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, 1998 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) 455 South Orange Avenue, Suite 700 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 10 Year 7.125% Notes 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 11, 1999, was $328,260,598. The number of shares of common stock outstanding as of March 11, 1999, was 30,033,278. 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, 1998 (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 1999 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, develops, owns and manages 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 $10 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, 1998, the Company borrowed $143,600,000 under its credit facility (i) to acquire 55 properties (23 of which were land only parcels, 14 of which are currently under construction), (ii) to purchase one building constructed by the tenant on a land parcel owned by the Company and (iii) to complete construction of 14 buildings by the Company on five land parcels acquired by the Company during 1997 and nine land parcels acquired by the Company in 1998. As of December 31, 1998, the Company owned 285 properties (the "Properties") that are leased to major businesses, including Academy, Babies "R" Us, Barnes & Noble, Bed Bath & Beyond, Best Buy, Borders, Burger King, CompUSA, Computer City, Dave & Buster's, Denny's, Dick's Clothing & Sporting Goods, Eckerd, Food 4 Less, Food Lion, Golden Corral, Good Guys, Hardee's, Heilig-Meyers, Hi-Lo Automotive, HomePlace, International House of Pancakes, Kash N' Karry, Levitz, Linens 'n Things, Marshalls, Michael's, Office Depot, OfficeMax, Oshman's, PETsMART, Pier 1 Imports, Robb & Stucky, Ross Dress For Less, Scotty's, Sears Homelife Centers, The Sports Authority, SuperValu and Waccamaw. The Company's Property portfolio was 99 percent leased at December 31, 1998. 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 1998, 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, 1998, Eckerd Corporation leased 52 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 1999. Any failure of this lessee could materially affect the Company's income. In January 1998, one of the Company's tenants, HomePlace, filed a voluntary petition for bankruptcy under Chapter 11 of the U.S. Bankruptcy Code. As a result, the tenant has the right to reject or affirm its leases with the Company. In May 1998, HomePlace rejected two of its five leases with the Company, at which time HomePlace was no longer required to pay rent on these two leases. In September 1998, one of these Properties was re-leased to Waccamaw Corporation. The Company is currently marketing the remaining Property, which is not subject to a lease, for sale or lease. As of December 31, 1998, HomePlace continued to lease three Properties which accounted for four percent of the Company's total rental and earned income for the year ended December 31, 1998. In August 1997, one of the Company's tenants, Luria's, filed a voluntary petition for bankruptcy under Chapter 11 of the U.S. Bankruptcy Code. As a result, the tenant has the right to reject or affirm its leases with the Company. In March 1998, Luria's rejected its three leases with the Company, at which time Luria's was no longer required to pay rent on these three leases. In August 1998, the Company re-leased one of these three Properties to The Sports Authority and in October 1998, the Company re-leased one of these Properties to Ross Dress for Less. Investment in Subsidiaries In November 1995, the Company formed two wholly owned subsidiaries, Net Lease Realty I, Inc. and Net Lease Realty II, Inc. In June 1997, the Company formed two wholly-owned subsidiaries, Net Lease Realty III, Inc. and Net Lease Realty IV, Inc. and in August 1998, the Company formed one wholly owned subsidiary, Net Lease Funding, Inc. Net Lease Realty I, Inc. and Net Lease Realty IV, Inc. were formed to facilitate the acquisition of certain properties. Net Lease Realty II, Inc. was utilized to facilitate the acquisition of CNL Realty Advisors, Inc., the Company's advisor, 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. was formed to facilitate the development of certain properties. Each of the wholly-owned subsidiaries is a qualified real estate investment trust subsidiary as defined under Internal Revenue Code Section 856(i)(2). Investment in Partnership 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 (the "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 million non-recourse mortgage on the Partnership's nine properties in September 1997 at 7.37% interest rate. As of December 31, 1998, 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 on going maintenance and operation, including utilities, property taxes and insurance. Advisory Services From July 10, 1992 through December 31, 1997, the Company and CNL Realty Advisors, Inc. (the "Advisor") were party to an advisory agreement (the "Advisory Agreement"), pursuant to which the Advisor provided certain management, advisory and acquisition services. In accordance with the terms of the Advisory Agreement, the Advisor received an annual fee, payable monthly, equal to (i) seven percent of funds from operations, as defined below, up to $10,000,000, (ii) six percent of funds from operations in excess of $10,000,000 but less than $20,000,000 and (iii) five percent of funds from operations in excess of $20,000,000. For the purposes of the Advisory Agreement, funds from operations means net income of the Company before advisory fee excluding depreciation and amortization expense, extraordinary gains and losses, nonrecurring items of income and expense and non-cash lease accounting adjustments. Under the Advisory Agreement, the Advisor generally was responsible for administering the day-to-day investment operations of the Company, including investment analysis and development, acquisitions, due diligence, and asset management and accounting services. These duties included collecting rental payments, inspecting and managing the Properties, assisting the Company in responding to tenant inquiries and notices, providing information to the Company about the status of the leases and the Properties, maintaining the Company's accounting books and records, and preparing and filing various reports, returns or statements with various regulatory agencies. In addition, the Advisor served as the Company's consultant in connection with policy decisions to be made by the Board of Directors, managed the Company's Properties and rendered other services as the Board of Directors deemed appropriate. Historically, the Company did not have a large enough asset base to provide the economies of scale needed to efficiently support the extensive general and administrative expenses of an in-house management team. As a result, the Advisor had incurred the full expense of a management and acquisition team while receiving advisory and acquisition fees that have offset this expense. In 1997, however, due to the Company's historical and anticipated growth, management believed that the efficiencies derived from being externally advised had diminished and that it would be more cost effective to become self-administered. The stockholders of the Company approved an agreement and plan of merger with the Advisor on December 18, 1997 at the 1997 annual meeting of stockholders, which resulted in the Company becoming a self-administered and self-managed REIT (the "Advisor Transaction"). The Advisor Transaction was completed on January 1, 1998. The Agreement and Plan of Merger provided for the merger of the Advisor 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 of the Company's common stock, for a period of up to five years. In connection with the property acquisitions during the year ended December 31, 1998, the Company issued an additional 57,813 shares of common stock in December 1998, and 371,938 shares of common stock in January 1999. 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. Employees As of December 31, 1998, the Company employed 78 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, 1998, the Company owned 285 Properties located in 38 states that are leased to 55 major retail tenants. Reference is made to the Schedule of Real Estate and Accumulated Depreciation 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 12,000 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 82,000 square feet. Building costs range from approximately $195,000 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, 1998, the weighted average remaining lease term was approximately 15 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, 1998, leases representing approximately 84 percent of annual base rent include contractual increases, leases representing approximately 30 percent of annual base rent include percentage rent provisions and leases representing approximately 22 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 1998, 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, 1998, Eckerd Corporation leased 52 Properties (including four properties under leases with the Partnership). As of December 31, 1998, one of the Company's lessees, Eckerd Corporation, leased Properties representing 11.7% of total assets. For information regarding the results of operations and financial condition of this entity, refer to its Annual Report on Form 10-K as filed with the Securities and Exchange Commission for the year ended January 31, 1998. 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 20 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 455 South Orange Avenue, Suite 700, 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 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. Management believes it will prevail in this suit and intends to vigorously defend its position. If the Company were to be held liable for these damages, it could materially affect the Company's earnings. 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. PART II Item 4. Submission of Matters to a Vote of Security Holders None. 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 39 of the Registrant's Annual Report to Shareholders for the year ended December 31, 1998; 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 1 of the Registrant's Annual Report to Shareholders for the year ended December 31, 1998; 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 8 through 19 of the Registrant's Annual Report to Shareholders for the year ended December 31, 1998; 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 "Market Risk", on page 19 of the Registrant's Annual Report to Shareholders for the year ended December 31, 1998; 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 38 of the Registrant's Annual Report to Shareholders for the year ended December 31, 1998; 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, 1998, 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, 1998 and 1997 Consolidated Statements of Earnings for the years ended December 31, 1998, 1997 and 1996 Consolidated Statements of Stockholders' Equity for the years ended December 31, 1998, 1997 and 1996 Consolidated Statements of Cash Flows for the years ended December 31, 1998,1997 and 1996 Notes to Consolidated Financial Statements 2.Financial Statement Schedule Report of Independent Auditors' on Supplementary Information Schedule III - Real Estate and Accumulated Depreciation as of December 31, 1998 Notes to Schedule III - Real Estate and Accumulated Depreciation as of December 31, 1998 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 3.1 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). 4.1 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.) 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 Second Amended and Restated Line of Credit and Security Agreement, dated December 7, 1995, among Registrant, certain lenders listed therein and First Union National Bank of Florida, as the Agent, relating to a $100,000,000 loan (filed as Exhibit 10.14 to the Registrant's Current Report on Form 8-K dated January 18, 1996, and incorporated herein by reference). 10.5 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). 10.6 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). 10.7 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). 10.8 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). 10.9 Third Amended and Restated Line of Credit and Security Agreement, dated September 3, 1996, by and among Registrant, certain lenders and First Union National Bank of Florida, as the Agent, relating to a $150,000,000 loan (filed as Exhibit 10.11 to the Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 1996, and incorporated herein by reference). 10.10 Second Renewal and Modification Promissory Note, dated September 3, 1996, by and among Registrant and First Union National Bank of Florida, as the Agent, relating to $150,000,000 loan (filed as Exhibit 10.12 to the Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 1996, and incorporated herein by reference). 10.11 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). 10.12 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). 12 Statement of Computation of Ratios of Earnings to Fixed Charges (filed herewith). 13 Annual Report to Shareholders for the year ended December 31, 1998 (filed herewith). 23 Consent of Independent Accountants dated March 30, 1999 (filed herewith). 27 Financial Data Schedule (filed herewith). (b) No reports on Form 8-K were filed during the quarter ended December 31, 1998. 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 day of March, 1999. 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, 1999 - ----------------------- Chief Executive Officer (Principal James M. Seneff, Jr. Executive Officer) /s/ Robert A. Bourne Vice Chairman of the March 30, 1999 - -------------------- Board ofDirectors Robert A. Bourne /s/ Edward Clark Director March 30, 1999 - ---------------- Edward Clark /s/ Clifford R. Hinkle Director March 30, 1999 - ---------------------- Clifford R. Hinkle /s/ Ted B. Lanier Director March 30, 1999 - ----------------- Ted B. Lanier /s/ Gary M. Ralston President March 30, 1999 - ------------------- Gary M. Ralston /s/ Kevin B. Habicht Chief Financial Officer (Principal March 30, 1999 - -------------------- Financial and Accounting Officer), Kevin B. Habicht Secretary and Treasurer
Report of Independent Auditors' on Supplementary Information The Board of Directors Commercial Net Lease Realty, Inc. Under date of January 15, 1999, we reported on the consolidated balance sheets of Commercial Net Lease Realty, Inc. as of December 31, 1998 and 1997, 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, 1998. 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 1998. In connection with our audits of the aforementioned consolidated financial statements, we also audited the related consolidated financial statement schedule as of December 31, 1998. This consolidated financial statement schedule is the responsibility of the Company's management. Our responsibility is to express an opinion on this consolidated financial statement schedule based on our audits. In our opinion, such consolidated financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein. /s/KPMG LLP - ------------- Orlando, Florida January 15, 1999
<TABLE> COMMERCIAL NET LEASE REALTY, INC. AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION December 31, 1998 <CAPTION> Initial Cost to Company Encum- --------------------------- brances Building and (n) Land Improvements - --------------------------- -------------- ------------ ------------- <S> <C> <C> <C> Properties 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 - Adjacent Excess Space: Memphis, TN - 549,309 539,643 Glendale, AZ - 340,753 - Babies "R" Us: Arlington, TX - 830,689 2,611,867 Barnes & Noble: Lakeland, FL - 1,070,902 1,516,983 Brandon, FL 1,515,699 (m) 1,476,407 1,527,150 Denver, CO - 3,244,785 2,722,087 Houston, TX - 3,307,562 2,396,024 Cary, NC - 2,778,458 2,650,008 Plantation, FL - 3,616,357 - Lafayette, LA - 1,204,279 2,301,983 Oklahoma City, OK - 1,688,556 2,311,487 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 - 1,078,710 - Best Buy: Corpus Christi, TX 1,268,679 (l) 818,448 896,395 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 4,588,832 (m) 3,030,769 6,061,538 Richmond, VA 2,410,871 (m) 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 - Burger King: Asheboro, NC - 420,508 815,190 Galliano, LA - 249,001 1,130,506 John's Island, SC - 385,517 698,309 Lake Charles, LA - 272,381 965,713 Lancaster, OH - 220,846 582,815 Natchez, MS - 206,717 653,530 Tappahannock, VA - 289,840 572,779 Warren, MI - 298,817 785,031 Manchester, NH - 619,037 428,757 Rochester, NH - 216,652 779,450 Columbus, OH - 357,114 407,093 Coon Rapids, MN - 322,658 544,936 Opeleousas, LA - 460,374 824,510 St. Paul, MN - 225,297 542,847 Checkers: Orlando, FL - 256,568 - CompUSA: Mission Viejo, CA - 2,706,352 1,368,966 Computer City: Miami, FL 2,311,432 (m) 2,713,192 1,866,676 Baton Rouge, LA - 609,069 913,603 Anchorage, AK - 928,321 1,662,584 Dave's: Maple Heights, OH - 1,034,758 2,874,414 Dave & Buster's: Utica, MI - 3,776,169 - Denny's: Duncan, SC - 219,703 - Greensboro, NC - 265,915 493,407 Greenville, SC - 344,817 400,895 Houston, TX - 289,036 572,985 Landrum, SC - 155,429 - Mooresville, NC - 307,299 - Santee, SC - 244,284 312,045 Topeka, KS - 414,686 - Winter Springs, FL - 555,232 - Dick's Clothing: Taylor, MI - 1,920,032 3,526,868 White Marsh, MD - 2,680,532 3,916,889 Eckerd: San Antonio, TX 618,229 (m) 440,985 - Dallas, TX 595,628 (m) 541,493 - Garland, TX 479,282 (m) 239,014 - Arlington, TX 507,235 (m) 368,964 - Millville, NJ 629,123 (m) 417,603 - Atlanta, GA 562,221 (m) 445,593 - Mantua, NJ 654,043 (m) 344,022 - Amarillo, TX 581,981 (m) 329,231 - Amarillo, TX 756,379 (m) 650,864 - Glassboro, NJ 717,544 (m) 534,243 - Kissimmee , FL 835,902 (m) 715,480 - Colleyville, TX 923,863 (m) 756,472 - Tampa, FL - 604,682 - Douglasville, GA - 413,439 995,209 Lafayette, LA - 967,528 - Moore, OK - 414,738 - Midwest City, OK - 1,080,637 1,103,351 Tallahassee, FL - 691,523 - Irving, TX - 1,000,222 - Snellville, GA - 486,272 1,320,087 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 Morrow, GA - 550,457 1,248,422 Warner Robins, GA - 707,488 - Lewisville, TX - 789,237 - Forest Hill, TX - 692,165 - Del City, OK - 1,387,362 (c) Arlington, TX - 414,568 (c) Ft. Worth, TX - - - Land 'O Lakes, FL - 1,455,464 - Garland, TX - 522,461 - Garland, TX - 1,476,838 - Oklahoma City, OK - 1,543,480 - Vineland, NJ - 725,734 - Food 4 Less: Lemon Grove, CA - 3,695,816 - Chula Vista, CA - 3,568,862 (c) Golden Corral: Woodstock, GA (e) - 200,680 328,450 Edenton, NC - 36,578 318,481 Rockledge, FL (e) - 120,593 340,889 Gilmer, TX (e) - 116,815 296,454 Bonham, TX (e) - 128,451 344,170 Leitchfield, KY (e) - 73,660 306,642 Marietta, GA (e) - 156,190 346,509 Atlanta, TX (e) - 88,457 368,317 Vernon, TX (e) - 105,798 328,943 Abbeville, LA (e) - 98,577 362,416 Fredricksburg,TX - 169,984 321,189 Clanton, AL (e) - 113,017 296,921 Pleasanton, TX (e) - 139,694 316,070 Bowie, TX (e) - 57,824 311,544 Lake Placid, FL (e) - 115,113 305,074 Ennis, TX - 153,701 366,639 Melbourne, FL (e) - 193,447 341,351 Franklin, LA (e) - 105,840 396,831 Franklin, VA - 100,808 424,164 Durant, OK - 140,862 411,135 Good Guys, The: Foothill Ranch, CA - 1,456,113 2,505,022 Valencia,CA - 1,622,252 2,895,298 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 - 2,294,449 - Hardee's: Chalkville, AL - 170,834 457,167 Columbia, TN - 226,300 - Gulf Shores, AL - 348,281 595,164 Horn Lake, MS - 302,787 - Johnson City, TN - 215,567 - Mobile, AL - 336,696 - Petal, MS - 277,104 415,193 Rock Hill, SC - 216,777 466,450 Tusculum, TN - 182,349 507,293 Warrior, AL - 177,659 - West Point, MS - 173,386 - Heilig-Meyers: Baltimore, MD - 469,782 813,074 Glen Burnie, MD - 625,588 922,897 Lima, OH - 344,742 1,097,694 Copperas Cove, TX - 445,558 943,339 Nacadoches, 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 - International House of Pancakes: Stafford, TX 481,435 (m) 382,084 - Sunset Hills, MO 508,831 (m) 271,853 - Las Vegas, NV 572,085 (m) 519,947 - Ft. Worth, TX 532,218 (m) 430,896 - Arlington, TX 511,075 (m) 404,512 - Matthews, NC 522,717 (m) 380,043 - Phoenix, AZ 526,235 (m) 483,374 - Just for Feet: Albuquerque, NM - 1,441,777 2,335,475 Kroger: Columbus, OH - 780,838 520,559 Linens 'n Things: Freehold, NJ 2,931,484 (l) 1,753,766 2,208,651 Marshalls: Freehold, NJ 3,431,576 (l) 2,052,946 2,585,432 Michael's Grapevine, TX - 1,017,934 2,066,715 Office Depot: Arlington, TX 1,013,151 (m) 596,024 1,411,432 Richmond, VA 888,772 1,948,036 OfficeMax: Corpus Christi, TX 1,439,600 (l) 893,270 978,344 Dallas, TX 1,427,472 (m) 1,118,500 1,709,891 Cincinnati, OH 1,068,962 (m) 543,489 1,574,551 Evanston, IL 1,829,742 (m) 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 - 2,906,424 - Tigard, OR - 1,539,873 2,247,321 Dover, NJ - 1,138,296 3,238,083 Griffin, GA - 683,747 - Oshman's Sporting Goods: Dallas, TX - 1,311,440 - Party City: Memphis, TN - 238,229 - Petco: Grand Forks, ND - 306,629 909,671 PETsMART: Chicago - 2,723,463 3,564,837 Pier 1 Imports: Memphis, TN - 713,319 821,770 Sanford, FL - 738,051 803,082 Knoxville, TN - 466,636 - Mason, OH - 592,257 - Harlingen, TX - 315,434 - Pizza Hut: Orlando, FL - 220,632 258,483 Rally's: Toledo, OH - 125,882 319,770 Robb & Stucky: Ft. Myers, FL - 2,188,440 6,225,401 Roger & Marv's: Kenosha, WI - 1,917,607 3,431,363 Ro-Jack's Food Store: Warwick, RI - 1,699,330 - 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 - 1,044,796 2,011,952 Sears Homelife: Clearwater, FL 2,745,218 (l) 1,184,438 2,526,207 Orlando, FL 1,516,665 (m) 820,397 2,184,721 Pensacola, FL 1,750,804 633,125 1,595,405 Raleigh, NC 2,205,051 1,848,026 1,753,635 Tampa, FL 2,277,113 1,454,908 2,045,833 7-Eleven: Land 'O Lakes, FL - 1,076,495 - Tampa Palms, FL - 1,080,670 - Shop & Save: Homestead, PA - 1,139,419 - Penn Hills, PA - 1,043,297 1,243,131 Sports Authority: Memphis, TN - 820,340 - Little Rock, AR - 3,418,875 2,660,206 Tampa, FL - 2,127,503 1,521,730 SuperValu: Huntington, WV - 1,254,238 760,602 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 Wendy's Old Fashioned Hamburger: Fenton, MO - 307,068 496,410 Longwood, FL - 333,335 194,926 Sacramento, CA - 585,872 - Vacant Properties: Arlington, TX - 752,840 3,980,309 South Miami, FL - 1,379,229 1,723,047 Unallocated costs relating to con- struction in progress =========== ============ ============= 47,248,377 259,590,038 249,823,310 =========== ============ ============= Properties 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: Altamonte Spgs, FL - - 3,267,579 Checkers: Orlando, FL - - 286,910 Denny's: Landrum, SC - - 374,684 Mooresville, NC - - 535,309 Duncan, SC - - 628,571 Akron, OH - 137,424 733,450 Topeka, KS - - 498,921 Winter Springs, FL - - 620,148 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 681,021 (m) 286,231 1,063,142 Amarillo, TX - - 849,071 Amarillo, TX - - 869,846 Amarillo, TX 494,316 (m) 158,851 855,348 Glassboro, NJ - - 887,497 Kissimmee , FL - - 933,852 Colleyville, TX - - 1,076,066 Alice,TX 501,579 (m) 189,187 804,963 Tampa, FL - - 1,090,532 Lafayette, LA - - 949,128 Moore, OK - - 879,296 Tallahassee, FL - - 1,274,147 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 - (o) 1,365,125 Oklahoma City, OK - (o) 1,419,093 Norman, OK - - 1,225,477 Chattanooga , TN - - 1,344,240 Del City, OK - - - Arlington, TX - - - Food 4 Less: Lemon Grove, CA - - 4,068,179 Chula Vista, CA - - 4,266,181 Food Lion: Keystone Hts, FL 976,377 (m) 88,604 1,845,988 Chattanooga, TN 1,028,344 (m) 336,488 1,701,072 Lynchburg, VA 1,333,443 (l) 128,216 1,674,167 Martinsburg, WV 1,005,462 (m) 448,648 1,543,573 The Good Guys: Stockton, CA 1,794,428 (m) 580,609 2,974,868 Portland, OR - 817,574 2,630,652 Hardee's: Mobile, AL - - 479,107 Warrior, AL - - 470,556 Horn Lake, MS - - 555,975 West Point, MS - - 517,424 Columbia, TN - - 584,927 Johnson City, TN - - 570,690 Iuka, MS - 130,258 505,363 Biscoe, NC - 60,301 479,984 Aynor, SC - 44,871 521,192 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 HomePlace: Bowie, MD - - 4,262,338 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 Ro-Jack's Food Store: Warwick, RI - - 2,978,154 Shop & Save: Homestead, PA - - 2,578,098 Wacammaw: Fairfax, VA - - 3,356,493 ========== ========== =========== 7,814,970 10,238,422 129,708,614 ========== ========== =========== </TABLE> <TABLE> <CAPTION> Costs Capitalized Subsequent to Gross Amount at Which Acquisition Carried at Close of Period (b) ------------------- ----------------------------------- Improve- Carrying Building and ments Costs Land Improvements Total - ----------------------- -------- ------- --------- ------------ ---------- <S> <C> <C> <C> <C> <C> Properties 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 Adjacent Excess Space: Memphis, TN - - 549,309 539,643 1,088,952 Glendale, AZ 294,706 - 340,753 (g) 340,753 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 Cary, NC - - 2,778,458 2,650,008 5,428,466 Plantation, FL - - 3,616,357 (c) 3,616,357 Lafayette, LA - - 1,204,279 2,301,983 3,506,262 Oklahoma City, OK - - 1,688,556 2,311,487 4,000,043 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 933,157 - 1,078,710 (g) 1,078,710 Best Buy: Corpus Christi, TX 12,222 - 818,448 908,617 1,727,065 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 - - 3,030,769 6,061,538 9,092,307 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 Burger King: Asheboro, NC - - 420,508 815,190 1,235,698 Galliano, LA - - 249,001 1,130,506 1,379,507 John's Island, SC - - 385,517 698,309 1,083,826 Lake Charles, LA - - 272,381 965,713 1,238,094 Lancaster, OH - - 220,846 582,815 803,661 Natchez, MS - - 206,717 653,530 860,247 Tappahannock, VA - - 289,840 572,779 862,619 Warren, MI - - 298,817 785,031 1,083,848 Manchester, NH - - 619,037 428,757 1,047,794 Rochester, NH - - 216,652 779,450 996,102 Columbus, OH - - 357,114 407,093 764,207 Coon Rapids, MN - - 322,658 544,936 867,594 Opeleousas, LA - - 460,374 824,510 1,284,884 St. Paul, MN - - 225,297 542,847 768,144 Checkers: Orlando, FL - - 256,568 (c) 256,568 CompUSA: Mission Viejo, CA - - 2,706,352 1,368,966 4,075,318 Computer City: Miami, FL - - 2,713,192 1,866,676 4,579,868 Baton Rouge, LA - - 609,069 913,603 1,522,672 Anchorage, AK - - 928,321 1,662,584 2,590,905 Dave's: Maple Heights, OH - - 1,034,758 2,874,414 3,909,172 Dave & Buster's: Utica, MI - - 3,776,169 (c) 3,776,169 Denny's: Duncan, SC - - 219,703 (c) 219,703 Greensboro, NC - - 265,915 493,407 759,322 Greenville, SC - - 344,817 400,895 745,712 Houston, TX - - 289,036 572,985 862,021 Landrum, SC - - 155,429 (c) 155,429 Mooresville, NC - - 307,299 (c) 307,299 Santee, SC - - 244,284 312,045 556,329 Topeka, KS - - 414,686 (c) 414,686 Winter Springs, FL - - 555,232 (c) 555,232 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 Colleyville, TX - - 756,472 (c) 756,472 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 - - 1,080,637 1,103,351 2,183,988 Tallahassee, FL - - 691,523 (c) 691,523 Irving, TX - - 1,000,222 (c) 1,000,222 Snellville, GA - - 486,272 1,320,087 1,806,359 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 Morrow, GA - - 550,457 1,248,422 1,798,879 Warner Robins, GA 1,199,202 - 707,488 (g) 707,488 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 Ft. Worth, TX 81,167 - - 81,167 81,167 Land 'O Lakes, FL 344,728 - 1,455,464 (g) 1,455,464 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 1,446,932 - 1,543,480 (g) 1,543,480 Vineland, NJ 1,557,030 - 725,734 (q) 725,734 Food 4 Less: Lemon Grove, CA - - 3,695,816 (c) 3,695,816 Chula Vista, CA - - 3,568,862 (c) 3,568,862 Golden Corral: Woodstock, GA (e) - - 200,680 328,450 529,130 Edenton, NC - - 36,578 318,481 355,059 Rockledge, FL (e) - - 120,593 340,889 461,482 Gilmer, TX (e) - - 116,815 296,454 413,269 Bonham, TX (e) - - 128,451 344,170 472,621 Leitchfield, K(e) - - 73,660 306,642 380,302 Marietta, GA (e) - - 156,190 346,509 502,699 Atlanta, TX (e) - - 88,457 368,317 456,774 Vernon, TX (e) - - 105,798 328,943 434,741 Abbeville, LA (e) - - 98,577 362,416 460,993 Fredricksburg, TX - - 169,984 321,189 491,173 Clanton, AL (e) - - 113,017 296,921 409,938 Pleasanton, TX(e) - - 139,694 316,070 455,764 Bowie, TX (e) - - 57,824 311,544 369,368 Lake Placid, F(e) - - 115,113 305,074 420,187 Ennis, TX - - 153,701 366,639 520,340 Melbourne, FL (e) - - 193,447 341,351 534,798 Franklin, LA (e) - - 105,840 396,831 502,671 Franklin, VA - - 93,719 424,164 517,883 Durant, OK - - 140,862 411,135 551,997 Good Guys, The: Foothill Ranch, CA - - 1,456,113 2,505,022 3,961,135 Valencia,CA - - 1,622,252 2,895,298 4,517,550 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 - - 2,294,449 (f) 2,294,449 Hardee's: Chalkville, AL - - 170,834 457,167 628,001 Columbia, TN - - 226,300 (c) 226,300 Gulf Shores, AL - - 348,281 595,164 943,445 Horn Lake, MS - - 302,787 (c) 302,787 Johnson City, TN - - 215,567 (c) 215,567 Mobile, AL - - 336,696 (c) 336,696 Petal, MS - - 277,104 415,193 692,297 Rock Hill, SC - - 216,777 466,450 683,227 Tusculum, TN - - 182,349 507,293 689,642 Warrior, AL - - 177,659 (c) 177,659 West Point, MS - - 173,386 (c) 173,386 Heilig-Meyers: Baltimore, MD - - 469,782 813,074 1,282,856 Glen Burnie, MD - - 625,588 922,897 1,548,485 Lima, OH - - 344,742 1,097,694 1,442,436 Copperas Cove, TX - - 445,558 943,339 1,388,897 Nacadoches, 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 (c) 1,965,508 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 Just for Feet: Albuquerque, NM - - 1,441,777 2,335,475 3,777,252 Kroger: Columbus, OH - - 780,838 520,559 1,301,397 Linens 'n Things: Freehold, NJ - - 1,753,766 2,208,651 3,962,417 Marshalls: Freehold, NJ - - 2,052,946 2,585,432 4,638,378 Michael's 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 1,275,738 - 2,906,424 (g) 2,906,424 Tigard, OR - - 1,539,873 2,247,321 3,787,194 Dover, NJ - - 1,138,296 3,238,083 4,376,379 Griffin, GA 491,821 - 683,747 (g) 683,747 Oshman's Sporting Goods: Dallas, TX - - 1,311,440 (c) 1,311,440 Party City: Memphis, TN 209,674 - 238,229 (g) 238,229 Petco: Grand Forks, ND - - 306,629 909,671 1,216,300 PETsMART: Chicago - - 2,723,463 3,564,837 6,288,300 Pier 1 Imports: Memphis, TN - - 713,319 821,770 1,535,089 Sanford, FL - - 738,051 803,082 1,541,133 Knoxville, TN - - 466,636 (f) 466,636 Mason, OH - - 592,257 (f) 592,257 Harlingen, TX - - 315,434 (f) 315,434 Pizza Hut: Orlando, FL - - 220,632 258,483 479,115 Rally's: Toledo, OH - - 125,882 319,770 445,652 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 Ro-Jack's Food Store: Warwick, RI - - 1,699,330 (c) 1,699,330 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 - - 1,044,796 2,011,952 3,056,748 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 409,606 - 1,076,495 (g) 1,076,495 Tampa Palms, FL 254,450 - 1,080,670 (g) 1,080,670 Shop & Save: Homestead, PA - - 1,139,419 (c) 1,139,419 Penn Hills, PA - - 1,043,297 1,243,131 2,286,428 Sports Authority: Memphis, TN 2,573,264 - 820,340 2,573,264 3,393,604 Little Rock, AR - - 3,418,875 2,660,206 6,079,081 Tampa, FL - - 2,127,503 1,521,730 3,649,233 SuperValu: Huntington, WV - - 1,254,238 760,602 2,014,840 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 Wendy's Old Fashioned Hamburger: Fenton, MO - - 307,068 496,410 803,478 Longwood, FL - - 333,335 194,926 528,261 Sacramento, CA - - 585,872 - 585,872 Vacant Properties: Arlington, TX - - 752,840 3,980,309 4,733,149 South Miami, FL - - 1,379,229 1,723,047 3,102,276 Unallocated costs relating to construction in progress 1,095,703 =========== ===== =========== =========== =========== 28,915,025 - 258,544,906 269,225,588 527,770,494 =========== ===== =========== =========== =========== Properties 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: Altamonte Spgs, FL - - - (c) (c) Checkers: Orlando, FL - - - (c) (c) Denny's: Landrum, SC - - - (c) (c) Mooresville, NC - - - (c) (c) Duncan, SC - - - (c) (c) Akron, OH - - (d) (d) (d) Topeka, KS - - - (c) (c) Winter Springs, 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 - - (d) (d) (d) Amarillo, TX - - - (c) (c) Amarillo, TX - - - (c) (c) Amarillo, TX - - (d) (d) (d) Glassboro, NJ - - - (c) (c) Kissimmee , FL - - - (c) (c) Colleyville, TX - - - (c) (c) Alice,TX - - (d) (d) (d) Tampa, FL - - - (c) (c) Lafayette, LA - - - (c) (c) Moore, OK - - - (c) (c) Tallahassee, FL - - - (c) (c) East Point, GA - - (d) (d) (d) Irving, TX - - - (c) (c) Ft. Worth, TX - - (d) (d) (d) Williston, FL - - - (c) (c) Jasper, FL - - - (c) (c) Oklahoma City, OK - - (o) (c) (c) Oklahoma City, OK - - (o) (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) 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) The Good Guys: Stockton, CA - - (d) (d) (d) Portland, OR - - (d) (d) (d) Hardee's: Mobile, AL - - - (c) (c) Warrior, AL - - - (c) (c) Horn Lake, MS - - - (c) (c) West Point, MS - - - (c) (c) Columbia, TN - - - (c) (c) Johnson City, TN - - - (c) (c) Iuka, MS - - (d) (d) (d) Biscoe, NC - - (d) (d) (d) Aynor, SC - - (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) HomePlace: Bowie, MD - - - (c) (c) 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) Ro-Jack's Food Store: Warwick, RI - - - (c) (c) Shop & Save: Homestead, PA - - - (c) (c) Wacammaw: Fairfax, VA - - - (c) (c) ========= ======= =========== ========== ========== 2,792,096 - - - - ========= ======= =========== ========== ========== </TABLE> <TABLE> <CAPTION> Life on Which Depreciation in Date Latest Income Accumulated of Con- Date Statement is Depreciation struction Acquired Computed - --------------------------- ------------ --------- -------- --------------- <S> <C> <C> <C> <C> Properties 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) Adjacent Excess Space: Memphis, TN 1,686 1998 11/98 40 years Glendale, AZ - (g) 12/98 (g) Babies "R" Us: Arlington, TX 163,786 1996 06/96 40 years Barnes & Noble: Lakeland, FL 150,657 1995 07/94 (h) 40 years Brandon, FL 151,878 1995 08/94 (h) 40 years Denver, CO 289,334 1994 09/94 40 years Houston, TX 194,685 1995 10/94 (h) 40 years Cary, NC 194,298 1996 05/95 (h) 40 years Plantation, FL - 1996 05/95 (h) (c) Lafayette, LA 155,384 1996 06/95 (h) 40 years Oklahoma City, OK 171,808 1996 06/95 (h) 40 years Daytona, FL 150,500 1996 09/95 (h) 40 years Freehold, NJ 165,154 1995 01/96 40 years Dayton, OH 130,953 1996 05/97 40 years Redding, CA 62,657 1997 06/97 40 years Marlton, NJ 13,495 1998 11/98 40 years Bed, Bath & Beyond: Richmond, VA 42,724 1997 06/98 40 years Los Angeles, CA 9,654 1975 11/98 40 years Glendale, AZ - (g) 12/98 (g) Best Buy: Corpus Christi, TX 115,720 1967 11/93 40 years Brandon, FL 129,944 1996 02/97 40 years Evanston, IL - 1994 02/97 (c) Cuyahoga Falls, OH 90,934 1970 06/97 40 years Rockville, MD 124,643 1995 07/97 40 years Fairfax, VA 110,619 1995 08/97 40 years St. Petersburg, FL 95,561 1997 09/97 40 years North Fayette, PA 31,050 1997 06/98 40 years Blockbuster: Conyers, GA 21,440 1997 06/97 40 years Borders Books & Music: Wilmington, DE 610,227 1994 12/94 40 years Richmond, VA 231,436 1995 06/95 40 years Ft. Lauderdale, FL 279,265 1995 02/96 40 years Bangor, ME 157,150 1996 06/96 40 years Altamonte Spgs, FL - 1997 09/97 (c) Burger King: Asheboro, NC 132,468 1986 07/92 40 years Galliano, LA 183,707 1991 07/92 40 years John's Island, SC 113,475 1988 07/92 40 years Lake Charles, LA 156,928 1988 07/92 40 years Lancaster, OH 94,707 1987 07/92 40 years Natchez, MS 106,199 1986 07/92 40 years Tappahannock, VA 93,077 1987 07/92 40 years Warren, MI 127,568 1987 07/92 40 years Manchester, NH 59,953 1980 05/93 40 years Rochester, NH 108,989 1987 05/93 40 years Columbus, OH 56,003 1982 06/93 40 years Coon Rapids, MN 74,966 1990 06/93 40 years Opeleousas, LA 113,427 1989 06/93 40 years St. Paul, MN 74,679 1986 06/93 40 years Checkers: Orlando, FL - 1988 07/92 (c) CompUSA: Mission Viejo, CA 122,634 1994 02/94 (h) 40 years Computer City: Miami, FL 219,462 1994 04/94 40 years Baton Rouge, LA 68,581 1995 12/95 40 years Anchorage, AK 118,005 1995 02/96 40 years Dave's: Maple Heights, OH 134,738 1985 02/97 40 years Dave & Buster's: Utica, MI - 1998 06/98 (c) Denny's: Duncan, SC - 1992 05/93 (c) Greensboro, NC 68,993 1992 05/93 40 years Greenville, SC 56,057 1985 05/93 40 years Houston, TX 80,120 1985 05/93 40 years Landrum, SC - 1992 05/93 (c) Mooresville, NC - 1992 05/93 (c) Santee, SC 43,633 1992 05/93 40 years Topeka, KS - 1989 06/93 (c) Winter Springs, FL - 1994 01/94 (c) Dick's Clothing: Taylor, MI 202,416 1996 08/96 40 years White Marsh, MD 224,800 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) Colleyville, TX - 1995 06/95 (c) Tampa, FL - 1995 12/95 (c) Douglasville, GA 72,706 1996 01/96 40 years Lafayette, LA - 1995 01/96 (c) Moore, OK - 1995 01/96 (c) Midwest City, OK 77,932 1996 03/96 40 years Tallahassee, FL - 1996 06/96 (c) Irving, TX - 1996 12/96 (c) Snellville, GA 66,182 1996 12/96 40 years Jasper, FL - 1994 01/97 (c) Williston, FL - 1995 01/97 (c) Pantego, TX 55,843 1997 06/97 40 years Conyers, GA 38,499 1997 06/97 40 years Norman, OK - 1997 06/97 (c) Chattanooga , TN - 1997 09/97 (c) Stone Mountain, GA 35,878 1997 09/97 40 years Arlington, TX 13,092 1998 11/97 (i) 40 years Leavenworth, KS 18,022 1998 11/97 (i) 40 years Augusta, GA 34,551 1997 12/97 40 years Riverdale, GA 44,465 1997 12/97 40 years Morrow, GA 32,511 1997 12/97 40 years Warner Robins, GA - (g) 03/98 (g) Lewisville, TX 9,737 1998 04/98 (i) 40 years Forest Hill, TX 11,011 1998 04/98 (i) 40 years Del City, OK - 1998 05/98 (c) Arlington, TX - 1998 05/98 (c) Ft. Worth, TX 2,706 1998 06/98 15 years Land 'O Lakes, FL - (g) 08/98 (g) Garland, TX 1,478 1998 06/98 (i) 40 years Garland, TX 4,376 1998 06/98 (i) 40 years Oklahoma City, OK - (g) 08/98 (g) Vineland, NJ - (q) 09/98 (q) Food 4 Less: Lemon Grove, CA - 1996 07/95 (h) (c) Chula Vista, CA (c) 1995 11/98 (c) Golden Corral: Woodstock, GA (e) 138,325 1984 11/84 35 years Edenton, NC 134,174 1984 11/84 35 years Rockledge, FL (e) 142,540 1984 12/84 35 years Gilmer, TX (e) 123,971 1984 12/84 35 years Bonham, TX (e) 143,912 1984 12/84 35 years Leitchfield, KY (e) 128,221 1984 12/84 35 years Marietta, GA (e) 144,892 1984 12/84 35 years Atlanta, TX (e) 153,641 1985 01/85 35 years Vernon, TX (e) 133,927 1985 03/85 35 years Abbeville, LA (e) 147,555 1985 04/85 35 years Fredricksburg, TX 130,770 1985 04/85 35 years Clanton, AL (e) 120,889 1985 05/85 35 years Pleasanton, TX (e) 128,686 1985 05/85 35 years Bowie, TX (e) 126,843 1985 05/85 35 years Lake Placid, FL (e) 124,209 1985 05/85 35 years Ennis, TX 145,608 1985 07/85 35 years Melbourne, FL (e) 135,565 1985 07/85 35 years Franklin, LA (e) 157,598 1985 07/85 35 years Franklin, VA 125,381 1987 02/87 40 years Durant, OK 96,852 1989 08/89 40 years Good Guys, The: Foothill Ranch, CA 125,588 1995 12/96 40 years Valencia,CA 135,717 1995 02/97 40 years Riverside, CA 113,249 1995 05/97 40 years Clackamas, OR 19,592 1995 06/98 40 years Bellingham, WA 23,895 1994 06/98 40 years Federal Way, WA 22,501 1994 06/98 40 years East Palo Alto, CA - (f) 12/98 (f) Hardee's: Chalkville, AL 59,150 1992 10/93 40 years Columbia, TN - 1993 10/93 (c) Gulf Shores, AL 77,004 1993 10/93 40 years Horn Lake, MS - 1993 10/93 (c) Johnson City, TN - 1993 10/93 (c) Mobile, AL - 1993 10/93 (c) Petal, MS 53,719 1993 10/93 40 years Rock Hill, SC 60,351 1993 10/93 40 years Tusculum, TN 65,635 1993 10/93 40 years Warrior, AL - 1992 10/93 (c) West Point, MS - 1993 10/93 (c) Heilig-Meyers: Baltimore, MD 2,541 1968 11/98 40 years Glen Burnie, MD 2,884 1968 11/98 40 years Lima, OH 3,430 1997 11/98 40 years Copperas Cove, TX 2,948 1972 11/98 40 years Nacadoches, TX 3,929 1997 11/98 40 years Hi-Lo Automotive: Mesquite, TX 53,975 1994 10/94 40 years Arlington, TX 58,389 1993 11/94 40 years Ft. Worth, TX 52,328 1993 11/94 40 years Garland, TX 52,299 1993 11/94 40 years Houston, TX 54,342 1994 11/94 40 years Dallas, TX 54,540 1994 12/94 40 years Bastrop, TX 31,237 1994 09/95 40 years Eagle Pass, TX 37,164 1994 09/95 40 years Lake Worth, TX 43,985 1995 09/95 40 years McAllen, TX 49,357 1995 09/95 40 years Nacogdoches, TX 42,576 1995 09/95 40 years San Antonio, TX 52,483 1994 09/95 40 years Temple, TX 47,918 1989 09/95 40 years Universal City, TX 46,526 1995 09/95 40 years HomePlace: Altamonte Spgs, FL 157,494 1997 09/97 40 years Ft. Myers, FL 105,344 1997 12/97 40 years Bowie, MD - 1997 12/97 (c) 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) Just for Feet: Albuquerque, NM 90,013 1997 06/97 40 years Kroger: Columbus, OH 24,401 1982 02/97 40 years Linens 'n Things: Freehold, NJ 239,716 1994 08/94 40 years Marshalls: Freehold, NJ 280,610 1994 08/94 40 years Michael's Grapevine, TX 27,987 1998 06/98 40 years Office Depot: Arlington, TX 173,408 1991 01/94 40 years Richmond, VA 126,072 1996 05/96 40 years OfficeMax: Corpus Christi, TX 134,664 1967 11/93 40 years Dallas, TX 213,854 1993 12/93 40 years Cincinnati, OH 176,463 1994 07/94 40 years Evanston, IL 156,477 1995 06/95 40 years Altamonte Spgs, FL 219,490 1995 01/96 40 years Pompano Beach, FL 138,345 1972 02/96 40 years Cutler Ridge, FL 92,753 1995 06/96 40 years Sacramento, CA 148,257 1996 12/96 40 years Salinas, CA 85,750 1995 02/97 40 years Redding, CA 84,081 1997 06/97 40 years Kelso, WA 43,258 1998 09/97 40 years Lynchburg, VA 13,499 1998 02/98 40 years Leesburg, FL 2,009 1998 08/98 40 years Plymouth Meeting, PA - (g) 10/98 (g) Tigard, OR 7,023 1995 11/98 40 years Dover, NJ 10,119 1995 11/98 40 years Griffin, GA - (g) 11/98 (g) Oshman's Sporting Goods: Dallas, TX - 1994 03/94 (c) Party City: Memphis, TN - (g) 12/98 (g) Petco: Grand Forks, ND 23,713 1996 12/97 40 years PETsMART: Chicago 25,994 1998 09/98 40 years Pier 1 Imports: Memphis, TN 31,672 1997 09/96 (h) 40 years Sanford, FL 15,894 1998 06/97 (h) 40 years Knoxville, TN - (f) 01/98 (f) Mason, OH - (f) 06/98 (f) Harlingen, TX - (f) 11/98 (f) Pizza Hut: Orlando, FL 66,910 1974 08/93 20.9 years Rally's: Toledo, OH 53,599 1989 07/92 38.8 years Robb & Stucky: Ft. Myers, FL 164,758 1997 12/97 40 years Roger & Marv's: Kenosha, WI 156,156 1992 02/97 40 years Ro-Jack's Food Store: Warwick, RI - 1992 02/97 (c) Ross Dress For Less: Coral Gables, FL 37,836 1994 06/96 40 years Scotty's: Orlando, FL 183,025 1995 06/95 40 years Orlando, FL 178,894 1995 06/95 40 years Sears Homelife: Clearwater, FL 354,234 1992 05/93 40 years Orlando, FL 305,636 1992 05/93 40 years Pensacola, FL 100,156 1994 06/96 40 years Raleigh, NC 110,089 1995 06/96 40 years Tampa, FL 128,433 1992 06/96 40 years 7-Eleven: Land 'O Lakes, FL - (g) 10/98 (g) Tampa Palms, FL - (g) 12/98 (g) Shop & Save: Homestead, PA - 1994 02/97 (c) Penn Hills, PA 58,272 1991 02/97 40 years Sports Authority: Memphis, TN 13,402 1998 12/97 (i) 40 years Little Rock, AR 19,397 1998 09/98 40 years Tampa, FL 95,425 1994 06/96 40 years SuperValu: Huntington, WV 35,653 1971 02/97 40 years Top's: Lacey, WA 331,976 1992 02/97 40 years Wacammaw: Fairfax, VA - 1995 12/95 (c) White Marsh, MD 59,502 1998 03/98 (i) 40 years Waremart: Eureka, CA 256,435 1965 02/97 40 years Wendy's Old Fashioned Hamburger: Fenton, MO 97,939 1985 07/92 33 years Longwood, FL 40,400 1982 07/92 31.4 years Sacramento, CA - (p) 02/98 (p) Vacant Properties: Arlington, TX 65,321 1996 06/96 38.4 years South Miami, FL 39,244 1988 06/96 38.1 years Unallocated costs relating to con- struction in progress =========== 17,335,079 =========== Properties 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: Altamonte Spgs, FL (c) 1997 09/97 (c) Checkers: Orlando, FL (c) 1988 07/92 (c) Denny's: Landrum, SC (c) 1992 05/93 (c) Mooresville, NC (c) 1992 05/93 (c) Duncan, SC (c) 1992 05/93 (c) Akron, OH (d) 1992 05/93 (d) Topeka, KS (c) 1989 06/93 (c) Winter Springs, FL (c) 1994 01/94 (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 (d) 1994 11/94 (d) 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) Colleyville, TX (c) 1995 06/95 (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) Tallahassee, FL (c) 1996 06/96 (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) 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) The Good Guys: Stockton, CA (d) 1991 07/94 (d) Portland, OR (d) 1996 05/96 (d) Hardee's: Mobile, AL (c) 1993 10/93 (c) Warrior, AL (c) 1992 10/93 (c) Horn Lake, MS (c) 1993 10/93 (c) West Point, MS (c) 1993 10/93 (c) Columbia, TN (c) 1993 10/93 (c) Johnson City, TN (c) 1993 10/93 (c) Iuka, MS (d) 1993 10/93 (d) Biscoe, NC (d) 1993 10/93 (d) Aynor, SC (d) 1993 10/93 (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) HomePlace: Bowie, MD (c) 1997 12/97 (c) 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) Ro-Jack's Food Store: Warwick, RI (c) 1992 02/97 (c) Shop & Save: Homestead, PA (c) 1994 02/97 (c) Wacammaw: Fairfax, VA (c) 1995 12/95 (c) =========== - =========== </TABLE> <TABLE> COMMERCIAL NET LEASE REALTY, INC. NOTES TO SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION December 31, 1998 (a) Transactions in real estate and accumulated depreciation during 1998, 1997 and 1996, are summarized as follows: <CAPTION> 1998 1997 1996 ----------- ----------- ----------- <S> <C> <C> <C> Land and Buildings: Balance at the Beginning of Period 413,274,423 277,109,358 161,454,129 Acquisitions 129,416,817 156,011,944 116,563,622 Sale of land and buildings (5,407,999) (19,846,879) (908,393) ----------- ----------- ----------- Balance at the Close of Period 537,283,241 413,274,423 277,109,358 =========== =========== =========== Accumulated Depreciation: Balance at the Beginning of Period 12,296,997 8,078,562 5,497,390 Sale of land and buildings (820,506) (258,942) (222,940) Depreciation expense 5,858,588 4,477,377 2,804,112 ---------- ---------- ---------- Balance at the Close of Period 17,335,079 12,296,997 8,078,562 ========== ========== ========== <FN> (b) As of December 31, 1998, all of the leases are treated as operating leases for federal income tax purposes. As of December 31, 1998, the aggregate cost of the properties owned by the Company and its subsidiaries for federal income tax purposes was $668,371,927. (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. (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 years ended December 31, 1997 and 1996, the Company (i) incurred acquisition fees and expense reimbursement fees totaling $2,278,306 and $937,363, respectively, 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 and $17,968,518, respectively. 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 the year ended December 31, 1998. (l) Property is encumbered as a part of the Company's $13,150,000 long term, fixed rate mortgage and security agreement. (m) Property is encumbered as a part of the Company's $39,450,000 long term, fixed rate mortgage and security agreement. (n) 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. (o) 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. (p) 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. (q) The Company acquired a land parcel adjacent to its existing Eckerd in Vineland, New Jersey, and is in the process of replacing the building in order to increase the gross leaseable area. The original lease is recorded as a direct financing lease. </FN> </TABLE>
EXHIBITS EXHIBIT INDEX Exhibit Number - -------------- 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). 4.1 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, andincorporated 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.) 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 Second Amended and Restated Line of Credit and Security Agreement, dated December 7, 1995, among Registrant, certain lenders listed therein and First Union National Bank of Florida, as the Agent, relating to a $100,000,000 loan (filed as Exhibit 10.14 to the Registrant's Current Report on Form 8-K dated January 18, 1996, and incorporated herein by reference). 10.5 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). 10.6 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). 10.7 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). 10.8 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). 10.9 Third Amended and Restated Line of Credit and Security Agreement, dated September 3, 1996, by and among Registrant, certain lenders and First Union National Bank of Florida, as the Agent, relating to a $150,000,000 loan (filed as Exhibit 10.11 to the Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 1996, and incorporated herein by reference). 10.10 Second Renewal and Modification Promissory Note, dated September 3, 1996, by and among Registrant and First Union National Bank of Florida, as the Agent, relating to $150,000,000 loan (filed as Exhibit 10.12 to the Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 1996, and incorporated herein by reference). 10.11 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). 10.12 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). 12 Statement of Computation of Ratios of Earnings to Fixed Charges (filed herewith). 13 Annual Report to Shareholders for the year ended December 31,1998 (filed herewith). 23 Consent of Independent Accountants dated March 30, 1999 (filed herewith). 27 Financial Data Schedule (filed herewith). (b) No reports on Form 8-K were filed during the quarter ended December 31, 1998.