It is believed that consolidation in the banking and finance industries has resulted in reduced lending capacity available to larger companies operating multiple real estate locations and most traditional banks and finance companies have regulatory restrictions and self-imposed risk limitations that limit their ability to offer long-term, fixed rate real estate financing to any single company or group of affiliated entities.

Under a sale-leaseback transaction, the Company acquires properties and lease the properties back to the seller or operator under a triple-net lease. Under a triple-net lease, the tenant is responsible for all improvements and is contractually obligated to perform and pay all operating expenses of the property including insurance, real estate taxes, utilities and repair. The Company believes that sale-leasebacks generally offer the most efficient means of long-term real estate financing. The leases generally have a primary term of 15 to 20 years, with renewal options for additional periods. The Company also seeks to obtain fixed or variable rent increases on a scheduled basis.

Although the Company focuses on sale-leaseback transactions, it sometimes structures its investment in a particular property as a mortgage loan secured by the property in situations where a customary net lease transaction would have an adverse impact on the seller of a property or would otherwise be inappropriate for the Company. The Company anticipates that most of its lending transactions will be loans secured by commercial property. The Company attempts to structure mortgage loans in a manner that would provide it with an economic return similar to that which the Company could expect to receive had the investment been structured as a net lease transaction. The Company’s commercial mortgage loans may participate in a portion of any real estate appreciation, sales or economic interest. Any real estate loans the Company makes will likewise have loan terms up to 20 years. All of the Company’s mortgage loans have to be approved by the Company’s investment committee.

Rental revenue totaled $977,788 for the quarter.

Interest income on mortgage loans receivable, totaling $936,441 in the first quarter of 2004, was generated by the 67 mortgage loans that were purchased by the Company in December 2003.

Other interest income, totaling $639,049 in the first quarter, represents income generated on temporary investment securities pending investment in real estate.