UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D. C. 20549FORM 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, 2001OR[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from toCommission file number 0-12989COMMERCIAL NET LEASE REALTY, INC.(Exact name of registrant as specified in its charter)
450 South Orange Avenue, Suite 900Orlando, Florida 32801(Address of principal executive offices, including zip code)Registrant's telephone number, including area code: (407) 265-7348Securities registered pursuant to Section 12(b)(6) of the Act:
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. [ ]The aggregate market value of voting stock held by non-affiliates of the registrant as of February 28, 2002 was $488,804,820.The number of shares of common stock outstanding as of February 28, 2002 was 40,651,054.
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, 2001 (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 2002 Annual Meeting of Shareholders (Items 10, 11, 12 and 13 of Part III).
PART I
Item 1. BusinessCommercial Net Lease Realty, Inc., a Maryland corporation is a fully integrated, self-administered real estate investment trust (“REIT”) formed in 1984. Commercial Net Lease Realty, Inc. and its wholly-owned subsidiaries (the “Registrant” or the “Company”), 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 $8.0 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. PropertiesAs of December 31, 2001, the Company owned 351 properties (the “Properties”) that are leased to major businesses, including Academy, Barnes & Noble, Bed, Bath & Beyond, Bennigan’s, Best Buy, Borders, Eckerd, Food 4 Less, Good Guys, OfficeMax and The Sports Authority. Approximately 89 percent of the gross leasable area of the Company’s Property portfolio was leased at December 31, 2001. 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 2001, one of the Company’s lessees, Eckerd Corporation, accounted for more than 10 percent of the Company’s total rental income (including the Company’s share of rental income from nine properties owned by one of the Company’s unconsolidated affiliates). As of December 31, 2001, Eckerd Corporation leased 49 properties (including three properties under leases with one of the Company’s unconsolidated affiliates). It is anticipated that, based on the minimum rental payments required by the leases, Eckerd Corporation will continue to account for more than 10 percent of the Company’s total rental income in 2002. Any failure of this lessee to make its lease payments when they are due could materially affect the Company’s income.Investment in Consolidated SubsidiariesDuring its course of business, the Company has formed or acquired eighteen 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), CNLR LP Corp. (April 2000), ECK-Falls Church, LLC (October 2001) and CNLR Texas GP Corp. (October 2001). The following subsidiaries were acquired with the Captec Net Lease Realty, Inc. ("Captec") merger: CNLR Texas Opportunity, L.P., CNLR Texas Ster L.P., CNLR Ster Florida, LLC, CNLR Ster Glendale Arizona, LLC, CNLR Ster Paradise Valley Arizona, LLC, CNLR Ster Richmond Virginia, LLC, CNLR Ster Toledo Ohio, LLC, Commercial Net Lease Realty Trust and Hollywood CNLR, LLC (December 2001) (the "Former Captec Subsidiaries"). Net Lease Realty I, Inc., Net Lease Realty IV, Inc. and ECK-Falls Church, LLC 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 are currently not engaged in any business operations, and Net Lease Realty III, Inc. is the general partner of and holds a 20 percent interest in Net Lease Institutional Realty, L.P. Net Lease Funding, Inc. holds a non-voting and non-controlling interest in two entities that hold an interest in mortgage loans. CNLR Texas GP Corp. was formed to serve as the general partner to various partnerships that own real estate. The Former Captec Subsidiaries own real estate. 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 AffiliatesIn May 1999, the Company transferred its build-to-suit development operation to a 95-percent-owned, taxable unconsolidated subsidiary, Commercial Net Lease Realty Services, Inc. (“Services”). The Company contributed $5,700,000 of real estate and other assets to Services in exchange for 5,700 shares of non-voting common stock. In connection with its contribution, the Company received a 95 percent, non-controlling interest in Services and was entitled to receive 95 percent of the dividends paid by Services. On December 31, 2001, the Company contributed an additional $20,042,000 of real estate. As a result of its additional contribution, as of January 1, 2002 the Company will have a 98.7 percent, non-controlling interest in Services and will be entitled to receive 98.7 percent of the dividends paid by Services. The Company has also entered into a secured line of credit agreement with Services for a $85,000,000 revolving credit facility. The credit facility is secured by a first mortgage on Services’ properties. In addition, the Company entered into lines of credit and security agreements with wholly-owned subsidiaries of Services for $55,500,000 of revolving credit facilities. Collectively, these agreements provide an aggregate borrowing capacity of $140,500,000 to Services and its wholly-owned subsidiaries and each agreement has an expiration date of October 31, 2003. Services acquires, develops, leases and sells freestanding retail properties. The Company accounts for its interest in Services and its wholly-owned subsidiaries under the equity method of accounting. 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, 2001, the Partnership owned nine properties (the “Partnership Properties”), of which eight are 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 $137,000 to $730,000 and building sites ranging from 11,000 to 54,000 square feet. 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. In June and November 2001, the Company entered into LLC arrangements, CNL Commercial Holdings I, LLC and CNL Commercial Holdings II, LLC, respectively, with CNL Commercial Finance, Inc., a related party. These limited liability companies hold an interest in mortgage loans. The Company holds a non-voting and non-controlling interest of 42.737 percent and 43.997 percent, respectively in these investments, and accounts for its interests under the equity method of accounting. Advisory ServicesOn 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. The Company has issued the entire Share Balance as of December 31, 2001. 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. MergerOn December 1, 2001, the Company acquired 100 percent of Captec, a publicly traded real estate investment trust, which owned 135 freestanding, net lease properties located in 26 states. Captec shareholders received $11,839,000 in cash, 4,349,918 newly issued Commercial Net Lease Realty common shares and 1,999,974 newly issued shares of Commercial Net Lease Realty’s 9% Class A Perpetual Preferred Stock. The merger was accounted for under the purchase method of accounting. Under the purchase method of accounting, the merger acquisition price of $124,722,000 was allocated to the assets acquired and liabilities assumed at their fair values. As a result, the Company did not record goodwill.CompetitionThe Company generally competes with other REITs, 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 REITs own, manage or develop retail properties. EmployeesAs of December 31, 2001, the Company employed 35 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. PropertiesAs of December 31, 2001, the Company owned 351 Properties located in 40 states, 89 percent of which are leased to 94 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 PropertiesLand. The Company’s Property sites range from approximately 15,000 to 583,000 (average of 103,000) 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 $73,000 to $8,882,000 (average of $1,014,000).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 83,000 (average of 19,000) square feet. Building costs range from $45,000 to $7,082,000 (average of $1,411,000) 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, 2001, 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 $1,248,000 (average of $252,000). 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 two to 12 percent after every one to 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, 2001, leases representing approximately 84 percent of annual base rent include contractual increases, leases representing approximately 23 percent of annual base rent include percentage rent provisions and leases representing approximately 15 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 2001, one of the Company’s lessees, Eckerd Corporation (a retail drugstore chain that is a wholly-owned subsidiary of J.C. Penny Company, Inc.) accounted for more than 10 percent of the Company’s total rental income (including the Company’s share of rental income from the Partnership Properties). As of December 31, 2001, Eckerd Corporation leased 49 properties (including three properties under leases with the Partnership), representing 8.6 percent of the Company’s 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, 2001. The Company generally competes with other REITs, 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 12 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 ProceedingsThe Company is a 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. On January 4, 2002, the Magistrate Judge in this action submitted a Report and Recommendation to the Federal Court Judge which recommended that the Company’s motion for summary judgment of dismissal of the action be granted. The Company believes, in the unlikely event that (i) the Federal Court Judge in this action overrules the Magistrate Judge’s Report and Recommendation and (ii) the Company is subsequently held liable, the resulting judgment would not materially affect the Company’s operations or financial condition. Beginning July 9, 2001, following the public announcement of the Company’s proposed merger with Captec, various Captec stockholders filed three lawsuits against Captec and its directors in the Chancery Court of the State of Delaware for New Castle County and an additional lawsuit in the United Stated District Court for the Eastern District of Michigan (the “Michigan Lawsuit”) alleging breaches of fiduciary duty in connection with the merger and in connection with the sale of certain assets of Captec to CRC Asset Acquisition LLC, a Michigan limited liability company controlled by a Captec officer. The Michigan Lawsuit also named the Company, but the Company has since been dismissed as a party to that lawsuit. On October 11, 2001, the Chancery Court of the State of Delaware for New Castle County issued an order consolidating the three Delaware Lawsuits into one action, IN RE CAPTC NET LEASE REALTY, INC. SHAREHOLDERS LITIGATION, CONSOLIDATED C.A. No. 19008-NC (the “Consolidated Action”). The plaintiffs are seeking a declaration that the action is properly maintainable as a class action, equitable relief that would enjoin the proposed merger and unspecified damages. The plaintiffs also sought a preliminary injunction barring the Company’s proposed acquisition of Captec. Captec and the other defendants have entered into a Memorandum of Understanding with the plaintiffs (“MOU”), pursuant to which the parties agreed in principle to settle the Consolidated Action. Under the MOU, Captec agreed to provide to its shareholders additional disclosures concerning the proposed merger with the Company and agreed, if the settlement is approved ultimately by the court, to pay plaintiffs’ attorneys’ fees in an amount to be determined by the court but not to exceed $350,000, which had been properly accrued by Captec. The parties agreed in the MOU to withdraw their preliminary injunction request, to negotiate and execute a Stipulation of Settlement, and to submit the Stipulation of Settlement to the court for approval. If a Stipulation of Settlement is not executed by the parties or if the Stipulation of Settlements not approved by the court, the Consolidated Action could continue and could result in damage awards against Captec and/or its directors, damages for which the Company, as successor in interest to Captec, could be responsible. At this stage of the anticipated settlement of the Consolidated Action, management is not in a position to assess the likelihood that the settlement will not be consummated in substantial conformance with the MOU. On January 24, 2002, Phillip Goldstein and Judy Kauffman Goldstein, beneficial owners of shares of Captec stock held of record by Cede & Co. who alleged that they did not vote for the merger (and who alleged that they caused a written demand for appraisal of their Captec shares to be served on Captec), filed in the Chancery Court of the State of Delaware in and for New Castle County a Petition for Appraisal of Stock, PHILLIP GOLDSTEIN, JUDY KAUFFMAN GOLDSTEIN and CEDE & CO. v. COMMERCIAL NET LEASE REALTY, INC., C.A. No. 19368NC (“Appraisal Action”). The Appraisal Action alleges that 1,072,146 shares of Captec dissented from the merger and seeks to require the Company to pay to all Captec shareholders who have demanded appraisal of their shares the fair value of those shares, with interest from the date of the merger. The Appraisal Action also seeks to require the Company to pay all costs of the proceeding, including fees and expenses for plaintiff’s attorneys and experts. At this early stage in the Appraisal Action, management is not in a position to assess the likelihood, or amount, of any potential award to the dissenting shareholders. On January 4, 2002, Calapasas Investment Partnership No. 1 Limited Partnership, a Captec shareholder, filed a class action complaint against Captec, certain former Captec directors, and the Company (as successor in interest to Captec) in the United States District Court for the Northern District of California, CALAPASAS INVESTMENT PARTNERSHIP NO. 1 LIMITED PARTNERSHIP v. CAPTEC NET LEASE REALTY, INC, a Delaware Corporation; COMMERCIAL NET LEASE REALTY, INC. (as successor in interest to CAPTEC); PATRICK L. BEACH; W. ROSS MARTIN; H. REID SHERARD; RICHARD J. PETERS; LEE C. HOWLEY; and WILLIAM H. KRUL III, Case No. C 02 00071 PJH. In its complaint Calapasas alleged that Captec and certain of its directors violated provisions of the Securities and Exchange Act of 1934 by misrepresenting the value of certain Captec assets on certain of its financial statements in 2000 and 2001 (the “Calapasas Action”). The Calapasas Action asserts that it is brought on behalf of a class consisting of all persons and entities (except insiders) who purchased Captec common stock between August 9, 2000 and prior to July 2, 2001. The Calapasas Action seeks to be certified as a class action and seeks compensatory and punitive damages for the plaintiff and other members of the class, as well as costs and expenses, including fees for plaintiff’s attorneys, accountants and experts. The Calapasas Action could result in damage awards against Captec and/or its directors, damages for which the Company, as successor in interest to Captec, could be responsible. At this early stage in the Calapasas Action, management is not in a position to assess the likelihood, or amount, of any potential damage award to the plaintiff class.In the ordinary course of its business, the Company is a party to various other legal actions which management believes are routine in nature and incidental to the operation of the business of the Company. Management believes that the outcome of the proceedings will not have a material adverse effect upon its operation or financial condition.Item 4. Submission of Matters to a Vote of Security HoldersNone.
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 60 of the Registrant’s Annual Report to Shareholders for the year ended December 31, 2001; 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 DataInformation 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, 2001; 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 15 through 27 of the Registrant’s Annual Report to Shareholders for the year ended December 31, 2001; 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 RiskInformation 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 26 and 27 of the Registrant’s Annual Report to Shareholders for the year ended December 31, 2001; 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 59 of the Registrant’s Annual Report to Shareholders for the year ended December 31, 2001; 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, 2001, are incorporated herein by reference. Item 9. Changes in and Disagreements with Accountants on Accounting and Financial DisclosureNone.
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 TransactionsReference 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
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 27th of March, 2002.
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.
COMMERCIAL NET LEASE REALTY, INC. AND SUBSIDIARIESSCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION AND AMORTIZATIONDecember 31, 2001
Initial cost to company ------------------------------- Building, improvements and Encumbrances leasehold (m) Land interests - ---------------------------------- ------------ ------------ ------------ 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 Albertsons: Watsonville, CA - 805,056 - Lodi, CA - 613,710 - Sonora, CA - 587,782 - Applebee's: Ballwin, MO - 1,496,173 1,403,581 Arby's: Colorado Springs, CO - 205,957 533,540 Thomson, GA - 267,842 503,550 Whitmore Lake, MI - 170,515 468,916 Albuquerque, NM - 442,991 507,790 Albuquerque, NM - 250,881 513,970 Santa Fe, NM - 450,358 341,960 Washington Courthouse, OH - 156,875 545,841 Babies "R" Us: Arlington, TX - 830,689 2,611,867 Independence, MO - 1,678,794 2,301,909 Barnes & Noble: Brandon, FL 1,302,214 (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 - 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 - Bennigan's: Aurora, CO - 1,064,850 1,260,409 Milford, CT - 921,200 697,298 Altamonte Springs, FL - 1,088,282 924,425 Gainesville, FL - 751,687 848,816 Jacksonville, FL - 1,359,559 1,026,095 Schaumburg, IL - 2,064,964 1,311,190 Flint, MI - 496,299 895,296 Raleigh, NC - 793,017 876,727 Tulsa, OK - 1,013,184 1,290,590 Wichita Falls, TX - 818,611 1,107,418 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 Denver, CO - 8,881,890 4,372,684 Blockbuster: Conyers, GA - 320,029 556,282 Mobile, AL - 491,453 498,488 Mobile, AL - 843,121 562,498 Gainesville, GA - 294,882 611,570 Glasgow, KY - 302,859 560,904 Alice, TX - 318,285 578,268 Kingsville, TX - 498,849 457,695 BMW: Duluth, GA - 4,433,613 4,080,186 Borders Books & Music: Wilmington, DE 3,942,500 (l) 3,030,769 6,061,538 Richmond, VA 2,071,302 (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 Springs, FL - 1,947,198 - Boston Market: Geneva, IL - 1,125,347 1,036,952 Orland Park, IL - 562,384 556,201 Wheaton, IL - 1,115,457 1,014,184 Burton, MI - 619,778 707,242 Novi, MI - 835,669 651,108 North Olmsted, OH - 601,800 460,521 Warren, OH - 562,446 467,592 Dunmore, PA - 773,882 496,976 Boxley Enterprises: Orlando, FL - 220,632 258,483 Buffalo Wild Wings: Michigan City, IN - 162,538 492,007 Burger King: Colonial Heights, VA - 662,345 609,787 Charles Town, WV - 580,288 640,282 Carino's: Beaumont, TX - 439,076 1,363,447 Lewisville, TX - 1,369,836 1,018,659 Lubbock, TX - 1,007,432 1,205,512 Champps: Alpharetta, GA - 3,032,965 1,641,820 Irving, TX - 1,760,020 1,724,220 Checkers: Orlando, FL - 256,568 - Claim Jumper: Tempe, AZ - 2,530,892 2,920,575 Roseville, CA - 1,556,732 2,013,650 Computer City: Baton Rouge, LA - 609,069 913,603 Miami, FL 1,985,869 (l) 2,713,192 1,866,676 Damon's: Chandler, AZ - 654,765 765,164 Dave & Buster's: Utica, MI - 3,776,169 - Denny's: Tucson, AZ - 827,002 305,209 Hammond, LA - 247,600 813,514 Columbus, TX - 428,429 816,644 Henderson, TX - 453,329 463,648 Red Oak, TX - 73,290 520,950 Tyler, TX - 464,490 457,479 Dick's Clothing: Taylor, MI - 1,920,032 3,526,868 White Marsh, MD - 2,680,532 3,916,889 Donato's: Medina, OH - 405,113 463,582 Eckerd: San Antonio, TX 531,152 (l) 440,985 - Dallas, TX 511,734 (l) 541,493 - Arlington, TX 435,791 (l) 368,964 - Millville, NJ 540,512 (l) 417,603 - Atlanta, GA 483,032 (l) 445,593 - Mantua, NJ 561,921 (l) 344,022 - Amarillo, TX 500,009 (l) 329,231 - Amarillo, TX 649,844 (l) 650,864 - Glassboro, NJ 616,478 (l) 534,243 - Kissimmee, FL 718,166 (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 585,099 (l) 2,068,089 - Richardson, TX - 2,553,094 - Gladstone, MO 299,398 1,851,374 - Falls Church, VA - 3,125,610 - Fazoli's Restaurant: Bay City, MI - 647,055 633,899 Food 4 Less: Lemon Grove, CA - 3,695,816 - Chula Vista, CA - 3,568,862 - Gateway: Glendale, AZ - 341,713 982,429 Golden Corral: Gilmer, TX - 116,815 296,454 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 Pleasanton, TX - 139,694 316,070 Lake Placid, FL - 115,113 305,074 Franklin, LA (e) - 105,840 396,831 Tampa, FL - 1,187,614 1,339,000 Brandon, FL - 1,329,793 1,390,502 Dallas, TX - 1,138,129 1,024,747 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 Nacogdoches, TX - 397,074 1,257,402 Hollywood Video: Cincinnati, OH - 282,200 520,623 Clifton, CO - 245,462 732,477 Homelife: Clearwater, FL - 1,184,438 2,526,207 Orlando, FL 1,303,044 (l) 820,397 2,184,721 Pensacola, FL 1,405,758 633,125 1,595,405 Raleigh, NC 1,859,454 1,848,026 1,753,635 Tampa, FL 1,790,309 1,454,908 2,045,833 Hooters: Tampa, FL - 783,923 504,768 International House of Pancakes: Stafford, TX 413,626 (l) 382,084 - Sunset Hills, MO 437,163 (l) 271,853 - Las Vegas, NV 491,508 (l) 519,947 - Ft. Worth, TX 457,256 (l) 430,896 - Arlington, TX 439,091 (l) 404,512 - Matthews, NC 449,093 (l) 380,043 - Phoenix, AZ 452,115 (l) 483,374 - Midwest City, OK - 407,268 - Jared Jewelers: Richmond, VA - 955,134 1,336,152 Jo-Ann etc: Corpus Christi, TX - 818,448 896,395 Just for Feet: Albuquerque, NM - 1,441,777 2,335,475 Kash N' Karry: Palm Harbor, FL - 335,851 - Gainesville, FL - 317,386 - Brandon, FL - 322,476 - Sarasota, FL - 470,600 - Keg Steakhouse: Gresham, OR - 817,311 108,294 Bellingham, WA - 397,443 455,605 Lynnwood, WA - 1,255,513 649,236 Tacoma, WA - 526,792 794,722 KFC: Marysville, WA - 646,779 545,592 Erie, PA - 516,508 496,092 Kona Steakhouse: Round Rock, TX - 714,863 836,483 Kroger: Columbus, OH - 780,838 520,559 Michaels: Grapevine, TX - 1,017,934 2,066,715 Mountain Jack's: Southfield, MI - 366,448 643,759 Centerville, OH - 850,625 1,059,430 Office Depot: Arlington, TX 870,450 (l) 596,024 1,411,432 Richmond, VA - 888,772 1,948,036 OfficeMax: Corpus Christi, TX - 893,270 978,344 Dallas, TX 1,226,414 (l) 1,118,500 1,709,891 Cincinnati, OH 918,399 (l) 543,489 1,574,551 Evanston, IL 1,572,025 (l) 1,867,831 1,757,618 Altamonte Springs, FL - 1,689,793 3,050,160 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 - Perfect Teeth: Rio Rancho, NM - 255,781 507,855 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 Pizza Hut: Monroeville, AL - 547,300 44,237 Popeye's: Snellville, GA - 642,169 436,512 Rally's: Toledo, OH - 125,882 319,770 Red Robin: Highlands Ranch, CO - 1,339,532 2,273,361 Columbus, OH - 1,032,008 1,107,250 Issaquah, WA - 1,530,700 1,939,837 Riser Foods: Maple Heights, OH - 1,034,758 2,874,414 Rite Aid: Mobile, AL - 1,136,618 1,694,187 Orange Beach, AL - 1,409,980 1,996,043 Roadhouse Grill: Cheektowaga, NY - 689,040 386,251 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 Schlotzsky's Deli: Phoenix, AZ - 706,306 315,469 Phoenix, AZ - 593,718 282,777 Scottsdale, AZ - 717,138 310,610 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 Skipper's Fish &Chips: Salem, OR - 555,951 735,651 Spokane, WA - 470,840 530,289 Sportmart: Chicago, IL - 2,761,710 3,757,120 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 Steak & Ale: Jacksonville, FL - 986,565 855,523 Indianapolis, IN - 639,584 1,015,173 Indianapolis, IN - 398,841 1,011,771 Oklahoma City, OK - 463,814 927,781 Richmond, VA - 712,840 995,148 Friendswood, TX - 463,947 1,011,053 Garland, TX - 366,044 932,988 Stop & Go: Grand Prairie, TX - 421,254 684,568 Kennedale, TX - 399,988 692,190 SuperValu: Huntington, WV - 1,254,238 760,602 Warwick, RI - 1,699,330 - Taco Bell: Ocala, FL - 275,023 754,990 Ormond Beach, FL - 632,337 525,616 Brooklyn Park, MN - 283,782 418,740 Chanhassen, MN - 291,317 648,900 Saint Cloud, MN - 279,243 301,790 West Saint Paul, MN - 476,860 1,292,650 Target: Chico, CA - 1,269,272 - Victorville, CA - 1,908,815 - San Diego, CA - 2,672,390 - Texas Roadhouse: Grand Junction, CO - 584,237 920,143 Thornton, CO - 598,556 1,019,164 TGI Friday's: Corpus Christi, TX - 1,209,702 1,532,125 Tony Roma's: Montgomery, AL - 1,418,158 1,140,080 Fort Myers, FL - 1,031,217 1,179,350 Top's: Lacey, WA - 2,777,449 7,082,150 United Trust Bank: Bridgeview, IL - 673,238 744,154 Vacant Land: Little Rock, AR - 539,094 - Vacant Property: Garland, TX 411,776 (l) 239,014 626,170 Orlando, FL - 1,157,268 2,077,131 Orlando, FL - 521,489 1,004,226 Fairfax, VA - 2,156,801 3,119,408 Altamonte Springs, FL - 2,906,409 4,877,225 Ft. Myers, FL - 1,956,579 4,045,196 Bowie, MD - 1,965,508 4,221,074 White Marsh, MD - 3,762,030 - Rincon, GA - 244,607 1,166,045 Bourbonnais, IL - 298,192 1,329,492 Mount Vernon, IL - 227,161 1,088,189 Muskogee, OK - 241,858 1,165,932 Stillwater, OK - 253,603 1,086,792 Everett, PA - 226,366 1,159,833 Lebanon, PA - 211,611 1,122,630 Clovis, NM - 230,270 1,117,126 Middletown, OH - 240,849 1,095,714 Conway, SC - 247,173 1,140,660 Copperas Cove, TX - 445,558 943,339 Augusta, GA - 176,656 674,253 Mesa, AZ - 195,652 512,566 Riverdale, GA - 255,286 344,714 Swansea, IL - 183,366 529,761 Eden Prairie, MN - 259,665 722,153 Florissant, MO - 325,472 580,155 Greenville, NC - 244,905 314,186 Wilmington, NC - 218,126 327,329 Wilmington, NC - 86,540 113,460 Kearney, NE - 250,454 613,182 Vons: Moreno Valley, CA - 759,052 1,652,162 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 Waremart: Eureka, CA - 3,135,036 5,470,607 Wendy's Old Fashioned Hamburger: Fenton, MO - 307,068 496,410 Sacramento, CA - 585,872 - New Kensington, PA - 501,136 333,445 Whataburger: Albuquerque, NM - 624,318 418,975 Wherehouse Music: Homewood, AL - 1,031,974 696,950 Leasehold Interests: - 3,380,756 - ------------ ------------ ------------ $ 30,232,502 $350,742,943 $352,416,770 ============ ============ ============ 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 Springs, 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 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 424,692 (l) 158,851 855,348 Glassboro, NJ - - 887,497 Kissimmee, FL - - 933,852 Alice, TX 430,932 (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 Heights, FL 838,855 (l) 88,604 1,845,988 Chattanooga, TN 883,503 (l) 336,488 1,701,072 Lynchburg, VA - 128,216 1,674,167 Martinsburg, WV 863,844 (l) 448,648 1,543,573 Good Guys, The: Stockton, CA 1,541,685 (l) 580,609 2,974,868 Portland, OR - 817,574 2,630,652 Heilig-Meyers: York, PA - 279,312 1,109,609 Marlow Heights, MD - 415,926 1,397,178 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 Jared Jewelers: Aurora, IL - (n) 1,928,871 Glendale, AZ - (n) 1,599,105 Oviedo, FL 694,415 (n) 1,500,145 Phoenix, AZ 619,259 (n) 1,241,825 Toledo, OH - (n) 1,457,625 Lewisville, TX 481,010 (n) 1,502,903 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 ------------ ------------ ------------ $ 6,778,195 $ 6,048,580 $101,939,424 ============ ============ ============ Costs capitalized subsequent to Gross amount at which acquisition carried at close of period (b) ---------------------------- --------------------------------------------- Building, improvements and Carrying leasehold Improvements costs Land interests Total - -------------------------------- ------------ ------------ ------------ ------------ ------------ 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 Albertsons: Watsonville, CA - - 805,056 - 805,056 Lodi, CA - - 613,710 - 613,710 Sonora, CA - - 587,782 - 587,782 Applebee's: Ballwin, MO - - 1,496,173 1,403,581 2,899,754 Arby's: Colorado Springs, CO - - 205,957 533,540 739,497 Thomson, GA - - 267,842 503,550 771,392 Whitmore Lake, MI - - 170,515 468,916 639,431 Albuquerque, NM - - 442,991 507,790 950,781 Albuquerque, NM - - 250,881 513,970 764,851 Santa Fe, NM - - 450,358 341,960 792,318 Washington Courthouse, OH - - 156,875 545,841 702,716 Babies "R" Us: Arlington, TX - - 830,689 2,611,867 3,442,556 Independence, MO - - 1,678,794 2,301,909 3,980,703 Barnes & Noble: 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 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 Bennigan's: Aurora, CO - - 1,064,850 1,260,409 2,325,259 Milford, CT - - 921,200 697,298 1,618,498 Altamonte Springs, FL - - 1,088,282 924,425 2,012,707 Gainesville, FL - - 751,687 848,816 1,600,503 Jacksonville, FL - - 1,359,559 1,026,095 2,385,654 Schaumburg, IL - - 2,064,964 1,311,190 3,376,154 Flint, MI - - 496,299 895,296 1,391,595 Raleigh, NC - - 793,017 876,727 1,669,744 Tulsa, OK - - 1,013,184 1,290,590 2,303,774 Wichita Falls, TX - - 818,611 1,107,418 1,926,029 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 Denver, CO - - 8,881,890 4,372,684 13,254,574 Blockbuster: Conyers, GA - - 320,029 556,282 876,311 Mobile, AL - - 491,453 498,488 989,941 Mobile, AL - - 843,121 562,498 1,405,619 Gainesville, GA - - 294,882 611,570 906,452 Glasgow, KY - - 302,859 560,904 863,763 Alice, TX - - 318,285 578,268 896,553 Kingsville, TX - - 498,849 457,695 956,544 BMW: Duluth, GA - - 4,433,613 4,080,186 8,513,799 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 Springs, FL - - 1,947,198 (c) 1,947,198 Boston Market: Geneva, IL - - 1,125,347 1,036,952 2,162,299 Orland Park, IL - - 562,384 556,201 1,118,585 Wheaton, IL - - 1,115,457 1,014,184 2,129,641 Burton, MI - - 619,778 707,242 1,327,020 Novi, MI - - 835,669 651,108 1,486,777 North Olmsted, OH - - 601,800 460,521 1,062,321 Warren, OH - - 562,446 467,592 1,030,038 Dunmore, PA - - 773,882 496,976 1,270,858 Boxley Enterprises: Orlando, FL - - 220,632 258,483 479,115 Buffalo Wild Wings: Michigan City, IN - - 162,538 492,007 654,545 Burger King: Colonial Heights, VA - - 662,345 609,787 1,272,132 Charles Town, WV - - 580,288 640,282 1,220,570 Carino's: Beaumont, TX - - 439,076 1,363,447 1,802,523 Lewisville, TX - - 1,369,836 1,018,659 2,388,495 Lubbock, TX - - 1,007,432 1,205,512 2,212,944 Champps: Alpharetta, GA - - 3,032,965 1,641,820 4,674,785 Irving, TX - - 1,760,020 1,724,220 3,484,240 Checkers: Orlando, FL - - 256,568 (c) 256,568 Claim Jumper: Tempe, AZ - - 2,530,892 2,920,575 5,451,467 Roseville, CA - - 1,556,732 2,013,650 3,570,382 Computer City: Baton Rouge, LA - - 609,069 913,603 1,522,672 Miami, FL - - 2,713,192 1,866,676 4,579,868 Damon's: Chandler, AZ - - 654,765 765,164 1,419,929 Dave & Buster's: Utica, MI - - 3,776,169 (c) 3,776,169 Denny's: Tucson, AZ - - 827,002 305,209 1,132,211 Hammond, LA - - 247,600 813,514 1,061,114 Columbus, TX - - 428,429 816,644 1,245,073 Henderson, TX - - 453,329 463,648 916,977 Red Oak, TX - - 73,290 520,950 594,240 Tyler, TX - - 464,490 457,479 921,969 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 Donato's: Medina, OH - - 405,113 463,582 868,695 Eckerd: San Antonio, TX - - 440,985 (c) 440,985 Dallas, TX - - 541,493 (c) 541,493 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 - - 457,659 (c) 457,659 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 213,000 - 2,553,094 (g) 2,553,094 Gladstone, MO 1,739,568 - 1,851,374 1,739,568 3,590,942 Falls Church, VA 2,360,700 - 3,125,610 (g) 3,125,610 Fazoli's Restaurant: Bay City, MI - - 647,055 633,899 1,280,954 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: Gilmer, TX - - 116,815 296,454 413,269 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 Pleasanton, TX - - 139,694 316,070 455,764 Lake Placid, FL - - 115,113 305,074 420,187 Franklin, LA (e) - - 105,840 396,831 502,671 Tampa, FL - - 1,187,614 1,339,000 2,526,614 Brandon, FL - - 1,329,793 1,390,502 2,720,295 Dallas, TX - - 1,138,129 1,024,747 2,162,876 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 Nacogdoches, TX - - 397,074 1,257,402 1,654,476 Hollywood Video: Cincinnati, OH - - 282,200 520,623 802,823 Clifton, CO - - 245,462 732,477 977,939 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 Hooters: Tampa, FL - - 783,923 504,768 1,288,691 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 Jared Jewelers: Richmond, VA - - 955,134 1,336,152 2,291,286 Jo-Ann etc: Corpus Christi, TX 12,222 - 818,448 908,617 1,727,065 Just for Feet: Albuquerque, NM - - 1,441,777 2,335,475 3,777,252 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 Keg Steakhouse: Gresham, OR - - 817,311 108,294 925,605 Bellingham, WA - - 397,443 455,605 853,048 Lynnwood, WA - - 1,255,513 649,236 1,904,749 Tacoma, WA - - 526,792 794,722 1,321,514 KFC: Marysville, WA - - 646,779 545,592 1,192,371 Erie, PA - - 516,508 496,092 1,012,600 Kona Steakhouse: Round Rock, TX - - 714,863 836,483 1,551,346 Kroger: Columbus, OH - - 780,838 520,559 1,301,397 Michaels: Grapevine, TX - - 1,017,934 2,066,715 3,084,649 Mountain Jack's: Southfield, MI - - 366,448 643,759 1,010,207 Centerville, OH - - 850,625 1,059,430 1,910,055 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 Springs, FL - - 1,689,793 3,050,160 4,739,953 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 Perfect Teeth: Rio Rancho, NM - - 255,781 507,855 763,636 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 Pizza Hut: Monroeville, AL - - 547,300 44,237 591,537 Popeye's: Snellville, GA - - 642,169 436,512 1,078,681 Rally's: Toledo, OH - - 125,882 319,770 445,652 Red Robin: Highlands Ranch, CO - - 1,339,532 2,273,361 3,612,893 Columbus, OH - - 1,032,008 1,107,250 2,139,258 Issaquah, WA - - 1,530,700 1,939,837 3,470,537 Riser Foods: Maple Heights, OH - - 1,034,758 2,874,414 3,909,172 Rite Aid: Mobile, AL - - 1,136,618 1,694,187 2,830,805 Orange Beach, AL - - 1,409,980 1,996,043 3,406,023 Roadhouse Grill: Cheektowaga, NY - - 689,040 386,251 1,075,291 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 Schlotzsky's Deli: Phoenix, AZ - - 706,306 315,469 1,021,775 Phoenix, AZ - - 593,718 282,777 876,495 Scottsdale, AZ - - 717,138 310,610 1,027,748 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 Skipper's Fish & Chips: Salem, OR - - 555,951 735,651 1,291,602 Spokane, WA - - 470,840 530,289 1,001,129 Sportmart: Chicago, IL - - 2,761,710 3,757,120 6,518,830 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 Steak & Ale: Jacksonville, FL - - 986,565 855,523 1,842,088 Indianapolis, IN - - 639,584 1,015,173 1,654,757 Indianapolis, IN - - 398,841 1,011,771 1,410,612 Oklahoma City, OK - - 463,814 927,781 1,391,595 Richmond, VA - - 712,840 995,148 1,707,988 Friendswood, TX - - 463,947 1,011,053 1,475,000 Garland, TX - - 366,044 932,988 1,299,032 Stop & Go: Grand Prairie, TX - - 421,254 684,568 1,105,822 Kennedale, TX - - 399,988 692,190 1,092,178 SuperValu: Huntington, WV - - 1,254,238 760,602 2,014,840 Warwick, RI - - 1,699,330 (c) 1,699,330 Taco Bell: Ocala, FL - - 275,023 754,990 1,030,013 Ormond Beach, FL - - 632,337 525,616 1,157,953 Brooklyn Park, MN - - 283,782 418,740 702,522 Chanhassen, MN - - 291,317 648,900 940,217 Saint Cloud, MN - - 279,243 301,790 581,033 West Saint Paul, MN - - 476,860 1,292,650 1,769,510 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 Texas Roadhouse: Grand Junction, CO - - 584,237 920,143 1,504,380 Thornton, CO - - 598,556 1,019,164 1,617,720 TGI Friday's: Corpus Christi, TX - - 1,209,702 1,532,125 2,741,827 Tony Roma's: Montgomery, AL - - 1,418,158 1,140,080 2,558,238 Fort Myers, FL - - 1,031,217 1,179,350 2,210,567 Top's: Lacey, WA - - 2,777,449 7,082,150 9,859,599 United Trust Bank: Bridgeview, IL - - 673,238 744,154 1,417,392 Vacant Land: Little Rock, AR - - 539,094 - 539,094 Vacant Property: Garland, TX - - 239,014 626,170 865,184 Orlando, FL - - 1,157,268 2,077,131 3,234,399 Orlando, FL - - 521,489 1,004,226 1,525,715 Fairfax, VA - - 2,156,801 3,119,408 5,276,209 Altamonte Springs, 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 White Marsh, MD 3,006,391 - 3,762,030 3,006,391 6,768,421 Rincon, GA - - 244,607 1,166,045 1,410,652 Bourbonnais, IL - - 298,192 1,329,492 1,627,684 Mount Vernon, IL - - 227,161 1,088,189 1,315,350 Muskogee, OK - - 241,858 1,165,932 1,407,790 Stillwater, OK - - 253,603 1,086,792 1,340,395 Everett, PA - - 226,366 1,159,833 1,386,199 Lebanon, PA - - 211,611 1,122,630 1,334,241 Clovis, NM - - 230,270 1,117,126 1,347,396 Middletown, OH - - 240,849 1,095,714 1,336,563 Conway, SC - - 247,173 1,140,660 1,387,833 Copperas Cove, TX - - 445,558 943,339 1,388,897 Augusta, GA - - 176,656 674,253 850,909 Mesa, AZ - - 195,652 512,566 708,218 Riverdale, GA - - 255,286 344,714 600,000 Swansea, IL - - 183,366 529,761 713,127 Eden Prairie, MN - - 259,665 722,153 981,818 Florissant, MO - - 325,472 580,155 905,627 Greenville, NC - - 244,905 314,186 559,091 Wilmington, NC - - 218,126 327,329 545,455 Wilmington, NC - - 86,540 113,460 200,000 Kearney, NE - - 250,454 613,182 863,636 Vons: Moreno Valley, CA - - 759,052 1,652,162 2,411,214 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 Waremart: Eureka, CA - - 3,135,036 5,470,607 8,605,643 Wendy's Old Fashioned Hamburger: Fenton, MO - - 307,068 496,410 803,478 Sacramento, CA - - 585,872 - 585,872 New Kensington, PA - - 501,136 333,445 834,581 Whataburger: Albuquerque, NM - - 624,318 418,975 1,043,293 Wherehouse Music: Homewood, AL - - 1,031,974 696,950 1,728,924 Leasehold Interests: - - 3,380,756 - 3,380,756 ------------ ------------ ------------ ------------ ------------ $ 36,014,502 $ - $349,651,924 $385,857,571 $735,509,495 ============ ============ ============ ============ ============ 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 Springs, 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) 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 Heights, 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: York, PA - - (d) (d) (d) Marlow Heights, MD - - (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) Jared Jewelers: Aurora, IL - - (n) (c) (c) Glendale, AZ - - (n) (c) (c) Oviedo, FL - - (n) (c) (c) Phoenix, AZ - - (n) (c) (c) Toledo, OH - - (n) (c) (c) Lewisville, TX - - (n) (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) ------------ ------------ ------------ ------------ ------------ $ 6,756,327 $ - $ - $ - $ - ============ ============ ============ ============ ============ Life on which depreciation and amortization Accumulated in latest depreciation Date income and of con- Date statement is amortization struction acquired computed - ---------------------------------- ------------ --------- --------- ------------ Real Estate the company has invested in under operating 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) Houston, TX 113,612 1976 03/99 40 years Pasadena, TX 152,186 1994 03/99 40 years Beaumont, TX 170,938 1992 03/99 40 years Adjacent Excess Space: Memphis, TN 42,160 1998 11/98 40 years Albertsons: Watsonville, CA - (f) 03/99 (f) Lodi, CA - (f) 03/99 (f) Sonora, CA - (f) 03/99 (f) Applebee's: Ballwin, MO 1,462 1995 12/01 40 years Arby's: Colorado Springs, CO 556 1998 12/01 40 years Thomson, GA 525 1997 12/01 40 years Whitmore Lake, MI 488 1993 12/01 40 years Albuquerque, NM 529 1993 12/01 40 years Albuquerque, NM 535 1988 12/01 40 years Santa Fe, NM 356 1998 12/01 40 years Washington Courthouse, OH 569 1998 12/01 40 years Babies "R" Us: Arlington, TX 359,676 1996 06/96 40 years Independence, MO 2,398 1996 12/01 40 years Barnes & Noble: Brandon, FL 266,414 1995 08/94 (h) 40 years Denver, CO 493,490 1994 09/94 40 years Houston, TX 374,387 1995 10/94 (h) 40 years Plantation, FL (c) 1996 05/95 (h) (c) Freehold, NJ 334,704 1995 01/96 40 years Dayton, OH 372,713 1996 05/97 40 years Redding, CA 184,585 1997 06/97 40 years Marlton, NJ 337,387 1998 11/98 40 years Bed, Bath & Beyond: Richmond, VA 279,346 1997 06/98 40 years Los Angeles, CA 241,359 1975 11/98 40 years Glendale, AZ 169,530 1999 12/98 (i) 40 years Bennigan's: Aurora, CO 1,313 1996 12/01 40 years Milford, CT 726 1988 12/01 40 years Altamonte Springs, FL 963 1988 12/01 40 years Gainesville, FL 884 1993 12/01 40 years Jacksonville, FL 1,069 1993 12/01 40 years Schaumburg, IL 1,366 1988 12/01 40 years Flint, MI 933 1993 12/01 40 years Raleigh, NC 913 1993 12/01 40 years Tulsa, OK 1,344 1993 12/01 40 years Wichita Falls, TX 1,154 1993 12/01 40 years Best Buy: Brandon, FL 337,854 1996 02/97 40 years Evanston, IL (c) 1994 02/97 (c) Cuyahoga Falls, OH 267,888 1970 06/97 40 years Rockville, MD 381,052 1995 07/97 40 years Fairfax, VA 351,971 1995 08/97 40 years St. Petersburg, FL 317,510 1997 09/97 40 years North Fayette, PA 203,020 1997 06/98 40 years Denver, CO 59,213 1991 06/01 40 years Blockbuster: Conyers, GA 63,161 1997 06/97 40 years Mobile, AL 519 1997 12/01 40 years Mobile, AL 586 1997 12/01 40 years Gainesville, GA 637 1997 12/01 40 years Glasgow, KY 584 1997 12/01 40 years Alice, TX 602 1995 12/01 40 years Kingsville, TX 477 1995 12/01 40 years BMW: Duluth, GA 4,250 1984 12/01 40 years Borders Books & Music: Wilmington, DE 1,064,843 1994 12/94 40 years Richmond, VA 426,405 1995 06/95 40 years Ft. Lauderdale, FL 574,358 1995 02/96 40 years Bangor, ME 343,657 1996 06/96 40 years Altamonte Springs, FL (c) 1997 09/97 (c) Boston Market: Geneva, IL 1,080 1996 12/01 40 years Orland Park, IL 579 1995 12/01 40 years Wheaton, IL 1,056 1995 12/01 40 years Burton, MI 737 1997 12/01 40 years Novi, MI 678 1995 12/01 40 years North Olmsted, OH 480 1996 12/01 40 years Warren, OH 487 1997 12/01 40 years Dunmore, PA 518 1996 12/01 40 years Boxley Enterprises: Orlando, FL 103,983 1974 08/93 20.9 years Buffalo Wild Wings: Michigan City, IN 513 1996 12/01 40 years Burger King: Colonial Heights, VA 635 1997 12/01 40 years Charles Town, WV 667 1985 12/01 40 years Carino's: Beaumont, TX 1,420 2000 12/01 40 years Lewisville, TX 1,061 1994 12/01 40 years Lubbock, TX 1,256 1995 12/01 40 years Champps: Alpharetta, GA 1,710 1999 12/01 40 years Irving, TX 1,796 2000 12/01 40 years Checkers: Orlando, FL (c) 1988 07/92 (c) Claim Jumper: Tempe, AZ 3,042 2000 12/01 40 years Roseville, CA 2,098 2001 12/01 40 years Computer City: Baton Rouge, LA 137,102 1995 12/95 40 years Miami, FL 359,463 1994 04/94 40 years Damon's: Chandler, AZ 797 1997 12/01 40 years Dave & Buster's: Utica, MI (c) 1998 06/98 (c) Denny's: Tucson, AZ 318 1974 12/01 40 years Hammond, LA 847 1997 12/01 40 years Columbus, TX 851 1997 12/01 40 years Henderson, TX 483 1995 12/01 40 years Red Oak, TX 543 1986 12/01 40 years Tyler, TX 477 1995 12/01 40 years Dick's Clothing: Taylor, MI 466,931 1996 08/96 40 years White Marsh, MD 518,567 1996 08/96 40 years Donato's: Medina, OH 483 1996 12/01 40 years Eckerd: San Antonio, TX (c) 1993 12/93 (c) Dallas, TX (c) 1994 01/94 (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) Amarillo, TX (c) 1994 12/94 (c) Amarillo, TX (c) 1994 12/94 (c) Glassboro, NJ (c) 1994 12/94 (c) Kissimmee, FL (c) 1995 04/95 (c) Tampa, FL (c) 1995 12/95 (c) Douglasville, GA 147,346 1996 01/96 40 years Lafayette, LA (c) 1995 01/96 (c) Moore, OK (c) 1995 01/96 (c) Midwest City, OK 160,683 1996 03/96 40 years Irving, TX (c) 1996 12/96 (c) Jasper, FL (c) 1994 01/97 (c) Williston, FL (c) 1995 01/97 (c) Pantego, TX 164,512 1997 06/97 40 years Conyers, GA 113,417 1997 06/97 40 years Norman, OK (c) 1997 06/97 (c) Chattanooga, TN (c) 1997 09/97 (c) Stone Mountain, GA 119,208 1997 09/97 40 years Arlington, TX 117,830 1998 11/97 (i) 40 years Leavenworth, KS 117,834 1998 11/97 (i) 40 years Augusta, GA 134,057 1997 12/97 40 years Riverdale, GA 172,523 1997 12/97 40 years Warner Robins, GA 90,771 1999 03/98 (i) 40 years Lewisville, TX 109,894 1998 04/98 (i) 40 years Forest Hill, TX 99,103 1998 04/98 (i) 40 years Del City, OK (c) 1998 05/98 (c) Arlington, TX (c) 1998 05/98 (c) Garland, TX 107,867 1998 06/98 (i) 40 years Garland, TX 109,397 1998 06/98 (i) 40 years Oklahoma City, OK 108,800 1999 08/98 (i) 40 years Vineland, NJ (c) 1999 09/98 (c) Richardson, TX - (g) 06/99 (g) Gladstone, MO 59,798 2000 12/99 (i) 40 years Falls Church, VA - (g) 10/01 (g) Fazoli's Restaurant: Bay City, MI 660 1997 12/01 40 years Food 4 Less: Lemon Grove, CA (c) 1996 07/95 (h) (c) Chula Vista, CA (c) 1995 11/98 (c) Gateway: Glendale, AZ 59,937 1999 12/98 (i) 40 years Golden Corral: Gilmer, TX 149,381 1984 12/84 35 years Leitchfield, KY 154,505 1984 12/84 35 years Marietta, GA 174,593 1984 12/84 35 years Atlanta, TX 185,211 1985 01/85 35 years Vernon, TX 162,122 1985 03/85 35 years Abbeville, LA 178,619 1985 04/85 35 years Pleasanton, TX 155,777 1985 05/85 35 years Lake Placid, FL 150,358 1985 05/85 35 years Franklin, LA 191,612 1985 07/85 35 years Tampa, FL 1,395 1997 12/01 40 years Brandon, FL 1,448 1998 12/01 40 years Dallas, TX 1,067 1994 12/01 40 years Good Guys, The: Foothill Ranch, CA 313,465 1995 12/96 40 years Riverside, CA 325,177 1995 05/97 40 years Clackamas, OR 128,099 1995 06/98 40 years Bellingham, WA 156,236 1994 06/98 40 years Federal Way, WA 147,119 1994 06/98 40 years East Palo Alto, CA 237,630 1999 12/98 (h) 40 years Heilig-Meyers: Baltimore, MD 63,521 1968 11/98 40 years Glen Burnie, MD 72,760 1968 11/98 40 years Nacogdoches, TX 98,235 1997 11/98 40 years Hollywood Video: Cincinnati, OH 542 1998 12/01 40 years Clifton, CO 763 1998 12/01 40 years Homelife: Clearwater, FL 544,548 1992 05/93 40 years Orlando, FL 469,491 1992 05/93 40 years Pensacola, FL 219,811 1994 06/96 40 years Raleigh, NC 241,612 1995 06/96 40 years Tampa, FL 281,870 1992 06/96 40 years Hooters: Tampa, FL 526 1993 12/01 40 years 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) Midwest City, OK - (k) 03/96 (k) Jared Jewelers: Richmond, VA 1,392 1998 12/01 40 years Jo-Ann etc: Corpus Christi, TX 183,918 1967 11/93 40 years Just for Feet: Albuquerque, NM 265,174 1997 06/97 40 years Kash N' Karry: Palm Harbor, FL - (f) 03/99 (f) Gainesville, FL - (f) 03/99 (f) Brandon, FL - (f) 03/99 (f) Sarasota, FL - (f) 03/99 (f) Keg Steakhouse: Gresham, OR 113 1993 12/01 40 years Bellingham, WA 475 1981 12/01 40 years Lynnwood, WA 676 1992 12/01 40 years Tacoma, WA 828 1981 12/01 40 years KFC: Marysville, WA 568 1996 12/01 40 years Erie, PA 517 1996 12/01 40 years Kona Steakhouse: Round Rock, TX 871 1998 12/01 40 years Kroger: Columbus, OH 63,443 1982 02/97 40 years Michaels: Grapevine, TX 182,990 1998 06/98 40 years Mountain Jack's: Southfield, MI 671 1976 12/01 40 years Centerville, OH 1,104 1986 12/01 40 years Office Depot: Arlington, TX 279,265 1991 01/94 40 years Richmond, VA 272,175 1996 05/96 40 years OfficeMax: Corpus Christi, TX 213,825 1967 11/93 40 years Dallas, TX 342,095 1993 12/93 40 years Cincinnati, OH 294,554 1994 07/94 40 years Evanston, IL 288,298 1995 06/95 40 years Altamonte Springs, FL 448,251 1995 01/96 40 years Cutler Ridge, FL 203,687 1995 06/96 40 years Sacramento, CA 370,347 1996 12/96 40 years Salinas, CA 222,949 1995 02/97 40 years Redding, CA 247,698 1997 06/97 40 years Kelso, WA 178,673 1998 09/97 (i) 40 years Lynchburg, VA 152,349 1998 02/98 40 years Leesburg, FL 146,687 1998 08/98 40 years Plymouth Meeting, PA 152,386 1999 10/98 (i) 40 years Tigard, OR 175,572 1995 11/98 40 years Dover, NJ 252,975 1995 11/98 40 years Griffin, GA 122,004 1999 11/98 (i) 40 years Oshman's Sporting Goods: Dallas, TX (c) 1994 03/94 (c) Party City: Memphis, TN 72,205 1999 12/98 40 years Perfect Teeth: Rio Rancho, NM 529 1997 12/01 40 years Petco: Grand Forks, ND 91,939 1996 12/97 40 years PETsMART: Chicago, IL 293,421 1998 09/98 40 years Pier 1 Imports: Anchorage, AK 242,699 1995 02/96 40 years Memphis, TN 93,305 1997 09/96 (h) 40 years Sanford, FL 76,126 1998 06/97 (h) 40 years Knoxville, TN 54,347 1999 01/98 (h) 40 years Mason, OH 56,237 1999 06/98 (h) 40 years Harlingen, TX 41,760 1999 11/98 (h) 40 years Valdosta, GA 42,814 1999 01/99 (h) 40 years Pizza Hut: Monroeville, AL 46 1996 12/01 40 years Popeye's: Snellville, GA 455 1995 12/01 40 years Rally's: Toledo, OH 78,355 1989 07/92 38.8 years Red Robin: Highlands Ranch, CO 2,368 1996 12/01 40 years Columbus, OH 1,153 1998 12/01 40 years Issaquah, WA 2,021 1995 12/01 40 years Riser Foods: Maple Heights, OH 350,319 1985 02/97 40 years Rite Aid: Mobile, AL 1,765 2000 12/01 40 years Orange Beach, AL 2,079 2000 12/01 40 years Roadhouse Grill: Cheektowaga, NY 402 1994 12/01 40 years Robb & Stucky: Ft. Myers, FL 636,578 1997 12/97 40 years Roger & Marv's: Kenosha, WI 413,509 1992 02/97 40 years Ross Dress For Less: Coral Gables, FL 167,549 1994 06/96 40 years Schlotzsky's Deli: Phoenix, AZ 329 1995 12/01 40 years Phoenix, AZ 295 1995 12/01 40 years Scottsdale, AZ 324 1995 12/01 40 years 7-Eleven: Land 'O Lakes, FL 60,420 1999 10/98 (i) 40 years Tampa Palms, FL 64,029 1999 12/98 (i) 40 years Shop & Save: Homestead, PA (c) 1994 02/97 (c) Penn Hills, PA 151,507 1991 02/97 40 years Silk City: Arlington, TX 378,870 1996 06/96 40 years Skipper's Fish & Chips: Salem, OR 766 1996 12/01 40 years Spokane, WA 552 1996 12/01 40 years Sportmart: Chicago, IL 3,914 1920 12/01 40 years Sports Authority: Tampa, FL 209,555 1994 06/96 40 years Memphis, TN 206,397 1998 12/97 (i) 40 years Little Rock, AR 218,913 1998 09/98 40 years Staples: Orlando, FL 43,188 1995 06/95 40 years Steak & Ale: Jacksonville, FL 891 1996 12/01 40 years Indianapolis, IN 1,057 1996 12/01 40 years Indianapolis, IN 1,054 1996 12/01 40 years Oklahoma City, OK 966 1996 12/01 40 years Richmond, VA 1,037 1996 12/01 40 years Friendswood, TX 1,053 1993 12/01 40 years Garland, TX 972 1996 12/01 40 years Stop & Go: Grand Prairie, TX 713 1986 12/01 40 years Kennedale, TX 721 1985 12/01 40 years SuperValu: Huntington, WV 92,698 1971 02/97 40 years Warwick, RI (c) 1992 02/97 (c) Taco Bell: Ocala, FL 786 2001 12/01 40 years Ormond Beach, FL 548 2001 12/01 40 years Brooklyn Park, MN 436 1996 12/01 40 years Chanhassen, MN 676 1997 12/01 40 years Saint Cloud, MN 314 1999 12/01 40 years West Saint Paul, MN 1,347 1999 12/01 40 years Target: Chico, CA - (f) 03/99 (f) Victorville, CA - (f) 03/99 (f) San Diego, CA - (f) 03/99 (f) Texas Roadhouse: Grand Junction, CO 958 1997 12/01 40 years Thornton, CO 1,062 1998 12/01 40 years TGI Friday's: Corpus Christi, TX 1,596 1995 12/01 40 years Tony Roma's: Montgomery, AL 1,188 1999 12/01 40 years Fort Myers, FL 1,229 1999 12/01 40 years Top's: Lacey, WA 863,137 1992 02/97 40 years United Trust Bank: Bridgeview, IL 775 1997 12/01 40 years Vacant Land: Little Rock, AR - - 09/98 - Vacant Property: Garland, TX 7,827 1994 02/94 40 years Orlando, FL 338,809 1995 06/95 40 years Orlando, FL 286,602 1995 06/95 40 years Fairfax, VA 38,993 1995 12/95 40 years Altamonte Springs, FL 523,286 1997 09/97 40 years Ft. Myers, FL 408,733 1997 12/97 40 years Bowie, MD 269,527 1997 12/97 38.5 years White Marsh, MD 284,981 1998 03/98 (i) 40 years Rincon, GA 13,014 1997 11/98 37.4 years Bourbonnais, IL 14,838 1997 11/98 37.4 years Mount Vernon, IL 14,509 1997 11/98 37.6 years Muskogee, OK 15,546 1997 11/98 37.5 years Stillwater, OK 14,491 1998 11/98 37.5 years Everett, PA 12,945 1998 11/98 37.4 years Lebanon, PA 12,529 1997 11/98 37.4 years Clovis, NM 26,948 1996 11/98 38 years Middletown, OH 12,229 1997 11/98 37.4 years Conway, SC 12,731 1997 11/98 37.4 years Copperas Cove, TX 73,698 1972 11/98 40 years Augusta, GA 702 1998 12/01 40 years Mesa, AZ 534 1997 12/01 40 years Riverdale, GA 359 1995 12/01 40 years Swansea, IL 552 1997 12/01 40 years Eden Prairie, MN 752 1997 12/01 40 years Florissant, MO 604 1997 12/01 40 years Greenville, NC 239 1994 12/01 40 years Wilmington, NC 341 1995 12/01 40 years Wilmington, NC 207 1980 12/01 40 years Kearney, NE 639 1997 12/01 40 years Vons: Moreno Valley, CA 115,307 1983 03/99 40 years Wal-Mart: Sealy, TX 103,526 1982 03/99 40 years Aransas Pass, TX 184,262 1983 03/99 40 years Winfield, AL 117,564 1983 03/99 40 years Corpus Christi, TX 150,677 1983 03/99 40 years Beeville, TX 161,597 1983 03/99 40 years Corpus Christi, TX 218,546 1983 03/99 40 years Waremart: Eureka, CA 666,730 1965 02/97 40 years Wendy's Old Fashioned Hamburger: Fenton, MO 143,182 1985 07/92 33 years Sacramento, CA - (k) 02/98 (k) New Kensington, PA 347 1980 12/01 40 years Whataburger: Albuquerque, NM 436 1995 12/01 40 years Wherehouse Music: Homewood, AL 726 1997 12/01 40 years Leasehold Interests: 604,283 - (p) (o) ------------ $ 31,678,077 ============ 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 Springs, 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) 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 Heights, 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: York, PA (d) 1997 11/98 (d) Marlow Heights, MD (d) 1968 11/98 (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) Jared Jewelers: Aurora, IL (c) 2000 12/01 (c) Glendale, AZ (c) 1998 12/01 (c) Oviedo, FL (c) 1998 12/01 (c) Phoenix, AZ (c) 1998 12/01 (c) Toledo, OH (c) 1998 12/01 (c) Lewisville, TX (c) 1998 12/01 (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) ------------ $ - ============
COMMERCIAL NET LEASE REALTY, INC. AND SUBSIDIARIESNOTES TO SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION AND AMORTIZATIONDecember 31, 2001
(a) Transactions in real estate and accumulated depreciation during 2001, 2000 and 1999 are summarized as follows:
(b) As of December 31, 2001, all of the leases are treated as operationg leases for federal income tax purposes. As of December 31, 2001, the aggregate cost of the properties owned by the Company and its subsidiaries for federal income tax purposes was $793,622,747.(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 the land for this property.(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) 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. (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 leasehold interests are amortized over the life of the respective leases which range from 4.5 and 12.5 years.(p) The leasehold interest sites were acquired between August 1999 and August 2001.
(a) The following shows the changes in the carrying amounts of mortgage loans during the years:
(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, 2001, 2000 and 1999 were $88,111,817, $69,756,217 and $36,113,091, respectively.(e) Mortgages totaling $1,425,000 and $18,634,755 were accepted in connection with the real estate for the year 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.