - 1994 03/94 (c) Atlanta, GA - 1994 03/94 (c) Mantua, NJ - 1994 06/94 (c) Amarillo, TX - 1994 12/94 (c) Amarillo, TX - 1994 12/94 (c) Glassboro, NJ - 1994 12/94 (c) Kissimmee, FL - 1995 04/95 (c) Tampa, FL - 1995 12/95 (c) Douglasville, GA 122,466 1996 01/96 40 years Lafayette, LA - 1995 01/96 (c) Moore, OK - 1995 01/96 (c) Midwest City, OK 133,099 1996 03/96 40 years Irving, TX - 1996 12/96 (c) Jasper, FL - 1994 01/97 (c) Williston, FL - 1995 01/97 (c) Pantego, TX 128,289 1997 06/97 40 years Conyers, GA 88,444 1997 06/97 40 years Norman, OK - 1997 06/97 (c) Chattanooga, TN - 1997 09/97 (c) Stone Mountain, GA 91,431 1997 09/97 40 years Arlington, TX 82,918 1998 11/97 (i) 40 years Leavenworth, KS 84,563 1998 11/97 (i) 40 years Augusta, GA 100,888 1997 12/97 40 years Riverdale, GA 129,837 1997 12/97 40 years Warner Robins, GA 60,088 1999 03/98 (i) 40 years Lewisville, TX 76,509 1998 04/98 (i) 40 years Forest Hill, TX 69,739 1998 04/98 (i) 40 years Del City, OK - 1998 05/98 (c) Arlington, TX - 1998 05/98 (c) Garland, TX 72,404 1998 06/98 (i) 40 years Garland, TX 74,390 1998 06/98 (i) 40 years Oklahoma City, OK 72,023 1999 08/98 (i) 40 years Vineland, NJ - 1999 09/98 (c) Richardson, TX - (g) 06/99 (g) Gladstone, MO 16,308 2000 12/99 (i) 40 years Food 4 Less: Lemon Grove, CA - 1996 07/95 (h) (c) Chula Vista, CA - 1995 11/98 (c) Gateway: Glendale, AZ 35,376 1999 12/98 (i) 40 years Golden Corral: Edenton, NC 152,373 1984 11/84 35 years Rockledge, FL (e) 162,019 1984 12/84 35 years Gilmer, TX 140,911 1984 12/84 35 years Bonham, TX (e) 163,579 1984 12/84 35 years Leitchfield, KY 145,744 1984 12/84 35 years Marietta, GA (e) 164,692 1984 12/84 35 years Atlanta, TX 174,688 1985 01/85 35 years Vernon, TX 152,723 1985 03/85 35 years Abbeville, LA 168,265 1985 04/85 35 years Clanton, AL (e) 137,856 1985 05/85 35 years Pleasanton, TX 146,747 1985 05/85 35 years Lake Placid, FL 141,642 1985 05/85 35 years Melbourne, FL (e) 155,071 1985 07/85 35 years Franklin, LA (e) 180,274 1985 07/85 35 years Good Guys, The: Foothill Ranch, CA 250,839 1995 12/96 40 years Riverside, CA 254,534 1995 05/97 40 years Clackamas, OR 91,930 1995 06/98 40 years Bellingham, WA 112,122 1994 06/98 40 years Federal Way, WA 105,579 1994 06/98 40 years East Palo Alto, CA 152,509 1999 12/98 (h) 40 years Heilig-Meyers: Baltimore, MD 43,195 1968 11/98 40 years Glen Burnie, MD 49,462 1968 11/98 40 years Lima, OH 58,315 1997 11/98 40 years Copperas Cove, TX 50,115 1972 11/98 40 years Nacogdoches, TX 66,800 1997 11/98 40 years Hi-Lo Automotive: Mesquite, TX 79,651 1994 10/94 40 years Arlington, TX 86,969 1993 11/94 40 years Ft. Worth, TX 77,943 1993 11/94 40 years Garland, TX 77,900 1993 11/94 40 years Houston, TX 80,940 1994 11/94 40 years Dallas, TX 81,737 1994 12/94 40 years Bastrop, TX 50,394 1994 09/95 40 years Eagle Pass, TX 59,956 1994 09/95 40 years Lake Worth, TX 70,961 1995 09/95 40 years McAllen, TX 79,627 1995 09/95 40 years Nacogdoches, TX 68,688 1995 09/95 40 years San Antonio, TX 84,670 1994 09/95 40 years Temple, TX 77,306 1989 09/95 40 years Universal City, TX 75,060 1995 09/95 40 years HomePlace: Altamonte Spgs, FL 401,355 1997 09/97 40 years Ft. Myers, FL 307,603 1997 12/97 40 years Bowie, MD 159,889 1997 12/97 38.5 years International House of Pancakes: Stafford, TX - 1992 10/93 (c) Sunset Hills, MO - 1993 10/93 (c) Las Vegas, NV - 1993 12/93 (c) Ft. Worth, TX - 1993 12/93 (c) Arlington, TX - 1993 12/93 (c) Matthews, NC - 1993 12/93 (c) Phoenix, AZ - 1993 12/93 (c) Midwest City, OK - (o) 03/96 (o) Just for Feet: Albuquerque, NM 206,787 1997 06/97 40 years Jo-Ann etc: Corpus Christi, TX 161,186 1967 11/93 40 years Kash N' Karry: Palm Harbor, FL - (p) 03/99 (p) Gainesville, FL - (p) 03/99 (p) Brandon, FL - (p) 03/99 (p) Sarasota, FL - (p) 03/99 (p) Kroger: Columbus, OH 50,429 1982 02/97 40 years Lucky: Watsonville, CA - (p) 03/99 (p) Lodi, CA - (p) 03/99 (p) Sonora, CA - (p) 03/99 (p) Michaels: Grapevine, TX 131,323 1998 06/98 40 years Office Depot: Arlington, TX 243,980 1991 01/94 40 years Richmond, VA 223,474 1996 05/96 40 years OfficeMax: Corpus Christi, TX 187,438 1967 11/93 40 years Dallas, TX 299,348 1993 12/93 40 years Cincinnati, OH 255,190 1994 07/94 40 years Evanston, IL 244,358 1995 06/95 40 years Altamonte Spgs, FL 371,998 1995 01/96 40 years Pompano Beach, FL 233,585 1972 02/96 40 years Cutler Ridge, FL 166,709 1995 06/96 40 years Sacramento, CA 296,317 1996 12/96 40 years Salinas, CA 177,216 1995 02/97 40 years Redding, CA 193,159 1997 06/97 40 years Kelso, WA 133,535 1998 09/97 (i) 40 years Lynchburg, VA 106,066 1998 02/98 40 years Leesburg, FL 98,461 1998 08/98 40 years Plymouth Meeting, PA 96,120 1999 10/98 (i) 40 years Tigard, OR 119,389 1995 11/98 40 years Dover, NJ 172,023 1995 11/98 40 years Griffin, GA 76,956 1999 11/98 (i) 40 years Oshman's Sporting Goods: Dallas, TX - 1994 03/94 (c) Party City: Memphis, TN 43,796 1999 12/98 40 years Petco: Grand Forks, ND 69,197 1996 12/97 40 years PETsMART: Chicago, IL 204,278 1998 09/98 40 years Pier 1 Imports: Anchorage, AK 201,134 1995 02/96 40 years Memphis, TN 72,761 1997 09/96 (h) 40 years Sanford, FL 56,048 1998 06/97 (h) 40 years Knoxville, TN 35,976 1999 01/98 (h) 40 years Mason, OH 34,111 1999 06/98 (h) 40 years Harlingen, TX 22,850 1999 11/98 (h) 40 years Valdosta, GA 22,666 1999 01/99 (h) 40 years Rally's: Toledo, OH 70,103 1989 07/92 38.8 years Riser Foods: Maple Heights, OH 278,459 1985 02/97 40 years Robb & Stucky: Ft. Myers, FL 479,304 1997 12/97 40 years Roger & Marv's: Kenosha, WI 327,724 1992 02/97 40 years Ross Dress For Less: Coral Gables, FL 124,318 1994 06/96 40 years Scotty's: Orlando, FL 286,881 1995 06/95 40 years Orlando, FL 265,095 1995 06/95 40 years Sears Homelife: Clearwater, FL 481,110 1992 05/93 40 years Orlando, FL 414,872 1992 05/93 40 years Pensacola, FL 179,926 1994 06/96 40 years Raleigh, NC 197,771 1995 06/96 40 years Tampa, FL 230,725 1992 06/96 40 years 7-Eleven: Land 'O Lakes, FL 39,996 1999 10/98 (i) 40 years Tampa Palms, FL 41,093 1999 12/98 (i) 40 years Shop & Save: Homestead, PA - 1994 02/97 (c) Penn Hills, PA 120,428 1991 02/97 40 years Silk City: Arlington, TX 274,354 1996 06/96 40 years Sports Authority: Tampa, FL 171,512 1994 06/96 40 years Memphis, TN 142,066 1998 12/97 (i) 40 years Little Rock, AR 152,408 1998 09/98 40 years Staples: Orlando, FL 14,396 1995 06/95 40 years SuperValu: Huntington, WV 73,683 1971 02/97 40 years Warwick, RI - 1992 02/97 (c) Target: Chico, CA - (p) 03/99 (p) Victorville, CA - (p) 03/99 (p) San Diego, CA - (p) 03/99 (p) Top's: Lacey, WA 686,083 1992 02/97 40 years Waccamaw: Fairfax, VA - 1995 12/95 (c) White Marsh, MD 209,821 1998 03/98 (i) 40 years Waremart: Eureka, CA 529,965 1965 02/97 40 years Wal-Mart: Sealy, TX 66,442 1982 03/99 40 years Aransas Pass, TX 118,258 1983 03/99 40 years Winfield, AL 75,452 1983 03/99 40 years Corpus Christi, TX 96,703 1983 03/99 40 years Beeville, TX 103,712 1983 03/99 40 years Corpus Christi, TX 140,261 1983 03/99 40 years Texarkana, AR 164,913 1983 03/99 40 years Wendy's Old Fashioned Hamburger: Fenton, MO 128,101 1985 07/92 33 years Sacramento, CA - (o) 02/98 (o) Vacant Land: Little Rock, AR - - 09/98 - Vons: Moreno Valley, CA 74,003 1983 03/99 40 years Leasehold Interests: 325,294 - 08/99 (q) ----------- $27,438,288 =========== Real Estate the Company has Invested in Under Direct Financing Leases: Academy: Houston, TX $ (c) 1994 05/95 (c) Houston, TX (c) 1995 06/95 (c) N. Richland Hills, TX (c) 1996 08/95 (h) (c) Houston, TX (c) 1996 02/96 (h) (c) Houston, TX (c) 1996 06/96 (h) (c) Baton Rouge, LA (c) 1997 08/96 (h) (c) Barnes & Noble: Plantation, FL (c) 1996 05/95 (h) (c) Best Buy: Evanston, IL (c) 1994 02/97 (c) Borders Books & Music: Altamonte Spgs, FL (c) 1997 09/97 (c) Checkers: Orlando, FL (c) 1988 07/92 (c) Dave & Buster's: Utica, MI (c) 1998 06/98 (c) Eckerd: San Antonio, TX (c) 1993 12/93 (c) Dallas, TX (c) 1994 01/94 (c) Garland, TX (c) 1994 02/94 (c) Arlington, TX (c) 1994 02/94 (c) Millville, NJ (c) 1994 03/94 (c) Atlanta, GA (c) 1994 03/94 (c) Mantua, NJ (c) 1994 06/94 (c) Vineland, NJ (c) 1999 03/99 (j) (c) Amarillo, TX (c) 1994 12/94 (c) Amarillo, TX (c) 1994 12/94 (c) Amarillo, TX (d) 1994 12/94 (d) Glassboro, NJ (c) 1994 12/94 (c) Kissimmee, FL (c) 1995 04/95 (c) Alice, TX (d) 1995 06/95 (d) Tampa, FL (c) 1995 12/95 (c) Lafayette, LA (c) 1995 01/96 (c) Moore, OK (c) 1995 01/96 (c) East Point, GA (d) 1996 12/96 (d) Irving, TX (c) 1996 12/96 (c) Ft. Worth, TX (d) 1996 12/96 (d) Williston, FL (c) 1995 01/97 (c) Jasper, FL (c) 1994 01/97 (c) Oklahoma City, OK (c) 1997 06/97 (c) Oklahoma City, OK (c) 1997 06/97 (c) Norman, OK (c) 1997 06/97 (c) Chattanooga, TN (c) 1997 09/97 (c) Del City, OK (c) 1998 10/98 (j) (c) Arlington, TX (c) 1998 11/98 (j) (c) Kennett Square, PA (c) 2000 12/00 (c) Food 4 Less: Lemon Grove, CA (c) 1996 07/95 (h) (c) Chula Vista, CA (c) 1995 11/98 (c) Food Lion: Keystone Hts, FL (d) 1993 05/93 (d) Chattanooga, TN (d) 1993 10/93 (d) Lynchburg, VA (d) 1994 01/94 (d) Martinsburg, WV (d) 1994 08/94 (d) Good Guys, The: Stockton, CA (d) 1991 07/94 (d) Portland, OR (d) 1996 05/96 (d) Heilig-Meyers: Rincon, GA (d) 1997 11/98 (d) Bourbonnais, IL (d) 1997 11/98 (d) Mount Vernon, IL (d) 1997 11/98 (d) Muskogee, OK (d) 1997 11/98 (d) Stillwater, OK (d) 1998 11/98 (d) Everett, PA (d) 1998 11/98 (d) Lebanon, PA (d) 1997 11/98 (d) York, PA (d) 1997 11/98 (d) Marlow Heights, MD (d) 1968 11/98 (d) Clovis, NM (d) 1996 11/98 (d) Middletown, OH (d) 1997 11/98 (d) Conway, SC (d) 1997 11/98 (d) Hi-Lo Automotive: Copperas Cove, TX (d) 1994 10/94 (d) Ft. Worth, TX (d) 1993 10/94 (d) Baton Rouge, LA (d) 1994 10/94 (d) Lake Jackson, TX (d) 1994 10/94 (d) Edinberg, TX (d) 1993 10/94 (d) Pantego, TX (d) 1993 10/94 (d) Ft. Worth, TX (d) 1993 11/94 (d) Pharr, TX (d) 1993 11/94 (d) Baton Rouge, LA (d) 1994 12/94 (d) Houston, TX (d) 1982 09/95 (d) International House of Pancakes: Stafford, TX (c) 1992 10/93 (c) Sunset Hills, MO (c) 1993 10/93 (c) Las Vegas, NV (c) 1993 12/93 (c) Ft. Worth, TX (c) 1993 12/93 (c) Arlington, TX (c) 1993 12/93 (c) Matthews, NC (c) 1993 12/93 (c) Phoenix, AZ (c) 1993 12/93 (c) Kash N' Karry: Brandon, FL (d) 1997 10/96 (h) (d) Levitz: Tempe, AZ (d) 1994 01/95 (d) Oshman's Sporting Goods: Dallas, TX (c) 1994 03/94 (c) Shop & Save: Homestead, PA (c) 1994 02/97 (c) SuperValu: Warwick, RI (c) 1992 02/97 (c) Waccamaw: Fairfax, VA (c) 1995 12/95 (c) ----------- $ - =========== </TABLE> <TABLE> COMMERCIAL NET LEASE REALTY, INC. AND SUBSIDIARIES NOTES TO SCHEDULE III-REAL ESTATE AND ACCUMULATED DEPRECIATION AND AMORTIZATION December 31, 2000 (a) Transactions in real estate and accumulated depreciation during 2000, 1999 and 1998, are summarized as follows: <CAPTION> 2000 1999 1998 ------------ ------------ ------------ <S> <C> <C> <C> Land, Buildings, and Leasehold Interests: Balance at the Beginning of Period $568,216,480 $537,283,241 $413,274,423 Acquisitions 1,963,085 76,165,384 129,416,817 Sale of land, buildings, and leasehold interests (27,779,028) (45,232,145) (5,407,999) ------------ ------------ ------------ Balance at the Close of Period $542,400,537 $568,216,480 $537,283,241 ============ ============ ============ Accumulated Depreciation and Amortization: Balance at the Beginning of Period $ 22,022,978 $ 17,335,079 $ 12,296,997 Sale of land, buildings, and leasehold interests (2,353,983) (2,835,339) (820,506) Depreciation and Amortization expense 7,769,293 7,523,238 5,858,588 ------------ ------------ ------------ Balance at the Close of Period $ 27,438,288 $ 22,022,978 $ 17,335,079 ============ ============ ============ <FN> (b) As of December 31, 2000, all of the leases are treated as operating leases for federal income tax purposes. As of December 31, 2000, the aggregate cost of the properties owned by the Company and its subsidiaries for federal income tax purposes was $640,189,576. (c) For financial reporting purposes, the portion of the lease relating to the building has been recorded as a direct financing lease; therefore, depreciation is not applicable. (d) For financial reporting purposes, the lease for the land and building has been recorded as a direct financing lease; therefore, depreciation is not applicable. (e) The tenant of this property, Golden Corral Corporation, has subleased this property. Golden Corral Corporation continues to be responsible for complying with all the terms of the lease agreement and is continuing to pay rent on this property to the Company. (f) The Company owns only land for this property. Pursuant to the lease agreement, the Company is to purchase the building once construction is complete. (g) The Company owns only land for this property. The building is under construction; therefore, no depreciation was taken. (h) Date acquired represents acquisition date of land. Pursuant to lease agreement, the Company purchased the buildings from the tenants upon completion of construction, generally within 12 months from the acquisition of the land. (i) Date acquired represents acquisition date of land. The Company developed the buildings, generally completing construction within 12 months from the acquisition date of the land. (j) Date acquired represents date of building construction completion. The land has been recorded as operating lease. (k) During the year ended December 31, 1997, the Company (i) incurred acquisition fees and expense reimbursement fees totaling $2,278,306, paid to CNL Realty Advisors, Inc. and (ii) acquired land and buildings purchased from affiliates of CNL Realty Advisors, Inc. for an aggregate cost of $37,712,514. Such amounts are included in land and buildings on operating leases and net investments in direct financing leases. On January 1, 1998, the Company acquired CNL Realty Advisors, Inc. and became self-administered. As a result, the Company was not a party to such transactions and began internally performing the services previously provided by CNL Realty Advisors, Inc. for each of the years ended since December 31, 1998. (l) Property is encumbered as a part of the Company's $39,450,000 long term, fixed rate mortgage and security agreement. (m) Encumbered properties for which the portion of the lease relating to the land is accounted for as an operating lease and the portion of the lease relating to the building is accounted for as a direct financing lease, the total amount of the encumbrance is listed with the land portion of the property. (n) The Company owns only the building for this property. The land is subject to a ground lease between the Company and an unrelated third party. (o) The Company owns only the land for this property, which is subject to a ground lease between the Company and the tenant. The tenant funded the improvements on the property. (p) The Company owns only the land for this property. (q) The leasehold interests are amortized over the life of the respective leases which range from 4.5 and 12.5 years. </FN> </TABLE> <TABLE> COMMERCIAL NET LEASE REALTY, INC. AND SUBSIDIARIES SCHEDULE IV - MORTGAGE LOANS ON REAL ESTATE December 31, 2000 <CAPTION> Principal Amount of Loans Subject Final Periodic Face Carrying to Delinquent Interest Maturity Payment Prior Amount of Amount of Principal Description Rate Date Terms Liens Mortgages Mortgages(d) or Interest - ------------------------------------- -------- -------- -------- ------ ----------- ------------ -------------- <S> <C> <C> <C> <C> <C> <C> <C> First Mortgages on Retail Properties: National City, CA 11.5% 2009 (b) - $ 2,765,000 $ 1,834,662 $ - San Jose, CA 11.5% 2009 (b) - 2,565,000 1,740,089 - Land 'O Lakes, FL 9.5% 2002 (g) - 540,861 519,441 - South Miami, FL 9.0% 2003 (c) - 2,500,000 2,500,000 - Lawton and Oklahoma City, OK (f) 8.5% 2001 (c) - 4,399,805 4,399,805 - Burleson, TX 8.5% 2001 (c) - 2,355,279 2,355,279 - Revolving Lines of Credit Secured by Various Properties: Commercial Net Lease Realty Services Inc. Prime rate + 0.25% 2003 (c) - 56,406,941 56,406,941 - ----------- ----------- ------------ $71,532,886 $69,756,217 $ - =========== =========== ============ <FN> (a) The following shows the changes in the carrying amounts of mortgage loans during the periods: 2000 1999 ------------ ------------ Balance at Beginning of Period $ 36,113,091 $ - New mortgage loans 42,850,026 48,917,787 (e)(f) Deductions during the period: Collections of principal (9,206,900) (12,804,696)(f) Foreclosures - - ------------ ------------ Balance at the Close of Period $ 69,756,217 $ 36,113,091 ============ ============ (b) Principal and interest is payable at level amounts over the life of the loan. (c) Interest only payments are due quarterly. Principal is due at maturity. (d) Mortgages held by the Company and its subsidiaries for federal income tax purposes for the years ended December 31, 2000 and 1999, was $69,756,217 and $36,113,091, respectively. (e) Mortgages totaling $1,425,000 and $18,634,755 were accepted in connection with the sale of real estate for the years ended December 31, 2000 and 1999, respectively. (f) As of December 31, 1999, mortgages totaling $6,755,084 were accepted as payment towards the principal balance of the revolving line of credit for Commercial Net Lease Realty Services, Inc. (an unconsolidated affiliate of the Company). The mortgagees are affiliates of certain members of the Company's board of directors. (g) Construction loan with monthly interest payments rolled into the principal balance of the mortgage. </FN> </TABLE> EXHIBITS EXHIBIT INDEX Exhibit Number - -------------- 3. Articles of Incorporation and By-laws 3.1 Articles of Incorporation of the Registrant (filed as Exhibit 3.3(i) to the Registrant's Registration Statement No. 1-11290 on Form 8-B, and incorporated herein by reference). 3.2 Bylaws of the Registrant, (filed as Exhibit 3(ii) to Amendment No. 2 to the Registrant's Registration No. 33-83110 on Form S-3, and incorporated herein by reference). 3.3 Articles of Amendment to the Articles of Incorporation of the Registrant (filed as Exhibit 3.3 to the Registrant's Form 10-Q for the quarter ended June 30, 1996, and incorporated herein by reference). 3.4 Articles of Amendment to the Articles of Incorporation of the Registrant (filed as Exhibit 3.4 to the Registrant's Current Report on Form 8-K dated February 18, 1998, and filed with the Securities and Exchange Commission on February 19, 1998, and incorporated herein by reference). 3.5 First Amended and Restated Articles of Incorporation of the Registrant (filed as Exhibit 3.1 to the Registrant's Registration Statement No. 333-64511 on Form S-3, and incorporated herein by reference). 4. Instruments defining the rights of security holders, including indentures 4.1 Specimen Certificate of Common Stock, par value $0.01 per share, of the Registrant (filed as Exhibit 3.4 to the Registrant's Registration Statement No. 1-11290 on Form 8-B and incorporated herein by reference). 4.2 Form of Indenture dated March 25, 1998, by and among Registrant and First Union National Bank, Trustee, relating to $100,000,00 of 7.125% Notes due 2008 (filed as Exhibit 4.1 to the Registrant's Current Report on Form 8-K dated March 20, 1998, and incorporated herein by reference.) 4.3 Form of Supplement Indenture No. 1 dated March 25, 1998, by and among Registrant and First Union National Bank, Trustee, relating to $100,000,000 of 7.125% Notes due 2008 (filed as Exhibit 4.2 to the Registrant's Current Report on Form 8-K dated March 20, 1998, and incorporated herein by reference.) 4.4 Form of 7.125% Note due 2008 (filed as Exhibit 4.3 to the Registrant's Current Report on Form 8-K dated March 20, 1998, and incorporated herein by reference.) 4.5 Form of Supplemental Indenture No. 2 dated June 21, 1999, by and among Registrant and First Union National Bank, Trustee, relating to $100,000,000 of 8.125% Notes due 2004 (filed as Exhibit 4.2 to the Registrant's Current Report on Form 8-K dated June 17, 1999, and incorporated herein by reference). 4.6 Form of 8.125% Notes due 2004 (filed as Exhibit 4.3 to the Registrant's Current Report on Form 8-K dated June 17, 1999, and incorporated herein by reference). 4.7 Form of Supplemental Indenture No. 3 dated September 20, 2000, by and among Registrant and First Union National Bank, Trustee, relating to $20,000,000 of 8.5% Notes due 2010 (filed as Exhibit 4.2 to the Registrant's Current Report on Form 8-K dated September 20, 2000, and incorporated herein by reference). 4.8 Form of 8.5% Notes due 2010 (filed as Exhibit 4.3 to the Registrant's Current Report on Form 8-K dated September 20, 2000, and incorporated herein by reference). 10. Material Contracts 10.1 Letter Agreement dated July 10, 1992, amending Stock Purchase Agreement dated January 23, 1992 (filed as Exhibit 10.34 to the Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 1992, and incorporated herein by reference). 10.2 Advisory Agreement between Registrant and CNL Realty Advisors, Inc. effective as of April 1, 1993 and renewed January 1, 1997 (filed as Exhibit 10.04 to Amendment No. 1 to the Registrant's Registration Statement No. 33-61214 on Form S-2, and incorporated herein by reference). 10.3 1992 Commercial Net Lease Realty, Inc. Stock Option Plan (filed as Exhibit No. 10(x) to the Registrant's Registration Statement No. 33-83110 on Form S-3, and incorporated herein by reference). 10.4 Secured Promissory Note, dated December 14, 1995, among Registrant and Principal Mutual Life Insurance Company relating to a $13,150,000 loan (filed as Exhibit 10.15 to the Registrant's Current Report on Form 8-K dated January 18, 1996, and incorporated herein by reference). 10.5 Mortgage and Security Agreement, dated December 14, 1995, among Registrant and Principal Mutual Life Insurance Company relating to a $13,150,000 loan (filed as Exhibit 10.16 to the Registrant's Current Report on Form 8-K dated January 18, 1996, and incorporated herein by reference). 10.6 Loan Agreement, dated January 19, 1996, among Registrant and Principal Mutual Life Insurance Company relating to a $39,450,000 loan (filed as Exhibit 10.12 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 1995, and incorporated herein by reference). 10.7 Secured Promissory Note, dated January 19, 1996, among Registrant and Principal Mutual Life Insurance Company relating to a $39,450,000 loan (filed as Exhibit 10.13 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 1995, and incorporated herein by reference). 10.8 Agreement and Plan of Merger dated May 15, 1997, by and among Commercial Net Lease Realty, Inc. and Net Lease Realty II, Inc. and CNL Realty Advisors, Inc. and the Stockholders of CNL Realty Advisors, Inc. (filed as Exhibit 10.1 to the Registrant's Current Report on Form 8-K dated May 16, 1997, and incorporated herein by reference). 10.9 Fourth Amended and Restated Line of Credit and Security Agreement, dated August 6, 1997, by and among Registrant, certain lenders and First Union National Bank, as the Agent, relating to a $200,000,000 loan (filed as Exhibit 10 to the Registrant's Current Report on Form 8-K dated September 12, 1997, and incorporated herein by reference). 10.10 Fifth Amended and Restated Line of Credit and Security Agreement, dated September 23, 1999, by and among Registrant, certain lenders and First Union National Bank, as the Agent, relating to a $200,000,000 loan (filed as Exhibit 10.13 to the Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 1999 and incorporated herein by reference). 10.11 Sixth Amended and Restated Line of Credit and Security Agreement, dated October 26, 2000, by and among Registrant, certain lenders and First Union National Bank, as the Agent, relating to a $200,000,000 loan (filed as Exhibit 10.11 to the Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 2000 and incorporated herein by reference). 12. Statement of Computation of Ratios of Earnings to Fixed Charges (filed herewith). 13. Annual Report to Shareholders for the year ended December 31, 2000 (filed herewith). 23. Consent of Independent Accountants dated March 30, 2001 (filed herewith). (b) No reports on Form 8-K were filed during the quarter ended December 31, 2000.