UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): April 21, 2011
Cole Credit Property Trust III, Inc.
(Exact Name of Registrant as Specified in Its Charter)
         
Maryland
(State or other jurisdiction of incorporation
or organization)
  000-53960
(Commission File Number)
  26-1846406
(I.R.S. Employer
Identification No.)
2555 East Camelback Road, Suite 400, Phoenix, Arizona 85016
(Address of principal executive offices)
(Zip Code)
(602) 778-8700
(Registrant’s telephone number, including area code)
None
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
     
o
  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
   
o
  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
   
o
  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
   
o
  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
 

 


 

Item 8.01   Other Events
This Current Report on Form 8-K is being filed by Cole Credit Property Trust III, Inc. (which may be referred to as the “Registrant,” the “Company,” “we,” “our,” and “us”) to present information about the prior performance of programs sponsored by Cole Real Estate Investments, the Company’s sponsor. This prior performance information is being filed on Form 8-K in order to be incorporated by reference into the Company’s Registration Statement on Form S-11 (File No. 333-164884), as amended.

2


 

SIGNATURE
     Pursuant to the requirements 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.
         
Dated: April 21, 2011   COLE CREDIT PROPERTY TRUST III, INC.
 
       
 
  By:   /s/ Simon J. Misselbrook
 
       
 
  Name:   Simon J. Misselbrook
 
  Title:   Vice President of Accounting
Principal Accounting Officer

3


 

 
APPENDIX A
 
PRIOR PERFORMANCE TABLES
 
The prior performance tables that follow present certain information regarding the real estate programs previously sponsored by entities affiliated with our sponsor, Cole Real Estate Investments. The Company has presented all prior programs that have similar investment objectives to this offering. In determining which prior programs have similar investment objectives to this offering, the Company considered factors such as the type of real estate acquired by the program, the extent to which the program was designed to provide current income through the payment of cash distributions or to protect and preserve capital contributions, and the extent to which the program seeks to increase the value of the investments made in the program. The information in this section should be read together with the summary information in our prospectus under “Prior Performance Summary.”
 
These tables contain information that may aid a potential investor in evaluating the program presented. However, the information contained in these tables does not relate to the properties held or to be held by us, and the purchase of our shares will not create any ownership interest in the programs included in these tables.
 
These tables are presented on a tax basis rather than in accordance with accounting principles generally accepted in the United States (“GAAP”) except where noted. Tax basis accounting does not take certain income or expense accruals into consideration at the end of each fiscal year. Income may be understated in the tables, as GAAP accounting would require certain amortization or leveling of rental revenue, the amount of which is undetermined at this time. Expenses may be understated by monthly operating expenses, which typically are paid in arrears. The following tables are included in this section:
 
  •  Table I — Experience in Raising and Investing Funds;
 
  •  Table II — Compensation to Sponsor;
 
  •  Table III — Operating Results of Prior Programs;
 
  •  Table IV — Results of Completed Programs; and
 
  •  Table V — Sales or Disposals of Properties.
 
For information regarding the acquisitions of properties by programs sponsored by Cole Real Estate Investments during the three years ending December 31, 2010, see Table VI contained in Part II of our registration statement, which is not a part of our prospectus. We will provide a copy of Table VI to you upon written request and without charge.
 
 
Past performance is not necessarily indicative of future results.


1


 

TABLE I
 
EXPERIENCE IN RAISING AND INVESTING FUNDS (UNAUDITED)
 
This table provides a summary of the experience of the sponsors of Prior Real Estate Programs for which offerings have been closed since January 1, 2008. Information is provided with regard to the manner in which the proceeds of the offerings have been applied. Also set forth below is information pertaining to the timing and length of these offerings and the time period over which the proceeds have been invested in the properties. All figures are as of December 31, 2010.
 
                 
    Cole Credit Property
    Cole Net Lease
 
    Trust II, Inc.(4)     Portfolio VI(5)(6)  
 
Dollar amount offered
  $ 2,270,000,000     $ 25,640,000  
Dollar amount raised
    2,162,851,236       25,640,000  
Percentage amount raised
    100.0 %     100.0 %
Less offering expenses:
               
Selling commissions and discounts retained by affiliates
    6.3 %     5.5 %
Organizational expenses(1)
    2.4 %     1.0 %
Other
           
Reserves
    0.1 %     0.9 %
Percent available for investment
    91.2 %     92.6 %
Acquisition costs:(2)
               
Prepaid items and fees related to purchase of property
    1.1 %     0.7 %
Cash down payment
    88.1 %     91.9 %
Acquisition fees(3)
    2.0 %      
Other
           
                 
Total acquisition cost
    91.2 %     92.6 %
Percent leverage
    50 %     54 %
Date offering began
    6/27/2005       9/10/2007  
Length of offering (in months)
    Ongoing       5  
Months to invest 90% of amount available for investment
    40       3  
 
 
(1) Organizational expenses include legal, accounting, printing, escrow, filing, recording and other related expenses associated with the formation and original organization of the program and also includes fees paid to the sponsor and to affiliates.
 
(2) Acquisition costs expressed as a percentage represent the costs incurred to acquire real estate with the initial capital raised in the respective offerings and do not include the costs incurred to acquire additional real estate with the proceeds from financing transactions and excess working capital.
 
(3) Acquisition fees include fees paid to the sponsor or affiliates based upon the terms of the offering memorandum or prospectus.
 
(4) These amounts include Cole Credit Property Trust II, Inc.’s initial, follow-on and distribution reinvestment plan offerings. Cole Credit Property Trust II, Inc. began its initial offering on June 27, 2005 and closed its initial offering on May 22, 2007. The total dollar amount registered and available to be offered in the initial offering was $552.8 million. The total dollar amount raised in the initial offering was $547.4 million. Cole Credit Property Trust II, Inc. began its follow-on offering on May 23, 2007 and closed its follow-on offering on January 2, 2009. The total dollar amount registered and available to be offered in the follow-on offering was $1.5 billion. The total dollar amount raised in the follow-on offering was $1.5 billion. It took Cole Credit Property Trust II, Inc. 40 months to invest 90% of the amount available for investment in its initial and follow-on offerings. Cole Credit Property Trust II, Inc. began its distribution reinvestment plan offering on
 
 
Past performance is not necessarily indicative of future results.


2


 

TABLE I
 
EXPERIENCE IN RAISING AND INVESTING FUNDS (UNAUDITED) — (Continued)
 
September 18, 2008 and was currently offering shares under this distribution reinvestment plan offering as of December 31, 2010. The total initial dollar amount registered and available to be offered in the distribution reinvestment plan offering is $285.0 million. The total dollar amount raised in the distribution reinvestment plan offering was $144.5 million as of December 31, 2010.
 
(5) The Offering is a Delaware Statutory Trust Program sponsored by Cole Real Estate Investments which consists of the sale of Delaware statutory trust interests in properties initially owned by subsidiaries of Cole Collateralized Senior Notes, LLC, Cole Collateralized Senior Notes II, LLC, Cole Collateralized Senior Notes III, LLC or Cole Collateralized Senior Notes IV, LLC.
 
(6) Acquisition cost amounts represent the costs paid by the tenant-in-common or Delaware statutory trust investors to acquire interest in the properties.
 
Past performance is not necessarily indicative of future results.


3


 

TABLE II
 
COMPENSATION TO SPONSOR (UNAUDITED)
 
This table sets forth the compensation paid to our sponsor and its affiliates, including compensation paid out of the offering proceeds and compensation paid in connection with the ongoing operations of Prior Real Estate Programs. Prior Real Estate Programs whose offerings have closed since January 1, 2008 are shown separately and all other programs have been aggregated. Each of the Prior Real Estate Programs for which information is presented below has similar or identical investment objectives to this program. All amounts are as of December 31, 2010.
 
                 
    Cole Credit Property
    Cole Net Lease
 
    Trust II, Inc.     Portfolio VI  
 
Date offering commenced
    6/27/2005       9/10/2007  
Dollar amount raised
  $ 2,162,851,236     $  25,639,300  
Amount paid to sponsor from proceeds of offering:
               
Underwriting fees
    25,741,562       256,401  
Acquisition fees and real estate commissions(1)
    68,046,144        
Advisory fees
           
Other(2)
    20,819,387        
Amount of cash generated from operations before deducting payments to sponsor
    398,931,974       5,285,977  
Amount paid to sponsor from operations:
               
Property management fees
    15,426,105        
Partnership management fees(3)
    25,953,917       74,797  
Reimbursements
    5,421,724        
Leasing commissions
    546,695        
Other(4)
    95,869        
Amount of property sales and refinancing before deducting payments to sponsor
               
Cash(5)
           
Notes
           
Amount paid to sponsor from property sales and refinancing
               
Incentive fees
           
Real estate commissions
           
Other
           
 
Past performance is not necessarily indicative of future results.
 


4


 

TABLE II
 
COMPENSATION TO SPONSOR (UNAUDITED) — (Continued)
 
         
    60 Other Programs
 
    (6)  
 
Date offering commenced
    N/A  
Dollar amount raised
  $  
Amount paid to sponsor from proceeds of offering:
       
Underwriting fees
     
Acquisition fees and real estate commissions(1)
    964,045  
Advisory fees
     
Other(2)
    14,500  
Amount of cash generated from operations before deducting payments to sponsor
    80,532,948  
Amount paid to sponsor from operations:
       
Property management fees
    2,411,047  
Partnership management fees(3)
    3,413,397  
Reimbursements
     
Leasing commissions
    10,500  
Other(4)
     
Amount of property sales and refinancing before deducting payments to sponsor
       
Cash(5)
    11,438,651  
Notes
     
Amount paid to sponsor from property sales and refinancing
       
Incentive fees
     
Real estate commissions
     
Other
     
 
 
(1) Properties are acquired with a combination of funds from offering proceeds and debt. The acquisition and real estate commissions reported in this table include the total amount of fees paid to the sponsor or its affiliates regardless of the funding source for these costs.
 
(2) Amounts primarily relate to loan coordination fees, a development fee and reimbursement of certain offering costs paid by the sponsor.
 
(3) Amounts primarily relate to asset management fees and expenses.
 
(4) Amounts primarily relate to construction management fees.
 
(5) Amounts herein include initial investments of capital raised and properties acquired through reinvested amounts.
 
(6) 60 of the offerings of the prior programs aggregated herein were not closed within the past three years and therefore are not shown separately. Amounts presented represent aggregate payments to the sponsor in the most recent three years. The programs have similar investment objectives to our program.
 
 
Past performance is not necessarily indicative of future results.

5


 

 
TABLE III
 
OPERATING RESULTS OF PRIOR PROGRAMS (UNAUDITED)
 
The following sets forth the unaudited operating results of Prior Real Estate Programs sponsored by the sponsor of this program, the offerings of which have been closed since January 1, 2006. The information relates only to programs with investment objectives similar to our program. All figures are as of December 31 of the year indicated, except as noted.
 
                                         
    Cole Collateralized Senior Notes IV, LLC
 
    May 2005
 
    (Unaudited)  
    2006     2007     2008     2009     2010  
 
Gross Revenues
  $ 2,070,894     $ 1,520,899     $ 1,419,521     $ 683,412     $ 320,154  
Profit (loss) on sale of properties
          121,341                   (354,000 )
Less:
                                       
Operating expenses(1)
    1,131,745       85,088       146,340       138,335       261,741  
Interest paid to note investors
    2,371,674       2,369,739       2,369,739       2,369,739       2,424,395  
Other interest expense
    536,618       343,887       191,182       48,481        
Depreciation and amortization(2)
    426,629       460,010       540,056       611,779       463,232  
                                         
Net Income (loss) — Tax Basis(3)
  $ (2,395,772 )   $ (1,616,484 )   $ (1,827,796 )   $ (2,484,922 )   $ (3,183,214 )
                                         
Taxable income
                                       
— from operations(4)(9)
  $ (2,395,772 )   $ (1,737,825 )   $ (1,827,796 )   $ (2,484,922 )   $ (2,829,214 )
— from gain (loss) on sale
          121,341                   (354,000 )
Cash generated
                                       
— from operations
    402,531       1,091,924       1,081,999       496,596       58,413  
— from sales
    28,358,859       7,870,622       1,222,901              
— from refinancing
                             
                                         
Cash generated from operations, sales and refinancing
    28,761,390       8,962,546       2,304,900       496,596       58,413  
Less: Cash distributions to investors(11)
                                       
— from operating cash flow
    402,531       1,091,924       1,081,999       496,596       58,413  
— from sales and refinancing
    1,969,143       1,277,815       1,287,740 (10)     1,873,143 (10)     2,365,982 (10)
— from other
                             
                                         
Cash generated (deficiency) after cash distributions
  $ 26,389,716     $ 6,592,807     $ (64,839 )   $ (1,873,143 )   $ (2,365,982 )
Less: Special items (not including sales and refinancing)
                             
                                         
Cash generated (deficiency) after cash distributions and special items
  $ 26,389,716     $ 6,592,807     $ (64,839 )   $ (1,873,143 )   $ (2,365,982 )
                                         
Tax and distribution data per $1,000 invested
                                       
Federal income tax results:
                                       
Ordinary income (loss)
                                       
— from operations
  $     $     $     $     $ (5)
— from recapture
                             
Capital gain (loss)
                             
Cash distributions to investors
                                       
Source (on a tax basis)
                                       
— Investment income
  $     $     $     $     $ (5)
— Return of capital
                             
Source (on a cash basis)
                                       
— Sales
                             
— Refinancing
                             
— Operations
                             
— Other
                             
Amount (in percentage terms) remaining invested in program properties at the end of the last year reported in the table
                                    2 %
 
 
 
Past performance is not necessarily indicative of future results.


6


 

TABLE III
 
OPERATING RESULTS OF PRIOR PROGRAMS (UNAUDITED) — (Continued)
 
                                         
    Cole Credit Property Trust II, Inc.
 
    June 2005
 
    (Unaudited)  
    2006     2007     2008     2009     2010  
 
Gross Revenues
  $ 19,519,507     $ 92,100,308     $ 202,282,667     $ 276,026,961     $ 269,274,321  
Equity in income of unconsolidated joint venture
                470,978       612,432       964,828  
Profit (loss) on sale of properties
                             
Less:
                                       
Operating expenses(1)
    3,306,511       12,662,270       32,191,062       50,986,169       47,170,233  
Interest expense
    8,397,634       39,075,748       78,063,338       98,996,703       102,976,724  
Depreciation and amortization(2)
    6,469,366       30,482,273       63,858,422       90,750,170       85,162,219  
Impairment of real estate assets
          5,400,000       3,550,000       13,500,000       4,500,435  
                                         
Net Income (loss) — GAAP Basis(6)
  $ 1,345,996     $ 4,480,017     $ 25,090,823     $ 22,406,351     $ 30,429,538  
                                         
Taxable income
                                       
— from operations(4)
  $ 3,104,068     $ 15,703,828     $ 42,432,587     $ 53,168,771     $ 45,882,738 (7)
— from gain on sale
                             
Cash generated
                                       
— from operations
    7,861,475       43,366,041       96,073,918       116,871,698       105,627,000  
— from sales
                             
— from refinancing
                             
                                         
Cash generated from operations, sales and refinancing
    7,861,475       43,366,041       96,073,918       116,871,698       105,627,000  
Less: Cash distributions to investors
                                       
— from operating cash flow
    7,075,329       37,727,364       96,051,343       116,871,698       105,627,000  
— from sales and refinancing
                             
— from other(8)
                      18,111,554       23,623,894  
                                         
Cash generated (deficiency) after cash distributions
    786,146       5,638,677       22,575       (18,111,554 )     (23,623,894 )
Less: Special items (not including sales and refinancing)
                             
                                         
Cash generated (deficiency) after cash distributions and special items
  $ 786,146     $ 5,638,677     $ 22,575     $ (18,111,554 )   $ (23,623,894 )
                                         
Tax and distribution data per $1,000 invested
                                       
Federal income tax results:
                                       
Ordinary income (loss)
                                       
— from operations
  $ 10.13     $ 16.80     $ 21.02     $ 27.24     $ 22.20  
— from recapture
                             
Capital gain (loss)
                             
Cash distributions to investors
                                       
Source (on a GAAP basis)
                                       
— Investment income
    26.40       25.00       30.00       26.00       21.90  
— Return of capital
    36.46       37.00       36.00       41.00       40.50  
Source (on a cash basis)
                                       
— Sales
                             
— Refinancing
                             
— Operations
    62.86       62.00       66.00       58.01       50.99  
— Other(8)
                      8.99       11.41  
Amount (in percentage terms) remaining invested in program properties at the end of the last year reported in the table
                                    100 %
 
 
 
Past performance is not necessarily indicative of future results.

7


 

TABLE III
 
OPERATING RESULTS OF PRIOR PROGRAMS (UNAUDITED) — (Continued)
 
                                         
    Walgreens — Edgewood, NM
 
    September 2004
 
    (Unaudited)  
    2006     2007     2008     2009     2010  
 
Gross Revenues
  $ 276,137     $ 276,538     $ 275,854     $ 298,614     $ 275,646  
Profit (loss) on sale of properties
                             
Less:
                                       
Operating expenses(1)
    13,699       14,229       14,347       14,648       13,806  
Interest expense
    118,666       118,666       118,991       128,744       118,666  
Depreciation and amortization(2)
                             
                                         
Net Income (loss) — Tax Basis(3)
  $ 143,772     $ 143,643     $ 142,516     $ 155,222     $ 143,174  
                                         
Taxable income
                                       
— from operations(4)
  $ 143,772     $ 143,643     $ 142,516     $ 155,222     $ 143,174  
— from gain on sale
                             
Cash generated
                                       
— from operations
    143,772       143,643       142,516       155,222       143,174  
— from sales
                             
— from refinancing
                             
                                         
Cash generated from operations, sales and refinancing
    143,772       143,643       142,516       155,222       143,174  
Less: Cash distributions to investors
                                       
— from operating cash flow
    144,072       144,072       144,072       144,070       144,070  
— from sales and refinancing
                             
— from other
                             
                                         
Cash generated (deficiency) after cash distributions
    (300 )     (429 )     (1,556 )     11,152       (896 )
Less: Special items (not including sales and refinancing
                             
                                         
Cash generated (deficiency) after cash distributions and special items
  $ (300 )   $ (429 )   $ (1,556 )   $ 11,152     $ (896 )
                                         
Tax and distribution data per $1,000 invested
                                       
Federal income tax results:
                                       
Ordinary income (loss)
                                       
— from operations
  $ 67.37     $ 67.31     $ 66.78     $ 72.74     $ 67.09  
— from recapture
                             
Capital gain (loss)
                             
Cash distributions to investors
                                       
Source (on a tax basis)
                                       
— Investment income
    67.51       67.51       67.51       67.51       67.51  
— Return of capital
                             
Source (on a cash basis)
                                       
— Sales
                             
— Refinancing
                             
— Operations
    67.51       67.51       67.51       67.51       67.51  
— Other
                             
Amount (in percentage terms) remaining invested in program properties at the end of the last year reported in the table
                                    100 %
 
 
 
Past performance is not necessarily indicative of future results.

8


 

TABLE III
 
OPERATING RESULTS OF PRIOR PROGRAMS (UNAUDITED) — (Continued)
 
                                         
    Gander Mountain — Hermantown, MN
 
    September 2005
 
    (Unaudited)  
    2006     2007     2008     2009     2010  
 
Gross Revenues
  $ 885,140     $ 1,063,286     $ 896,361     $ 901,115     $ 916,365  
Profit (loss) on sale of properties
                             
Less:
                                       
Operating expenses(1)
    26,926       171,824       34,853       31,397       31,838  
Depreciation and amortization(2)
                             
                                         
Net Income (loss) — Tax Basis(3)
  $ 858,214     $ 891,462     $ 861,508     $ 869,718     $ 884,527  
                                         
Taxable income
                                       
— from operations(4)
  $ 858,214     $ 891,462     $ 861,508     $ 869,718     $ 884,527  
— from gain on sale
                             
Cash generated
                                       
— from operations
    858,214       891,462       861,508       869,718       884,527  
— from sales
                             
— from refinancing
                             
                                         
Cash generated from operations, sales and refinancing
    858,214       891,462       861,508       869,718       884,527  
Less: Cash distributions to investors
                                       
— from operating cash flow
    861,636       861,636       861,650       861,643       871,311  
— from sales and refinancing
                             
— from other
                             
                                         
Cash generated (deficiency) after cash distributions
    (3,422 )     29,826       (142 )     8,075       13,216  
Less: Special items (not including sales and refinancing
                             
                                         
Cash generated (deficiency) after cash distributions and special items
  $ (3,422 )   $ 29,826     $ (142 )   $ 8,075     $ 13,216  
                                         
Tax and distribution data per $1,000 invested
                                       
Federal income tax results:
                                       
Ordinary income (loss)
                                       
— from operations
  $ 73.21     $ 76.04     $ 73.49     $ 74.19     $ 75.45  
— from recapture
                             
Capital gain (loss)
                             
Cash distributions to investors
                                       
Source (on a tax basis)
                                       
— Investment income
    73.50       73.50       73.50       73.50       74.32  
— Return of capital
                             
Source (on a cash basis)
                                       
— Sales
                             
— Refinancing
                             
— Operations
    73.50       73.50       73.50       73.50       74.32  
— Other
                             
Amount (in percentage terms) remaining invested in program properties at the end of the last year reported in the table
                                    100 %
 
 
 
Past performance is not necessarily indicative of future results.

9


 

TABLE III
 
OPERATING RESULTS OF PRIOR PROGRAMS (UNAUDITED) — (Continued)
 
                                         
    Best Buy — Baytown, TX
 
    October 2005
 
    (Unaudited)  
    2006     2007     2008     2009     2010  
 
Gross Revenues
  $ 489,624     $ 490,312     $ 488,836     $ 528,932     $ 488,255  
Profit (loss) on sale of properties
                             
Less:
                                       
Operating expenses(1)
    7,846       17,573       8,823       8,973       11,232  
Interest Expense
                             
Depreciation and amortization(2)
                             
                                         
Net Income (loss) — Tax Basis(3)
  $ 481,778     $ 472,739     $ 480,013     $ 519,959     $ 477,023  
                                         
Taxable income
                                       
— from operations(4)
  $ 481,778     $ 472,739     $ 480,013     $ 519,959     $ 477,023  
— from gain on sale
                             
Cash generated
                                       
— from operations
    481,778       472,739       480,013       519,959       477,023  
— from sales
                             
— from refinancing
                             
                                         
Cash generated from operations, sales and refinancing
    481,778       472,739       480,013       519,959       477,023  
Less: Cash distributions to investors
                                       
— from operating cash flow
    445,785       478,572       478,573       478,574       478,574  
— from sales and refinancing
                             
— from other
                             
                                         
Cash generated (deficiency) after cash distributions
    35,993       (5,833 )     1,440       41,385       (1,551 )
Less: Special items (not including sales and refinancing
                             
                                         
Cash generated (deficiency) after cash distributions and special items
  $ 35,993     $ (5,833 )   $ 1,440     $ 41,385     $ (1,551 )
                                         
Tax and distribution data per $1,000 invested
                                       
Federal income tax results:
                                       
Ordinary income (loss)
                                       
— from operations
  $ 57.89     $ 56.80     $ 57.67     $ 62.47     $ 57.31  
— from recapture
                             
Capital gain (loss)
                             
Cash distributions to investors
                                       
Source (on a tax basis)
                                       
— Investment income
    53.56       57.50       57.50       57.50       57.50  
— Return of capital
                             
Source (on a cash basis)
                                       
— Sales
                             
— Refinancing
                             
— Operations
    53.56       57.50       57.50       57.50       57.50  
— Other
                             
Amount (in percentage terms) remaining invested in program properties at the end of the last year reported in the table
                                    100 %
 
 
 
Past performance is not necessarily indicative of future results.

10


 

TABLE III
 
OPERATING RESULTS OF PRIOR PROGRAMS (UNAUDITED) — (Continued)
 
                                         
    Walgreens — Natchitoches, LA
 
    November 2005
 
    (Unaudited)  
    2006     2007     2008     2009     2010  
 
Gross Revenues
  $ 242,647     $ 255,718     $ 255,356     $ 255,068     $ 255,068  
Profit (loss) on sale of properties
                             
Less:
                                       
Operating expenses(1)
    10,747       9,056       9,097       8,546       8,995  
Interest expense
    116,328       130,858       131,217       130,858       130,858  
Depreciation and amortization(2)
                             
                                         
Net Income (loss) — Tax Basis(3)
  $ 115,572     $ 115,804     $ 115,042     $ 115,664     $ 115,215  
                                         
Taxable income
                                       
— from operations(4)
  $ 115,572     $ 115,804     $ 115,042     $ 115,664     $ 115,215  
— from gain on sale
                             
Cash generated
                                       
— from operations
    115,572       115,804       115,042       115,664       115,215  
— from sales
                             
— from refinancing
                             
                                         
Cash generated from operations, sales and refinancing
    115,572       115,804       115,042       115,664       115,215  
Less: Cash distributions to investors
                                       
— from operating cash flow
    99,268       114,600       114,597       114,595       114,595  
— from sales and refinancing
                             
— from other
                             
                                         
Cash generated (deficiency) after cash distributions
    16,304       1,204       445       1,069       620  
Less: Special items (not including sales and refinancing
                             
                                         
Cash generated (deficiency) after cash distributions and special items
  $ 16,304     $ 1,204     $ 445     $ 1,069     $ 620  
                                         
Tax and distribution data per $1,000 invested
                                       
Federal income tax results:
                                       
Ordinary income (loss)
                                       
— from operations
  $ 65.55     $ 65.69     $ 65.25     $ 65.61     $ 65.35  
— from recapture
                             
Capital gain (loss)
                             
Cash distributions to investors
                                       
Source (on a tax basis)
                                       
— Investment income
    56.31       65.00       65.00       65.00       65.00  
— Return of capital
                             
Source (on a cash basis)
                                       
— Sales
                             
— Refinancing
                             
— Operations
    56.31       65.00       65.00       65.00       65.00  
— Other
                             
Amount (in percentage terms) remaining invested in program properties at the end of the last year reported in the table
                                    100 %
 
 
 
Past performance is not necessarily indicative of future results.

11


 

TABLE III
 
OPERATING RESULTS OF PRIOR PROGRAMS (UNAUDITED) — (Continued)
 
                                         
    Kohl’s — Lakewood, CO
 
    November 2005
 
    (Unaudited)  
    2006     2007     2008     2009     2010  
 
Gross Revenues
  $ 1,009,577     $ 1,064,348     $ 1,150,875     $ 972,785     $ 1,061,191  
Profit (loss) on sale of properties
                             
Less:
                                       
Operating expenses(1)
    27,941       23,997       26,791       22,020       22,223  
Interest expense
    524,194       586,904       588,512       586,904       586,904  
Depreciation and amortization(2)
                             
                                         
Net Income (loss) — Tax Basis(3)
  $ 457,442     $ 453,447     $ 535,572     $ 363,861     $ 452,064  
                                         
Taxable income
                                       
— from operations(4)
  $ 457,442     $ 453,447     $ 535,572     $ 363,861     $ 452,064  
— from gain on sale
                             
Cash generated
                                       
— from operations
    457,442       453,447       535,572       363,861       452,064  
— from sales
                             
— from refinancing
                             
                                         
Cash generated from operations, sales and refinancing
    457,442       453,447       535,572       363,861       452,064  
Less: Cash distributions to investors
                                       
— from operating cash flow
    387,805       447,660       445,460       447,660       447,660  
— from sales and refinancing
                             
— from other
                             
                                         
Cash generated (deficiency) after cash distributions
    69,637       5,787       90,112       (83,799 )     4,404  
Less: Special items (not including sales and refinancing
                             
                                         
Cash generated (deficiency) after cash distributions and special items
  $ 69,637     $ 5,787     $ 90,112     $ (83,799 )   $ 4,404  
                                         
Tax and distribution data per $1,000 invested
                                       
Federal income tax results:
                                       
Ordinary income (loss)
                                       
— from operations
  $ 61.31     $ 60.78     $ 71.78     $ 48.77     $ 60.59  
— from recapture
                             
Capital gain (loss)
                             
Cash distributions to investors
                                       
Source (on a tax basis)
                                       
— Investment income
    51.98       60.00       59.71       60.00       60.00  
— Return of capital
                             
Source (on a cash basis)
                                       
— Sales
                             
— Refinancing
                             
— Operations
    51.98       60.00       59.71       60.00       60.00  
— Other
                             
Amount (in percentage terms) remaining invested in program properties at the end of the last year reported in the table
                                    100 %
 
 
 
Past performance is not necessarily indicative of future results.

12


 

TABLE III
 
OPERATING RESULTS OF PRIOR PROGRAMS (UNAUDITED) — (Continued)
 
                                         
    The Shoppes at North Village — St. Joseph, MO
 
    December 2005
 
    (Unaudited)  
    2006     2007     2008     2009     2010  
 
Gross Revenues
  $ 2,824,347     $ 4,209,047     $ 4,139,927     $ 3,977,184     $ 4,140,512  
Profit (loss) on sale of properties
                             
Less:
                                       
Operating expenses(1)
    871,927       1,270,287       1,486,329       1,285,810       1,354,968  
Interest expense
    1,094,702       1,611,155       1,615,569       1,611,154       1,611,155  
Depreciation and amortization(2)
                             
                                         
Net Income (loss) — Tax Basis(3)
  $ 857,718     $ 1,327,605     $ 1,038,029     $ 1,080,220     $ 1,174,389  
                                         
Taxable income
                                       
— from operations(4)
  $ 857,718     $ 1,327,605     $ 1,038,029     $ 1,080,220     $ 1,174,389  
— from gain on sale
                             
Cash generated
                                       
— from operations
    857,718       1,327,605       1,038,029       1,080,220       1,174,389  
— from sales
                             
— from refinancing
                             
                                         
Cash generated from operations, sales and refinancing
    857,718       1,327,605       1,038,029       1,080,220       1,174,389  
Less: Cash distributions to investors
                                       
— from operating cash flow
    808,917       1,246,236       1,176,954       846,026       910,836  
— from sales and refinancing
                             
— from other
                             
                                         
Cash generated (deficiency) after cash distributions
    48,801       81,369       (138,925 )     234,194       263,553  
Less: Special items (not including sales and refinancing
                             
                                         
Cash generated (deficiency) after cash distributions and special items
  $ 48,801     $ 81,369     $ (138,925 )   $ 234,194     $ 263,553  
                                         
Tax and distribution data per $1,000 invested
                                       
Federal income tax results:
                                       
Ordinary income (loss)
                                       
— from operations
  $ 41.98     $ 64.98     $ 50.81     $ 52.87     $ 57.48  
— from recapture
                             
Capital gain (loss)
                             
Cash distributions to investors
                                       
Source (on a tax basis)
                                       
— Investment income
    39.59       61.00       57.18       41.84       45.01  
— Return of capital
                0.43              
Source (on a cash basis)
                                       
— Sales
                             
— Refinancing
                             
— Operations
    39.59       61.00       57.18       41.84       45.01  
— Other
                0.43              
Amount (in percentage terms) remaining invested in program properties at the end of the last year reported in the table
                                    100 %
 
 
 
Past performance is not necessarily indicative of future results.

13


 

TABLE III
 
OPERATING RESULTS OF PRIOR PROGRAMS (UNAUDITED) — (Continued)
 
                                         
    Walgreens — Sumter, SC
 
    January 2006
 
    (Unaudited)  
    2006     2007     2008     2009     2010  
 
Gross Revenues
  $ 314,624     $ 325,980     $ 325,445     $ 325,085     $ 325,085  
Profit (loss) on sale of properties
                             
Less:
                                       
Operating expenses(1)
    14,066       13,354       13,830       12,921       12,704  
Interest expense
    158,325       171,598       172,138       171,668       171,668  
Depreciation and amortization(2)
                             
                                         
Net Income (loss) — Tax Basis(3)
  $ 142,233     $ 141,028     $ 139,477     $ 140,496     $ 140,713  
                                         
Taxable income
                                       
— from operations(4)
  $ 142,233     $ 141,028     $ 139,477     $ 140,496     $ 140,713  
— from gain on sale
                             
Cash generated
                                       
— from operations
    142,233       141,028       139,477       140,496       140,713  
— from sales
                             
— from refinancing
                             
                                         
Cash generated from operations, sales and refinancing
    142,233       141,028       139,477       140,496       140,713  
Less: Cash distributions to investors
                                       
— from operating cash flow
    121,169       139,884       139,887       139,880       139,880  
— from sales and refinancing
                             
— from other
                             
                                         
Cash generated (deficiency) after cash distributions
    21,064       1,144       (410 )     616       833  
Less: Special items (not including sales and refinancing
                             
                                         
Cash generated (deficiency) after cash distributions and special items
  $ 21,064     $ 1,144     $ (410 )   $ 616     $ 833  
                                         
Tax and distribution data per $1,000 invested
                                       
Federal income tax results:
                                       
Ordinary income (loss)
                                       
— from operations
  $ 66.09     $ 65.53     $ 64.81     $ 65.29     $ 65.39  
— from recapture
                             
Capital gain (loss)
                             
Cash distributions to investors
                                       
Source (on a tax basis)
                                       
— Investment income
    56.31       65.00       65.00       65.00       65.00  
— Return of capital
                             
Source (on a cash basis)
                                       
— Sales
                             
— Refinancing
                             
— Operations
    56.31       65.00       65.00       65.00       65.00  
— Other
                             
Amount (in percentage terms) remaining invested in program properties at the end of the last year reported in the table
                                    100 %
 
 
Past performance is not necessarily indicative of future results.

14


 

TABLE III
 
OPERATING RESULTS OF PRIOR PROGRAMS (UNAUDITED) — (Continued)
 
                                         
    Kohl’s — St. Joseph, MO
 
    February 2006
 
    (Unaudited)  
    2006     2007     2008     2009     2010  
 
Gross Revenues
  $ 564,619     $ 710,939     $ 801,046     $ 694,012     $ 728,238  
Profit (loss) on sale of properties
                             
Less:
                                       
Operating expenses(1)
    159,442       179,656       170,276       162,445       148,858  
Interest expense
    190,758       325,358       326,249       325,358       325,358  
Depreciation and amortization(2)
                             
                                         
Net Income (loss) — Tax Basis(3)
  $ 214,419     $ 205,925     $ 304,521     $ 206,209     $ 254,022  
                                         
Taxable income
                                       
— from operations(4)
  $ 214,419     $ 205,925     $ 304,521     $ 206,209     $ 254,022  
— from gain on sale
                             
Cash generated
                                       
— from operations
    214,419       205,925       304,521       206,209       254,022  
— from sales
                             
— from refinancing
                             
                                         
Cash generated from operations, sales and refinancing
    214,419       205,925       304,521       206,209       254,022  
Less: Cash distributions to investors
                                       
— from operating cash flow
    132,308       247,020       247,020       247,020       247,020  
— from sales and refinancing
                             
— from other
                             
                                         
Cash generated (deficiency) after cash distributions
    82,111       (41,095 )     57,501       (40,811 )     7,002  
Less: Special items (not including sales and refinancing
                             
                                         
Cash generated (deficiency) after cash distributions and special items
  $ 82,111     $ (41,095 )   $ 57,501     $ (40,811 )   $ 7,002  
                                         
Tax and distribution data per $1,000 invested
                                       
Federal income tax results:
                                       
Ordinary income (loss)
                                       
— from operations
  $ 52.08     $ 50.02     $ 73.97     $ 50.09     $ 61.70  
— from recapture
                             
Capital gain (loss)
                             
Cash distributions to investors
                                       
Source (on a tax basis)
                                       
— Investment income
    32.14       60.00       60.00       60.00       60.00  
— Return of capital
                             
Source (on a cash basis)
                                       
— Sales
                             
— Refinancing
                             
— Operations
    32.14       60.00       60.00       60.00       60.00  
— Other
                             
Amount (in percentage terms) remaining invested in program properties at the end of the last year reported in the table
                                    100 %
 
 
Past performance is not necessarily indicative of future results.


15


 

TABLE III
 
OPERATING RESULTS OF PRIOR PROGRAMS (UNAUDITED) — (Continued)
 
                                         
    Home Depot — Bellingham, WA
 
    April 2006
 
    (Unaudited)  
    2006     2007     2008     2009     2010  
 
Gross Revenues
  $ 608,739     $ 1,571,778     $ 1,572,745     $ 1,568,675     $ 1,698,802  
Profit (loss) on sale of properties
                             
Less:
                                       
Operating expenses(1)
    14,676       54,775       60,817       59,764       61,629  
Depreciation and amortization(2)
                             
                                         
Net Income (loss) — Tax Basis(3)
  $ 594,063     $ 1,517,003     $ 1,511,928     $ 1,508,911     $ 1,637,173  
                                         
Taxable income
                                       
— from operations(4)
  $ 594,063     $ 1,517,003     $ 1,511,928     $ 1,508,911     $ 1,637,173  
— from gain on sale
                             
Cash generated
                                       
— from operations
    594,063       1,517,003       1,511,928       1,508,911       1,637,173  
— from sales
                             
— from refinancing
                             
                                         
Cash generated from operations, sales and refinancing
    594,063       1,517,003       1,511,928       1,508,911       1,637,173  
Less: Cash distributions to investors
                                       
— from operating cash flow
    463,771       1,494,708       1,494,264       1,494,715       1,494,715  
— from sales and refinancing
                             
— from other
                             
                                         
Cash generated (deficiency) after cash distributions
    130,292       22,295       17,664       14,196       142,458  
Less: Special items (not including sales and refinancing
                             
                                         
Cash generated (deficiency) after cash distributions and special items
  $ 130,292     $ 22,295     $ 17,664     $ 14,196     $ 142,458  
                                         
Tax and distribution data per $1,000 invested
                                       
Federal income tax results:
                                       
Ordinary income (loss)
                                       
— from operations
  $ 24.05     $ 61.40     $ 61.20     $ 61.07     $ 66.27  
— from recapture
                             
Capital gain (loss)
                             
Cash distributions to investors
                                       
Source (on a tax basis)
                                       
— Investment income
    18.77       60.50       60.48       60.50       60.50  
— Return of capital
                             
Source (on a cash basis)
                                       
— Sales
                             
— Refinancing
                             
— Operations
    18.77       60.50       60.48       60.50       60.50  
— Other
                             
Amount (in percentage terms) remaining invested in program properties at the end of the last year reported in the table
                                    100 %
 
 
Past performance is not necessarily indicative of future results.


16


 

TABLE III
 
OPERATING RESULTS OF PRIOR PROGRAMS (UNAUDITED) — (Continued)
 
                                         
    Cole Net Lease Portfolio I
 
    May 2006
 
    (Unaudited)  
    2006     2007     2008     2009     2010  
 
Gross Revenues
  $ 583,357     $ 1,429,279     $ 1,426,846     $ 1,424,945     $ 1,425,015  
Profit (loss) on sale of properties
                15,000              
Less:
                                       
Operating expenses(1)
    26,130       36,148       49,261       45,508       38,796  
Interest expense
    265,912       752,356       754,449       752,387       752,387  
Depreciation and amortization(2)
                             
                                         
Net Income (loss) — Tax Basis(3)
  $ 291,315     $ 640,775     $ 638,136     $ 627,050     $ 633,832  
                                         
Taxable income
                                       
— from operations(4)
  $ 291,315     $ 640,775     $ 623,136     $ 627,050     $ 633,832  
— from gain on sale
                15,000              
Cash generated
                                       
— from operations
    291,315       640,775       623,136       627,050       633,832  
— from sales
                15,000              
— from refinancing
                             
                                         
Cash generated from operations, sales and refinancing
    291,315       640,775       638,136       627,050       633,832  
Less: Cash distributions to investors
                                       
— from operating cash flow
    203,698       623,484       623,482       623,480       623,481  
— from sales and refinancing
                15,000              
— from other
                             
                                         
Cash generated (deficiency) after cash distributions
    87,617       17,291       (346 )     3,570       10,351  
Less: Special items (not including sales and refinancing
                             
                                         
Cash generated (deficiency) after cash distributions and special items
  $ 87,617     $ 17,291     $ (346 )   $ 3,570     $ 10,351  
                                         
Tax and distribution data per $1,000 invested
                                       
Federal income tax results:
                                       
Ordinary income (loss)
                                       
— from operations
  $ 30.37     $ 66.80     $ 64.96     $ 65.37     $ 66.08  
— from recapture
                             
Capital gain (loss)
                1.56              
Cash distributions to investors
                                       
Source (on a tax basis)
                                       
— Investment income
    21.24       65.00       65.00       65.00       65.00  
— Return of capital
                             
Source (on a cash basis)
                                       
— Sales
                1.56              
— Refinancing
                             
— Operations
    21.24       65.00       63.44       65.00       65.00  
— Other
                             
Amount (in percentage terms) remaining invested in program properties at the end of the last year reported in the table
                                    100 %
 
 
Past performance is not necessarily indicative of future results.


17


 

TABLE III
 
OPERATING RESULTS OF PRIOR PROGRAMS (UNAUDITED) — (Continued)
 
                                         
    Cole Net Lease Portfolio II
 
    June 2006
 
    (Unaudited)  
    2006     2007     2008     2009     2010  
 
Gross Revenues
  $ 313,447     $ 1,539,612     $ 1,579,494     $ 1,529,434     $ 1,528,068  
Profit (loss) on sale of properties
                             
Less:
                                       
Operating expenses(1)
    4,849       64,435       75,030       71,118       69,062  
Interest expense
    133,317       797,719       799,905       797,719       797,719  
Depreciation and amortization(2)
                             
                                         
Net Income (loss) — Tax Basis(3)
  $ 175,281     $ 677,458     $ 704,559     $ 660,597     $ 661,287  
                                         
Taxable income
                                       
— from operations(4)
  $ 175,281     $ 677,458     $ 704,559     $ 660,597     $ 661,287  
— from gain on sale
                             
Cash generated
                                       
— from operations
    175,281       677,458       704,559       660,597       661,287  
— from sales
                             
— from refinancing
                             
                                         
Cash generated from operations, sales and refinancing
    175,281       677,458       704,559       660,597       661,287  
Less: Cash distributions to investors
                                       
— from operating cash flow
    77,402       650,712       650,718       650,710       650,710  
— from sales and refinancing
                             
— from other
                             
                                         
Cash generated (deficiency) after cash distributions
    97,879       26,746       53,841       9,887       10,577  
Less: Special items (not including sales and refinancing
                             
                                         
Cash generated (deficiency) after cash distributions and special items
  $ 97,879     $ 26,746     $ 53,841     $ 9,887     $ 10,577  
                                         
Tax and distribution data per $1,000 invested
                                       
Federal income tax results:
                                       
Ordinary income (loss)
                                       
— from operations
  $ 17.51     $ 67.67     $ 70.38     $ 65.99     $ 66.06  
— from recapture
                             
Capital gain (loss)
                             
Cash distributions to investors
                                       
Source (on a tax basis)
                                       
— Investment income
    7.73       65.00       65.00       65.00       65.00  
— Return of capital
                             
Source (on a cash basis)
                                       
— Sales
                             
— Refinancing
                             
— Operations
    7.73       65.00       65.00       65.00       65.00  
— Other
                             
Amount (in percentage terms) remaining invested in program properties at the end of the last year reported in the table
                                    100 %
 
 
Past performance is not necessarily indicative of future results.


18


 

TABLE III
 
OPERATING RESULTS OF PRIOR PROGRAMS (UNAUDITED) — (Continued)
 
                                         
    Barrywoods Crossing — Kansas City, MO
 
    July 2006
 
    (Unaudited)  
    2006     2007     2008     2009     2010  
 
Gross Revenues
  $ 969,929     $ 3,887,472     $ 4,145,429     $ 3,894,998     $ 4,516,114  
Profit (loss) on sale of properties
                               
Less:
                                       
Operating expenses(1)
    642,129       1,261,696       1,391,359       1,333,093       1,437,777  
Interest expense
    126,766       1,521,195       1,546,548       1,542,323       1,542,323  
Depreciation and amortization(2)
                             
                                         
Net Income (loss) — Tax Basis(3)
  $ 201,034     $ 1,104,581     $ 1,207,522     $ 1,019,582     $ 1,536,014  
                                         
Taxable income
                                       
— from operations(4)
  $ 201,034     $ 1,104,581     $ 1,207,522     $ 1,019,582     $ 1,536,014  
— from gain on sale
                             
Cash generated
                                       
— from operations
    201,034       1,104,581       1,207,522       1,019,582       1,536,014  
— from sales
                             
— from refinancing
                             
                                         
Cash generated from operations, sales and refinancing
    201,034       1,104,581       1,207,522       1,019,582       1,536,014  
Less: Cash distributions to investors
                                       
— from operating cash flow
          1,486,685       1,198,964       893,615       1,007,503  
— from sales and refinancing
                             
— from other
                             
                                         
Cash generated (deficiency) after cash distributions
    201,034       (382,104 )     8,558       125,967       528,511  
Less: Special items (not including sales and refinancing
                             
                                         
Cash generated (deficiency) after cash distributions and special items
  $ 201,034     $ (382,104 )   $ 8,558     $ 125,967     $ 528,511  
                                         
Tax and distribution data per $1,000 invested
                                       
Federal income tax results:
                                       
Ordinary income (loss)
                                       
— from operations
  $ 9.85     $ 54.15     $ 59.19     $ 49.98     $ 75.29  
— from recapture
                             
Capital gain (loss)
                             
Cash distributions to investors
                                       
Source (on a tax basis)
                                       
— Investment income
          64.00       50.31       41.52       49.39  
— Return of capital
          8.88       8.46       2.28        
Source (on a cash basis)
                                       
— Sales
                             
— Refinancing
                             
— Operations
          64.00       50.31       41.52       49.39  
— Other
          8.88       8.46       2.28        
Amount (in percentage terms) remaining invested in program properties at the end of the last year reported in the table
                                    100 %
 
 
Past performance is not necessarily indicative of future results.


19


 

TABLE III
 
OPERATING RESULTS OF PRIOR PROGRAMS (UNAUDITED) — (Continued)
 
                                         
    Cole Net Lease Portfolio III
 
    December 2006
 
    (Unaudited)  
    2006     2007     2008     2009     2010  
 
Gross Revenues
  $     $ 2,447,247     $ 2,416,921     $ 2,413,694     $ 2,413,690  
Profit (loss) on sale of properties
                13,766              
Less:
                                       
Operating expenses(1)
          119,032       109,158       107,334       105,115  
Interest expense
          1,241,384       1,305,593       1,302,026       1,302,026  
Depreciation and amortization(2)
                             
                                         
Net Income (loss) — Tax Basis(3)
  $     $ 1,086,831     $ 1,015,936     $ 1,004,334     $ 1,006,549  
                                         
Taxable income
                                       
— from operations(4)
  $     $ 1,086,831     $ 1,002,170     $ 1,004,334     $ 1,006,549  
— from gain on sale
                13,766              
Cash generated
                                       
— from operations
          1,086,831       1,002,170       1,004,334       1,006,549  
— from sales
                21,115              
— from refinancing
                             
                                         
Cash generated from operations, sales and refinancing
          1,086,831       1,023,285       1,004,334       1,006,549  
Less: Cash distributions to investors
                                       
— from operating cash flow
          1,004,184       1,004,185       1,004,184       1,004,184  
— from sales and refinancing
                13,766              
— from other
                             
                                         
Cash generated (deficiency) after cash distributions
          82,647       5,334       150       2,365  
Less: Special items (not including sales and refinancing
                             
                                         
Cash generated (deficiency) after cash distributions and special items
  $     $ 82,647     $ 5,334     $ 150     $ 2,365  
                                         
Tax and distribution data per $1,000 invested
                                       
Federal income tax results:
                                       
Ordinary income (loss)
                                       
— from operations
  $     $ 70.35     $ 64.87     $ 65.01     $ 65.15  
— from recapture
                             
Capital gain (loss)
                0.89              
Cash distributions to investors
                                       
Source (on a tax basis)
                                       
— Investment income
          65.00       65.00       65.00       65.00  
— Return of capital
                             
Source (on a cash basis)
                                       
— Sales
                0.89              
— Refinancing
                             
— Operations
          65.00       64.11       65.00       65.00  
— Other
                             
Amount (in percentage terms) remaining invested in program properties at the end of the last year reported in the table
                                    100 %
 
 
Past performance is not necessarily indicative of future results.


20


 

TABLE III
 
OPERATING RESULTS OF PRIOR PROGRAMS (UNAUDITED) — (Continued)
 
                                 
    Centerpointe Shopping Center — Woodridge, IL
 
    May 2007
 
    (Unaudited)  
    2007     2008     2009     2010  
 
Gross Revenues
  $ 2,632,042     $ 4,241,709     $ 4,267,839     $ 4,178,527  
Profit (loss) on sale of properties
                       
Less:
                               
Operating expenses(1)
    643,478       1,525,240       1,393,905       1,274,911  
Interest expense
    837,535       1,525,064       1,520,897       1,520,897  
Depreciation and amortization(2)
                       
                                 
Net Income (loss) — Tax Basis(3)
  $ 1,151,029     $ 1,191,405     $ 1,353,037     $ 1,382,719  
                                 
Taxable income
                               
— from operations(4)
  $ 1,151,029     $ 1,191,405     $ 1,353,037     $ 1,382,719  
— from gain on sale
                       
Cash generated
                               
— from operations
    1,151,029       1,191,405       1,353,037       1,382,719  
— from sales
                       
— from refinancing
                       
                                 
Cash generated from operations, sales and refinancing
    1,151,029       1,191,405       1,353,037       1,382,719  
Less: Cash distributions to investors
                               
— from operating cash flow
    807,647       1,334,400       1,334,400       1,225,408  
— from sales and refinancing
                       
— from other
                       
                                 
Cash generated (deficiency) after cash distributions
    343,382       (142,995 )     18,637       157,311  
Less: Special items (not including sales and refinancing
                       
                                 
Cash generated (deficiency) after cash distributions and special items
  $ 343,382     $ (142,995 )   $ 18,637     $ 157,311  
                                 
Tax and distribution data per $1,000 invested
                               
Federal income tax results:
                               
Ordinary income (loss)
                               
— from operations
  $ 52.08     $ 53.91     $ 61.22     $ 62.57  
— from recapture
                       
Capital gain (loss)
                       
Cash distributions to investors
                               
Source (on a tax basis)
                               
— Investment income
    36.55       60.38       60.38       55.45  
— Return of capital
                       
Source (on a cash basis)
                               
— Sales
                       
— Refinancing
                       
— Operations
    36.55       60.38       60.38       55.45  
— Other
                       
Amount (in percentage terms) remaining invested in program properties at the end of the last year reported in the table
                            100 %
 
 
Past performance is not necessarily indicative of future results.


21


 

TABLE III
 
OPERATING RESULTS OF PRIOR PROGRAMS (UNAUDITED) — (Continued)
 
                                 
    Cole Net Lease Portfolio IV
 
    May 2007
 
    (Unaudited)  
    2007     2008     2009     2010  
 
Gross Revenues
  $ 533,742     $ 904,933     $ 890,068     $ 898,522  
Profit (loss) on sale of properties
                       
Less:
                               
Operating expenses(1)
    57,576       150,569       136,884       150,707  
Interest expense
    217,699       368,879       367,871       367,871  
Depreciation and amortization(2)
                       
                                 
Net Income (loss) — Tax Basis(3)
  $ 258,467     $ 385,485     $ 385,313     $ 379,944  
                                 
Taxable income
                               
— from operations(4)
  $ 258,467     $ 385,485     $ 385,313     $ 379,944  
— from gain on sale
                       
Cash generated
                               
— from operations
    258,467       385,485       385,313       379,944  
— from sales
                       
— from refinancing
                       
                                 
Cash generated from operations, sales and refinancing
    258,467       385,485       385,313       379,944  
Less: Cash distributions to investors
                               
— from operating cash flow
    232,801       360,185       360,180       370,085  
— from sales and refinancing
                       
— from other
                       
                                 
Cash generated (deficiency) after cash distributions
    25,666       25,300       25,133       9,859  
Less: Special items (not including sales and refinancing
                       
                                 
Cash generated (deficiency) after cash distributions and special items
  $ 25,666     $ 25,300     $ 25,133     $ 9,859  
                                 
Tax and distribution data per $1,000 invested
                               
Federal income tax results:
                               
Ordinary income (loss)
                               
— from operations
  $ 43.06     $ 64.22     $ 64.19     $ 63.29  
— from recapture
                       
Capital gain (loss)
                       
Cash distributions to investors
                               
Source (on a tax basis)
                               
— Investment income
    38.78       60.00       60.00       61.65  
— Return of capital
                       
Source (on a cash basis)
                               
— Sales
                       
— Refinancing
                       
— Operations
    38.78       60.00       60.00       61.65  
— Other
                       
Amount (in percentage terms) remaining invested in program properties at the end of the last year reported in the table
                            100 %
 
 
Past performance is not necessarily indicative of future results.


22


 

TABLE III
 
OPERATING RESULTS OF PRIOR PROGRAMS (UNAUDITED) — (Continued)
 
                                 
    Cole Net Lease Portfolio V
 
    June 2007
 
    (Unaudited)  
    2007     2008     2009     2010  
 
Gross Revenues
  $ 1,216,587     $ 2,873,638     $ 3,074,756     $ 2,870,184  
Profit (loss) on sale of properties
                       
Less:
                               
Operating expenses(1)
    33,570       109,101       104,964       104,694  
Interest expense
    444,412       1,378,431       1,374,664       1,374,664  
Depreciation and amortization(2)
                       
                                 
Net Income (loss) — Tax Basis(3)
  $ 738,605     $ 1,386,106     $ 1,595,128     $ 1,390,826  
                                 
Taxable income
                               
— from operations(4)
  $ 738,605     $ 1,386,106     $ 1,595,128     $ 1,390,826  
— from gain on sale
                       
Cash generated
                               
— from operations
    738,605       1,386,106       1,595,128       1,390,826  
— from sales
                       
— from refinancing
                       
                                 
Cash generated from operations, sales and refinancing
    738,605       1,386,106       1,595,128       1,390,826  
Less: Cash distributions to investors
                               
— from operating cash flow
    550,545       1,449,144       1,449,147       1,501,499  
— from sales and refinancing
                       
— from other
                       
                                 
Cash generated (deficiency) after cash distributions
    188,060       (63,038 )     145,981       (110,673 )
Less: Special items (not including sales and refinancing
                       
                                 
Cash generated (deficiency) after cash distributions and special items
  $ 188,060     $ (63,038 )   $ 145,981     $ (110,673 )
                                 
Tax and distribution data per $1,000 invested
                               
Federal income tax results:
                               
Ordinary income (loss)
                               
— from operations
  $ 33.64     $ 63.13     $ 72.65     $ 63.34  
— from recapture
                       
Capital gain (loss)
                       
Cash distributions to investors
                               
Source (on a tax basis)
                               
— Investment income
    25.07       66.00       66.00       68.38  
— Return of capital
                       
Source (on a cash basis)
                               
— Sales
                       
— Refinancing
                       
— Operations
    25.07       66.00       66.00       68.38  
— Other
                       
Amount (in percentage terms) remaining invested in program properties at the end of the last year reported in the table
                            100 %
 
 
Past performance is not necessarily indicative of future results.


23


 

TABLE III
 
OPERATING RESULTS OF PRIOR PROGRAMS (UNAUDITED) — (Continued)
 
                                 
    Cole Net Lease Portfolio VI
 
    September 2007
 
    (Unaudited)  
    2007     2008     2009     2010  
 
Gross Revenues
  $ 598,105     $ 3,551,029     $ 3,497,557     $ 3,491,178  
Profit (loss) on sale of properties
                       
Less:
                               
Operating expenses(1)
    45,111       229,233       212,360       203,081  
Interest expense
    144,049       1,700,718       1,696,068       1,696,069  
Depreciation and amortization(2)
                       
                                 
Net Income (loss) — Tax Basis(3)
  $ 408,945     $ 1,621,078     $ 1,589,129     $ 1,592,028  
                                 
Taxable income
                               
— from operations(4)
  $ 408,945     $ 1,621,078     $ 1,589,129     $ 1,592,028  
— from gain on sale
                       
Cash generated
                               
— from operations
    408,945       1,621,078       1,589,129       1,592,028  
— from sales
                       
— from refinancing
                       
                                 
Cash generated from operations, sales and refinancing
    408,945       1,621,078       1,589,129       1,592,028  
Less: Cash distributions to investors
                               
— from operating cash flow
    269,301       1,589,676       1,589,678       1,589,678  
— from sales and refinancing
                       
— from other
                       
                                 
Cash generated (deficiency) after cash distributions
    139,644       31,402       (549 )     2,350  
Less: Special items (not including sales and refinancing
                       
                                 
Cash generated (deficiency) after cash distributions and special items
  $ 139,644     $ 31,402     $ (549 )   $ 2,350  
                                 
Tax and distribution data per $1,000 invested
                               
Federal income tax results:
                               
Ordinary income (loss)
                               
— from operations
  $ 17.58     $ 63.22     $ 61.98     $ 62.09  
— from recapture
                       
Capital gain (loss)
                       
Cash distributions to investors
                               
Source (on a tax basis)
                               
— Investment income
    11.57       62.00       62.00       62.00  
— Return of capital
                       
Source (on a cash basis)
                               
— Sales
                       
— Refinancing
                       
— Operations
    11.57       62.00       62.00       62.00  
— Other
                       
Amount (in percentage terms) remaining invested in program properties at the end of the last year reported in the table
                            100 %
 
 
Past performance is not necessarily indicative of future results.


24


 

TABLE III
 
OPERATING RESULTS OF PRIOR PROGRAMS (UNAUDITED) — (Continued)
 
 
(1) Operating expenses include management fees paid to affiliates for such services as accounting, property supervision, etc.
 
(2) Amortization of organizational costs is computed over a period of 60 months. Depreciation of commercial real property is determined on the straight-line method over an estimated useful life of 39 years. Leasehold interests are amortized over the life of the lease.
 
(3) The respective program maintains its books on a tax basis of accounting rather than a GAAP basis. There are several potential differences in tax and GAAP basis, including, among others; (a) tax basis accounting does not take certain income or expense accruals into consideration at the end of each fiscal year, (b) rental income is recorded on a tax basis, as it is received where it is accrued on a straight-line basis over the life of the lease for GAAP, and (c) all properties are recorded at cost and depreciated over their estimated useful life on a tax basis even if they qualify as a direct financing lease for GAAP purposes. These differences generally result in timing differences between fiscal years but total operating income over the life of the partnership will not be significantly different between the two bases of accounting.
 
(4) Cash generated from operation generally includes net income plus depreciation and amortization plus, where applicable, any decreases in accounts receivable and accrued rental income or increases in accounts payable minus, where applicable, any increases in accounts receivable and accrued rental income or decreases in accounts payable. In addition, cash generated from operations is reduced for any property costs related to development projects and is increased by proceeds when the project is sold (usually in less than twelve months).
 
(5) Investors in this program receive interest income which is reported to them on Form 1099-INT, thus tax and cash distribution data per $1,000 invested is not included.
 
(6) Cole Credit Property Trust, Inc. and Cole Credit Property Trust II, Inc. maintain their books on a GAAP basis of accounting rather than on a tax basis.
 
(7) Due to the timing of tax return filings, amounts shown represent estimates and may change when tax returns are filed at a future date.
 
(8) Includes cash flows from operations in excess of distributions from previous periods and cash proceeds from line of credit borrowings.
 
(9) Cash generated from operations for this program generally includes net income (loss) plus depreciation and amortization, plus distributions in the form of interest paid to note investors, minus, where applicable, profit on sale of properties.
 
(10) Includes cash flows from sales in excess of distributions from previous periods.
 
(11) Investors in this program receive interest income per annum. Amounts represent the funding source of the interest payments, the total of which is disclosed above in interest paid to note investors.
 
 
Past performance is not necessarily indicative of future results.


25


 

TABLE IV
 
RESULTS OF COMPLETED PROGRAMS (UNAUDITED)
 
The following table presents summary information on the results of Prior Real Estate Programs that completed operations since January 1, 2006 to December 31, 2010 and that had similar or identical investment objectives to those of our program. All amounts are from the inception of the program to the date the program was completed.
 
                         
    Cole
             
    Collateralized
          Cole
 
    Senior Notes,
          Santa Fe
 
Program Name
  LLC           Investors, LP  
 
Dollar amount raised
  $  28,038,500             $ 6,180,000  
Number of properties purchased
    45               1  
Date of closing of offering
    6/3/2004               11/20/2002  
Date of first sale of property
    11/6/2003               11/30/2007  
Date of final sale of property
    4/26/2006               11/30/2007  
Tax and Distribution Data Per $1,000 Investment Through 12/31/09
                       
Federal income tax results:
                       
Ordinary income (loss)
                       
— from operations
  $       (2)     $ (304 )
— from recapture
          (2)       429  
Capital gain (loss)
          (2)       1,762  
Deferred gain
                       
— Capital
          (2)        
— Ordinary
          (2)        
Cash distributions to investors:
                       
Source (on Tax Basis)(1)
                       
— Investment income
          (2)       824  
— Return of capital
    28,038,500       (2)       1,000  
Source (on Cash Basis)
                       
— Sales
    85,696,933       (3)       1,731  
— Refinancing
          (2)        
— Operations
    (506,433)       (2)       93  
— Other
          (2)        
Receivable on net purchase money financing
          (2)        
 
 
 
Past performance is not necessarily indicative of future results.


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TABLE IV
 
RESULTS OF COMPLETED PROGRAMS (UNAUDITED) — (Continued)
 
                                 
                Cole
       
          Cole Credit
    Collateralized
       
    Cole Credit
    Property
    Senior
       
    Property
    Fund II,
    Notes II,
       
Program Name
  Fund, LP     LP     LLC        
 
Dollar amount raised
  $  25,000,000     $  24,494,500     $  28,750,000          
Number of properties purchased
    14       10       49          
Date of closing of offering
    9/2/2003       3/25/2004       2/15/2005          
Date of first sale of property
    9/30/2008       9/30/2008       8/13/2004          
Date of final sale of property
    9/30/2008       9/30/2008       5/8/2008          
Tax and Distribution Data Per $1,000 Investment Through 12/31/09
                               
Federal income tax results:
                               
Ordinary income (loss)
                               
— from operations
  $ 230     $ 218     $       (2 )
— from recapture
    220       252             (2 )
Capital gain (loss)
    202       119             (2 )
Deferred gain
                               
— Capital
                      (2 )
— Ordinary
                      (2 )
Cash distributions to investors:
                               
Source (on Tax Basis)(1)
                               
— Investment income
    488       507             (2 )
— Return of capital
    1,000       1,000       28,750,000       (2 )
Source (on Cash Basis)
                               
— Sales
    1,035       1,091       153,355,044       (3 )
— Refinancing
                      (2 )
— Operations
    453       416       (7,231,419)       (2 )
— Other
                      (2 )
Receivable on net purchase money financing
                      (2 )
 
 
(1) The respective program maintains its books on a tax basis of accounting rather than on a GAAP basis. There are potential differences in accounting for cash distributions on a tax basis and GAAP basis, the most significant of which is that partnership syndication costs, which include securities commissions and other costs, would be recorded as a reduction of capital for GAAP purposes, which would result in lower return of capital and higher investment income amounts on a GAAP basis than on a tax basis.
 
(2) Investors in this program receive interest per annum, which is included in interest expense. Therefore, tax and cash distribution data per $1,000 invested is not applicable.
 
(3) Over the course of the program, certain properties acquired with the initial note proceeds were sold and the sales proceeds were reinvested in replacement properties. Certain replacement properties were subsequently sold and the sales proceeds were reinvested in new replacement properties, this may have occurred multiple times over the life of the program or certain properties. This amount represents the accumulated proceeds from sale and reinvestment of the sales proceeds in replacement properties.
 
 
Past performance is not necessarily indicative of future results.

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TABLE V
 
SALES OR DISPOSALS OF PROPERTIES (UNAUDITED)
 
This table provides summary information on the results of sales or disposals of properties since January 1, 2008 by Prior Real Estate Programs having similar investment objectives to those of our program. All amounts are through December 31, 2010.
 
                                                                                         
                                                                Excess
 
                                              Including Closing and Soft Costs     (Deficiency)
 
                Selling Price, Net of Closing Costs and GAAP Adjustments                 Total
          of Property
 
                            Purchase
                      Acquisition
          Operating
 
                            Money
    Adjustments
                Cost, Capital
          Cash
 
                Cash Received
    Mortgage
    Mortgage
    Resulting from
          Original
    Improvements,
          Receipts
 
    Date
    Date of
    Net of Closing
    Balance at
    Taken Back by
    Application of
          Mortgage
    Closing and
          Over Cash
 
Property
  Acquired     Sale     Costs     Time of Sale     Program     GAAP(3)     Total(1)     Financing     Soft Costs(2)     Total     Expenditures  
 
Cole Collateralized Senior Notes II, LLC
                                                                                       
Tortuga Cantina Woodlands, TX
    12/03       05/08       502,807       1,355,250                   1,858,057       1,345,997       671,188       2,017,185       414,142  
Cole Collateralized Senior Notes III, LLC
                                                                                       
DST Interests in Cole Net Lease Portfolio VI(4)(6)
    Various       02/08       23,798,400       29,740,000                   53,538,400       29,740,000       23,798,400       53,538,400       386,094  
Cole Acquisitions I, LLC(5)
                                                                                       
CVS Robertsdale, AL
    04/06       02/08       1,703,695       2,720,000                   4,423,695       3,348,000       1,111,360       4,459,360       222,906  
Cole Credit Property Fund, LP
                                                                                       
Payless Shoes Columbia, SC
    02/03       09/08       539,250       860,000                   1,399,250             1,581,966       1,581,966       582,574  
Walgreens Jacksonville, FL
    02/03       09/08       2,538,500       2,510,750                   5,049,250       3,652,000       855,318       4,507,318       1,398,635  
CVS Hamilton, OH
    03/03       09/08       1,811,750       1,787,500                   3,599,250             3,266,592       3,266,592       1,058,181  
Walgreens Akron, OH
    04/03       09/08       919,250       1,900,000                   2,819,250             2,800,400       2,800,400       688,613  
Walgreens Seattle, WA
    04/03       09/08       3,299,244       3,349,500                   6,648,744       4,848,000       1,223,201       6,071,201       2,019,210  
Walgreens LaMarque, TX
    05/03       09/08       2,232,250       2,277,000                   4,509,250       3,296,000       832,650       4,128,650       1,188,276  
CVS Mechanicville, NY
    06/03       09/08       1,298,850       1,290,000                   2,588,850       1,824,000       544,647       2,368,647       649,045  
Office Depot Laurel, MS
    06/03       09/08       1,379,250       1,270,000                   2,649,250             2,320,534       2,320,534       815,536  
Home Depot Colma, CA(7)
    06/03       09/08       17,553,309       21,613,000                   39,166,309       26,400,000       6,970,111       33,370,111       11,735,401  
Walgreens Saginaw, MI
    06/03       09/08       1,916,750       2,282,500                   4,199,250             4,141,775       4,141,775       1,222,700  
Walgreens Tulsa, OK
    08/03       09/08       973,750       1,215,500                   2,189,250             2,208,207       2,208,207       675,934  
Walgreens Broken Arrow, OK
    08/03       09/08       971,750       1,127,500                   2,099,250             2,041,363       2,041,363       628,969  
Office Depot — London, KY
    09/03       09/08       1,819,250       1,680,000                   3,499,250             3,076,041       3,076,041       1,070,680  
Cole Credit Property Fund II, LP
                                                                                       
Best Buy Las Cruces, NM
    11/03       09/08       2,290,250       3,809,000                   6,099,250             5,873,060       5,873,060       1,473,826  
Staples Angola, IN
    12/03       09/08       1,200,250       1,999,000                   3,199,250             3,087,065       3,087,065       733,421  
TJ Maxx Staunton, VA
    02/04       09/08       1,183,250       3,116,000                   4,299,250             5,033,670       5,033,670       1,320,813  
AT&T Santa Clara, CA
    03/04       09/08       4,156,030       6,032,000                   10,188,030             9,293,258       9,293,258       2,025,298  
Walgreens Tulsa (Memorial), OK
    03/04       09/08       1,023,250       1,926,000                   2,949,250       2,320,000       657,933       2,977,933       631,667  
Walgreens Crossville, TN
    03/04       09/08       1,696,250       2,753,000                   4,449,250       3,388,000       871,868       4,259,868       815,324  
CVS Columbia I, TN
    05/04       09/08       884,250       1,715,000                   2,599,250       1,840,000       547,215       2,387,215       275,980  
CVS Columbia II, TN
    05/04       09/08       664,250       1,735,000                   2,399,250       1,860,000       558,230       2,418,230       291,369  
Walgreens Newton, IA
    10/04       09/08       1,936,250       2,393,000                   4,329,250       2,393,000       2,107,368       4,500,368       794,166  
 
 
(1) None of the amounts are being reported for tax purposes on the installment basis. See Table IV for allocation of the taxable gains between ordinary and capital income for all sales.
 
(2) The amounts shown do not include a pro rata share of the original offering costs. There were no carried interest received in lieu of commissions in connection with the acquisition of the property.
 
(3) As the financial statements are prepared on an income tax basis, there are no GAAP adjustments included herein.
 
(4) Amounts herein relate to the sale of DST interests in single-tenant commercial properties. There was no gain or loss related to the sales as the interests in the property were sold at cost, with each purchaser acquiring their interest with cash and the assumption of a pro-rata portion of any existing loan on the property.
 
 
Past performance is not necessarily indicative of future results.


28


 

 
TABLE V
 
SALES OR DISPOSALS OF PROPERTIES (UNAUDITED) — (Continued)
 
 
(5) These properties were acquired by a joint venture between Cole Collateralized Senior Notes, LLC, Cole Collateralized Senior Notes II, LLC, Cole Collateralized Senior Notes III, LLC, and Cole Collateralized Senior Notes IV, LLC.
 
(6) DST Interests in Cole Net Lease Portfolio VI include: Mercedes Benz West Covina, CA, Walgreens Westford, MA, Walgreens Wilmington, MA, Walgreens Brenham, TX, Starbucks Crestwood, KY, Starbucks Danville, KY, and Starbucks Somerset, KY.
 
(7) Home Depot Colma, CA was acquired by Cole Credit Property Fund, LP and Cole Credit Property Fund II, LP.
 
 
Past performance is not necessarily indicative of future results.


29