AUTOMOTIVE REALTY TRUST OF AMERICA, S-11, 1998-04-20

AUTOMOTIVE REALTY TRUST OF AMERICA
S-11, 1998-04-20

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<PAGE> 1
As filed with the Securities and Exchange Commission on April 20, 1998
Registration No. 333-
================================================================================

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

---------------

FORM S-11

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

---------------

AUTOMOTIVE REALTY TRUST OF AMERICA
(Exact Name of Registrant as Specified in its Governing Instruments)

---------------

CAMPBELL CENTRE II
8150 N. CENTRAL EXPRESSWAY, SUITE 1233
DALLAS, TEXAS 75206
TELEPHONE: (214) 346-2944
FACSIMILE: (214) 368-4886
(Address, Telephone Number and Facsimile Number of
Registrant's Principal Executive Offices)

---------------

DAVID L. JOHNSTON
PRESIDENT AND CHIEF EXECUTIVE OFFICER
AUTOMOTIVE REALTY TRUST OF AMERICA
CAMPBELL CENTRE II
8150 N. CENTRAL EXPRESSWAY, SUITE 1233
DALLAS, TEXAS 75206
(214) 346-2944
(Name, Address and Telephone Number of Agent for Service)

Copies To:

Bryan L. Goolsby, Esq. Tracy K. Edmonson, Esq.
Donald A. Hammett, Jr., Esq. Laura L. Gabriel, Esq.
Liddell, Sapp, Zivley, Hill & LaBoon, L.L.P. Latham & Watkins
2001 Ross Avenue, Suite 3000 505 Montgomery Street, Suite 1900
Dallas, Texas 75201 San Francisco, California 94111
Telephone: (214) 849-5500 Telephone: (415) 391-0600
Facsimile: (214) 849-5599 Facsimile: (415) 395-8095

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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As
soon as practicable after the effective date of this registration statement.

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]

If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. [ ]

If this Form is a post-effective amendment filed pursuant to Rule
462(d) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. [ ]

If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]

CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
===============================================================================================================================
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF SECURITIES AMOUNT BEING OFFERING PRICE PER AGGREGATE OFFERING AMOUNT OF
BEING REGISTERED REGISTERED SHARE (1) PRICE (1) REGISTRATION FEE
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Shares of
Beneficial Interest, no
par value per share 8,740,000(2) $21.00 $183,540,000 $54,144
===============================================================================================================================
</TABLE>

(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(o) of the Securities Act of 1933.
(2) Includes 1,140,000 Common Shares of Beneficial Interest that may be
purchased by the Underwriters to cover over-allotments, if any.

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.

<PAGE> 2
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.

SUBJECT TO COMPLETION, DATED APRIL 20, 1998

PROSPECTUS
7,600,000 SHARES

[logo]

AUTOMOTIVE REALTY TRUST OF AMERICA

COMMON SHARES OF BENEFICIAL INTEREST

---------------

Automotive Realty Trust of America (the "Company") is a newly organized
self-administered and self-managed real estate investment trust ("REIT") formed
under the Texas Real Estate Investment Trust Act, as amended, to invest in the
real property and related improvements used by operators of high-quality,
well-located automobile dealerships and motor vehicle related businesses located
throughout the United States. The Company is one of the first real estate
investment trusts formed to invest in automobile dealership-related real estate,
and the Company believes it is therefore positioned to take advantage of the
growth in the automobile industry and consolidation among automobile
dealerships. The Company's acquisition strategy is to purchase real property and
related improvements from automobile dealerships and lease the property back to
the original owners or their affiliates.

Upon the closing of this offering (the "Offering") and the Formation
Transactions (as defined herein), it is anticipated that the Company will own 67
automobile dealership properties (the "Initial Properties") located in
California, Colorado, Florida, Maryland, Ohio, Tennessee, Texas and Virginia.

All of the Company's common shares of beneficial interest, no par value
per share (the "Common Shares"), offered hereby are being sold by the Company.
Upon completion of certain transactions relating to the formation of the
Company, the executive officers of the Company and the Founding Dealers (as
defined herein) will own approximately 52% of the Company, on a fully-diluted
basis (assuming an initial public offering price of $20 per Common Share),
through their ownership of Common Shares and interests in ARTA Operating Limited
Partnership, a Delaware limited partnership controlled by the Company ("OP
Units"). Jack I. Tompkins, Chairman of the Board, has agreed to purchase 150,000
Common Shares, and Bert Wollen, Executive Vice-President - Business Development
and Chief Acquisition Officer, has agreed to purchase 75,000 Common Shares at
the initial public offering price in a private placement anticipated to close
simultaneously with the closing of the Offering.

Prior to this Offering, there has not been a public market for the
Common Shares. It is currently estimated that the initial public offering price
will be between $19 and $21 per share. See "Underwriting" for information
relating to the factors to be considered in determining the initial public
offering price. Application will be made to have the Common Shares listed on the
New York Stock Exchange under the symbol "RTA."

To assure that the Company maintains its qualification as a REIT, the
Company's Amended and Restated Declaration of Trust (the "Declaration of Trust")
provides that, with certain exceptions, no person may own more than 9.8% of the
number or value of outstanding shares of beneficial interest of any class of the
Company. See "Description of Shares of Beneficial Interest -- Certain Provisions
of Texas Law and the Company's Declaration of Trust and Bylaws -- Restrictions
on Transfer."

SEE "RISK FACTORS" BEGINNING ON PAGE 13 FOR A DISCUSSION OF CERTAIN
MATTERS THAT SHOULD BE CONSIDERED BY POTENTIAL INVESTORS INCLUDING, WITHOUT
LIMITATION:

o Risks affecting automobile dealerships generally, including,
without limitation, industry consolidation, competition,
seasonality, susceptibility to changing consumer preferences
and unpredictability of discretionary consumer spending, all
of which could adversely affect a lessee's ability to make its
lease payments to the Company;
o Dependence upon lease payments from the Company's lessees for
substantially all of the Company's income and the difficulties
associated with attracting replacement lessees;
o Lack of investment diversification among different industries;
o The limitations imposed by federal and state laws on the
Company's recourse against lessees who default under their
leases;
o Risks associated with the long term nature of the leases (with
terms, including options, of up to 35 years), together with
lock-out periods applicable to many of the Initial
Properties, which may have an adverse effect on the Company's
ability to sell a property;
o The lack of appraisals of the Initial Properties and the
possibility that the purchase prices paid for the Initial
Properties may exceed the fair market value of one or more of
the Initial Properties;

<PAGE> 3

o The risks associated with repurchase options allowing certain
dealer lessees to repurchase properties at prices that may be
less than the existing fair market values thereof;
o The lack of control over the day-to-day operations and
management of the automobile dealerships and related
businesses which lease property from the Company;
o Dependence upon future acquisitions, and the related risks of
competition for acquisition opportunities and possible
unavailability of capital to make such acquisitions;
o The possible inability of the Company to achieve or maintain
its proposed initial distribution rate;
o The lack of an operating history for the Company; and
o Adverse tax consequences of failing to qualify as a REIT and,
in the event of such failure, the decrease in funds
available to pay distributions to shareholders resulting from
taxation as a regular corporation.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

<TABLE>
<CAPTION>
======================================================================================================
Underwriting
Price to Discounts and Proceeds to
Public Commissions (1) Company (2)
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Share $ $ $
- ------------------------------------------------------------------------------------------------------
Total (3) $ $ $
======================================================================================================
</TABLE>

(1) For information regarding indemnification of the Underwriters, see
"Underwriting."
(2) Before deducting expenses estimated at $__________, payable by the Company.
(3) The Company has granted the Underwriters a 30-day option to purchase up to
an additional 1,140,000 Common Shares solely to cover over-allotments, if
any. See " Underwriting." If such option is exercised in full, the total
Price to Public, Underwriting Discounts and Commissions, and Proceeds to
Company will be $ , $ and $ , respectively.

---------------

The Common Shares are being offered by the several Underwriters named
herein, subject to prior sale, when, as and if accepted by them and subject to
certain conditions. It is expected that certificates for the Common Shares
offered hereby will be available for delivery on or about ___________, 1998, at
the office of Smith Barney Inc., 333 West 34th Street, New York, New York 10001.

---------------

Joint Lead Managers and Joint Bookrunners

SALOMON SMITH BARNEY NATIONSBANC MONTGOMERY SECURITIES LLC

---------------

JEFFERIES & COMPANY, INC.
SANDERS MORRIS MUNDY

, 1998

<PAGE> 4

CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS THAT
STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE COMMON SHARES,
INCLUDING OVER- ALLOTMENT, ENTERING STABILIZING BIDS, EFFECTING SYNDICATE
COVERING TRANSACTIONS AND IMPOSING PENALTY BIDS. FOR A DESCRIPTION OF THESE
ACTIVITIES, SEE "UNDERWRITING."

---------------

THIS DOCUMENT DOES NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN
OFFER TO BUY SECURITIES IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION
IS UNLAWFUL.
---------------

<PAGE> 5

TABLE OF CONTENTS

<TABLE>
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Page
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<S> <C>
PROSPECTUS SUMMARY....................................................................................................1
The Company .................................................................................................1
Risk Factors.................................................................................................3
Automotive Industry..........................................................................................4
Business and Growth Strategy.................................................................................5
Formation Transactions.......................................................................................6
Organization.................................................................................................7
Property Descriptions and Dealership Operation Profiles......................................................7
The Offering ................................................................................................9
Benefits to Related Parties.................................................................................10
Distribution Policy.........................................................................................11
Federal Income Tax Considerations...........................................................................11
Summary Financial Data......................................................................................11

RISK FACTORS.........................................................................................................13
Automotive Industry Risks...................................................................................13
Dependence upon Lessees.....................................................................................15
Concentration of Investments in the Automotive Industry.....................................................15
Defaults by Lessees.........................................................................................15
Duration of the Leases; No Right to Terminate Leases Upon Sale..............................................16
Lack of Appraisals..........................................................................................16
Repurchase Options..........................................................................................16
Lack of Control Over Day-to-Day Operations and Management of the Dealerships................................16
Dependence on Acquisitions..................................................................................16
Possible Inability to Achieve or Maintain the Company's Initial Distribution Rate...........................17
Lack of Operating History...................................................................................17
Inability of the Company to Close the Acquisition of Property or Close Such Acquisition as Scheduled........18
Real Estate Investment Risks................................................................................18
Conflicts of Interest.......................................................................................19
No Prior Trading Market; Dilution; Adverse Effect of Increases in Market Interest Rates.....................20
Changes in Policies.........................................................................................21
Ownership Limits............................................................................................21
Anti-Takeover Provisions....................................................................................21
Adverse Tax Consequences....................................................................................22
Dependence Upon Key Personnel...............................................................................23
Shares Eligible for Future Sale.............................................................................23
Environmental and Other Regulations.........................................................................24
Cost of Compliance with the Americans with Disabilities Act.................................................25
Risks for Investors Subject to ERISA........................................................................26
Competition From Other Companies with Similar Business Objectives and Strategies............................26
Indemnification.............................................................................................26
Risks of Leverage; No Limitation on Indebtedness............................................................26

USE OF PROCEEDS......................................................................................................28

DISTRIBUTION POLICY..................................................................................................29

CAPITALIZATION.......................................................................................................31

DILUTION ............................................................................................................32
</TABLE>

<PAGE> 6

<TABLE>
<S> <C>
SELECTED HISTORICAL FINANCIAL INFORMATION ..........................................................................33

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS...............................................................34
Overview....................................................................................................34
Pro Forma Results of Operations for the Company.............................................................35
Pro Forma Liquidity and Capital Resources of the Company....................................................35
Inflation...................................................................................................36
Seasonality.................................................................................................36
New Accounting Pronouncement................................................................................36

ORGANIZATION AND FORMATION TRANSACTIONS..............................................................................37
Organization................................................................................................37
The Formation Transactions..................................................................................37
Acquisition of the Initial Properties From the Founding Dealers.............................................38

BUSINESS AND PROPERTIES..............................................................................................39
The Company.................................................................................................39
The Operating Partnership...................................................................................40
Automotive Industry Overview................................................................................40
Business and Growth Strategy................................................................................41
Property Descriptions and Lease Terms.......................................................................42
Investment Policies.........................................................................................55

MANAGEMENT...........................................................................................................56
Executive Officers and Trust Managers.......................................................................56
Compensation of Trust Managers..............................................................................58
Executive Compensation......................................................................................58
Incentive Share Plan........................................................................................58
Employment Agreements.......................................................................................59
Limitation of Liability and Indemnification.................................................................60
Compensation and Audit Committee............................................................................60
Indemnification of Trust Managers and Officers..............................................................60
Transactions with Certain Officers and Trust Managers.......................................................60

CERTAIN POLICIES AND OBJECTIVES......................................................................................62
Investment Policies.........................................................................................62
Disposition Policy..........................................................................................62
Financing Policies..........................................................................................63
Conflict of Interest Policies...............................................................................63
Certain Other Policies......................................................................................64

PARTNERSHIP AGREEMENT................................................................................................65
Management..................................................................................................65
Amendments..................................................................................................65
Transfers of OP Units.......................................................................................65
Initial and Additional Capital Contributions................................................................65
Redemption of OP Units......................................................................................66
Term........................................................................................................66

PRINCIPAL SHAREHOLDERS...............................................................................................67
</TABLE>

<PAGE> 7

<TABLE>
<S> <C>
DESCRIPTION OF SHARES OF BENEFICIAL INTEREST.........................................................................68
General.....................................................................................................68
Common Shares...............................................................................................68
Preferred Shares............................................................................................68
Certain Provisions of Texas Law and the Company's Declaration of Trust and Bylaws...........................68
Transfer Agent..............................................................................................72

SHARES ELIGIBLE FOR FUTURE SALE......................................................................................72
Lock-up Agreements..........................................................................................72
Registration Rights.........................................................................................73

FEDERAL INCOME TAX CONSIDERATIONS....................................................................................73
Taxation of the Company ...................................................................................73
Failure to Qualify..........................................................................................78
Partnership Anti-Abuse Rule.................................................................................78
Taxation of Taxable Domestic Shareholders...................................................................79
Backup Withholding..........................................................................................79
Taxation of Tax-Exempt Shareholders.........................................................................80
Taxation of Foreign Shareholders............................................................................80
State and Local Taxes.......................................................................................82
Tax Aspects of the Operating Partnership....................................................................82

ERISA CONSIDERATIONS.................................................................................................84

UNDERWRITING.........................................................................................................86

LEGAL MATTERS........................................................................................................87

EXPERTS ............................................................................................................87

ADDITIONAL INFORMATION...............................................................................................87

INDEX TO COMBINED FINANCIAL STATEMENTS ..............................................................................F-1

</TABLE>
iii

<PAGE> 8

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by, and should be
read in conjunction with, the more detailed information included elsewhere
herein. Unless otherwise indicated, the information contained in this Prospectus
assumes that (i) the initial public offering price per Common Share will be $20,
which is the midpoint of the range of the estimated initial public offering
prices set forth on the front cover of this Prospectus (the "Offering Price"),
and (ii) the Underwriters' over-allotment option is not exercised. Unless the
context otherwise requires, the term "Company," as used herein, includes
Automotive Realty Trust of America and ARTA Operating Limited Partnership, a
Delaware limited partnership (the "Operating Partnership"), and all references
to Founding Dealers and Initial Dealer Lessees (each, as defined herein) also
refer to their respective affiliates. This Prospectus contains forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933, as
amended (the "Securities Act") and Section 21E of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), including, without limitation, statements
containing the words "believes," "anticipates," "expects" and words of similar
import. Such forward-looking statements relate to future events, the future
financial performance of the Company, and involve known and unknown risks,
uncertainties and other factors that may cause the actual results, performance
or achievements of the Company or industry to be materially different from any
future results, performance or achievements expressed or implied by such
forward-looking statements. Prospective investors should specifically consider
the various factors identified in this Prospectus that could cause actual
results to differ, including those discussed in the sections entitled
"Prospectus Summary," "Risk Factors," "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and "Business and Properties."
The Company and the Underwriters disclaim any obligation to update any such
factors or to publicly announce the result of any revisions to any of the
forward-looking statements contained herein to reflect future events or
developments. The laws cited above may not be applicable to initial public
offerings such as this Offering. This Prospectus includes statistical data
regarding the automotive industry. Unless otherwise indicated, such data is
taken or derived from information published by (i) the Industry Analysis
Division of the National Automobile Dealers Association ("NADA") in its NADA
Data 1996, and NADA Data 1997, and on the "NADANET" Website located at
"www.nadanet.com/news/nadadata/econfyi.htm," or (ii) Crain Communications, Inc.
in its Automotive News 100-Year Almanac, 1996 Market Data Book and 1997 Market
Data Book.

THE COMPANY

The Company is a newly organized self-administered and self-managed
real estate investment trust ("REIT") formed under the Texas Real Estate
Investment Trust Act, as amended, to invest in the real property and related
improvements used by operators of high-quality, well-located automobile
dealerships and motor vehicle related businesses located throughout the United
States ("Automotive Properties"). The Company is one of the first REITs formed
to invest in Automotive Properties, and the Company believes it is therefore
positioned to take advantage of the growth in the automobile industry and the
consolidation among automobile dealerships. The Company's acquisition strategy
is to purchase Automotive Properties and lease such properties back to the
original owners or their affiliates. This strategy allows the management of the
dealerships to remain in place. Additionally, through the sale of its property
to a REIT, an automobile dealer may consolidate its real estate with the real
estate of other dealers and have the opportunity to obtain liquidity and funds
to expand the operations of its retail operating businesses, while maintaining
control of such operating businesses. Further, the Company believes that its
acquisition strategy and its Operating Partnership structure will provide
automobile dealers with opportunities to diversify their assets and facilitate
their estate planning. The Company believes that its lease structure will be
attractive to other owners of Automotive Properties and may facilitate the
acquisition of properties that might not otherwise be available for purchase.

Upon the closing of this offering (the "Offering") and the Formation
Transactions (as defined herein), it is anticipated that the Company will
acquire 67 automobile dealership properties (collectively, the "Initial
Properties" and individually, an "Initial Property") located in California (5),
Colorado (3), Florida (6), Maryland (15), Ohio (6), Tennessee (10), Texas (17)
and Virginia (5) from 17 dealer groups (the "Founding Dealers"). The Company
will lease the Initial Properties back to the Founding Dealers or their
affiliates (collectively, the "Initial Dealer Lessees" and individually, an
"Initial Dealer Lessee") under long-term triple-net operating leases
(collectively, the "Initial Leases" and individually, an "Initial Lease"). See
"Business and Properties -- Property Descriptions and Lease Terms." Of the
Founding Dealers, four are in the 100 largest automobile dealership groups (as
determined based on revenues) in the United States, and many have received
numerous industry awards in connection with the operation of their respective
businesses. In addition, the Company believes that each of the Founding Dealers
has historically demonstrated strong operating performance.

<PAGE> 9

over the last five years, the number of automobile dealerships has decreased, in
part through the consolidation currently underway in the industry. The Company
intends to target for acquisition high-quality, well-located Automotive
Properties owned by reputable, financially strong automobile dealerships that
have long business track records, proven operating histories and the capacity to
increase sales and compete in a consolidating automobile dealership environment.
The Company believes that its multiple independent lessee structure, the
substantial industry knowledge, experience and relationships within the
automotive industry of its management and Board of Trust Managers and the
financial condition and reputation of the Initial Dealer Lessees will provide
the Company with a competitive advantage in the acquisition of high-quality,
well-located Automotive Properties.

The Initial Leases are typically for terms of ten years with two
renewal options of five to ten years each. The majority of all of the Initial
Leases between the Company and the Initial Dealer Lessees (representing 82% of
the aggregate Initial Annual Base Rent (as defined herein)) are cross-defaulted
with other Initial Leases within each particular Founding Dealer or are
guaranteed by other Initial Dealer Lessees within such Founding Dealer. Of the
remaining Initial Leases, (i) the obligations of Chase Chevrolet, Sunnyside
Automotive, Towson Ford and FUS, Inc. are guaranteed by one or more principals
(and in the case of FUS, Inc. is limited to 90% of the basic rental under the
Initial Lease and extends for a period of seven years), (ii) the obligations of
the Bowers Transportation Group ("Bowers Group") are subject to a limited
third-party guarantee, except for two Initial Properties and (iii) the
obligations of the Sterling McCall Group are not subject to any such cross-
default provisions or guarantees. It is anticipated that the Company's leases
will provide the Company with a consistent stream of cash flow, which will
generally increase annually based upon increases in the Consumer Price Index.
See "Business and Properties -- Property Descriptions and Lease Terms -- Lease
Payments." The Initial Leases will be long-term "triple-net operating" leases
that generally require an Initial Dealer Lessee to pay all operating costs of
the Initial Property leased by it, as well as all taxes, utilities, insurance,
repairs, maintenance and other expenses. See "Business and Properties --
Property Descriptions and Lease Terms --Triple Net Operating Leases." Twelve
Founding Dealers have repurchase options, rights of first refusal and/or rights
of first offer regarding the respective Initial Properties to be contributed by
them in the Formation Transactions. See "Business and Properties -- Property
Descriptions and Lease Terms." By leasing the Initial Properties to the Initial
Dealer Lessees, there will be continuity of management of the dealerships, which
the Company believes should facilitate its growth and profitability.

The Company has established base rentals under the Initial Leases at
conservative levels to provide lessees with sufficient cash flow to make rental
payments. Based on its financial due diligence, the Company believes that the
average of the Founding Dealers' aggregate 1997 estimated operating cash flow is
in excess of 2.5 times their average initial lease payments for the Initial
Properties. In addition, the Company believes that the average lease payment to
be made by the Founding Dealers is less than 1.2% of 1997 average gross sales of
the Founding Dealers.

Jack I. Tompkins, Chairman of the Board of Trust Managers, David L.
Johnston, President and Chief Executive Officer, and Bert Wollen, Executive Vice
President-Business Development and Chief Acquisition Officer, are the Company's
executive officers (the "Executive Officers"). Messrs. Tompkins and Wollen have
28 and 24 years of experience, respectively, in various industries, including
experience in financial transactions and mergers and acquisitions, and each has
experience as an officer of a public company. Mr. Johnston has 24 years of
experience in the real estate industry and has been an executive officer of two
publicly traded REITs. Messrs. Tompkins and Wollen have agreed to purchase an
aggregate of 225,000 Common Shares (collectively, the "Placement Shares") at the
initial public offering price in a private placement (the "Private Placement")
anticipated to close simultaneously with the closing of the Offering. Upon the
closing of the Offering and the Formation Transactions, the Company's Executive
Officers, members of its Board of Trust Managers ("Trust Managers"), certain
affiliates of the Trust Managers, and certain employees of the Company will
beneficially hold an aggregate of approximately 22% of the Company on a
fully-diluted and exchanged basis (assuming an initial public offering price of
$20 per share), through their ownership of the Company's common shares of
beneficial interest, no par value (the "Common Shares"), and interests in the
Operating Partnership ("OP Units"). See "Principal Shareholders."

Following the closing of the Offering, the Company expects to have
access to a variety of debt and equity financing sources to fund acquisitions,
including the ability to issue additional OP Units in the Operating Partnership.
The Company is presently negotiating with NationsBank, N.A., an affiliate of
NationsBanc Montgomery Securities LLC ("NationsBanc Montgomery"), to provide a
$100 million line of credit facility (the "Line of Credit"), which the Company
intends to use primarily to finance future acquisitions. The Company anticipates
that NationsBank, N.A., will fully underwrite $75 million of the Line of Credit
and syndicate the balance. There can be no assurance that such negotiations will
result in a binding commitment for a Line of Credit. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations -- Pro
Forma Liquidity and Capital Resources of the Company." In connection with the
acquisition of the Initial Properties, the Company will assume approximately
$5.6 million of outstanding indebtedness (the "Assumed Debt"), and anticipates
drawing approximately $34.4 million under the Line of Credit. Upon the closing
of the Offering and assuming such

<PAGE> 10

advance under the Line of Credit, the Company's debt to total market
capitalization will be approximately 10.9%. The Company believes its initial low
level of Assumed Debt, coupled with the Line of Credit, should provide the
Company with financial flexibility in pursuing acquisition opportunities. The
Company intends to maintain a capital structure that limits consolidated
indebtedness to no more than 40% of its total market capitalization. See
"Certain Policies and Objectives -- Financing Policies."

RISK FACTORS

An investment in the Common Shares involves various risks, and
prospective investors should carefully consider the matters discussed under
"Risk Factors" beginning on page 13 prior to any investment in the Company. Such
risks include, among others:

o The risks affecting automobile dealerships generally,
including, without limitation, industry consolidation,
competition, seasonality, susceptibility to changing
consumer preferences, and unpredictability of
discretionary consumer spending, all of which could have
a material adverse effect on a lessee's ability to make
its lease payments to the Company;

o The dependence upon lease payments from the Company's
lessees for substantially all of the Company's income
and the difficulties associated with attracting
replacement lessees;

o The lack of investment diversification among different
industries other than the automobile industry;

o The limitation imposed by federal and state laws on
the Company's recourse against lessees who default under
the leases;

o The risks associated with the long term nature of the
leases (which, with extensions, may have terms of up
to 35 years) which, together with certain lock-out
periods during which the Company may not sell many of the
Initial Properties, may have a material adverse effect on
the Company's ability to sell a property;

o The lack of appraisals of the Initial Properties and
the possibility that the purchase price paid for an
Initial Property may exceed the fair market value of
such Initial Property;

o The risks associated with repurchase options allowing
certain Initial Dealer Lessees to repurchase the
Initial Properties at prices that may be less than
the then existing fair market values thereof (see
"Business and Properties -- Property Descriptions and
Lease Terms -- Repurchase Options, Rights of First
Refusal and Rights of First Offer");

o The lack of control over the day-to-day operations and
management of the lessees of Automotive Properties;

o The dependence upon future acquisitions, and the
related risks of competition for acquisition
opportunities and possible unavailability of capital
to make such acquisitions;

o The possible inability of the Company to achieve or
maintain its proposed initial distribution rate;

o The lack of an operating history for the Company;

o Any inability to close the acquisition of an Initial
Property;

o The risks associated with real estate investments
generally;

o The conflicts of interest in connection with the Offering
and the Formation Transactions;

o The absence of a prior market for the Common Shares
and the potential effect of increases in market
interest rates on the trading prices of the Common
Shares;

<PAGE> 11

o The risks associated with the ability of the Board of
Trust Managers of the Company (the "Board of Trust
Managers") to change the investment, financing and
other policies of the Company at any time without
shareholder approval;

o The restrictions on the ownership of the Common Shares
and certain other potential anti-takeover effects of
Texas law and the Company's organizational documents,
which may inhibit a change in control of the Company or
other transactions, even if such a change in control or
other transactions might be beneficial to the Company's
shareholders;

o The adverse tax consequences of the Company failing
to qualify as a REIT and, in the event of such
failure, the decrease in funds available to pay
distributions to shareholders resulting from taxation
as a regular corporation;

o The risks associated with the Company's dependence upon
key personnel;

o The immediate dilution of $3.84 per share in the net
tangible book value of Common Shares purchased in the
Offering;

o The risks of dilution to holders of Common Shares
resulting from future sales by the Company of Common
Shares;

o The potential liabilities relating to unknown or future
environmental issues or compliance with various federal,
state and local laws;

o The risks associated with compliance with the Americans
with Disabilities Act of 1990, as amended (the "ADA"),
should a lessee fail to fulfill its obligation to comply
with the ADA under its lease;

o The fact that an investment in the Common Shares may be
unsuitable for certain investors subject to the
Employee Retirement Income Security Act of 1974, as
amended ("ERISA");

o The risk of a failure to obtain the consent of a
manufacturer, if required under a franchise agreement,
in order for a dealer or an affiliate thereof to
transfer its real property and related improvements to
the Company; and

o The risks associated with the indemnification of
officers, Trust Managers, shareholders, employees and
agents of the Company.

AUTOMOTIVE INDUSTRY

Automotive retailing is the largest retail trade sector in the United
States. The automobile dealership industry is highly fragmented and largely
privately held, with approximately 22,701 automobile dealership locations
representing more than 53,000 franchised dealerships in 1997. It is estimated
that sales by franchised automobile dealers account for one-fifth of the
nation's total retail sales of all products and merchandise. In 1996, each of
the 100 largest automobile dealership groups (as determined based upon revenues)
had revenues in excess of $200 million. From 1992 through 1996, new vehicle
sales revenues grew at a 10.5% compounded annual rate. Over the same period,
used vehicle sales revenues grew at a 14.6% compounded annual rate. Slower unit
volume growth over this time period has been offset by the rising prices
associated with new vehicles and, on average, the higher prices paid for later
model high-quality used vehicles that now comprise a significant portion of the
used vehicle market. Automobile sales are affected by many factors, including,
without limitation, rates of unemployment, income growth, interest rates, other
national and local economic conditions, automotive innovations, weather patterns
and general consumer sentiment. See "Risk Factors -- Automotive Industry Risks."

<PAGE> 12

of a dealership is important to maintain a recurring, recession-resistant income
stream. Based on the Company's review of the internally generated, unaudited
financial statements of the Founding Dealers, the aggregate revenues of the
Initial Dealer Lessees from service/parts/collision repair cover approximately
57% of the total fixed expenses of the Initial Dealer Lessees.

As the automotive industry has evolved, so has the profile of the
typical automobile dealership. Over the past three decades, there has been a
trend toward consolidation with fewer owners and automobile dealers. The number
of automobile dealers has declined from approximately 24,825 in 1990 to
approximately 22,701 in 1997, an approximate 9% decrease. Increased competition
from independent leasing companies, Internet purchasing services and warehouse
clubs has contributed to the decline in the number of automobile dealerships.
Manufacturers have responded to the increased competition by consolidating
dealerships, requiring automobile dealers to upgrade facilities and partnering
with some of their automobile dealers to create automotive superstores in
selected markets. The Company believes that these factors, together with
increasing capital requirements for operating automobile dealerships, lack of a
viable exit strategy (especially for larger dealerships), increased consumer
information, aging dealership principals, declining new vehicle gross margins,
high-cost distribution systems, vehicle manufacturer programs and other efforts
to reduce the number of franchises, the advent and growth of specialty retailers
for used vehicles, parts and services, and the increasing acceptance of public
ownership of franchised automobile dealerships by automobile manufacturers
indicate that there will be further consolidation in the automotive industry.
Consolidation should translate into fewer, larger dealers with substantial
capital requirements to support, improve and expand operations.

BUSINESS AND GROWTH STRATEGY

The Company's business objective is to increase Cash Available for
Distribution (as defined herein) per share and maximize shareholder value by
acquiring high-quality, well-located Automotive Properties throughout the United
States. The Company will focus on the ownership and acquisition of Automotive
Properties that are leased by reputable, financially strong dealerships that
have long business track records, proven operating histories and the capacity to
increase sales and compete in a consolidating automobile dealership environment.
The Company expects to achieve these objectives by successfully implementing the
growth, acquisition and operating strategies set forth below.

Growth Strategies. The Company's primary growth strategies are to (i)
acquire additional Automotive Properties that meet the Company's acquisition
criteria, (ii) increase rents pursuant to Consumer Price Index adjustments as
provided under the Initial Leases and under leases for Automotive Properties
that may be acquired in the future, (iii) acquire additional Automotive
Properties from Founding Dealers as they expand their businesses and (iv) work
with lessees to provide additional capital to expand their existing facilities
in order to maximize the dealers' performance while benefitting from related
rental increases.

Acquisition Strategy. Given the highly fragmented nature of the
automotive industry in the United States, the Company believes there are
significant opportunities to make acquisitions that meet the Company's
investment criteria. The Company believes that the combination of its multiple
lessee structure, the strong reputation of the Company's management team and of
the Founding Dealers, the high quality of the Company's portfolio of Automotive
Properties and its ability to issue OP Units to finance acquisitions will be
especially attractive to those dealers that seek liquidity with respect to the
value of their real property and deferral of capital gains thereon without
relinquishing operational control of their facilities. As a public company, the
Company expects to have access to a wide variety of financing sources to fund
acquisitions, including the ability to issue various types of public and private
debt and equity securities, as well as the ability to issue OP Units as
consideration for Automotive Properties where cash is not appropriate for tax or
other reasons.

The Company intends to concentrate its investment activities on
purchasing Automotive Properties that meet one or more of the following
acquisition criteria:

o Quality retail sites that are well-located
o Reputable and financially sound lessees with proven operating
histories
o Demonstrated operating cash flow coverage typically in excess
of two times initial lease payment
o Validation of the foregoing by application of the Company's
valuation methodology, which includes a thorough evaluation of
the automobile dealer's financial strength as measured against
a proprietary database of automobile dealership information

<PAGE> 13

within the automotive industry that the Company believes will assist it in
identifying potential acquisitions. The Company has relationships with
consultants and certified public accounting firms who have an active presence in
the automotive industry. Furthermore, the Company has entered into a memorandum
of understanding with CB Commercial/Madison Advisory Group which anticipates
that CB Commercial will serve as the Company's exclusive real estate brokerage
firm for identifying future acquisitions and, in return therefor, will receive a
fee. See "Business and Properties -- Business and Growth Strategy." The Company
believes that CB Commercial's national brokerage force of over 2,600
professionals should give it a significant advantage in identifying acquisitions
without incurring substantial additional general and administrative expenses.
The Company's acquisition strategy will be supported by its multiple lessees and
their strategic alliances with dealerships and industry contacts. These
relationships are expected to enhance the Company's acquisition efforts and
allow the Company to move quickly to acquire properties in markets where a
Founding Dealer has market knowledge and operating expertise.

Operating Strategy. The principal elements of the Company's operating
strategy include:

o Leasing high-quality, well-located Automotive Properties to
reputable, financially strong dealerships with long business
track records and proven operating histories
o Leasing its properties on a triple-net operating basis
o Monitoring on an ongoing basis the operating performance of
the dealerships and compliance by the lessees with their lease
obligations
o Cross-defaulting lease obligations of affiliated properties
operated within dealership groups
o Obtaining pledges of OP Units and/or guarantees of related
parties as security for lease payments
o Limiting consolidated indebtedness of the Company to no more
than 40% of the Company's total market capitalization

FORMATION TRANSACTIONS

In the Formation Transactions, Messrs. Tompkins and Wollen have agreed
to purchase 150,000 and 75,000 Common Shares, respectively, at the initial
public offering price in the Private Placement. See "Organization and Formation
Transactions."

In the Formation Transactions, the Founding Dealers will contribute the
Initial Properties to the Operating Partnership in exchange for OP Units with an
aggregate estimated value of approximately $158.7 million, approximately $50.8
million in cash, the assumption by the Company of approximately $5.6 million in
Assumed Debt and repayment of approximately $119.4 million in existing
indebtedness. OP Units may be redeemed, at the election of the holder, for cash
or, at the Company's option, exchanged for Common Shares on a one-for-one basis
at any time after the first anniversary of the closing of the Formation
Transaction in which the OP Units are issued. Upon the closing of the Formation
Transactions, it is anticipated that the Company will own an approximate 52%
ownership interest in the Operating Partnership (including a 1% interest as a
general partner of the Operating Partnership). The percentage ownership interest
may fluctuate based on the number of OP Units actually issued. See "Organization
and Formation Transactions." The Operating Partnership, as lessor, will lease
the Initial Properties to the Initial Dealer Lessees pursuant to the Initial
Leases, which are structured as triple-net operating leases and generally
provide for initial terms of ten years, with each Initial Dealer Lessee
generally having the right to extend the term of its Initial Lease for two
renewal terms of five to ten years each. See "Organization and Formation
Transactions" and "Business and Properties -- Property Descriptions and Lease
Terms." Although the closing of the Offering is conditioned upon the acquisition
by the Company of the Initial Properties, the Underwriters may, in their
discretion, waive this condition with respect to one or more Initial Properties.
See "Risk Factors -- Inability of the Company to Close the Acquisition of
Property or Close such Acquisition as Scheduled," "Use of Proceeds" and
"Underwriting."

<PAGE> 14

ORGANIZATION

Following the closing of the Formation Transactions, the structure and
relationships of the Company, the Operating Partnership, the Founding Dealers
and the Initial Dealer Lessees will be as follows:

[GRAPH]

PROPERTY DESCRIPTIONS AND DEALERSHIP OPERATION PROFILES

The Company has entered into agreements to acquire 67 Initial
Properties located in California, Colorado, Florida, Maryland, Ohio, Tennessee,
Texas and Virginia from 17 Founding Dealers. Set forth below is certain
information with respect to the Founding Dealers and the Initial Properties. See
also "Business and Properties -- Property Descriptions and Lease Terms --
Repurchase Options, Rights of First Refusal and Rights of First Offer."

<TABLE>
<CAPTION>
AGGREGATE
GROSS
LAND LEASEABLE INITIAL EXTENDED
NUMBER AREA BUILDING ANNUAL FIXED TERM
OF PURCHASE IN AREA BASE TERM (OPTIONS/
FOUNDING DEALER GROUPS PROPERTIES LOCATION PRICE ACRES (SQ. FT.) RENT (YEARS) YEARS)
- ---------------------- ---------- -------- ----- ----- ----------- ------- ------ --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Braman Group 9 Florida, $ 63,112,000 47.89 627,250 $ 6,311,200 10 2/10
Colorado
Park Place Motorcars 4 Texas 51,020,408 23.55 420,626 5,000,000 10 2/10
Momentum Motorcars 4 Texas 36,840,000 26.16 193,123 3,684,000 10 5/5
Len Stoler Automotive Group (1) 4 Maryland 21,100,000 30.27 153,318 2,110,000 10 2/5
Bowers Transportation Group 10 Tennessee 19,572,720 31.38 154,253 1,957,272 10 2/5
Sterling McCall Group 5 Texas 19,260,000 24.90 170,421 1,926,000 30(2) None
Frankel Automotive Group 4 Maryland 19,078,200 13.57 110,156 1,907,820 10 2/5
Lindsay Automotive Group 3 Virginia 18,600,000 9.98 127,155 1,860,000 10 2/5
Bob Bell Automotive Group 3 Maryland 15,000,000 24.34 151,000 1,500,000 10 2/5
Miller Automotive Group (3)(4) 4 California 14,790,000 3.37 89,818 1,479,000 10 2/5
Lustine Automotive Group 4 Maryland, 13,200,000 17.77 171,786 1,320,000 10 2/5
Virgina
The Motorcars Group 4 Ohio 12,840,000 8.68 85,100 1,284,000 10 2/10
Lynn Alexander Auto Group 4 Texas 9,000,000 18.54 130,525 900,000 10 2/5

</TABLE>

<PAGE> 15
<TABLE>
<CAPTION>
AGGREGATE
GROSS
LAND LEASEABLE INITIAL EXTENDED
NUMBER AREA BUILDING ANNUAL FIXED TERM
OF PURCHASE IN AREA BASE TERM (OPTIONS/
FOUNDING DEALER GROUPS PROPERTIES LOCATION PRICE ACRES (SQ. FT.) RENT (YEARS) YEARS)
- ---------------------- ---------- -------- -------- ----- ----------- ------- ------ --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Sunnyside Automotive 2 Ohio 7,344,000 6.90 83,000 734,400 10 2/5
Chase Chevrolet 1 California 7,200,000 7.36 48,294 720,000 10 2/5
Towson Ford 1 Maryland 4,200,000 2.81 33,000 420,000 10 2/5
FUS, Inc. 1 Maryland 2,328,000 3.52 18,403 232,800 10 2/5
-- ------------ -----------
TOTALS 67 $334,485,328 $33,346,492
== ============ ===========
</TABLE>

- ------------
(1) One property interest contributed is a ground lease which
includes an option to purchase the underlying property
contingent upon the death of the current lessor. Such option
will be assigned to the Company upon the closing of the
Formation Transactions with respect to the Len Stoler
Automotive Group.
(2) Subject to earlier termination by tenant upon written notice
delivered to the landlord no less than six months prior to the
Early Termination Date (as defined in the lease) or December
3, 2007, 2012, 2017 or 2022, as designated by the tenant, in
the tenant's sole discretion).
(3) A portion of one property interest contributed is a ground
lease with 45 years remaining on its fixed term, which
includes a right granted to the landlord's beneficiaries to
require the tenant to purchase the property after the death of
the landlord.
(4) One Initial Lease has a 25 year fixed term with no options to
extend the term thereof.

The following is a description of the allocation of the purchase price
for each Founding Dealer:

<TABLE>
<CAPTION>
ESTIMATED ESTIMATED ESTIMATED
TOTAL ASSUMED DEBT REPAID VALUE OF
FOUNDING DEALER GROUPS PURCHASE PRICE CASH DEBT AT CLOSING OP UNITS(1)
- ---------------------- -------------- ---- ----- ------------ -----------
<S> <C> <C> <C> <C> <C>
Braman Group(2) .............. $ 63,112,000 -- $ 5,646,000 $ 20,952,000 $ 36,514,000
Park Place Motorcars ......... 51,020,408 -- -- 26,645,550 24,374,858
Momentum Motorcars(3) ........ 36,840,000 -- -- 15,885,063 20,954,937
Len Stoler Automotive
Group ..................... 21,100,000 $ 2,532,813 -- 11,292,909 7,274,278
Bowers Transportation
Group ..................... 19,572,720 11,498,337 -- 6,344,742 1,729,641
Sterling McCall Group ........ 19,260,000 1,250,000 -- 8,916,153 9,093,847
Frankel Automotive Group ..... 19,078,200 -- -- -- 19,078,200
Lindsay Automotive Group ..... 18,600,000 -- -- 8,118,000 10,482,000
Bob Bell Automotive Group .... 15,000,000 -- -- 5,000,000 10,000,000
Miller Automotive Group ...... 14,790,000 100,000 -- 9,844,000 4,846,000
Lustine Automotive Group ..... 13,200,000 -- -- 6,379,400 6,820,600
The Motorcars Group .......... 12,840,000 12,840,000 -- -- --
Lynn Alexander Auto
Group ...................... 9,000,000 8,000,000 -- -- 1,000,000
Sunnyside Toyota ............. 7,344,000 7,344,000 -- -- --
Chase Chevrolet .............. 7,200,000 7,200,000 -- -- --
Towson Ford .................. 4,200,000 -- -- -- 4,200,000
FUS, Inc. .................... 2,328,000 -- -- -- 2,328,000
------------ ------------ ------------ ------------ ------------
TOTALS .............. $334,485,328 $ 50,765,150 $ 5,646,000 $119,377,817 $158,696,361
============ ============ ============ ============ ============
</TABLE>

- ----------
(1) The actual number of OP Units issued to the Founding Dealers will
vary depending upon the initial public offering price of the
Common Shares. The actual number of OP Units issued to each
Founding Dealer will be determined at the closing of the Formation

<PAGE> 16

Transactions by dividing the purchase price of the Initial
Properties contributed by such Founding Dealer to the Operating
Partnership (less the cash portion of the purchase price and any
Assumed Debt) by the initial public offering price per Common
Share. The number of Common Shares held by Jack I. Tompkins, Bert
Wollen and WS&B Auto REIT, LLC ("WS&B"), the founding shareholders
of the Company, will depend upon the actual amount of OP Units
issued in the Formation Transactions. Assuming an initial offering
price of $20 per Common Share, 7,934,818 OP Units will be issued
in the Formation Transactions, and the number of Common Shares
held by Messrs. Tompkins and Wollen and WS&B (excluding the
Placement Shares) will be 179,250, 119,250 and 238,500
respectively. If the initial public offering price per Common
Share is $21, the number of OP Units issued will be 7,556,970, and
the number of Common Shares held by Messrs. Tompkins and Wollen
and WS&B (excluding the Placement Shares) will be 273,712, 213,712
and 427,424, respectively. If the initial public offering price is
$19, the number of OP Units issued will be 8,352,440, and the
number of Common Shares held by Messrs. Tompkins and Wollen and
WS&B (excluding the Placement Shares) will be 74,845, 14,844 and
29,689, respectively. As a result, notwithstanding the initial
public offering price per Common Share, an aggregate of 16,425,984
Common Shares and OP Units will be outstanding on the closing of
the Offering.

(2) The Braman Group and its affiliates will also receive five-year
warrants to purchase 70,000 Common Shares at the initial public
offering price and a cash payment (which is a transaction cost to
the Company) of approximately $631,000 in connection with the
closing of the Formation Transactions involving the Braman Group.

(3) Ricardo Weitz, an affiliate of Momentum Motorcars, will also
receive five-year warrants to purchase 50,000 Common Shares at the
initial public offering price.

THE OFFERING

<TABLE>
<S> <C>
Common Shares offered by the Company................. 7,600,000
Common Shares to be outstanding
after this Offering(1)(2)......................... 8,491,166
OP Units to be outstanding after the Offering (2) ... 7,934,818
Common Shares and OP Units to be outstanding after
the Offering (1)................................. 16,425,984
Use of proceeds..................................... Proceeds of the Offering and the Private Placement,
together with borrowings under the Line of Credit,
will be used for the acquisition of the Initial
Properties, for the repayment of existing indebtedness
in connection with the acquisition of the Initial
Properties, and for working capital and general
corporate purposes.
Proposed New York Stock Exchange
symbol ............................................. RTA
</TABLE>

- ------------

(1) Includes an aggregate of 225,000 Common Shares agreed to be
purchased by Messrs. Tompkins and Wollen in the Private Placement.
See "Organization and Formation Transactions." Excludes (i)
1,642,600 Common Shares reserved for issuance pursuant to the
Incentive Share Plan (as defined herein), of which options to
purchase 1,000,000 Common Shares will be granted to certain
officers and Trust Managers of the Company in connection
with this Offering, (ii) 70,000 Common Shares reserved for
issuance upon exercise of five-year warrants to purchase Common
Shares at the initial public offering price to be issued to Norman
Braman and his affiliates in connection with the closing of the
Formation Transaction regarding the Braman Group, and (iii) 50,000
Common Shares reserved for issuance upon exercise of five-year
warrants to purchase Common Shares at the initial public offering
price to be issued to Ricardo Weitz, an affiliate of Momentum
Motorcars, in connection with the closing of the Formation
Transaction regarding Momentum Motorcars. See "Organization and
Formation Transactions," "Management -- Incentive Share Plan" and
"-- Transactions with Certain Officers and Trust Managers," and
"Partnership Agreement."
(2) OP Units are redeemable for cash or, at the Company's option,
exchangeable for Common Shares on a one-for-one basis. See
"Partnership Agreement -- Redemption of OP Units." Messrs.
Tompkins and Wollen have agreed to purchase an aggregate of
225,000 Common Shares in the Private Placement. See "Organization
and Formation Transactions." The actual number of OP Units issued
to the Founding Dealers will vary depending upon the initial
public offering price of the Common Shares. The foregoing table
assumes an initial public offering price of $20 per Common Share.
See "Organization and Formation Transactions" and "Benefits to
Related Parties."

<PAGE> 17

BENEFITS TO RELATED PARTIES

The closing of the Formation Transactions will result in benefits to
certain Executive Officers, Trust Managers and Founding Dealers. See "Management
- -- Transactions with Certain Officers and Trust Managers."

Nelson E. Bowers, II (affiliated with the Bowers Group), Norman Braman
(affiliated with the Braman Group) and Douglas W. Schnitzer (affiliated with
Park Place Motorcars ("Park Place")), each of whom is a Founding Dealer or an
affiliate thereof, have agreed to serve as Trust Managers of the Company upon
the closing of the Offering and the Formation Transactions with respect to their
respective affiliated dealer groups. In regard to Park Place, Kenneth L.
Schnitzer, the brother of Douglas W. Schnitzer, is primarily responsible for the
operations of Park Place. Douglas W. Schnitzer has responsibility for the real
estate operations of Senterra Real Estate Group, L.L.C. and certain affiliates
of Park Place. Douglas W. Schnitzer has also agreed to serve as the Chairman of
the Executive Committee of the Board of Trust Managers upon his election to the
Board of Trust Managers. In consideration for the contribution of the Initial
Properties owned by affiliates of Messrs. Bowers, Braman and Douglas W.
Schnitzer, Messrs. Bowers, Braman and Douglas W. Schnitzer, or their affiliates,
will receive cash and OP Units as set forth in "Business and Properties --
Property Descriptions and Lease Terms -- The Leases." The Initial Properties
owned by affiliates of Messrs. Bowers, Braman and Douglas W. Schnitzer will be
leased back to their affiliates who will continue the operation of dealerships
located upon such Initial Properties. See "Business and Properties -- Property
Descriptions and Lease Terms -- The Leases" and "Management -- Transactions with
Certain Officers and Trust Managers." In connection with the Formation
Transactions, due to potential adverse tax consequences to these Founding
Dealers, the Company has agreed not to sell certain Initial Properties owned by
affiliates of Messrs. Bowers, Braman and Douglas W. Schnitzer prior to the
expiration of certain lock-out periods. The lock-out periods applicable to
Initial Properties contributed by affiliates of Messrs. Braman and Douglas W.
Schnitzer are generally the earlier of ten years (20 years with respect to one
property owned by an affiliate of Mr. Braman), the sale or conversion of 75% of
the OP Units held by Messrs. Braman or Douglas W. Schnitzer, or their
affiliates, respectively, or the termination by their affiliated Initial Dealer
Lessees of their respective leases. The lock-out period applicable to Mr. Bowers
is generally the earlier of December 31, 2002 or the date upon which 75% of the
OP Units held by Mr. Bowers have been converted or sold. In addition, upon the
closing of the Formation Transactions (i) with respect to the Initial Properties
to be contributed by the Braman Group, Mr. Braman and his affiliates will
receive five-year warrants to purchase an aggregate of 70,000 Common Shares at
the initial public offering price and will receive a cash payment (which is a
transaction cost to the Company) of approximately $631,000 in connection with
the transfer of such properties to the Operating Partnership and (ii) with
respect to the Initial Properties to be contributed by Momentum Motorcars,
Douglas W. Schnitzer or his affiliates will receive a cash fee equal to up to 1%
of the total purchase price paid by the Company for such Initial Properties. The
warrants to be issued to Mr. Braman and his affiliates may not be exercised for
a period of one year after the closing of the Formation Transaction with respect
to the Braman Group. See "Management -- Transactions with Certain Officers and
Trust Managers."

In connection with his employment agreement, David L. Johnston received
16,666 Common Shares and options to purchase 33,334 Common Shares for $0.40 per
share (such options to vest over a two-year period). See "Management --
Employment Agreements."

The actual number of OP Units issued to each Founding Dealer will be
determined at the closing of the Formation Transactions by dividing the purchase
price of the Initial Properties contributed by such Founding Dealer to the
Operating Partnership (less the cash portion of the purchase price and any
Assumed Debt) by the initial public offering price per Common Share. The number
of Common Shares held by Jack I. Tompkins, Bert Wollen and WS&B, the founding
shareholders of the Company, will depend upon the actual amount of OP Units
issued in the Formation Transactions. Assuming an initial offering price of $20
per Common Share, 7,934,818 OP Units will be issued in the Formation
Transactions, and the number of Common Shares held by Messrs. Tompkins and
Wollen and WS&B (excluding the Placement Shares) will be 179,250, 119,250 and
238,500 respectively. If the initial public offering price per Common Share is
$21, the number of OP Units issued will be 7,556,970, and the number of Common
Shares held by Messrs. Tompkins and Wollen and WS&B (excluding the Placement
Shares) will be 273,712, 213,712 and 427,424, respectively. If the initial
public offering price is $19, the number of OP Units issued will be 8,352,440
and the number of Common Shares held by Messrs. Tompkins and Wollen and WS&B
(excluding the Placement Shares) will be 74,845, 14,844 and 29,689,
respectively. As a result, notwithstanding the initial public offering price per
Common Share, an aggregate of 16,425,984 Common Shares and OP Units will be
outstanding upon the closing of the Offering.

<PAGE> 18

DISTRIBUTION POLICY

The Company intends to pay to its shareholders regular quarterly
distributions of at least 95% of the Company's annual REIT taxable income
determined without regard to the deduction for dividends paid and by excluding
net capital gains (as determined under Section 857(a)(1) of the Internal Revenue
Code of 1986, as amended (the "Code")) each year so as to qualify for the
benefits accorded to a REIT under the Code. The Board of Trust Managers, in its
sole discretion, will determine the actual distribution rate based on the
Company's actual results of operations, economic conditions, tax considerations
(including those related to REITs) and other factors that the Board of Trust
Managers deems relevant. The Company's first distribution, for the period from
the closing of this Offering to June 30, 1998, is expected to equal a pro rata
share of the estimated initial quarterly distribution of $0.394 per Common
Share, which, on an annualized basis, will represent a distribution rate of
$1.58 per share, or 7.88% of the initial public offering price. On a pro forma
basis for the year ended December 31, 1997, the estimated initial distribution
would represent approximately 93.2% of the Company's estimated net income,
computed in accordance with generally accepted accounting principles (excluding
gains and losses from debt restructuring and property sales), plus depreciation,
amortization and minority interests, minus capital expenditures and principal
payments of indebtedness ("Cash Available for Distribution.") There can be no
assurance that the Company will be able to achieve or maintain its estimated
initial distribution rate. Holders of OP Units will receive distributions on a
per unit basis equal to the per share distributions to holders of Common Shares.
The Company does not expect to adjust the estimated initial distribution rate if
the Underwriters' over-allotment option is exercised. See "Distribution Policy."

FEDERAL INCOME TAX CONSIDERATIONS

The Company will elect to be taxed as a REIT under Sections 856 through
859 of the Code, commencing with its taxable year ending December 31, 1998. If
the Company qualifies for taxation as a REIT, with certain exceptions, the
Company will not be subject to federal income tax at the corporate level on its
taxable income that is distributed to shareholders. A REIT is subject to a
number of organizational and operational requirements, including a requirement
that it distribute at least 95% of its annual REIT taxable income determined
without regard to the deduction for dividends paid and by excluding any net
capital gains. For any taxable year in which the Company fails to qualify as a
REIT, the Company will be subject to federal income tax (including any
applicable alternative minimum tax) on its taxable income at corporate rates. In
connection with the Company's election to be taxed as a REIT, the Declaration of
Trust imposes restrictions on transfer of the Common Shares. See "Risk Factors
- -- Adverse Tax Consequences," "-- Anti-Takeover Provisions" and "-- Ownership
Limits," "Description of Shares of Beneficial Interest -- Certain Provisions of
Texas Law and the Company's Declaration of Trust and Bylaws -- Restrictions on
Transfer" and "Federal Income Tax Considerations."

SUMMARY FINANCIAL DATA

The following table sets forth unaudited selected pro forma financial
information for the Company. The pro forma operating information is presented as
if the closing of the Offering and the Formation Transactions had occurred as of
January 1, 1997, and therefore incorporates certain assumptions that are
included in the Notes to Pro Forma Condensed Statements of Operations included
elsewhere in this Prospectus. The pro forma balance sheet information is
presented as if the closing of the Offering and the Formation Transactions had
occurred on December 31, 1997. The pro forma information does not purport to
represent what the Company's financial position or results of operations
actually would have been had the Formation Transactions, in fact, occurred on
such date or at the beginning of the period indicated, or to project the
Company's financial position or results of operations at any future date or any
future period.

<PAGE> 19

AUTOMOTIVE REALTY TRUST OF AMERICA
UNAUDITED SUMMARY CONSOLIDATED PRO FORMA FINANCIAL DATA
(in thousands, except for share and per share data)

<TABLE>
<CAPTION>
Pro Forma for the Year Ended
December 31, 1997
-----------------
(Unaudited)
<S> <C>
Statement of Operations Data:
Rental Income 33,347
General and Administrative Expense 2,585
Depreciation 5,020
Minority Interest 10,731
Interest Expense 3,385
Net Income 11,626
Net Earnings Per Common Share
Basic 1.37
Fully Diluted 1.36
Weighted Average Common Shares Outstanding
Basic(1) 8,491,166
Fully Diluted(1) 8,523,833
</TABLE>

<TABLE>
<CAPTION>
Pro Forma at
December 31, 1997
-----------------
(Unaudited)
<S> <C>
Balance Sheet Data:
Real Estate Owned, at Cost 334,485
Total Assets 336,699
Debt Outstanding 40,000
Minority Interest 158,696
Total Shareholders' Equity 137,233
</TABLE>

- -------------
(1) The actual number of Common Shares issuable upon the closing of the
Offering will vary depending upon the initial public offering price per
Common Share. See "Organization and Formation Transactions."

<PAGE> 20

RISK FACTORS

An investment in the Common Shares involves various risks. Prospective
investors should carefully consider the following risk factors in conjunction
with the other information contained in this Prospectus before purchasing any
Common Shares in this Offering.

Certain statements included in this Prospectus are forward-looking
statements (within the meaning of Section 27A of the Securities Act and Section
21E of the Exchange Act), including, without limitation, statements containing
the words "believes," "anticipates," "expects" and words of similar import. Such
forward-looking statements relate to future events, the future financial
performance of the Company, and involve known and unknown risks, uncertainties
and other factors that may cause the actual results, performance or achievements
of the Company or industry results to be materially different from any future
results, performance or achievements expressed or implied by such
forward-looking statements. Prospective investors should specifically consider
the various factors identified in this Prospectus that could cause actual
results to differ, including, without limitation, those discussed in the
following section, as well as in the sections entitled "Prospectus Summary,"
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and "Business and Properties." The Company and the Underwriters
disclaim any obligation to update any such factors or to publicly announce the
result of any revisions to any of the forward-looking statements contained
herein to reflect future events or developments. The laws cited above may not be
applicable to initial public offerings such as this Offering.

AUTOMOTIVE INDUSTRY RISKS

Consolidation of the Automotive Industry. Vehicles, both new and used,
are being marketed and sold through a decreasing number of outlets. This rapid
consolidation of the automobile dealership industry is due to a number of
factors, including, but not limited to, increased consumer information, aging
dealership principals, declining new vehicle gross margins, high-cost
distribution systems, vehicle manufacturer programs and other efforts to reduce
the number of franchises, the advent and growth of specialty retailers for used
vehicles, parts and services, the increasing acceptance of public ownership of
franchised automobile dealerships by automobile manufacturers, and the desire of
certain manufacturers to strengthen their brand identity by consolidating their
franchised dealerships. See "Business and Properties -- Automotive Industry
Overview." As a result of these and other factors, there can be no assurance
that the Company will be able to attract replacement lessees or acquire the
property of additional dealerships, which, in turn, could have a material
adverse effect on the business, financial condition or results of operations of
the Company and its ability to make distributions to shareholders.

Influence of Vehicle Manufacturers. Automobile dealerships operate
pursuant to franchise agreements with vehicle manufacturers. No assurance can be
given that such manufacturers or any other manufacturer will not seek to impose
restrictions on a lessee's operations or capital structure. If a manufacturer
terminates or declines to renew a franchise agreement with a lessee, such action
could have a material adverse effect on such lessee, which, in turn, could have
a material adverse effect on the business, financial condition or results of
operations of the Company and its ability to make distributions to shareholders.

Standard automobile franchise agreements may contain restrictions on
the sale or transfer of assets or real property necessary for the operation of
the dealerships operated by the lessees, or may contain rights of first refusal
in favor of certain manufacturers to purchase those assets or real property.
Consents from certain manufacturers are required under various franchise
agreements in connection with the transfer of the Initial Properties of the
Company. There are no assurances that certain manufacturers will consent to the
sale of, or waive prior rights to purchase, certain properties that the Company
may negotiate to acquire, when such consents or waivers are required. Failure to
receive all or some required consents or waivers could prevent the Company from
acquiring one or more properties in the Formation Transactions and could have a
material adverse effect on the ability of the Company to acquire additional
properties. Also, such an event could impair the relationship between the dealer
and the manufacturer. The Contribution Agreements (as defined herein) for the
Initial Properties require, and the contribution agreements for future
properties will require, the contributors to indemnify the Company if the
Company does not acquire clear fee simple title to a property.

Operating Risks. The lessees will be subject to all operating risks
common to the automobile dealership industry. Each lessee is dependent upon the
applicable manufacturer to provide it with an inventory of new vehicles. If the
lessees are unable to obtain sufficient quantities of the most popular makes and
models, their profitability and their ability to make lease payments to the
Company may be adversely affected which, in turn, could have a material adverse
effect on the business, financial condition or results of operations of the
Company and its ability to make distributions to shareholders.

<PAGE> 21

The lessees depend on manufacturers for certain sales incentives and
other programs that are intended to promote dealership sales or support
dealership profitability. A reduction or discontinuation of a manufacturer's
incentive programs may adversely affect the profitability of a lessee and the
ability of such lessee to make lease payments to the Company which, in turn,
could have a material adverse effect on the business, financial condition or
results of operations of the Company and its ability to make distributions to
shareholders.

In addition, the Company's lessees are susceptible to (i) increases in
operating costs due to inflation and other factors, which increases may not be
offset by increased revenues, (ii) product liability claims and (iii) adverse
effects of general and local economic conditions. The foregoing factors could
adversely affect the ability of the lessees to make their lease payments, which,
in turn, could have a material adverse effect on the business, financial
condition or results of operations of the Company and its ability to make
distributions to shareholders.

Competition. The automotive industry is highly competitive with respect
to price, service, location and selection. Each lessee competes with numerous
franchised automobile dealerships (including publicly-held franchised dealership
consolidators) in each of its market segments, many of which are large and have
significant financial and marketing resources. Each lessee also competes with
private market buyers and sellers of used cars, used car dealerships, service
center chains and independent service and repair shops for service and repair
business. While sales of used vehicles have traditionally had higher gross
profit margins than new vehicle sales, competition in the used vehicle market
has been increasing in recent years.

Automobile dealers also have faced increased competition in the sale of
vehicles from non-traditional sources such as companies that sell automobiles on
the Internet, automobile rental agencies, independent leasing companies, price
clubs associated with established consumer agencies such as the American
Automobile Association and used car "superstores," some of which use
non-traditional sales techniques such as one-price shopping. The used car
"superstores" generally offer a greater and more varied selection of used
vehicles than do traditional automobile dealerships. Some of these recent market
entrants are capable of operating on smaller gross margins than those on which
the dealerships are capable of operating because they have lower overhead and
sales costs. Such increased competition may have an adverse effect on the
profitability of the lessees and their ability to make lease payments to the
Company which, in turn, could have a material adverse effect on the business,
financial condition or results of operations of the Company and its ability to
make distributions to shareholders.

In addition, the automotive industry is changing as a result of rapid
consolidation. The future success of the Company's lessees, and therefore, the
Company, may be affected by such changes, the nature of which cannot be forecast
with any degree of certainty. There can be no assurance that, in addition to the
competitive factors described above, additional developments in the automotive
industry will not create additional competitive pressures on the Company's
lessees, which could adversely affect the ability of its lessees to make their
lease payments, which, in turn, could have a material adverse effect on the
business, financial condition and results of operations of the Company and its
ability to make distributions to shareholders. Furthermore, no assurance can be
given that automobile manufacturers will not attempt to modify the historical
automobile manufacturer/dealer franchise system in a manner that increases
competition among dealers or that automobile manufacturers will not attempt to
market their vehicles through other distribution channels.

Seasonality; Quarterly Fluctuations. The automotive industry is
affected by economic factors, unpredictability of discretionary consumer
spending, and seasonal consumer buying patterns, with a disproportionate amount
of sales occurring in the second and third calendar quarters. The Founding
Dealers' quarterly revenues have fluctuated and may continue to fluctuate as a
result of a number of factors, including, without limitation, the timing of new
products, the mix of automobile sales and weather patterns. Seasonal variations
in revenue at dealerships may require the Company's lessees to supplement
revenue at their dealerships to make their lease payments. Failure of a lessee
to properly manage its cash flow may result in a lessee having insufficient cash
to make its lease payments during slow seasons, which could have a material
adverse effect on the business, financial condition or results of operations of
the Company and its ability to make distributions to shareholders. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Seasonality."

Susceptibility to Changing Consumer Preferences. The automotive
industry is subject to changing consumer preferences. Shifts in consumer
preferences may adversely affect dealerships that misjudge such preferences.
Accordingly, a market misjudgment could adversely affect the ability of a lessee
to make its lease payments, which, in turn, could have a material adverse effect
on the business, financial condition or results of operations of the Company and
its ability to make distributions to shareholders.

<PAGE> 22

DEPENDENCE UPON LESSEES

The Company's ability to make distributions to shareholders will depend
solely upon the ability of the lessees to make lease payments under the leases
(which will be dependent primarily on the lessees' ability to generate revenue
in excess of operating expenses from their dealerships). The success of any
retail automobile dealership is dependent on a number of factors, including, but
not limited to, competitive environment, adequate capital, accurate site
selection, the supply of new and used vehicles, vehicle manufacturers' approval
and control over dealership franchises, the building of brand recognition, rates
of unemployment, income growth, interest rates, other national and local
economic conditions, automotive innovations, weather patterns and general
consumer sentiment. Therefore, while the Company has evaluated, and plans to
continue to evaluate, the financial condition of its lessees based upon a due
diligence review of available financial and other pertinent information, there
can be no assurance that any lessee will not default on its lease payments. In
addition, the Initial Annual Base Rents with respect to certain of the Initial
Properties are based upon property values that assume completed construction or
improvements. Failure to complete all or a portion of such construction or
improvements with respect to a particular Initial Dealer Lessee could affect
that Lessee's ability to make its lease payments. See "Business and Properties
- -- Property Descriptions and Lease Terms -- Development Properties." Any failure
or delay by a lessee in making lease payments could have a material adverse
effect on the business, financial condition or results of operations of the
Company and its ability to make distributions to shareholders.

No assurance can be given that a lessee will exercise any option to
renew its lease upon the expiration of the term thereof. In addition, a failure
on the part of a lessee to comply with the material terms of its lease would
give the Company the right to terminate such lease, repossess the applicable
property and enforce the lease payment obligations under the lease. See "-- Real
Estate Investment Risks." In such an event, the Company will be required to
locate a qualified replacement lessee, or it may risk losing its ability to
elect or maintain its REIT status. The Company may not be able to attract
replacement lessees on a timely basis, if at all, or on terms acceptable to the
Company. Moreover, as a result of consolidation in the automotive industry,
both new and used vehicles are now being marketed and sold through a decreasing
number of outlets. See "-- Automotive Industry Risks -- Consolidation of the
Automotive Industry." Therefore, it may become increasingly difficult for the
Company to find suitable lessees to replace a defaulting lessee, particularly
in instances where the prior lessee was not able to operate profitably. In such
instances, the Company would likely be required to reduce the lease payments
with respect to such property, which, in turn, could have a material adverse
effect on the business, financial condition or results of operations of the
Company and its ability to make distributions to shareholders.

CONCENTRATION OF INVESTMENTS IN THE AUTOMOTIVE INDUSTRY

The Company's current strategy is to acquire primarily the land and
improvements of Automotive Properties. As a result, the Company will be subject
to risks inherent in investments in a single industry. The effect on the
Company's ability to make distributions to shareholders resulting from a
downturn in the automobile industry will, therefore, be more pronounced than if
the Company had further diversified its investments. Although retail automobile
dealerships typically are generic in nature, certain facilities may be better
suited for particular retail automobile dealership tenants and could require
modification prior to or at the commencement of a lease term if a property has
to be leased to another lessee. Furthermore, such properties may not be suitable
for lease to other types of lessees.

DEFAULTS BY LESSEES

The Company's recourse against an Initial Dealer Lessee or a future
lessee is and will be limited by federal bankruptcy laws and state laws
affecting creditors' rights and remedies available to owners of real property.
Many of the leases of the Initial Properties provide for an event of default
under a lease if any event of default occurs under any other lease of a
particular Initial Dealer Lessee. In the event of the financial failure of a
lessee (or a guarantor of the obligation of such lessee), such lessee (or the
guarantor of the obligations of such lessee) could seek the protection afforded
under the Bankruptcy Code. In such event, there can be no assurance that the
Company could promptly recover the applicable property from the lessee or from a
trustee or debtor-in-possession in any bankruptcy proceeding, or that the
Company would receive rent in the proceeding sufficient to cover its expenses
with respect to the property.

If a lessee files for bankruptcy protection, it initially will have at
least 60 days to decide whether to assume the lease. That period could be
extended by order of the Bankruptcy Court. During the period before the lease is
assumed or rejected, the lessee will not be required to pay amounts due under
the lease for the period before the bankruptcy was filed. If the lease is
assumed, the lessee will be required to pay all amounts then due under the
lease, but will not be required to pay interest on those amounts.

<PAGE> 23

If a lease is rejected by a bankrupt lessee, the rejection is treated
as a breach of the lease, and the Company will have a claim for damages
resulting from the breach. However, the claim will be limited to an amount equal
to the rent reserved under the lease, without acceleration, for the greater of
one year or 15% of the remaining term of the lease (but no more than three
years), plus rent already due but unpaid. In addition, the Company's rejection
claim ordinarily will be treated as a general unsecured claim, and will be paid
only to the extent that funds are available to pay general unsecured claims
against the lessee. There can be no assurance that any such payment would be
sufficient to pay the amounts due under the lease. The Company's ability to
recover damages from the lessee may be further limited if the lessee is a
newly-organized limited purpose entity or other entity with nominal
capitalization.

DURATION OF THE LEASES; NO RIGHT TO TERMINATE LEASES UPON SALE

The leases, some of which, with extensions, have terms of up to 35
years, do not terminate when the property occupied by the dealership is sold.
The value to a prospective buyer, and therefore, the price paid to the Company
for the applicable property, may be less than if the lease were to terminate
upon a sale. See "Business and Properties -- Property Descriptions and Lease
Terms."

LACK OF APPRAISALS

No third-party valuations of the Initial Properties were obtained in
connection with the Formation Transactions. The valuation of the Company is
based upon the capitalization of the Company's estimated Cash Available for
Distribution and the factors set forth in this Prospectus in the section
captioned "Underwriting." There can be no assurance that the price paid by the
Company for an Initial Property will not exceed the fair market value of such
Initial Property or that the price paid by the Company for other properties in
the future will not exceed their fair market value.

REPURCHASE OPTIONS

Eleven Founding Dealers have the option to repurchase their properties
at a price which in certain cases is based upon a multiple of the rental income
generated by such properties. There can be no assurance that the purchase price
paid by such Founding Dealers in connection with the repurchase of their
properties will not be less than the then existing fair market value of such
properties or the price that could otherwise be obtained by the Company upon the
sale of such properties in the open market. Further, there can be no assurance
that such repurchase options will not be exercised at a point in time in which a
transfer of such property is not in the best interests of the Company and its
shareholders. See "Business and Properties -- Lease Descriptions and Lease Terms
- -- Repurchase Options, Rights of First Refusal and Rights of First Offer."

LACK OF CONTROL OVER DAY-TO-DAY OPERATIONS AND MANAGEMENT OF THE DEALERSHIPS

In order to qualify as a REIT for federal income tax purposes, the
Company may not operate any Automotive Property or participate in the decisions
affecting the operations of any Automotive Property. Each lessee will control
the operations of its business. The Company will not have the authority to
require any lessee to operate its business in a particular manner, or to govern
any particular aspect of its operations, except as set forth in the applicable
lease. Thus, even if the Company believes a lessee is operating its business
inefficiently, the Company may not require a lessee to change its method of
operation. The Company is limited to seeking redress only if a lessee violates
the terms of its lease, in which case the Company's primary remedies will be to
enforce or terminate such lease and seek to recover damages from such lessee. If
a lease is terminated, the Company will be required to find another lessee or it
may risk losing its ability to elect or maintain its REIT status, as applicable.
There can be no assurance that the Company will be able to attract new lessees
on a timely basis, if at all, or on terms acceptable to the Company.

DEPENDENCE ON ACQUISITIONS

The Company's success in implementing its growth plan will depend
significantly on the Company's ability to acquire, at favorable prices,
additional Automotive Properties. Under the Initial Leases, increases in lease
payments (other than pursuant to the Revaluation Option, as defined herein) are
limited to annual cost-of-living increases (except with respect to Automotive
Properties leased to the Bowers Group) based upon increases in the Consumer
Price Index for All Urban Consumers, United States City Average issued by the
United States Department of Labor (the "CPI") and, in many cases, are subject to
limitations on the amount of such increases. See "Business and Properties --
Property Descriptions and Lease Terms -- Lease Payments." As a result, internal
growth through increases in revenues of the

<PAGE> 24

Initial Properties is not expected to provide as much growth in Cash Available
for Distribution to shareholders as will the acquisition of additional
properties. Although there are many potential Automotive Properties that may fit
the Company's acquisition criteria, there can be no assurance that the Company
will be able to consummate any such transactions in the future or that future
acquisitions of Automotive Properties will be consummated at acceptable prices
and terms. If the Company is unable to acquire Automotive Properties at
attractive prices, there could be a material adverse effect on the Company's
ability to implement its growth strategy, which could have a negative impact on
the performance of the Common Shares and the Company's ability to maintain or
increase distributions to shareholders.

The Company will compete for acquisition opportunities with entities
organized for purposes substantially similar to the Company's objectives as well
as other purchasers of real estate, automobile dealerships and related
businesses. The Company may be competing for such opportunities with entities
that have substantially greater financial resources than the Company and a
broader geographic base. These entities may also generally be able to accept
more risk than the Company prudently can manage. In addition, there are only a
limited number of attractive automobile dealerships in an environment which
includes the rapid consolidation of the automotive industry. Such competition in
the acquisition of properties, along with the consolidation in the automotive
industry, may generally reduce the number of suitable acquisition opportunities
available to the Company and may result in a higher cost for properties the
Company is able to purchase. See "Business and Properties -- Business and Growth
Strategy."

In addition, the success of the Company's growth strategy will depend,
in part, upon its access to capital necessary to acquire additional properties
through use of excess cash flow, borrowings or subsequent issuances of Common
Shares, OP Units or other securities. There can be no assurance that sufficient
financing will be available on a timely basis, or at all, or on terms acceptable
to the Company. In addition, the requirement that, in order to maintain
qualification as a REIT, the Company distribute at least 95% of its annual REIT
taxable income (determined without regard to the deduction for dividends paid
and by excluding any net capital gains) to maintain its qualification as a REIT
will limit the Company's ability to rely upon income from operations or cash
flow from operations to finance acquisitions. As a result, if financing is not
available or is not available in the amounts or on terms acceptable to the
Company, the implementation of the Company's growth strategy could be impeded,
which, in turn, could have a material adverse effect on the business, financial
condition or results of operations of the Company and its ability to make
distributions to shareholders.

If the Company were to raise additional capital through the issuance of
additional Common Shares, or securities convertible into or exercisable for
Common Shares (including OP Units), the interests of holders of the Common
Shares could be diluted. Likewise, the Board of Trust Managers is authorized to
cause the Company to issue Preferred Shares (as defined herein) in one or more
series and to determine the distributions and voting and other rights of the
Preferred Shares. Accordingly, the Board of Trust Managers may authorize the
issuance of Preferred Shares with voting, distribution and other similar rights
which could be dilutive to, or otherwise materially and adversely affect the
interests of, the holders of the Common Shares. See "Description of Shares of
Beneficial Interest."

POSSIBLE INABILITY TO ACHIEVE OR MAINTAIN THE COMPANY'S INITIAL DISTRIBUTION
RATE

The Company initially plans to distribute an annualized dividend of
approximately $1.58 per Common Share. If the Company's operating performance
falls short of estimates, the Company may be unable to achieve or maintain its
estimated initial distribution rate. See "Distribution Policy."

LACK OF OPERATING HISTORY

The Company has been recently organized and has no operating history.
There can be no assurance that the Company will be able to generate sufficient
revenue from operations to make anticipated distributions to shareholders. The
Company also will be subject to the risks generally associated with the
formation of any new business.

Upon consummation of the Formation Transactions, the Company will own
the Initial Properties. None of the Initial Properties has previously been owned
by the Company. There can be no assurance that the Initial Properties do not
have undisclosed characteristics or deficiencies that could have a material
adverse effect upon such Initial Properties' valuation or revenue potential.

The Company's ability to make and sustain cash distributions is based
upon its ability to generate sufficient Cash Available for Distribution which,
in turn, is based on many factors, including, without limitation, the ability of
the Company to make additional acquisitions, the ability of the Company to
negotiate favorable lease terms, the lessees' performance under leases and the
Company's anticipated operating expense levels. Some of these factors are beyond
the control of the Company. As a result, no assurance can be given

<PAGE> 25

as to the Company's ability to pay or maintain cash distributions. Neither is
there an assurance that the level of distributions will increase over time or
that contractual increases in rent under the leases of the Initial Properties or
the receipt of rental revenue in connection with future acquisitions of
properties will increase the Company's actual Cash Available for Distribution to
shareholders. Further, because of the long-term nature of the Company's leases
with regard to the Initial Properties and the application of a factor of the CPI
to determine rental increases (as well as limitations on the amount of such
increases), there can be no assurance that rental increases with respect to such
leases will result in lease payments with regard to the Initial Properties being
commensurate with then-prevailing market lease rates at the time of such rental
increases. See "Distribution Policy."

INABILITY OF THE COMPANY TO CLOSE THE ACQUISITION OF PROPERTY OR CLOSE SUCH
ACQUISITION AS SCHEDULED

The Contribution Agreements for the Initial Properties contain, and the
contribution agreements for the acquisition of future properties will contain,
closing conditions typically required in connection with the acquisition of
commercial real estate. Closing conditions under the Contribution Agreements
include the receipt of a survey, title insurance commitment and Phase I
environmental audit acceptable to the Company. Although the Company anticipates
that these closing conditions with respect to the Initial Properties will be
satisfied in advance of the closing of the Offering, information may come to the
attention of the Company that may cause the Company to conclude that the
acquisition of one or more of the Initial Properties is not in the best
interests of the Company. In addition, there may be a failure of performance by
either party at closing. In such case, the Company could refuse to purchase such
Initial Property, or enter into negotiations to resolve the relevant conditions,
which could delay, or result in a change of the terms of, the acquisition. The
failure to acquire one or more of the Initial Properties could have an adverse
effect on the business, financial condition or results of operations of the
Company and its ability to make distributions to shareholders. Although the
closing of the Offering is conditioned upon the acquisition by the Company of
the Initial Properties, the Underwriters may, in their discretion, waive this
condition with respect to one or more Initial Properties. See "Prospectus
Summary -- Formation Transactions," "Use of Proceeds" and "Underwriting."

REAL ESTATE INVESTMENT RISKS

Effect of Economic and Real Estate Conditions. Investments in real
estate involve a high level of risk. One of the risks of investing in real
estate is the possibility that the properties will not generate revenue
sufficient to meet operating expenses or will generate income and capital
appreciation, if any, at rates lower than those anticipated or available through
investment in comparable real estate or other investments. Income from
properties and yields from investments in properties may be affected by many
factors, including, without limitation, the type of property involved, the form
of investment, conditions in financial markets, over-building, changes in the
supply of or demand for similar or competing properties in an area, the impact
of environmental protection laws, changes in interest rates and availability of
financing which may render the sale or financing of a property difficult or
unattractive, reduction in rental income, adverse changes in applicable tax
laws, changes in general economic conditions, adverse local conditions such as
changes in real estate zoning laws that may reduce the desirability of real
estate in the area, acts of God (such as earthquakes, tornados, hurricanes or
floods), and the creation of mechanics' liens or similar encumbrances placed on
a property by a lessee or other party without the Company's knowledge and
consent. Some or all of the foregoing conditions may have a material adverse
effect on the Company's properties, which, in turn, could have a material
adverse effect on the business, financial condition or results of operations of
the Company and its ability to make distributions to shareholders.

The number of competitive properties operated as dealerships or related
businesses in a particular area could have a material adverse effect on the
Company's ability to lease a property in the event of the loss of a lessee.

Resale of Properties. Real estate investments are relatively illiquid.
Such illiquidity will tend to limit the ability of the Company to vary its
portfolio in response to changes in economic or other conditions. In addition,
applicable lock-out periods with regard to certain Initial Properties as well as
federal income tax provisions applicable to REITs limit the Company's ability to
sell its properties. All of these factors may make it more difficult or
impossible to transfer a property even if such transfer may be in the best
interests of the Company and its shareholders. The Company may or may not be
able to sell a property if and when the Company decides to do so. The real
estate market is affected by many factors, such as general economic downturns,
availability of financing, interest rates and other factors, including supply
and demand, that are beyond the control of the Company. The Company cannot
predict whether it would be able to sell any property for the price or on the
terms set by the Company, or whether any price or other terms offered by a
prospective purchaser would be acceptable to the Company. The Company cannot
predict the length of time needed to find a willing purchaser and to close the
sale of a property.

<PAGE> 26

The Company may not be able to sell a property as is. The Company may
be required to expend significant funds to correct defects affecting a property,
such as defects related to the environment, health or safety, or maintenance or
repair of the property. The Company may also be required to make improvements
before a property can be sold. There is no assurance that the Company will have
funds available to correct defects or make improvements. Furthermore, the
expenditure of funds to correct defects or make improvements (including
improvements necessary to relet a property) may adversely affect the funds
available for investment by the Company or actual Cash Available for
Distribution to shareholders.

If a property is not occupied or if rent is not being paid or is being
paid in an amount that is insufficient to cover operating expenses, the Company
could be required to expend funds in excess of net amounts received by the
Company in order to defray expenses with respect to that property, including
expenses relating to taxes, insurance, utilities and maintenance of the
property. Any such expenditures could have a material adverse effect on the
business, results of operations or financial condition of the Company and its
ability to make distributions to shareholders.

Uninsured Property Losses. The Company's leases require that each
lessee maintain extended coverage property insurance covering fire and other
hazards under "extended coverage" or "all risk" endorsements. There are,
however, certain types of losses (such as from hurricanes or earthquakes) that
may be either uninsurable or not insurable at commercially reasonable rates. In
addition, environmental considerations and other factors also might make it not
feasible to use insurance proceeds to replace a property after such property has
been damaged or destroyed. Should an uninsured loss occur with respect to a
property, the Company could lose both its invested capital in and anticipated
cash flow and profits from the lease payments relating to such property, which,
in turn, could have a material adverse effect on the business, financial
condition or results of operations of the Company and its ability to make
distributions to shareholders. See "Business and Properties -- Property
Descriptions and Lease Terms -- The Leases" and "-- Property Descriptions and
Lease Terms -- Insurance."

CONFLICTS OF INTEREST

Founding Dealers as Trust Managers. Nelson E. Bowers, II (affiliated
with the Bowers Group), Norman Braman (affiliated with the Braman Group) and
Douglas W. Schnitzer (affiliated with Park Place), each of whom is an affiliate
of a Founding Dealer, have agreed to join the Board of Trust Managers upon the
closing of the Offering and the Formation Transactions with respect to their
respective affiliated dealer groups. Upon the closing of the Offering and the
Formation Transactions, affiliates of Messrs. Bowers, Braman and Douglas W.
Schnitzer will own a __%, __% and __% interest, respectively, in the outstanding
OP Units, which may be redeemed for cash or exchanged for Common Shares (subject
to certain limitations). See "Management -- Transactions with Certain Officers
and Trust Managers." Messrs. Bowers, Braman and Douglas W. Schnitzer, as Trust
Managers, will be in a position to exercise influence over the operations and
affairs of the Company.

Terms of Transfer of the Initial Properties and the Initial Dealer
Leases. The terms of the transfer to the Company of certain Initial Properties
from affiliates of Messrs. Bowers, Braman and Douglas W. Schnitzer and the
related Initial Leases may be more advantageous to them than the terms the
Company will attempt to negotiate with sellers of future properties. Such Trust
Managers can influence the decision whether or not to take action against an
Initial Dealer Lessee or guarantor affiliated with a Trust Manager in the event
of a default. The terms of any related party agreement or the declaration of any
default against an Initial Dealer Lessee will require the authorization of a
majority of the disinterested Trust Managers of the Company (including such
operations and affairs which may affect the interests of their affiliates). Upon
the closing of the Formation Transactions with respect to the Initial Properties
to be contributed by the Braman Group, Mr. Braman and his affiliates will
receive warrants to purchase 70,000 Common Shares at the initial public offering
price and a cash payment (which is a transaction cost to the Company) of
approximately $631,000 in connection with the transfer of the Braman Group's
properties to the Operating Partnership. Upon the closing of the Formation
Transactions with respect to the Initial Properties to be contributed by
Momentum Motorcars, Douglas W. Schnitzer or his affiliates will receive a cash
fee equal to up to 1% of the total purchase price paid by the Company for such
Initial Properties.

Sale or Refinancing of Certain Initial Properties. The Initial Dealer
Lessees who are affiliates of certain Trust Managers have entered into Initial
Leases that grant certain rights to the Initial Dealer Lessees to repurchase the
Initial Properties upon the Company deciding to sell an Initial Property and
upon expiration of the fixed term or the extended term of the Initial Lease.
Messrs. Bowers, Braman or Douglas W. Schnitzer could influence the Company's
decision to sell, and the terms of sale of any Initial Property of an affiliated
Initial Dealer Lessee. These Initial Dealer Lessees could experience adverse tax
consequences upon the sale of, or reduction of mortgage

<PAGE> 27

indebtedness on, certain Initial Properties. While the Company, as the sole
general partner of the Operating Partnership, has the exclusive authority to
determine whether and on what terms to sell or finance certain properties
(subject to the applicable lock-out periods and other provisions further
described in "Business and Properties -- Property Descriptions and Lease
Terms"), such parties may have different objectives regarding the appropriate
pricing and timing of any sale of, or reduction of mortgage indebtedness on,
such properties. Trust Managers affiliated with Initial Dealer Lessees could
influence the Company not to sell a particular property, and not to incur
additional, or conversely, not to pay off outstanding, indebtedness on a
particular property, or not to enter into a merger or sale of all or
substantially all of the assets of the Company, even though such transaction
might otherwise be financially advantageous to the Company and its shareholders.

Pursuant to certain lock-out provisions, the Company may not sell
certain Initial Properties (subject to certain exceptions, including
transactions that would not result in the recognition of any gain to the
contributor or its investors for tax purposes), for periods ranging from 4 years
to 20 years on certain Initial Properties. See "Business and Properties --
Property Descriptions and Lease Terms -- Lease Payments." Thus, the lock-out
provisions materially restrict the Company's ability to sell or otherwise
dispose of such Initial Properties, even if it would otherwise be in the best
interests of the shareholders for the Company to sell one or more of such
Initial Properties, reduce the outstanding indebtedness with respect to any of
such Initial Properties, refinance such indebtedness, or increase the amount of
indebtedness with respect to such Initial Properties. Specifically, the Company
has agreed not to sell certain Initial Properties owned by affiliates of Messrs.
Bowers, Braman or Douglas W. Schnitzer prior to the expiration of certain
lock-out periods. The lock-out periods applicable to Initial Properties
contributed by affiliates of Messrs. Braman and Douglas W. Schnitzer are
generally the earlier of ten years (20 years with respect to one property owned
by an affiliate of Mr. Braman), the sale or conversion of 75% of the OP Units
held by Messrs. Braman or Douglas W. Schnitzer, or their affiliates,
respectively, or the termination by their affiliated Initial Dealer Lessees of
their respective Initial Leases. The lock-out period applicable to Mr. Bowers is
generally the earlier of December 31, 2002 or the date upon which 75% of the OP
Units held by Mr. Bowers have been converted or sold. See "Management --
Transactions with Certain Officers and Trust Managers." See also "Organization
and Formation Transactions" and "Business and Properties -- Property
Descriptions -- Repurchase Options, Rights of First Refusal and Rights of First
Offer."

Benefits to Certain Officers and Trust Managers. In connection with the
Offering and the Formation Transactions, Jack I. Tompkins, David L. Johnston and
Bert Wollen, Executive Officers of the Company who also serve as Trust Managers,
will realize certain benefits that will not be received by other persons. See
"Management." Messrs. Tompkins and Wollen have agreed to purchase 150,000 Common
Shares and 75,000 Common Shares, respectively, in the Private Placement. See
"Organization and Formation Transactions." The number of Common Shares held by
Jack I. Tompkins and Bert Wollen will depend upon the actual amount of OP Units
issued in the Formation Transactions. Assuming an initial offering price of $20
per Common Share, the number of Common Shares held by Messrs. Tompkins and
Wollen (excluding the Placement Shares) will be 179,250 and 119,250
respectively. If the initial public offering price per Common Share is $21, the
number of Common Shares held by Messrs. Tompkins and Wollen (excluding the
Placement Shares) will be 273,712 and 213,712, respectively. If the initial
public offering price is $19, the number of Common Shares held by Messrs.
Tompkins and Wollen (excluding the Placement Shares) will be 74,845 and 14,844,
respectively. In addition, officers, Trust Managers and certain employees of the
Company will be granted options to purchase Common Shares pursuant to the
Incentive Share Plan. Because certain officers, Trust Managers and affiliates of
the Company were involved in structuring the terms of these transactions, they
had the ability to influence the type and level of benefits they will receive.
As a result, the type and level of benefits these persons will receive may have
been different if they had not participated in structuring such terms. These
persons may have interests that conflict with the interests of persons acquiring
Common Shares in this Offering. Upon the closing of the Formation Transactions
with respect to the Initial Properties to be contributed by the Braman Group,
Mr. Braman and his affiliates will receive warrants to purchase an aggregate of
70,000 Common Shares at the initial public offering price and a cash payment
(which is a transaction cost to the Company) of approximately $631,000 in
connection with the transfer of such properties to the Operating Partnership.
Upon the closing of the Formation Transactions with respect to the Initial
Properties to be contributed by Momentum Motorcars, Douglas W. Schnitzer or his
affiliates will receive a cash fee equal to up to 1% of the total purchase price
paid by the Company for such Initial Properties.

NO PRIOR TRADING MARKET; DILUTION; ADVERSE EFFECT OF INCREASES IN MARKET
INTEREST RATES

Prior to this Offering, there has been no public market for the Common
Shares. The price of Common Shares in the Offering will be determined through
negotiations between the Company and the Underwriters. See "Underwriting" for a
discussion of factors to be considered in the determination of the initial
public offering price. There can be no assurance that an active trading market
will develop or be sustained or that the market price of the Common Shares will
not decline below the initial public offering price.

<PAGE> 28

The value of the Common Shares will depend upon various market
conditions, which may change from time to time. Among the market conditions that
may affect the value of the Common Shares are the following: the extent to which
a secondary market develops for the Common Shares following the closing of the
Offering; the extent of investor interest in the Company; the general reputation
of REITs and the attractiveness of their equity securities in comparison to
other equity securities; the Company's financial performance; and general stock
and bond market conditions, including changes in interest rates for fixed income
securities which may lead prospective purchasers of the Common Shares to demand
a higher annual yield from their investment in Common Shares. In addition,
purchasers of Common Shares in this Offering will experience immediate and
substantial dilution of $3.84 per share (based on an initial offering price of
$20 per share and after deducting underwriting discounts and estimated offering
expenses). See "Dilution."

The market value of the equity securities of a REIT is generally based
primarily upon the market's perception of the REIT's growth potential and its
current and potential future earnings and cash distributions, and is secondarily
based upon the real estate market value of the underlying assets. The failure of
the Company to meet the market's expectations with regard to growth, future
earnings and cash distributions likely would adversely affect the market price
of the Common Shares.

CHANGES IN POLICIES

The Company's policies with respect to all activities, including its
growth, debt, capitalization, distribution, investment, financing, operating
policies, and maintaining its qualification as a REIT will be determined by the
Board of Trust Managers. Although the Board of Trust Managers has no present
intention to do so, these policies may be amended or revised at any time and
from time to time at the discretion of the Board of Trust Managers without a
vote of the shareholders of the Company. If the Company changes these policies,
the risks and potential rewards of an investment in the Company also may change.
See "Certain Policies and Objectives."

OWNERSHIP LIMITS

In order for the Company to qualify and to maintain its qualification
as a REIT, not more than 50% in value of its outstanding shares may be owned,
directly or constructively, by five or fewer individuals (as defined in the Code
to include certain entities). To minimize the possibility that the Company will
fail to qualify as a REIT under this test, the Declaration of Trust authorizes
the Board of Trust Managers to take such action as may be required to preserve
the Company's qualification as a REIT. In addition, the Declaration of Trust,
subject to certain exceptions, provides that no holder may own, or be deemed to
own (under rules of constructive ownership as further described in the
Declaration of Trust), more than 9.8% (the "Ownership Limit") of the total
number or value of any class of outstanding shares of beneficial interest in the
Company. Direct or constructive ownership of Common Shares in excess of the
Ownership Limit would cause the violative transfer or ownership to be void or
cause shares to be designated as Excess Securities (as defined in the
Declaration of Trust), which will be held in trust for the benefit of a
charitable beneficiary. See "Description of Shares of Beneficial Interest --
Certain Provisions of Texas Law and the Company's Declaration of Trust and
Bylaws."

The ownership limits may have the effect of delaying, deferring or
preventing a transaction or a change in ownership or control of the Company that
might involve a premium for the Common Shares or otherwise be in the best
interests of the shareholders.

ANTI-TAKEOVER PROVISIONS

The Declaration of Trust and the Company's Amended and Restated Bylaws
(the "Bylaws"), as well as the Texas REIT Act, contain a number of provisions
that might have the effect of entrenching current management or delaying or
discouraging an unsolicited takeover of the Company. These provisions may delay,
defer or prevent a change in control of the Company, even if such a change in
control could be beneficial to the Company's shareholders, and also may deter
tender offers for Common Shares, even if such offers may be attractive to
shareholders, or limit the opportunity of shareholders to receive a premium for
their Common Shares that might otherwise exist if an investor were attempting to
effect a change in control of the Company.

These provisions include, among others, the following: (a) any transfer
or issuance of Common Shares or any security convertible into Common Shares that
would (i) create a direct or indirect ownership of Common Shares in excess of
the Ownership Limit, (ii) with respect to transfers only, result in the Common
Shares being owned by fewer than 100 persons, (iii) result in the Company being
"closely held" within the meaning of Section 856(h) of the Code, (iv) result in
the Company owning, directly or indirectly, 10% or more of the ownership
interest in any tenant or subtenant of the Company's real property within the
meaning of Section 856(d)(2)(B) of the Code or (v) result in the
disqualification of the Company as a REIT, will be null and void, and the
intended transferee will acquire no rights to the

<PAGE> 29

Common Shares; (b) a Trust Manager remains in office unless removed by
shareholders holding two-thirds of the outstanding Shares (as defined below);
and (c) except in certain circumstances, the affirmative vote of the holders of
not less than 80% of the outstanding Shares, including the affirmative vote of
the holders of not less than 50% of the outstanding Shares not owned, directly
or indirectly, by any Related Person (as defined in the Declaration of Trust),
is required for the approval of certain Business Combinations (as defined in the
Declaration of Trust). Additionally, the Declaration of Trust provides that any
Shares transferred in violation of the Ownership Limit become "Excess
Securities," which, in lieu of being owned by the holder whose ownership
violates such restrictions, shall be held in trust for the benefit of a
charitable beneficiary. The Company has the power to purchase or direct the sale
of such Excess Securities, with the sale proceeds being paid to the former owner
and a charitable beneficiary of the trust.

In addition, the Trust Managers have the power to issue 20,000,000
preferred shares of beneficial interest, no par value per share (the "Preferred
Shares" and collectively with the Common Shares, the "Shares"), with such rights
and preferences as determined by the Board of Trust Managers. The rights of the
holders of the Common Shares will be subject to, and may be adversely affected
by, the rights of the holders of any Preferred Shares that may be issued in the
future. The issuance of the Preferred Shares, while providing desired
flexibility in connection with possible acquisitions and other purposes, could
have the effect of making it more difficult for a third party to acquire a
majority of the outstanding voting securities of the Company, thereby delaying,
deferring or preventing a change of control of the Company. Furthermore, such
Preferred Shares may have other rights, including economic rights senior to the
Common Shares, and as a result, the issuance thereof could have a material
adverse effect on the market value of the Common Shares. See "Description of
Shares of Beneficial Interest -- Certain Provisions of Texas Law and the
Company's Declaration of Trust and Bylaws."

ADVERSE TAX CONSEQUENCES

The Company intends to operate so as to qualify as a REIT under the
Code. Although the Company believes that it will be so organized and will
operate in such a manner and has received an opinion of its legal counsel,
Liddell, Sapp, Zivley, Hill & LaBoon, L.L.P., as to its REIT status (which
opinion is based on certain assumptions and representations), no assurance can
be given that the Company will qualify or remain qualified as a REIT.
Qualification as a REIT involves the application of highly technical and complex
Code provisions for which there are only limited judicial or administrative
interpretations and the determination of various factual matters and
circumstances not entirely within the Company's control. For example, in order
to quality as a REIT, at least 95% of the Company's gross income in any year
must be derived from qualifying sources, and the Company must make distributions
to shareholders aggregating annually at least 95% of its annual taxable income
determined without regard to the deduction for dividends paid and by excluding
any net capital gains. In addition, no assurance can be given that new
legislation, regulations, administrative interpretations or court decisions will
not change the tax laws with respect to qualification as a REIT or the federal
income tax consequences of such qualification. The Company is not aware,
however, of any currently pending tax legislation that would adversely affect
its ability to qualify or maintain its qualification as a REIT.

The Operating Partnership has been structured to be classified as a
partnership for federal income tax purposes. If the Internal Revenue Service
(the "Service") were to challenge successfully the tax status of the Operating
Partnership as a partnership for federal income tax purposes, the Operating
Partnership would be treated as an association taxable as a corporation. In such
event, the character of the Company's assets and items of gross income would
change and preclude the Company from satisfying certain requirements of the
Code, which, in turn, would prevent the Company from qualifying as a REIT. See
"Federal Income Tax Considerations -- Taxation of the Company -- Requirements
for Qualification." In addition, the imposition of a corporate tax on the
Operating Partnership would reduce the amount of Cash Available for
Distribution. See "Federal Income Tax Considerations."

The Company intends to make distributions to its shareholders to comply
with the distribution provisions of the Code and to avoid federal income taxes
and the non-deductible 4% excise tax imposed on REITs that fail to distribute
annually at least 85% of REIT ordinary income and 95% of REIT capital gain net
income and all undistributed income from prior periods. The Company's income
consists primarily of its share of the income of the Operating Partnership, and
the Company's cash flow consists primarily of its share of distributions from
the Operating Partnership. Differences in timing between the receipt of income
and the payment of expenses in arriving at taxable income (of the Company or the
Operating Partnership) and the effect of non-deductible capital expenditures,
the creation of reserves or required debt amortization payments could in the
future require the Company to borrow funds through the Operating Partnership on
a short-term or long-term basis to meet the distribution requirements that are
necessary to continue to qualify as a REIT. For any taxable year that the
Company fails to qualify as a REIT, the Company will be subject to federal
income tax (including any applicable alternative minimum tax) on its taxable
income at corporate rates with no deduction for dividends paid to its
shareholders. In addition, unless entitled to relief under certain statutory
provisions, the Company also will be disqualified from treatment as a REIT for
the four taxable years following the

<PAGE> 30

year during which REIT qualification is lost. This treatment would reduce the
net earnings of the Company available for investment or distribution to
shareholders because of the additional tax liability to the Company for the year
or years involved. In addition, the Company would no longer be required to make
any distributions to shareholders. In such circumstances, the Company might need
to borrow funds to avoid adverse tax consequences even if management believes
that the then prevailing market conditions generally are not favorable for such
borrowings or that such borrowings are not advisable in the absence of such tax
considerations. There can be no assurance that the Company will be able to
continue to satisfy the annual distribution requirement so as to avoid corporate
income taxation on the earnings that it distributes.

Distributions by the Operating Partnership are determined by the
Company, as general partner, and are dependent on a number of factors, including
the amount of actual Cash Available for Distribution, the Operating
Partnership's financial condition, any decision by the Company's Board of Trust
Managers to reinvest funds rather than to distribute such funds, the Operating
Partnership's capital expenditure requirements, the annual distribution
requirements under the REIT provisions of the Code and such other factors as the
Board of Trust Managers deems relevant.

DEPENDENCE UPON KEY PERSONNEL

The Company's success depends to a large extent upon the experience and
abilities of Jack I. Tompkins, Chairman of the Board of Trust Managers, David L.
Johnston, President and Chief Executive Officer, and Bert Wollen, Executive Vice
President-Business Development and Chief Acquisition Officer, all of whom serve
as Trust Managers. The Executive Officers will receive substantial compensation
and/or other benefits from the Company. See "Management -- Executive Officers
and Trust Managers." Each of Messrs. Tompkins, Johnston and Wollen have
three-year employment agreements with the Company. See "Management -- Employment
Agreements." The loss of the services of any of these individuals could have a
material adverse effect on the business, financial condition or results of
operations of the Company and its ability to make distributions to shareholders.
The Company's success also is dependent upon its ability to attract and retain
additional qualified personnel.

SHARES ELIGIBLE FOR FUTURE SALE

The sale of a substantial number of Common Shares in the public market
following this Offering, or the perception that the sale of a substantial number
of Common Shares might occur, could have a material adverse effect on the
prevailing market price of the Common Shares or the ability of the Company to
raise capital through a public offering of its equity securities. Upon the
closing of this Offering and the Formation Transactions and assuming an initial
public offering price of $20 per Common Share, the Company will have outstanding
8,491,166 Common Shares (9,631,166 Common Shares if the Underwriters'
over-allotment option is exercised in full), of which the 7,600,000 Common
Shares sold in this Offering (8,740,000 Common Shares if the Underwriters'
over-allotment option is exercised in full) will be freely tradeable without
restriction or further registration under the Securities Act, except for those
Common Shares held by affiliates of the Company.

In addition to the Common Shares being offered by the Company in this
Offering, an aggregate of 7,934,818 OP Units will be outstanding upon the
closing of the Formation Transactions (assuming an initial public offering price
of $20 per Common Share). See "Organization and Formation Transactions." The OP
Units may be redeemed at the election of the holder for cash or, at the election
of the Company, exchanged for Common Shares on a one-for-one basis at any time
after the first anniversary of the completion of the Offering. Such Common
Shares and OP Units will be deemed to be "restricted securities" with the
meaning of Rule 144 under the Securities Act and may not be transferred unless
such Common Shares or OP Units have been registered under the Securities Act or
an exemption from registration is available, including any exemption from
registration provided under Rule 144.

In general, beginning 90 days after the date of this Prospectus and
upon satisfaction of certain conditions, Rule 144 permits the sale by
non-affiliates of certain amounts of restricted securities one year following
the date of acquisition of the restricted securities from the Company and, after
two years, permits unlimited sales by persons unaffiliated with the Company.
After the one-year period during which OP Units cannot be exchanged or redeemed,
the Common Shares issuable upon exchange of the OP Units may be sold in the
public market pursuant to any available exemption from registration. Pursuant to
the applicable Contribution Agreements, the Company has agreed to file, as soon
as practicable (and in no event later than 90 days) after the expiration of 12
months after the closing of the Formation Transactions, a registration statement
under the Securities Act with respect to the offer and sale of Common Shares
issuable on exchange of OP Units. Upon such registration statement being
declared effective, Common Shares issuable on exchange of OP Units could be sold
in the public market. See "Shares Eligible for Future Sale -- Registration
Rights." The Company has agreed, subject to certain exceptions, not to offer,
sell, offer to sell, contract to sell, assign, pledge, grant any option to
purchase or otherwise dispose of or transfer any Common

<PAGE> 31
Shares or any other security of the Company or the Operating Partnership
convertible into, or exchangeable or exercisable for Common Shares for a period
of six months after the date of this Prospectus, and Jack I. Tompkins, David L.
Johnston, Bert Wollen and Douglas W. Schnitzer, who will hold in the aggregate
______ Common Shares and ____ OP Units, have agreed not to offer, sell, offer to
sell, contract to sell, assign, pledge, grant any option to purchase or
otherwise dispose of or transfer any Common Shares or OP Units, or any other
security of the Company or the Operating Partnership convertible into, or
exchangeable or exercisable for, Common Shares or OP Units for a period of two
years after the date of this Prospectus, without the prior written consent of
Smith Barney Inc. Nelson E. Bowers, II, and Norman Braman have agreed not to
offer, sell, offer to sell, contract to sell, assign, pledge, grant any option
to purchase or otherwise dispose of or transfer any Common Shares or any other
security convertible into, or exchangeable or exercisable for, Common Shares for
a period of one year after the date of this Prospectus, without the prior
written consent of Smith Barney Inc. See "Underwriting." Smith Barney Inc., at
any time and without notice, may release all or any portion of the Common Shares
or OP Units subject to the foregoing lock-up agreements. Approximately 90 days
after the date of this Prospectus, the Company intends to file a registration
statement under the Securities Act registering the offer and sale of Common
Shares reserved for issuance under the Incentive Share Plan. Upon the closing of
this Offering, 1,642,600 Common Shares will be authorized under the Incentive
Share Plan, of which options to purchase 1,000,000 Common Shares will be
outstanding. Upon the effectiveness of such registration, shares issued on
exercise of options under, and Common Shares purchased pursuant to, the
Incentive Share Plan generally will be eligible for sale in the public market,
subject, in the case of options to purchase ___ Common Shares, to the lock-up
provisions described herein. See "Management -- Incentive Share Plan."

There can be no assurance as to when, and how many of, such Common
Shares will be sold and the effect that such sales may have on the market price
of the Common Shares. In addition, the Company intends to issue Common Shares
and OP Units in connection with the acquisition of additional properties in
other transactions. Such securities may be subject to resale restrictions in
accordance with the Securities Act. As such restrictions lapse or if such shares
are registered for sale to the public, such securities may be sold to the
public. If such sales or any other factor should reduce the market price of the
Common Shares, the Company's ability to raise additional capital in the equity
markets could be adversely affected. No prediction can be made as to the effect,
if any, that future sales of Common Shares, or the perception that such sales
could occur, will have on the price of the Common Shares. See "Shares Eligible
for Future Sale."

ENVIRONMENTAL AND OTHER REGULATIONS

The Initial Properties are subject to federal, state and local laws,
ordinances and regulations relating to the protection of human health and safety
and the environment ("Environmental Laws"). Under certain Environmental Laws, a
current or previous owner or operator of real property may be liable for
contamination resulting from the presence or discharge of hazardous or toxic
substances or wastes at such property. Such laws typically impose liability and
clean-up responsibility without regard to whether or not the owner or operator
knew of or caused the presence or discharge of such hazardous or toxic
substances or wastes, and the liability under such laws has been interpreted to
be joint and several unless the harm is divisible and there is a reasonable
basis for allocation of responsibility. In addition, the owner or operator of a
property may be subject to claims by third parties based on personal injury,
property damage and/or other costs, including investigation and clean-up costs,
resulting from environmental contamination or hazardous or toxic substances or
wastes present at or emanating from a property. Under certain other
Environmental Laws, generators of hazardous or toxic substances or wastes that
send such substances or wastes to disposal, recycling or treatment facilities
may be liable for remediation of contamination or hazardous or toxic substances
at such facilities. Other Environmental Laws, govern the generation, handling,
storage, transportation and disposal of hazardous and toxic substances or
wastes, the operation and removal of underground storage tanks, the discharge of
pollutants into surface waters and sewers, emissions of certain potentially
harmful substances into the air and employee health and safety.

Past and future operations on the Initial Properties subject to
Environmental Laws include the use, handling and contracting for recycling or
disposal of hazardous or toxic substances or wastes, including environmentally
sensitive materials such as motor oil, waste motor oil and filters, transmission
fluids, antifreeze, freon, waste paint and lacquer thinner, batteries, solvents,
lubricants, degreasing agents, gasoline and other petroleum products. Certain of
the Initial Properties contain, or may have contained, underground storage tanks
for the storage of petroleum products or other hazardous or toxic substances or
wastes. These operations create a potential for the release of petroleum
products or other hazardous or toxic substances or wastes. Some of the Initial
Properties are adjacent to or near other properties that have contained or
currently contain underground storage tanks used to store petroleum products or
other hazardous or toxic substances or wastes. In addition, certain of the
Initial Properties are on, or are adjacent to or near properties upon which
other parties, including former owners or tenants of the Initial Properties,
have engaged or may in the future engage in activities that may release
petroleum products or other hazardous or toxic substances or wastes into the
environment which may have affected or may affect the environmental condition of
the Initial Properties.

All of the Initial Properties will be subject to a Phase I
environmental assessment by an independent environmental consultant in
connection with this Offering. A Phase I environmental assessment is intended to
discover and evaluate information regarding the environmental condition of the
surveyed property and surrounding properties. A Phase I environmental assessment
generally includes a

24
<PAGE> 32

historical review, a public records review, an investigation of the surveyed
property and surrounding properties, and preparation and issuance of a written
report, but does not include soil or groundwater sampling or subsurface
investigation and typically does not include an asbestos survey, although the
Company undertook a limited assessment survey with respect to the Initial
Properties on which improvements were built at a time when asbestos containing
materials were commonly used. With respect to some of the Initial Properties for
which the Phase I environmental assessment raised issues of possible material
releases which could not be adequately assessed within the scope of a Phase I
environmental assessment, the Company will undertake a Phase II environmental
assessment. A Phase II environmental assessment usually consists of soil or
groundwater sampling or other intrusive investigation to detect whether
contaminants actually have been released into the environment.

Except as described below with respect to Miller Infiniti, none of the
Company's environmental assessments of the Initial Properties has revealed any
environmental liability that the Company believes would have a material adverse
effect on the Company's financial condition or results of operations taken as a
whole, nor is the Company aware of any such material environmental liability.
Nonetheless, it is possible that the Company's assessments do not reveal all
environmental liabilities or that there are material environmental liabilities
of which the Company is unaware. Moreover, there can be no assurance that (i)
future laws, ordinances or regulations will not impose any material
environmental liability or (ii) the current environmental condition of the
Initial Properties will not be affected by tenants, by the condition of land or
operations in the vicinity of the Initial Properties (such as releases from
underground storage tanks or other hazardous or toxic substance handling
activities), or by third parties unrelated to the Company. Petroleum
hydrocarbons and constituent compounds have been detected in groundwater
collected from one of the Initial Properties, Miller Infiniti. The Miller
Automotive Group has been performing and continues to perform product recovery
and groundwater monitoring operations at the property. The California Regional
Water Quality Control Board, Los Angeles region, has requested reports regarding
off-site groundwater assessment to determine the extent and nature of
groundwater impacts which may exist off-site, if any. Until product recovery
operations cease and the nature and extent of any migration is understood, the
costs associated with future monitoring and/or cleanup obligations is uncertain.
Moreover, the migration of hydrocarbon constituents onto property owned by third
parties may generate claims from such parties which may be material.
Furthermore, failure to perform investigation and cleanup obligations on a
timely basis by the Miller Automotive Group may cause governmental authorities
to initiate enforcement proceedings against the Miller Automotive Group as the
facility operator and former owner of the property and/or the Company as owner
of the property, the defense of and response to which may be material.

While the Initial Leases, including the Initial Lease applicable to
Miller Infiniti, provide that the Initial Dealer Lessees generally are required
to operate in compliance with all applicable Environmental Laws and to indemnify
the Company against any environmental liability arising from tenants' activities
on the Initial Properties, the Company could nevertheless be subject to
environmental liability relating to its management of the Initial Properties or
strict liability by virtue of its ownership interest in the Initial Properties,
and there can be no assurance that the Initial Dealer Lessees would satisfy
their indemnification obligations under the Initial Leases. If the costs of
compliance with Environmental Laws, either now existing or hereafter adopted,
exceed the Company's budgets for such items, the Company's ability to make
expected distributions to shareholders could be adversely affected.

The Company's lessees' operations are subject to extensive regulation,
the permitting, licensing and supervision under various federal, state and local
statutes, ordinances and regulations, including those relating to the taxation
and licensing of vehicles, insurance, consumer protection, workers' safety,
fire, occupational and life safety requirements, advertising, environmental
matters, currency controls, used vehicle sales, zoning, land use and labor.
There can be no assurance that a lessee will be able to maintain all requisite
licenses and permits. The failure to satisfy those and other regulatory
requirements could result in the imposition of fines by governmental authorities
or awards of damages to private litigants, which could have a material adverse
effect on the operations of the lessees' dealerships and their ability to make
lease payments to the Company and could, in turn, have a material adverse effect
on the business, financial condition or results of operations of the Company and
its ability to make distributions to shareholders. The adoption of additional
laws, rules and regulations could also have a material adverse effect on the
business, financial condition or results of operations of the Company and its
ability to make distributions to shareholders.

COST OF COMPLIANCE WITH THE AMERICANS WITH DISABILITIES ACT

The ADA requires public accommodations to meet certain federal
requirements related to access and use by disabled persons. Compliance with the
ADA could require removal of structural barriers to handicapped access in
certain public areas of properties where such removal is readily achievable.
Failure to comply with the ADA could result in an imposition of fines or the
award of damages to

<PAGE> 33

private litigants, and also could result in an order to correct any
non-complying feature. The applicable lessee generally will be responsible for
correcting any such non-complying feature. If the lessee fails or is unable to
correct a non-complying feature, however, the Company likely will be required to
do so. If required changes involve greater expenditures than the Company
currently anticipates, or if the changes must be made on a more accelerated
basis than it anticipates, there could be a material adverse effect on the
business, financial condition and results of operations of the Company and its
ability to make distributions to shareholders.

Additional and future legislation may impose other burdens or
restrictions on owners with respect to access by disabled persons. The ultimate
costs of complying with the ADA and other similar legislation are not currently
ascertainable and, while such costs are not expected to have a material adverse
effect on the business, financial condition or results of operations of the
Company or its ability to make distributions to shareholders, such costs could
be substantial.

RISKS FOR INVESTORS SUBJECT TO ERISA

Fiduciaries of a pension, profit-sharing or other employee benefit
plans subject to ERISA should consider, among other factors, whether the
investment of plan assets in the Common Shares satisfies the diversification
requirements of ERISA, whether the investment is prudent in light of possible
limitations on the marketability of the Common Shares, and whether such
fiduciaries have authority to acquire the Common Shares under their appropriate
governing instruments and Title I of ERISA. See "ERISA Considerations."

COMPETITION FROM OTHER COMPANIES WITH SIMILAR BUSINESS OBJECTIVES AND
STRATEGIES.

The Company believes that it is one of the first publicly-offered REITs
to focus primarily on consolidating Automotive Properties into a single
ownership structure. The Company also believes that other REITs or entities may
target these types of properties for acquisition or development financing, and
some of those companies may have greater financial resources or general real
estate experience than the Company. Those entities will compete with the Company
in seeking properties for acquisition and disposition and re-letting of
properties to dealers upon expiration of the lease terms. Such competition could
have a material adverse effect on the business, results of operations or
financial condition of the Company and its ability to make distributions to
shareholders.

INDEMNIFICATION

With certain exceptions applicable to the Sterling McCall Group and the
Bowers Group, the Initial Dealer Lessees have agreed to comply with, indemnify
and hold harmless the Company and its officers, Trust Managers, employees,
shareholders, agents and affiliates from, and to assume the cost of compliance
with, all laws and regulations applicable to its Automotive Properties,
including environmental laws, and remediation requirements. See "Business and
Properties -- Property Descriptions and Lease Terms -- Indemnification."
However, if any Initial Dealer Lessee fails to comply with such requirements,
the Company could be forced to pay such costs, which could be significant, and
then seek reimbursement of those costs from the Initial Dealer Lessee. Any such
payments could reduce the Cash Available for Distribution and adversely affect
the Company's ability to make distributions to shareholders.

RISKS OF LEVERAGE; NO LIMITATION ON INDEBTEDNESS

Upon the closing of the Offering and the Formation Transactions, the
Company expects to have outstanding indebtedness of approximately $5.6 million
of Assumed Debt and $34.4 million under the Line of Credit. The Company's
organizational documents do not contain any limitation on the amount or
percentage of indebtedness that the Company can incur. However, the Company
intends to maintain a capital structure that limits consolidated indebtedness to
no more than 40% of its total market capitalization. The Company may borrow
funds under the Line of Credit or from other lenders in the future, or may issue
corporate debt securities in public or private offerings. Any increase in the
Company's outstanding indebtedness will result in an increase in debt service
that could adversely affect the Cash Available for Distribution and would result
in the Company increasing the risk of default on its obligations. Certain of
such additional borrowings may, subject to existing loan agreements, be secured
by mortgages on the properties owned by the Company. If such additional
borrowings require balloon payments, the ability of the Company to make such
payments will depend on its ability to sell or refinance its properties for
amounts sufficient to repay such loans. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Pro Forma Liquidity
and Capital Resources of the Company" and "Certain Policies and Objectives --
Financing Policies."

<PAGE> 34

There can be no assurance that the Company, upon the incurrence of
debt, will be able to meet its debt service obligations and, to the extent that
it cannot, the Company will risk the loss of some or all of its assets,
including any property securing such debt, through foreclosure, which could have
a material adverse effect on the business, financial condition or results of
operations of the Company and its ability to make distributions to shareholders.
Adverse economic conditions could result in higher interest rates on variable
rate debt, including borrowings under the Line of Credit, which could decrease
Cash Available for Distribution, increase the risk of loss upon a sale or from a
foreclosure and adversely affect Cash Available for Distribution and the
Company's ability to make distributions to shareholders.

<PAGE> 35

USE OF PROCEEDS

The net proceeds to the Company from the sale of the Common Shares
offered hereby and the Private Placement, net of the estimated underwriting
discounts, commissions and other offering expenses, are estimated to be
approximately $138.1 million ($159.1 million if the Underwriters' over-allotment
option is exercised in full), assuming an initial public offering price of $20
per Common Share. The Company intends to contribute the net proceeds of this
Offering and the Private Placement to the Operating Partnership, which will use
such net proceeds, together with $34.4 million anticipated to be borrowed under
the Line of Credit, as follows: (i) approximately $50.8 million to pay the cash
consideration in connection with the purchase of the Initial Properties; (ii)
approximately $119.4 million to repay certain indebtedness of the Founding
Dealers (as more fully described in the tables set forth in "Business and
Properties -- Property Descriptions and Lease Terms -- Descriptions of
Properties"); (iii) $1.0 million to pay the Line of Credit fee; (iv) $920,000 to
repay existing indebtedness of the Company; and (v) approximately $431,000 for
working capital and general corporate purposes. The indebtedness to be repaid
bears interest at rates ranging from __% to __% per annum and matures at various
dates through _____.

If the initial public offering price is less than $20 per Common Share,
the Company may reduce the amount of the Offering proceeds applied to general
corporate purposes or draw additional amounts under the Line of Credit, as
necessary, to make the foregoing payments. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Pro Forma Liquidity
and Capital Resources of the Company." If the Underwriters' over-allotment
option is exercised in full, the Company expects to use the additional net
proceeds for general corporate purposes, including the acquisition of additional
properties. The closing of the Offering is conditioned upon the acquisition by
the Company of the Initial Properties; however, the Underwriters may, in their
discretion, waive this condition with respect to one or more of the Initial
Properties. See "Prospectus Summary -- Formation Transactions," "Use of
Proceeds" and "Underwriting." If one or more of the proposed Formation
Transactions is not consummated, the portion of the net proceeds allocated
thereto may instead be used for general corporate purposes, including the
repayment of certain indebtedness and the acquisition of additional properties,
although neither the Company nor the Operating Partnership has any commitment to
acquire any property other than in connection with the Formation Transactions.

Pending the uses described above, the net proceeds will be invested in
interest-bearing accounts and short-term, interest bearing securities that are
consistent with the Company's intention to qualify for taxation as a REIT. Such
investments may include, for example, government securities, certificates of
deposit and interest bearing bank deposits.

<PAGE> 36
DISTRIBUTION POLICY

Subsequent to the closing of this Offering, the Company intends to make
regular quarterly distributions to its shareholders. The Board of Trust
Managers, in its sole discretion, will determine the distribution rate based on
the Company's actual results of operations, economic conditions, tax
considerations (including those related to REITs) and other factors that the
Board of Trust Managers deems relevant. The Company's first distribution, for
the period from the completion of this Offering to June 30, 1998, is expected to
equal a pro rata share of the estimated initial quarterly distribution of $0.394
per Common Share and OP Unit, which, on an annualized basis, will represent a
distribution rate of $1.58 per share, or approximately 7.88% of the initial
public offering price. On a pro forma basis for the year ended December 31,
1997, the estimated initial distribution represents approximately 93.2% of
estimated Cash Available for Distribution. Holders of OP Units will receive
distributions on a per unit basis equal to the per share distributions to
holders of the Common Shares. See "The Partnership Agreement." The Company does
not expect to adjust the estimated initial distribution rate if the
Underwriters' over-allotment option is exercised.

The Company has established the initial distribution rate based upon
the Company's estimate of Cash Available for Distribution, which has been
derived from the pro forma condensed statement of operations of the Company for
the year ended December 31, 1997. The Company believes the pro forma financial
information for the year ended December 31, 1997 constitutes a reasonable basis
for setting the initial distribution rate. The estimate of Cash Available for
Distribution is being made solely for the purpose of setting the initial rate of
distribution and is not intended to be a projection or forecast of the Company's
results of operations or its liquidity.

The following table sets forth certain financial information for the
year ended December 31, 1997, which has been used to establish the expected
initial annualized distribution per Common Share.

<TABLE>
<CAPTION>
Year ended
December 31, 1997
-----------------
(in thousands, except
per share data)
<S> <C>
Pro forma income before minority interest (1).............................. 22,357

Pro forma depreciation .................................................... 5,020
------

Pro forma Funds from Operations (2) ....................................... 27,377

Adjustments:

Amortization of line of credit fees ....................................... 333

Amortization of deferred compensation ..................................... 40

Estimated capital expenditures(3) ......................................... --
-------

Estimated Cash Available for Distribution ................................. $27,750
=======

Expected initial annualized distribution(4) ............................... $25,871

Expected initial annualized distribution per OP Unit and per Common Share . $ 1.58

Expected payout ratio based on estimated Cash Available for Distribution (5) 93.2%
</TABLE>

- ------------
(1) Minority interest in pro forma income for the year ended December 31,
1997, is approximately $10.7 million (approximately 48%).
(2) Management and industry analysts generally consider Funds from
Operations (as defined below) to be one measure of the financial
performance of an equity REIT that provides a relevant basis for
comparison among REITs, and it is presented to assist investors in

<PAGE> 37

analyzing the performance of the Company. "Funds from Operations" is
defined as income before minority interest (computed in accordance with
generally accepted accounting principles), excluding gains (losses)
from debt restructuring and sales of property and real estate related
depreciation and amortization (excluding amortization of financing
costs). Funds from Operations does not represent cash generated from
operating activities in accordance with generally accepted accounting
principles and is not necessarily indicative of cash available to fund
cash needs. Funds from Operations should not be considered an
alternative to net income as an indication of the Company's financial
performance or as an alternative to cash flows from operating
activities as a measure of liquidity and may be determined differently
from similarly titled measures used by other REITs.

(3) Capital expenditures will be funded by Initial Dealer Lessees under
the Initial Leases.

(4) Represents expected initial annual distribution per Common Share and OP
Unit multiplied by the 16,425,984 Common Shares and OP Units to be
outstanding upon completion of the Formation Transactions and the
Offering.

(5) Represents the anticipated initial aggregate annual distribution
divided by Cash Available for Distribution.

The Company expects to maintain its initial distribution rate unless
actual results of operations, economic conditions or other factors differ from
the pro forma results for the year ended December 31, 1997. The Company's actual
Cash Available for Distribution will be affected by a number of factors. The
Company anticipates that the Cash Available for Distribution will not exceed
earnings and profits because the Company's non-cash expenses, primarily
depreciation and amortization, are not expected to be significant due to the
long depreciable lives assigned to properties for earnings and profits purposes
by the Company. Distributions by the Company to the extent of its current and
accumulated earnings and profits for federal income tax purposes, other than
capital gain dividends, will be taxable to shareholders as ordinary dividend
income. Any dividends designated by the Company as capital gain dividends
generally will give rise to capital gain for shareholders. Distributions in
excess of the Company's current and accumulated earnings and profits generally
will be treated as a non-taxable reduction of a shareholder's basis in the
Common Shares held to the extent thereof, and thereafter as capital gain.
Distributions treated as non-taxable reduction in basis will have the effect of
deferring taxation until the sale of a shareholder's Common Shares or future
distributions in excess of the shareholder's basis in the Common Shares held.
Based upon the total estimated Cash Available for Distribution set forth in the
table above, the Company believes that none of the Company's expected annual
distributions would represent a return of capital for federal income tax
purposes. See "Federal Income Tax Considerations -- Taxation of the Company --
Annual Distribution Requirements." If actual Cash Available for Distribution or
taxable income vary from these amounts, or if the Company is not treated as the
owner of one or more of its properties, the percentage of distributions that
represents a return of capital may be materially different.

In order to maintain its qualification as a REIT, the Company must make
annual distributions to its shareholders of at least 95% of its annual taxable
income determined without regard to the deductions for dividends paid and by
excluding any net capital gains. Based on the Company's pro forma results of
operations for the year ended December 31, 1997, the Company would have been
required to distribute approximately $21 million, or approximately $1.28 per
Common Share and OP Unit, in order to maintain its status as a REIT. Under
certain circumstances, the Company may be required to make distributions in
excess of Cash Available for Distribution in order to meet such requirements. In
such event, the Company would seek to borrow the amount of the deficiency or
sell assets to obtain the cash necessary to make distributions to retain its
qualification as a REIT for federal income tax purposes. See "Risk Factors --
Real Estate Investment Risks -- Market Illiquidity." The Board of Trust
Managers, in its sole discretion, will determine the actual distribution rate
based on a number of factors, including, without limitation, the amount of Cash
Available for Distribution, the Company's financial condition, capital
expenditure requirements for the properties, the annual distribution
requirements under the REIT provisions of the Code and such other factors as the
Board of Trust Managers deems relevant.

<PAGE> 38

CAPITALIZATION

The following table sets forth the historical and pro forma
capitalization of the Company at December 31, 1997, to reflect the (i) sale of
the 7,600,000 Common Shares offered hereby, the sale of the Placement Shares and
the application of the estimated net proceeds therefrom, as described under "Use
of Proceeds," and (ii) the consummation of the Formation Transactions, as
described under "Organization and Formation Transactions" and (iii) expected
borrowings under the Line of Credit.

<TABLE>
<CAPTION>
Historical Pro Forma
---------- ---------
(in thousands)
<S> <C> <C>
Mortgage notes payable .......................................................... $ -- $ 5,646
-------- --------
Debt outstanding under Line of Credit ........................................... -- 34,354
-------- --------
Minority interest in the Operating Partnership .................................. -- 158,696
-------- --------
Shareholders' equity:
Common shares of beneficial interest, no par value per share, 200,000,000
shares authorized, 1,596,666 shares issued and outstanding historical, and
8,491,166 shares issued and outstanding pro forma(1) ..................... -- --
Preferred shares of beneficial interest, no par value per share, 20,000,000
shares authorized, no shares issued ...................................... -- --
Additional paid-in capital ................................................... 176 137,233
-------- --------

Total shareholders' equity ...................................................... 176 137,233
-------- --------
Total capitalization ............................................................ $ 176 $335,929
======== ========
</TABLE>

- ------------
(1) Excludes shares issuable upon redemption of OP Units issued in connection
with the Formation Transactions. The actual number of Shares issuable
upon redemption of OP Units will vary depending upon the initial public
offering price. See "Organization and Formation Transactions."

<PAGE> 39

DILUTION

At December 31, 1997, the net tangible book value of the Company was
approximately $176,000 or $0.28 per Common Share. After giving effect to the
sale by the Company of 7,600,000 Common Shares offered hereby (assuming an
initial public offering price of $20 per share), the pro forma net tangible book
value of the Company at December 31, 1997 would have been $137.2 million or
$16.16 per Common Share. This represents an immediate decrease in the net
tangible book value per Common Share to purchasers of Common Shares in the
Offering. Net tangible book value per Common Share represents the amount of
total tangible assets of the Company less total liabilities, divided by the
number of Common Shares outstanding. The following table illustrates the
foregoing dilution.

<TABLE>
<S> <C> <C>
Assumed initial public offering price per share (1)............................... $ 20.00

Pro forma net tangible book value per share prior to the Offering attributable to
Common Shares issued to certain Executive Officers and Trust Managers (2)......... 0.28

Increase in net tangible book value per share attributable to the Offering........ 15.88
-----------

Pro forma net tangible book value after the Offering.............................. 16.16
---------

Dilution per share purchased in the Offering...................................... $ 3.84
=========
</TABLE>

- ------------
(1) Before deduction of underwriting discounts and commissions and
estimated expenses of the Offering.
(2) Reflects 179,250, 119,250 and 238,500 Common Shares held by Messrs.
Tompkins and Wollen and WS&B on the closing of the Offering.

The following table sets forth on a pro forma basis at December 31,
1997 (assuming an initial public offering price of $20 per share), the number of
Common Shares to be sold by the Company in the Offering, the number of Placement
Shares to be sold by the Company in the Private Placement, the total OP Units
anticipated to be issued by the Company in the Formation Transactions, the
number of Common Shares previously outstanding or to be issued to or for the
benefit of certain of the Founding Dealers and members of management, the total
consideration paid to the Company by purchasers of the Common Shares sold in the
Offering, the net book value as of December 31, 1997, of the assets transferred
or amount of cash contributed to the Company, and the net book value of the
average contribution or amount of cash contribution per Common Share or OP Unit
based on total contributions.

<TABLE>
<CAPTION>
BOOK VALUE OR
BOOK VALUE OR CASH
COMMON SHARES SOLD BY CASH CONTRIBUTIONS CONTRIBUTION
THE COMPANY TO THE COMPANY PER SHARE
----------- -------------- ---------
(IN THOUSANDS)
NUMBER PERCENT AMOUNT PERCENT
------ ------- ------ -------
<S> <C> <C> <C> <C> <C>
Shares sold to new public investors 7,600,000 46.3% $132,400 44.7% $17.42

Shares sold in the Private Placement 225,000 1.4 4,500 1.5 20.00

Shares issued in connection with the
formation of the Company 666,166(1) 4.0 333 0.1 0.50

OP Units issued to the Initial Dealers 7,934,818(1) 48.3 158,696 53.7 20.00
---------- ----- -------- -----

Total 16,425,984 100.0% $295,929 100.0%
========== ===== ======== =====
</TABLE>

- ------------
(1) The actual numbers of Common Shares issuable upon the closing
of the Offering and upon exchange of OP Units, and the number
of OP Units issued to the Founding Dealers will vary depending
upon the initial public offering price of the Common Shares.
See "Organization and Formation Transactions."

<PAGE> 40

SELECTED HISTORICAL FINANCIAL INFORMATION

The following tables set forth unaudited selected consolidated pro
forma financial information for the Company presented as if the Formation
Transactions had occurred as of December 31, 1997, and the pro forma operating
information therefore incorporates certain assumptions that are included in the
Notes to Pro Forma Condensed Statements of Operations included elsewhere in this
Prospectus. The pro forma balance sheet information is presented as if the
closing of the Offering and the Formation Transactions had occurred on December
31, 1997. The pro forma information does not purport to represent what the
Company's financial position or results of operations actually would have been
had the Formation Transactions, in fact, occurred on such date or at the
beginning of the period indicated, or to project the Company's financial
position or results of operations at any future date or any future period.

The unaudited selected consolidated pro forma financial information
should be read in conjunction with the financial statements and notes thereto
and "Management's Discussion and Analysis of Financial Condition and Results of
Operations" which is included elsewhere in this Prospectus.

AUTOMOTIVE REALTY TRUST OF AMERICA
UNAUDITED SELECTED CONSOLIDATED PRO FORMA FINANCIAL INFORMATION
(in thousands, except share and per share data)

<TABLE>
<CAPTION>
Pro Forma for the
Year Ended
December 31, 1997
-----------------
(Unaudited)
<S> <C>
Statement of Operations Data:
Rental Income $ 33,347
General and Administrative Expense 2,585
Depreciation 5,020
Minority Interest 10,731
Interest Expense 3,385
Net Income 11,626
Net Earnings Per Common Share
Basic $ 1.37
Fully Diluted $ 1.36
Weighted Average Common Shares Outstanding
Basic(1) 8,491,166
Fully Diluted(1) 8,523,833
</TABLE>

<TABLE>
<CAPTION>
Pro Forma at
December 31, 1997
-----------------
(Unaudited)
<S> <C>
Balance Sheet Data:
Real Estate Owned, at Cost $ 334,485
Total Assets 336,699
Debt Outstanding 40,000
Minority Interest 158,696
Total Shareholders' Equity 137,233
</TABLE>

- --------------

(1) The actual number of Common Shares issuable upon the closing of The
Offering will vary depending upon the initial public offering price
per Common Share. See "Organization and Formation Transactions."

<PAGE> 41

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

OVERVIEW

The Company was organized as a Texas REIT on August 28, 1997 and
intends to make an election to qualify under the Code as a REIT commencing with
its taxable year ending December 31, 1998. Substantially all of the Company's
initial revenues are expected to be derived from: (i) rents received under
long-term triple-net operating leases of Automotive Properties including 67
Initial Properties the Company anticipates acquiring upon the closing of this
Offering and which the Company will simultaneously lease back to the Initial
Dealer Lessees pursuant to the Initial Leases; and (ii) interest earned from the
temporary investment of funds in short-term investments. The Initial Annual Base
Rent (as defined herein) for each Initial Property under the Initial Leases is
set at a fixed amount and generally will be adjusted upward periodically based
on increases in the CPI, ranging from 1/2 adjustment to full CPI adjustment
every year, which may be subject to caps, which generally range from 2% to 4%,
respectively. See "Business and Properties -- Property Descriptions and Lease
Terms."

Upon the closing of this Offering and the Formation Transactions, the
Operating Partnership will own the Initial Properties, and the Company will own
a 1% general partner interest and an approximate 51% limited partner interest in
the Operating Partnership. See "Organization and Formation Transactions." The
Company is the sole general partner of the Operating Partnership. The Operating
Partnership's primary source of revenue will be the lease payments made to the
Operating Partnership under its leases, and the Company's sole source of revenue
will be distributions from the Operating Partnership.

As a result of the Formation Transactions, it is anticipated that the
Initial Properties will be contributed to the Operating Partnership,
substantially all of the indebtedness of the Founding Dealers related to the
Initial Properties will be repaid, and the Operating Partnership and the Initial
Dealer Lessees will enter into the Initial Leases providing for the
above-referenced lease payments to the Operating Partnership. In addition,
depreciation of the Initial Properties will be reflected in the results of
operations of the Company following the closing of the Formation Transactions.
Consequently, the results of operations for the Initial Dealer Lessees following
the Formation Transactions will differ from the historical results for the
Founding Dealers.

The Company intends to acquire the real estate of additional Automotive
Properties that meet one or more of its investment criteria. See "Business and
Properties -- Business and Growth Strategy." The Company expects to have access
to a variety of debt and equity financing sources to fund acquisitions,
including the Line of Credit and the ability to issue OP Units. See " -- Pro
Forma Liquidity and Capital Resources of the Company."

The Company will incur operating and administrative expenses including,
principally, compensation expense for its Executive Officers and other
employees, professional fees and various expenses incurred in the process of
acquiring additional properties (including, without limitation, due diligence
and other costs of investigating potential acquisitions). The Company will be
self-administered and self-managed by its Executive Officers and staff.

The primary non-cash expense of the Company will be the depreciation of
its properties. The Company expects to depreciate buildings and improvements on
the Initial Properties over a 39 1/2-year and 20-year period for tax and
financial reporting purposes, respectively. The Company will not own or lease
any personal property, furniture or equipment at any Initial Property.

The Company intends to make distributions to its shareholders in
amounts not less than the amounts required to maintain REIT status under the
Code and, in general, in amounts exceeding taxable income. The Company's ability
to make distributions will depend upon its actual Cash Available for
Distribution.

The Company had no operations prior to the Offering. The Company's
future results of operations will depend to a large degree upon the Company's
receipt of payments under the Initial Leases, the acquisition of the additional
properties, and the terms of any other investments the Company may make.

The following discussion and analysis of pro forma financial condition
and pro forma results of operations of the Company is based upon the
consolidated pro forma financial statements of the Company which are presented
elsewhere in this Prospectus.

<PAGE> 42

PRO FORMA RESULTS OF OPERATIONS FOR THE COMPANY

Pro forma results of operations are not necessarily indicative of what
the Company's results of operations would have been had the Company actually
consummated the Formation Transactions on the dates indicated, nor do they
purport to project future results of operations. Any significant transactions in
future periods could impact future revenues and expenses.

On a pro forma basis for the year ended December 31, 1997, the Company
would have received $33.3 million in revenue from the Initial Leases for the
Initial Properties, assuming a full year's operation for all Initial Properties.
The pro forma condensed consolidated statement of operations reflects Initial
Annual Base Rents from each Initial Dealer Lessee.

Total pro forma expenses, before minority interest of $11.0 million for
the year ended December 31, 1997, reflect the depreciation and amortization,
general and administrative expenses and interest expense. Depreciation expense
is based on the Company's cost of acquiring the Initial Properties.

Minority interest would have totaled $10.7 million for the year ended
December 31, 1997, reflecting the 48% interest of the Founding Dealers in the
pro forma net income of the Operating Partnership.

PRO FORMA LIQUIDITY AND CAPITAL RESOURCES OF THE COMPANY

On a pro forma basis, cash flow from operating activities for the year
ended December 31, 1997, excluding changes in working capital, would have been
$27.7 million. This reflects net income before minority interest, plus non-cash
charges to income for depreciation and loan fee and deferred compensation
amortization. Cash flows provided by financing activities, totaling $8.5
million, represent the amount of the initial borrowing of $34.4 million under
the Line of Credit, offset by distributions (based upon an initial estimated
annualized distribution of approximately $25.9 million) to holders of the Common
Shares and OP Units.

The Company's principal source of cash to meet its cash requirements,
including distributions to its shareholders, will be its share of the Operating
Partnership's cash flow. The Operating Partnership's sole source of revenue will
be lease payments under the Initial Leases. The Initial Dealer Lessees may have
nominal or limited capitalization, and the ability of the Initial Dealer Lessees
to make lease payments to the Operating Partnership and, therefore, the
Company's liquidity, including the ability to make distributions to its
shareholders, will depend upon the Company's lessees' ability to generate
sufficient cash flow from their dealership operations. See "Risk Factors --
Dependence upon Lessees."

Concurrently with the closing of the Formation Transactions and the
acquisition of the Initial Properties, it is anticipated that the Company will
utilize the net proceeds of this Offering and the Private Placement and advances
under the Line of Credit to fund the cash consideration to the Founding Dealers,
to repay certain indebtedness and to provide approximately $431,000 in initial
working capital ($21.4 million if the Underwriters' over-allotment option is
exercised). The Company has entered into negotiations with NationsBank, N.A., an
affiliate of NationsBanc Montgomery, to provide a $100 million Line of Credit,
subject to closing, which the Company intends to use primarily for future
acquisitions. The Company has not, however, finalized negotiations on the Line
of Credit, and there can be no assurance that the Company will obtain the Line
of Credit or otherwise have access to sufficient debt and equity financing to
allow it successfully to pursue its acquisition strategy. The Company
anticipates that the terms of a Line of Credit will impose certain conditions on
the Company's ability to draw on the Line of Credit. Such conditions may
include, without limitation, borrowing base limitations (which initially could
limit the availability of funds under the Line of Credit), a requirement that
advances be used primarily to fund acquisitions and a requirement that the
lender be granted a security interest in any real estate acquired with proceeds
from borrowings under the Line of Credit, as well as other properties owned by
the Company. If the Company is not able to successfully finalize the Line of
Credit, the Company anticipates that future acquisitions would be funded by the
issuance of OP Units to dealers, assumption of indebtedness of such dealers,
debt financing to be secured by the particular acquisition property, or with
proceeds of additional equity offerings. In the future, the Company may
negotiate additional credit facilities or issue corporate debt instruments. The
Company will not undertake investments unless adequate sources of financing are
available. Any debt issued or incurred by the Company may be secured or
unsecured, long-term or short-term, fixed or variable interest rate, and may be
subject to such other terms as the Board of Trust Managers deems prudent. The
Company currently has no binding commitment to acquire any real estate, other
than the Initial Properties, and there can be no assurance that the Company will
make any acquisitions of other real estate.

<PAGE> 43

Upon the closing of this Offering and the Formation Transactions, and
assuming an initial public offering price of $20 per Common Share, consolidated
indebtedness will comprise approximately 10.9% of the total market
capitalization of the Company on a pro forma basis. The Company intends to
maintain a capital structure with consolidated indebtedness representing no more
than 40% of its total market capitalization. See "Certain Policies and
Objectives -- Financing Policies."

INFLATION

The Company believes that the relatively moderate rates of inflation
over the last several years have not had a significant impact on the revenues or
profitability of the Founding Dealers. The Company does not expect inflation to
have any near-term material effect on the sale of the Initial Dealer Lessees'
products and services. However, there can be no assurance that there will be no
such effect in the future.

Generally, lease payments will increase annually in proportion to any
increases based on a factor of the CPI. All of the leases are triple-net
operating leases requiring the Initial Dealer Lessees to pay for all taxes,
maintenance and repair, insurance, utilities, services and other expenses,
thereby minimizing the effect of inflation on the Company.

SEASONALITY

Lessees may be adversely affected by extended periods of inclement
weather, which could deter customers from test driving vehicles or visiting
locations with large open-air lots. Historically, the Founding Dealers' sales,
in the aggregate, generally have been higher from March to September, in part
due to manufacturer-sponsored or subsidized marketing programs or incentives
near the end of each model year. As a result, operating income is typically
lower in the first and fourth quarters as fixed operating costs are spread over
generally lower sales volume. "See Risk Factors -- Automotive Industry Risks --
Seasonality; Quarterly Fluctuations." Fluctuations in a lessee's cash flow can
affect its ability to make rent payments.

NEW ACCOUNTING PRONOUNCEMENT

In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards ("SFAS") No. 128 "Earnings Per
Share," which simplifies the standards for computing and presenting earnings per
share ("EPS") and makes them comparable to international EPS standards. This
statement is effective for the year ended December 31, 1997. Earlier application
is not permitted and restatement of prior period earnings per share data is
required. The Company does not believe that implementation of SFAS No. 128 will
have a material impact on its EPS.

<PAGE> 44

ORGANIZATION AND FORMATION TRANSACTIONS

ORGANIZATION

Following the closing of this Offering and the Formation Transactions,
the structure and relationships of the Company, the Operating Partnership, the
Founding Dealers, and the Initial Dealer Lessees will be as follows:

[GRAPH]

THE FORMATION TRANSACTIONS

Contemporaneously with the closing of the Offering, the Company, the
Operating Partnership, the Founding Dealers, the Initial Dealer Lessees and
Messrs. Tompkins and Wollen plan to consummate the Formation Transactions
described below.

o Jack I. Tompkins, Chairman of the Board, and Bert Wollen,
Executive Vice-President - Business Development and Chief
Acquisition Officer, will purchase in the Private Placement
150,000 and 75,000 Common Shares, respectively. Based on the
midpoint of the range of the estimated public offering prices
set forth on the front cover of this Prospectus, Mr. Tompkins
has agreed to purchase Common Shares with an aggregate value of
$3,000,000, and Mr. Wollen has agreed to purchase Common Shares
with an aggregate value of $1,500,000. The closing of the
purchase of the Placement Shares by Messrs. Tompkins and Wollen
will occur on the earlier of the closing of the Offering or
October 1, 1998.

o The Company will sell 7,600,000 Common Shares in the Offering
and will contribute all of the net proceeds thereof, together
with the proceeds of the Private Placement, estimated to be
approximately $138.1 million ($159.1 million if the
Underwriters' over-allotment option is exercised in full), to
the Operating Partnership in return for an approximate 52%
ownership interest in the Operating Partnership (55% if the
Underwriters' over-allotment option is exercised in full). Upon
the closing of the Offering and the Formation Transactions, the
Company's ownership interest in the Operating Partnership will
represent an approximate 51% limited partner interest (an
approximate 54% limited partner interest if the Underwriters'
over-allotment option is exercised in full) and a 1% general
partner interest in the Operating Partnership. The Company is
the sole general partner of the Operating Partnership.

o Each Founding Dealer will convey to the Operating Partnership
all of its rights, title and interest in and to the real
property used by its dealerships and all of the buildings,
structures, parking areas, landscaping and improvements located
thereon (other than any personal property) and all fixtures and
other property affixed thereto, together with all rights,
privileges and appurtenances owned by such Founding Dealer in
any way related to such real property, pursuant to the terms and
subject to the conditions of each of the Contribution and
Exchange Agreements (collectively, "Contribution Agreements" and
individually, a "Contribution Agreement") among the Founding
Dealers, the Company and the Operating Partnership. In exchange
for such conveyances, the Operating Partnership will issue to
the Founding Dealers an aggregate of 7,934,818

<PAGE> 45

OP Units (based upon an initial public offering price of $20)
which have an aggregate value of approximately $158.7 million,
pay to the Founding Dealers an aggregate of approximately $50.8
million in cash (the "Cash Consideration") and assume
indebtedness of the Founding Dealers in the sum of approximately
$5.6 million and repay approximately $119.4 million of existing
indebtedness of the Founding Dealers. See "Business and
Properties -- Property Descriptions and Lease Terms --
Descriptions of the Properties."

o The actual number of OP Units issued to each Founding Dealer
will be determined at the closing of the Formation Transactions
by dividing the purchase price of the Initial Properties
contributed by such Founding Dealer to the Operating Partnership
(less the cash portion of the purchase price and any Assumed
Debt) by the initial public offering price per Common Share. The
number of Common Shares held by Jack I. Tompkins, Bert Wollen
and WS&B, the founding shareholders of the Company, will depend
upon the actual amount of OP Units issued in the Formation
Transactions. Assuming an initial offering price of $20 per
Common Share, 7,934,818 OP Units will be issued in the Formation
Transactions, and the number of Common Shares held by Messrs.
Tompkins and Wollen and WS&B (excluding the Placement Shares)
will be 179,250, 119,250 and 238,500 respectively. If the
initial public offering price per Common Share is $21, the
number of OP Units issued will be 7,556,970, and the number of
Common Shares held by Messrs. Tompkins and Wollen and WS&B
(excluding the Placement Shares) will be 273,712, 213,712 and
427,424, respectively. If the initial public offering price is
$19, the number of OP Units issued will be 8,352,440, and the
number of Common Shares held by Messrs. Tompkins and Wollen and
WS&B (excluding the Placement Shares) will be 74,845, 14,844 and
29,689, respectively. As a result, notwithstanding the initial
public offering price per Common Share, an aggregate of
16,425,984 Common Shares and OP Units will be outstanding on the
closing of the Offering.

ACQUISITION OF THE INITIAL PROPERTIES FROM THE FOUNDING DEALERS

The Operating Partnership will acquire the Initial Properties from the
Founding Dealers pursuant to Contribution Agreements with each Founding Dealer.
The obligations of the Founding Dealers to transfer such Initial Properties
pursuant to the Contribution Agreements are or will be conditioned upon the
closing of the Offering, the closing of the Formation Transactions under the
Contribution Agreements, and normal and customary conditions to the closing of
real estate transactions, including the consents of any lenders with respect to
loans which are being assumed by the Operating Partnership and consents required
under any manufacturers' franchise agreements. The Founding Dealers are in the
process of obtaining such lender or manufacturer consents, if applicable, and
expect to obtain all necessary consents prior to the closing of the Offering.
See "Risk Factors -- Automotive Industry Risks -- Influence of Vehicle
Manufacturers." The Contribution Agreements also contain representations and
warranties to the Operating Partnership concerning the ownership and operation
of the Initial Properties and environmental matters, together with certain other
covenants, representations and warranties customarily found in real estate
purchase agreements. Generally, claims for indemnification for any breach of a
representation or warranty by a Founding Dealer will survive closing and may be
made by the Operating Partnership at any time prior to the expiration of the
applicable statute of limitations. There is no assurance that a Founding Dealer
will be able to satisfy its indemnification obligation. Although the closing of
the Offering is conditioned upon the acquisition by the Company of the Initial
Properties, the Underwriters may, in their discretion, waive this condition with
respect to one or more Initial Properties. See "Prospectus Summary -- Formation
Transactions," "Use of Proceeds" and "Underwriting."

<PAGE> 46

BUSINESS AND PROPERTIES

THE COMPANY

The Company is a newly organized self-administered and self-managed
REIT formed under the Texas Real Estate Investment Trust Act, as amended, to
invest in Automotive Properties. The Company is one of the first REITs formed to
invest in Automotive Properties, and the Company believes it is therefore
positioned to take advantage of the growth in the automobile industry and the
consolidation among automobile dealerships. The Company's acquisition strategy
is to purchase Automotive Properties and lease such properties back to the
original owners or their affiliates. This strategy allows the management of the
dealerships to remain in place. Additionally, through the sale of its property
to a REIT, an automobile dealer may consolidate its real estate with the real
estate of other dealers and have the opportunity to obtain liquidity and funds
to expand the operations of its retail operating businesses, while maintaining
control of such operating businesses. Further, the Company believes that its
acquisition strategy and its Operating Partnership structure will provide
automobile dealers with opportunities to diversify their assets and facilitate
their estate planning. The Company believes that its lease structure will be
attractive to other owners of Automotive Properties and may facilitate the
acquisition of properties that might not otherwise be available for purchase.

Upon the closing of this Offering and the Formation Transactions, it is
anticipated that the Company will acquire 67 Initial Properties located in
California (5), Colorado (3), Florida (6), Maryland (15), Ohio (6), Tennessee
(10), Texas (17) and Virginia (5) from 17 Founding Dealers. The Company will
lease the Initial Properties back to the Initial Dealer Lessees under long-term
triple-net operating leases. See "-- Property Descriptions and Lease Terms." Of
the Founding Dealers, four are in the 100 largest automobile dealership groups
(as determined based on revenues) in the United States, and many have received
numerous industry awards in connection with the operation of their respective
businesses. In addition, the Company believes that each of the Founding Dealers
has historically demonstrated strong operating performance.

The Company believes that the trend toward consolidation of the
ownership of Automotive Properties will continue. The marketing of automobiles
by franchised dealers is a highly fragmented industry, with the largest 100
dealer groups generating less than 10% of total sales revenues nationwide and
controlling approximately 5% of all franchised dealerships. While automobile
sales have increased over the last five years, the number of automobile
dealerships has decreased, in part through the consolidation currently underway
in the industry. The Company intends to target for acquisition high-quality,
well-located Automotive Properties owned by reputable, financially strong
automobile dealerships that have long business track records, proven operating
histories and the capacity to increase sales and compete in a consolidating
automobile dealership environment. The Company believes that its multiple
independent lessee structure, the substantial industry knowledge, experience and
relationships within the automotive industry of its management and Board of
Trust Managers and the financial condition and reputation of the Initial Dealer
Lessees will provide the Company with a competitive advantage in the acquisition
of high-quality, well-located Automotive Properties.

The Initial Leases are typically for terms of ten years with two
renewal options of five to ten years each. The majority of the Initial Leases
between the Company and the Initial Dealer Lessees (representing 82% of the
aggregate Initial Base Annual Rent) are cross- defaulted with other Initial
Leases within each particular Founding Dealer or are guaranteed by other Initial
Dealer Lessees within such Founding Dealer. Of the remaining leases, (i) the
obligations of Chase Chevrolet, Sunnyside Automotive, Towson Ford and FUS, Inc.
are guaranteed by one or more principals (and in the case of FUS, Inc. is
limited to 90% of the basic rental under the Initial Lease and extends for a
period of seven years), (ii) the obligations of the Bowers Group are subject to
a limited third-party guarantee, except for two Initial Properties and (iii) the
obligations of the Sterling McCall Group are not subject to any such
cross-default provisions or guarantees. It is anticipated that the Company's
leases will provide the Company with a consistent stream of cash flow, which
will generally increase annually based upon increases in the Consumer Price
Index. See " -- Property Descriptions and Lease Terms -- Lease Payments." The
Initial Leases will be long-term "triple-net operating" leases that generally
require an Initial Dealer Lessee to pay all operating costs of the Initial
Property leased by it, as well as all taxes, utilities, insurance, repairs,
maintenance and other expenses. See "-- Property Descriptions and Lease Terms
- --Triple Net Operating Leases." Thirteen Founding Dealers have repurchase
options, rights of first refusal and/or rights of first offer regarding the
respective Initial Properties to be contributed by them in the Formation
Transactions. See "-- Property Descriptions and Lease Terms --Repurchase
Options, Rights of First Refusal and Rights of First Offer." By leasing the
Initial Properties to the Initial Dealer Lessees, there will be continuity of
management of the dealerships, which the Company believes should facilitate its
growth and profitability.

<PAGE> 47

Jack I. Tompkins, Chairman of the Board of Trust Managers, David L.
Johnston, President and Chief Executive Officer, and Bert Wollen, Executive Vice
President-Business Development and Chief Acquisition Officer, are the Company's
Executive Officers. Messrs. Tompkins and Wollen have 28 and 24 years of
experience, respectively, in various industries, including experience in
financial transactions and mergers and acquisitions, and each has experience as
an officer of a public company. Mr. Johnston has 24 years of experience in the
real estate industry and has been an executive officer of two publicly traded
REITs. Messrs. Tompkins and Wollen have agreed to purchase the Placement Shares
at the initial public offering price in the Private Placement. Upon the closing
of the Offering and the Formation Transactions, the Company's Executive
Officers, Trust Managers, certain affiliates of the Trust Managers, and certain
employees of the Company will beneficially hold an aggregate of approximately
22% of the Company on a fully-diluted and exchanged basis, through their
ownership of Common Shares, and OP Units. See "Principal Shareholders."

Following the closing of the Offering, the Company expects to have
access to a variety of debt and equity financing sources to fund acquisitions,
including the ability to issue additional OP Units in the Operating Partnership.
The Company is presently negotiating with NationsBank, N.A., an affiliate of
NationsBanc Montgomery, to provide a $100 million Line of Credit, which the
Company intends to use primarily to finance future acquisitions. The Company
anticipates that NationsBank, N.A., will fully underwrite $75 million of the
Line of Credit and syndicate the balance. There can be no assurance that such
negotiations will result in a binding commitment for a Line of Credit. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Pro Forma Liquidity and Capital Resources of the Company." In
connection with the acquisition of the Initial Properties, the Company will
assume approximately $5.6 million of outstanding indebtedness, and anticipates
drawing approximately $34.4 million under the Line of Credit. Upon the closing
of the Offering and assuming such advance under the Line of Credit, the
Company's debt to total market capitalization will be approximately 10.9%. The
Company believes its initial low level of Assumed Debt, coupled with the Line of
Credit, should provide the Company with financial flexibility in pursuing
acquisition opportunities. The Company intends to maintain a capital structure
that limits consolidated indebtedness to no more than 40% of its total market
capitalization. See "Certain Policies and Objectives -- Financing Policies."

The Company is anticipated to have __ full-time employees, __ of which
will be devoted primarily to acquisitions. The principal executive offices of
the Company are located at Campbell Centre II, 8150 North Central Expressway,
Suite 1233, Dallas, Texas, 75206 and its telephone number is (214) 346-2944.

THE OPERATING PARTNERSHIP

Upon contribution of the net proceeds of this Offering to the Operating
Partnership, the Company will acquire an approximate 51% limited partner
interest (54% limited partnership interest if the Underwriters' over-allotment
option is exercised) and a 1% general partner interest in the Operating
Partnership and will be the sole general partner of the Operating Partnership.
The other limited partners of the Operating Partnership will be the Founding
Dealers. In their capacity as such, the limited partners will have limited
authority to transact business for, or participate in the management, activities
or decisions of, the Operating Partnership. The OP Units held by the Founding
Dealers will be redeemable beginning one year after the closing of this Offering
for cash or, at the Company's option, exchangeable for Common Shares on a
one-for-one basis. See "Partnership Agreement." Upon the consummation of the
Formation Transactions and this Offering, the Operating Partnership will own all
of the Initial Properties and will lease the Initial Properties to the Initial
Dealer Lessees pursuant to the Initial Leases. See "-- Property Descriptions and
Lease Terms -- The Leases."

AUTOMOTIVE INDUSTRY OVERVIEW

<PAGE> 48

by the rising prices associated with new vehicles and, on average, the higher
prices paid for later model high-quality used vehicles that now comprise a
significant portion of the used vehicle market. Automobile sales are affected by
many factors, including, without limitation, rates of unemployment, income
growth, interest rates, other national and local economic conditions, automotive
innovations, weather patterns and general consumer sentiment. See "Risk Factors
- -- Automotive Industry Risks."

Although automobile dealerships generally rely on new and used car
sales for a significant portion of their revenues, strong automobile dealerships
generally generate additional revenue from diversified operations that include
after market products, financing and insurance products, service and parts, and
collision repair centers (commonly referred to as body shops). This
diversification reduces the impact on the dealers of economic downturns in any
one of these sub-sectors. On average, gross margins are 6.4% on new car sales,
11.1% on used car sales and 45.0% on revenues from service/parts/collision
repair businesses. The emphasis on the service/parts/collision repair businesses
of a dealership is important to maintain a recurring, recession-resistant income
stream. Based on the Company's review of the internally generated, unaudited
financial statements of the Founding Dealers, the aggregate revenues of the
Initial Dealer Lessees from service/parts/collision repair cover approximately
57% of the total fixed expenses of the Initial Dealer Lessees.

BUSINESS AND GROWTH STRATEGY

The Company's business objective is to increase Cash Available for
Distribution per share and maximize shareholder value by acquiring high-quality,
well-located Automotive Properties throughout the United States. The Company
will focus on the ownership and acquisition of Automotive Properties that are
leased by reputable, financially strong dealerships that have long business
track records, proven operating histories and the capacity to increase sales and
compete in a consolidating automobile dealership environment. The Company
expects to achieve these objectives by successfully implementing the growth,
acquisition and operating strategies set forth below.

Growth Strategies. The Company's primary growth strategies are to (i)
acquire additional Automotive Properties that meet the Company's acquisition
criteria, (ii) increase rents pursuant to CPI adjustments as provided under the
Initial Leases and under leases for Automotive Properties that may be acquired
in the future, (iii) acquire additional Automotive Properties from Founding
Dealers as they expand their businesses and (iv) work with lessees to provide
additional capital to expand their existing facilities in order to maximize the
dealers' performance while benefitting from related rental increases.

The Company intends to concentrate its investment activities on
purchasing Automotive Properties that meet one or more of the following
acquisition criteria:

<PAGE> 49

o Quality retail sites that are well-located
o Reputable and financially sound lessees with proven operating
histories
o Demonstrated operating cash flow coverage typically in excess of
two times initial lease payment
o Validation of the foregoing by application of the Company's
valuation methodology, which includes a thorough evaluation of the
automobile dealer's financial strength as measured against a
proprietary database of automobile dealership information

The experience of the Company's management in developing relationships
with dealers who are prospective sellers of real property to the Company will
facilitate the acquisition of properties that meet its acquisition criteria. The
Company has established relationships within the automotive industry that the
Company believes will assist it in identifying potential acquisitions. The
Company has relationships with consultants and certified public accounting firms
who have an active presence in the automotive industry. Furthermore, the Company
has entered into a memorandum of understanding with CB Commercial/Madison
Advisory Group which anticipates that CB Commercial will serve as the Company's
exclusive real estate brokerage firm for identifying future acquisitions. The
memorandum of understanding (which is subject to the execution of a definitive
agreement) contemplates a contract for a term of six months, renewable at the
election of both parties, pursuant to which CB Commercial would receive a fee
equal to 1% of the price of acquired properties as to which a real estate broker
is involved, together with a retainer of $25,000 upon signing a definitive
agreement and a retainer of $25,000 per month thereafter (which would be offset
against fees owed to CB Commercial or its personnel). The Company believes that
CB Commercial's national brokerage force of over 2,600 professionals should give
it a significant advantage in identifying acquisitions without incurring
substantial additional general and administrative expenses. The Company's
acquisition strategy will be supported by its multiple lessees and their
strategic alliances with dealerships and industry contacts. These relationships
are expected to enhance the Company's acquisition efforts and allow the Company
to move quickly to acquire properties in markets where a Founding Dealer has
market knowledge and operating expertise. The Company has entered into
arrangements with unaffiliated persons who have expertise and contacts in the
real estate or automotive industries pursuant to which the Company will pay a
sourcing fee equal to 1% of the total purchase price paid by the Company for the
Automotive Properties sourced by such persons.

Operating Strategy. The principal elements of the Company's operating
strategy include:

o Leasing high-quality, well-located Automotive Properties to
reputable, financially strong dealerships with long business
track records and proven operating histories
o Leasing its properties on a triple-net operating basis
o Monitoring on an ongoing basis the operating performance of the
dealerships and compliance by the lessees with their lease
obligations
o Cross-defaulting lease obligations of affiliated properties
operated within dealership groups
o Obtaining pledges of OP Units and/or guarantees of related
parties as security for lease payments
o Limiting consolidated indebtedness of the Company to no more
than 40% of the Company's total market capitalization

PROPERTY DESCRIPTIONS AND LEASE TERMS

Overview. Upon consummation of the Offering and the Formation
Transactions, it is anticipated the Company will own 67 automobile dealership
and related properties located in California (5), Colorado (3), Florida (6),
Maryland (15), Ohio (6), Tennessee (10), Texas (17) and Virginia (5), which will
be contributed by 17 Founding Dealers. The Operating Partnership's interest in
each Initial Property includes the land, buildings and improvements, related
easements and rights and fixtures. The Operating Partnership will not own or
lease any personal property, furniture or equipment at the Initial Properties,
all of which will be owned, or leased from third parties by the respective
Initial Dealer Lessees. The Initial Properties are generally zoned for a wide
range of commercial uses and typically have frontage on major transportation
arteries with high traffic patterns, high visibility, bright signage, and ease
of entrance and exit. The improvements on the Initial Properties generally
consist of one or more retail showrooms, office space, adjacent full service and
repair facilities, parts and accessories departments and, in many cases, acreage
set aside for used car sales, body shops and parking for inventory.

Each of the Initial Dealer Lessees operates under a franchise agreement
with the applicable vehicle manufacturer. Such franchise agreements generally
grant the Initial Dealer Lessee a non-exclusive right to sell the applicable
manufacturer's brand of vehicles and offer related parts and service within a
specified market area, although generally a manufacturer will retain the
discretion to allocate the mix of vehicles among its franchised dealerships
within a given market area. Such agreements also grant the Initial Dealer Lessee
the right to use the manufacturer's trade names in connection with the sale of
its vehicles. Franchise agreements generally impose operational requirements

<PAGE> 50

and restrictions on the Initial Dealer Lessee relating to such things as
inventory levels, working capital requirements, showroom and service facilities,
personnel and monthly financial reporting. Franchise agreements generally
provide for termination of the agreement by the manufacturer or non-renewal for
a variety of causes including, without limitation, changes of ownership without
prior approval, certain bankruptcy related events, the death, disability or
conviction of the dealer principal, the failure to maintain certain customer
satisfaction ratings, or any material breach of the franchise agreement.

The franchise relationship is also regulated by various state and
federal laws, which generally protect the franchised dealership. These include
statutes that prohibit a manufacturer from terminating or failing to renew a
franchise without good cause and statutes that prohibit a manufacturer from
unreasonably withholding approval of a proposed change in ownership. Under such
statutes, a vehicle manufacturer may disapprove of a proposed change in
ownership for certain enumerated reasons involving the character, financial
ability or business experience of the proposed transferee.

Descriptions of the Properties. Set forth below are brief descriptions
of each of the Initial Properties. Unless otherwise noted, the Operating
Partnership will own fee title to each Initial Property, free and clear of any
liens or encumbrances which could materially and adversely affect ownership and
operation of such properties.

<TABLE>
<CAPTION>
LAND GROSS LEASABLE
FOUNDING PURCHASE AREA IN BUILDING AREA
DEALER GROUPS INITIAL DEALER LESSEES LOCATION PRICE (1) ACRES (SQ.FT.)
- ------------- ---------------------- -------- --------- ------- --------------
<S> <C> <C> <C> <C> <C>
Braman Group(2) Braman Motorcars................................ Palm Beach, FL $ 12,600,000 11.99 91,180
Braman Motorcars................................ Palm Beach, FL 3,050,000 1.06 32,776
Braman Honda.................................... Miami, FL 11,500,000 5.30 211,399
Braman Cadillac................................. Miami, FL 5,600,000 3.31 23,200
Braman Motors................................... Miami, FL 7,599,000 6.70 80,797
Braman Motors................................... Miami, FL 3,163,000 1.07 42,429
Mile High Honda................................. Denver, CO 11,300,000 11.10 80,497
European Motorcars of Littleton................. Denver, CO 4,700,000 4.98 36,304
Prestige Porsche Audi........................... Denver, CO 3,600,000 2.38 28,668
------------ ----- -------
Sub-Total................................... $ 63,112,000 47.89 627,250
============ ===== =======

Park Place
Motorcars Park Place Motorcars of Houston................ Houston, TX $ 18,571,429 6.81 66,210
Park Place Motorcars............................ Dallas, TX 17,963,265 4.56 235,747
Park Place Lexus................................ Plano, TX 12,857,143 8.42 55,183
Park Place Motorcars............................ Dallas, TX 1,628,571 3.76 63,486
------------ ----- -------
Sub-Total................................... $ 51,020,408 23.55 420,626
============ ===== =======

Momentum Momentum Jaguar, Momentum Porsche and
Motorcars(3) Momentum Saab................................. Houston, TX $ 17,400,000 13.93 69,764
Momentum BMW.................................... Houston, TX 11,040,000 6.24 71,200
Momentum Volvo.................................. Houston, TX 4,200,000 1.37 14,583
Momentum Motorcars.............................. Houston, TX 4,200,000 4.62 37,576
------------ ----- -------
Sub-Total.................................. $ 36,840,000 26.16 193,123
============ ===== =======

Len Stoler Len Stoler Chrysler/Plymouth, Len Stoler
Automotive Lexus and Len Stoler Mitsubishi(4)............ Owings Mills, MD $ 8,900,000 4.03 48,000
Group
</TABLE>

<PAGE> 51
<TABLE>
<CAPTION>
AGGREGATE
LAND GROSS LEASABLE
FOUNDING PURCHASE AREA IN BUILDING AREA
DEALER GROUPS INITIAL DEALER LESSEES LOCATION PRICE (1) ACRES (SQ.FT.)
- ------------- ---------------------- -------- --------- ------- -------------
<S> <C> <C> <C> <C>
Len Stoler Ford, Len Stoler Nissan and
Len Stoler Porsche/Audi.................. Owings Mills, MD 6,500,000 7.00 55,000
Len Stoler
Chevrolet/Oldsmobile/Cadillac ............. Owings Mills, MD 3,200,000 13.00 35,000
Len Stoler Jeep Eagle Suzuki............... Westminster, MD 2,500,000 6.24 15,318
------------ ----- -------
Sub-Total............................. $ 21,100,000 30.27 153,318
============ ===== =======

Bowers
Transportation Group Saturn Retail Company of Tennessee......... Chattanooga, TN $ 3,246,480 5.00 17,240
Town & Country Jaguar...................... Chattanooga, TN 2,892,240 2.03 29,669
Sonic Automotive of Chattanooga............ Chattanooga, TN 2,798,400 3.85 32,138
Nebco of Cleveland, Inc., Toyota........... Cleveland, TN 2,520,000 3.36 15,356
Abra Auto Body & Glass..................... Chattanooga, TN 1,980,000 2.20 17,232
Town & Country Ford of Cleveland........... Cleveland, TN 1,914,240 5.60 17,280
Sonic Automotive 2490 South Lee
Highway.................................... Cleveland, TN 1,542,960 2.05 13,320
Sonic International Drive.................. Chattanooga, TN 1,328,400 3.75 7,314
Town & Country Ford of Cleveland........... Cleveland, TN 900,000 2.00 4,704
Town & Country Jaguar...................... Chattanooga, TN 450,000 1.54 --(5)
----------- ----- -------
Sub-Total............................. $19,572,720 31.38 154,253
=========== ===== =======

Sterling McCall Group One: SMC Luxury Cars, Inc.,
Group Lexus...................................... Houston, TX 8,400,000 7.65 21,005
Group One: Southwest Toyota................ Houston, TX 8,400,000 10.41 99,120
Group One: Southwest Toyota................ Houston, TX 840,000 3.00
Group One: Southwest Toyota................ Houston, TX 840,000 2.00 32,296
Group One: SMC Luxury Cars................. Houston, TX 780,000 1.84 18,000
----------- ----- -------
Sub-Total............................. $19,260,000 24.90 170,421
=========== ===== =======

Frankel Automotive
Group Frankel Cadillac........................... Baltimore, MD 6,286,200 5.03 49,205
Chesapeake Cadillac........................ Cockeysville, MD 5,160,000 2.87 29,915
Frankel Acura.............................. Cockeysville, MD 4,800,000 3.60 27,116
Chesapeake Cadillac........................ Cockeysville, MD 2,832,000 2.07 3,920
----------- ----- -------
Sub-Total............................. $19,078,200 13.57 110,156
=========== ===== =======

Lindsay Automotive Lindsay Cadillac........................... Alexandria, VA 9,000,000 5.40 93,046
Group Lindsay Lexus.............................. Alexandria, VA 6,000,000 3.53 22,645
Saturn of Alexandria....................... Alexandria, VA 3,600,000 1.05 11,464
----------- ----- -------
Sub-Total............................. $18,600,000 9.98 127,155
=========== ===== =======

</TABLE>

<PAGE> 52
<TABLE>
<CAPTION>
LAND AGGREGATE
IN GROSS LEASABLE
FOUNDING PURCHASE AREA BUILDING AREA
DEALER GROUPS INITIAL DEALER LESSEES LOCATION PRICE (1) ACRES (SQ.FT.)
- ------------- ---------------------- -------- --------- ------- ------------
<S> <C> <C> <C> <C> <C>
Bob Bell Automotive Bob Bell Ford.............................. Glen Burnie, MD $ 6,840,000 11.00 65,000
Group Bob Bell Chevrolet Nissan.................. Baltimore, MD 5,640,000 5.84 60,000
Bob Bell Chevrolet of Bel Air ............. Bel Air, MD 2,520,000 7.50 26,000
------------ ----- -------
Sub-Total............................. $ 15,000,000 24.34 151,000
============ ===== =======

Miller Automotive Miller Infiniti(6)......................... Van Nuys, CA $ 5,430,000 0.62 51,508
Group Miller Honda............................... Van Nuys, CA 3,720,000 1.36 8,815
Miller Mitsubishi.......................... Van Nuys, CA 2,880,000 0.89 12,608
Miller Honda............................... Van Nuys, CA 2,760,000 0.50 16,887
------------ ----- -------
Sub-Total............................. $ 14,790,000 3.37 89,818
============ ===== =======

Lustine Automotive
Group Lustine Chevrolet.......................... Hyattsville, MD $ 6,000,000 6.65 98,480
Saturn of Woodbridge....................... Woodbridge, VA 2,400,000 4.76 25,390
Lustine Toyota/Dodge....................... Woodbridge, VA 2,400,000 3.81 30,920
Lustine Nissan............................. Lanham, MD 2,400,000 2.55 16,996
------------ ----- -------
Sub-Total............................. $ 13,200,000 17.77 171,786
============ ===== =======

The Motorcars Group Motorcars West............................. North Olmsted, OH $ 4,800,000 4.95 18,000
Motorcars, Inc. Honda...................... Cleveland Heights, OH 4,740,000 2.00 29,600
Motorcars Oldsmobile-Pontiac............... Cleveland Heights, OH 2,400,000 1.40 24,000
Motorcars.................................. Cleveland, OH 900,000 0.33 13,500
------------ ----- -------
Sub-Total............................. $ 12,840,000 8.68 85,100
============ ===== =======

Lynn Alexander
Auto Group All American Chevrolet..................... San Angelo, TX $ 4,000,000 8.58 88,100
Lynn Alexander Lincoln Mercury
Dodge Nissan............................... San Angelo, TX 2,600,000 3.98 20,932
Lynn Alexander Chrysler Plymouth
Jeep Eagle................................. San Angelo, TX 1,400,000 1.66 11,493
Fiesta Dodge Chrysler Plymouth............. Big Spring, TX 1,000,000 4.32 10,000
------------ ----- -------
Sub-Total............................. $ 9,000,000 18.54 130,525
============ ===== =======

Sunnyside Automotive Sunnyside Toyota........................... North Olmsted, OH $ 4,944,000 6.90 34,000
Saturn of North Olmsted.................... North Olmsted, OH 2,400,000 --(7) 49,000
------------ ----- -------
Sub-Total............................. $ 7,344,000 6.90 83,000
============ ===== =======

Chase Chevrolet Chase Chevrolet............................ Stockton, CA $ 7,200,000 7.36 48,294
============ ===== =======
</TABLE>

<PAGE> 53
<TABLE>
<CAPTION>
LAND AGGREGATE
IN GROSS LEASABLE
FOUNDING PURCHASE AREA BUILDING AREA
DEALER GROUPS INITIAL DEALER LESSEES LOCATION PRICE (1) ACRES (SQ.FT.)
- ------------- ---------------------- -------- --------- ------- ---------------
<S> <C> <C> <C> <C> <C>
Towson Ford Towson Ford............................ Towson, MD $ 4,200,000 2.81 33,000
============ ==== ======

FUS, Inc. Neviaser Motors........................ Easton, MD $ 2,328,000 3.52 18,403
============ ==== ======

TOTAL $334,485,328
============
</TABLE>

- ------------
(1) The Founding Dealers are generally responsible for their
respective expenses of transfer, including title insurance
premiums, survey costs and transfer and recording taxes, if any.
(2) The Braman Group and its affiliates will also receive five-year
warrants to purchase an aggregate of 70,000 Common Shares at the
initial public offering price and a cash payment (which is a
transaction cost to the Company) of approximately $631,000 in
connection with the closing of the Formation Transaction
involving the Braman Group.
(3) Ricardo Weitz, an affiliate of Momentum Motorcars, will also
receive five-year warrants to purchase 50,000 Common Shares at
the initial public offering price.
(4) Property interest contributed is a ground lease which includes an
option to purchase the underlying property contingent upon the
death of the current lessor. Such option will be assigned to the
Company upon the closing of the Formation Transactions with
respect to the Len Stoler Automotive Group.
(5) Property interest is a parking lot with no building.
(6) A portion of the property interest contributed is a ground lease
with 45 years remaining on its fixed term, which includes a right
granted to the landlord's beneficiaries to require the tenant to
purchase the property on the death of the landlord.
(7) Both Sunnyside Automotive Initial Properties are on a contiguous
lot equaling 6.90 acres.

The following is a description of the allocation of the purchase price
for each Founding Dealer:

<TABLE>
<CAPTION>
TOTAL ESTIMATED ESTIMATED ESTIMATED
PURCHASE ASSUMED DEBT REPAID VALUE OF
FOUNDING DEALER GROUPS PRICE CASH DEBT AT CLOSING OP UNITS(1)
- ---------------------- ----- ---- ---- ---------- -----------
<S> <C> <C> <C> <C> <C>
Braman Group(2) ....................... $ 63,112,000 -- $ 5,646,000 $ 20,952,000 $ 36,514,000
Park Place Motorcars .................. 51,020,408 -- -- 26,645,550 24,374,858
Momentum Motorcars(3) ................. 36,840,000 -- -- 15,885,063 20,954,937
Len Stoler Automotive Group ........... 21,100,000 $ 2,532,813 -- 11,292,909 7,274,278
Bowers Transportation Group ........... 19,572,720 11,498,337 -- 6,344,742 1,729,641
Sterling McCall Group ................. 19,260,000 1,250,000 -- 8,916,153 9,093,847
Frankel Automotive Group .............. 19,078,200 -- -- -- 19,078,200
Lindsay Automotive Group .............. 18,600,000 -- -- 8,118,000 10,482,000
Bob Bell Automotive Group ............. 15,000,000 -- -- 5,000,000 10,000,000
Miller Automotive Group ............... 14,790,000 100,000 -- 9,844,000 4,846,000
Lustine Automotive Group .............. 13,200,000 -- -- 6,379,400 6,820,600
The Motorcars Group ................... 12,840,000 12,840,000 -- -- --
Lynn Alexander Auto Group ............. 9,000,000 8,000,000 -- -- 1,000,000
Sunnyside Automotive .................. 7,344,000 7,344,000 -- -- --
Chase Chevrolet ....................... 7,200,000 7,200,000 -- -- --
Towson Ford ........................... 4,200,000 -- -- -- 4,200,000
FUS, Inc. ............................. 2,328,000 -- -- -- 2,328,000

------------ ------------ ----------- ------------ ------------
Totals $334,485,328 $ 50,765,150 $ 5,646,000 $119,377,817 $158,696,361
============ ============ =========== ============ ============
</TABLE>

<PAGE> 54

- ----------

(1) The actual number of OP Units issued to the Founding Dealer Groups will
vary depending upon the initial public offering price of the Common
Shares. The actual number of OP Units issued to each Founding Dealer
will be determined at the closing of the Formation Transactions by
dividing the purchase price of the Initial Properties contributed by
such Founding Dealer to the Operating Partnership (less the cash
portion of the purchase price and any Assumed Debt) by the initial
public offering price per Common Share. The number of Common Shares
held by Jack I. Tompkins, Bert Wollen and WS&B, the founding
shareholders of the Company, will depend upon the actual amount of OP
Units issued in the Formation Transactions. Assuming an initial
offering price of $20 per Common Share, 7,934,818 OP Units will be
issued in the Formation Transactions and the number of Common Shares
held by Messrs. Tompkins and Wollen and WS&B (excluding the Placement
Shares) will be 179,250, 119,250 and 238,500 respectively. If the
initial public offering price per Common Share is $21, the number of OP
Units issued will be 7,556,970, and the number of Common Shares held by
Messrs. Tompkins and Wollen and WS&B (excluding the Placement Shares)
will be 273,712, 213,712 and 427,424, respectively. If the initial
public offering price is $19, the number of OP Units issued will be
8,352,440, and the number of Common Shares held by Messrs. Tompkins and
Wollen and WS&B (excluding the Placement Shares) will be 74,845, 14,844
and 29,689, respectively. As a result, notwithstanding the initial
public offering price per Common Share, an aggregate of 16,425,984
Common Shares and OP Units will be outstanding on the closing of the
Offering.
(2) The Braman Group and its affiliates will also receive five-year
warrants to purchase 70,000 Common Shares at the initial public
offering price and a cash payment (which is a transaction cost to the
Company) of approximately $631,000 in connection with the closing of
the Formation Transactions involving the Braman Group.
(3) Ricardo Weitz, an affiliate of Momentum Motorcars, will also receive
five-year warrants to purchase 50,000 Common Shares at the initial
public offering price.

The Leases. The following summarizes certain provisions of the Initial
Leases, and is qualified in its entirety by the lease agreements filed as
exhibits to the Registration Statement of which this Prospectus is a part and to
the terms of the Initial Leases described elsewhere in this Prospectus.

Each Initial Lease will contain the basic provisions described below or
substantially similar provisions. The leases for any property acquired by the
Operating Partnership in the future will contain such terms and conditions as
may be agreed upon between the lessee and the Operating Partnership at the time
of such acquisition. Such terms and conditions may vary from the terms and
conditions described herein.

Lease Term. The Initial Leases will be entered into upon the conveyance
to the Operating Partnership of the Initial Properties. Each Initial Property
will be leased to the respective Initial Dealer Lessee under a lease that will
generally have a primary term of ten years. Certain Initial Dealer Lessees will
have options to extend the term thereof, generally, for two terms of five to ten
years each. Many of the Initial Leases also provide that if a Founding Dealer
exercises and accepts the Revaluation Option (as defined herein) between years
three and five of the Initial Lease term, the Initial Lease will be amended to
extend the primary term to ten years after the date of exercise of the
Revaluation Option.

Revaluation Option. During the third through fifth years of an Initial
Lease, Founding Dealers (other than the Sterling McCall Group and the Bowers
Group) will have a one-time right to request that the Operating Partnership
reassess the purchase price of the Initial Property (the "Revaluation Option").
In the event that the Operating Partnership agrees to reassess the purchase
price and such reassessment results in an increase in the value of such Initial
Property, the Founding Dealer will receive additional OP Units to reflect the
reassessed value of such Initial Property. Further, any agreement by the
Operating Partnership to increase the value of such Initial Property may be
coupled with an increase in the base rent under the Initial Lease to reflect a
higher value of the Initial Property. Any additional OP Units that may be issued
as a result of the agreement of the Operating Partnership to increase the
purchase price of an Initial Property are to be valued on the basis of the then
current market price for Common Shares. The Operating Partnership has no
obligation to agree to reassess the purchase price of an Initial Property, and
any such reassessment (and increased base rent) is subject to a process that
requires that the Operating Partnership and the Founding Dealer agree on the
reassessed value and any increase in base rent.

Lease Payments. The fixed annual base rent under each Initial Lease
("Initial Annual Base Rent") has been negotiated by the Operating Partnership to
produce an appropriate yield to the Operating Partnership (based on the return
on the Operating Partnership's investment) considering (i) the purchase price of
the Initial Property, (ii) the financial strength of the Initial Dealer Lessee,
(iii) the rental

<PAGE> 55
rates for similarly situated properties in the geographic location in which the
Initial Property is situated, (iv) the characteristics of the Initial Property,
(v) the cost to the Operating Partnership of the funds used to acquire the
Initial Property, and (vi) the return that the Operating Partnership could
realize from alternative investments on that Initial Property's purchase price
(including acquisition fees and expenses). The yield to the Operating
Partnership from an investment in Initial Properties will differ from the yield
to shareholders from an investment in the Common Shares. The Initial Annual Base
Rent under the Initial Leases may be adjusted upward annually based on increases
in the CPI (generally ranging from 1/2 adjustment to a full CPI adjustment every
year). All of the Initial Leases, other than the Initial Leases pertaining to
the Bowers Group and Sunnyside Automotive, provide for rental increases based
upon the CPI. The annual CPI adjustment in connection with the Initial Leases of
nine Founding Dealers is a full CPI adjustment with two having no cap, one
having a 2% cap and six having a 4% cap. The annual CPI adjustment in connection
with the Initial Leases of four Founding Dealers is a one-half CPI adjustment
with a 2% cap. The CPI adjustment in connection with the Initial Leases of one
Founding Dealer is a one-half adjustment every five years with a 7.5% cap in any
five year period. The CPI adjustment in connection with the Initial Leases of
one Founding Dealer is a one-half CPI adjustment every five years. The Sunnyside
Automotive Initial Lease provides for a 2% annual increase for the second
through fifth lease period deferred until the last day of the fifth lease
period. The Operating Partnership will have general recourse to the Initial
Dealer Lessees. Generally, the Initial Dealer Lessees' payment obligations under
the Initial Leases will be secured by a pledge of a portion of the Founding
Dealer's OP Units for a one-year period following the closing of the Formation
Transaction with respect to such Initial Lease. Provided the Initial Dealer
Lessee is not in default under the Initial Lease at the end of such period, the
security interest will be terminated. If the Initial Dealer Lessee is in default
at the end of the first year, or if any sum paid to the Operating Partnership by
the Initial Dealer Lessee is reclaimed by a third party, the security
arrangement will remain in effect or be reinstated, as appropriate. Except for
certain of the Initial Leases in three of the Founding Dealers that are not
guaranteed or cross-defaulted, all payment obligations not secured by a pledge
of OP Units are either guaranteed or subject to cross-default provisions. The
lease payments for each of the properties are set forth below:

<TABLE>
<CAPTION>
INITIAL
FOUNDING ANNUAL FIXED EXTENDED TERM
DEALER GROUPS INITIAL DEALER LESSEES LOCATION BASE RENT TERM (OPTIONS/YEARS)
- ------------- ---------------------- -------- --------- ----- ---------------
<S> <C> <C> <C> <C> <C>
Braman Group Braman Motorcars............................ Palm Beach, FL $ 1,260,000 10 years 2/10 year options
Braman Motorcars............................ Palm Beach, FL 305,000 10 years 2/10 year options
Braman Honda................................ Miami, FL 1,150,000 10 years 2/10 year options
Braman Cadillac............................. Miami, FL 560,000 10 years 2/10 year options
Braman Motors............................... Miami, FL 759,900 10 years 2/10 year options
Braman Motors............................... Miami, FL 316,300 10 years 2/10 year options
Mile High Honda............................. Denver, CO 1,130,000 10 years 2/10 year options
European Motorcars of Littleton............. Denver, CO 470,000 10 years 2/10 year options
Prestige Porsche Audi....................... Denver, CO 360,000 10 years 2/10 year options
-------------
Sub-Total.............................. $ 6,311,200
=============

Park Place Motorcars Park Place Motorcars of Houston............. Houston, TX $ 1,820,000 10 years 2/10 year options
Park Place Motorcars........................ Dallas, TX 1,760,400 10 years 2/10 year options
Park Place Lexus............................ Plano, TX 1,260,000 10 years 2/10 year options
Park Place Motorcars........................ Dallas, TX 159,600 10 years 2/10 year options
-------------
Sub-Total.............................. $ 5,000,000
=============

Momentum Motorcars Momentum Jaguar
Momentum Porsche
Momentum Saab............................. Houston, TX $ 1,740,000 10 years 5/5 year options
Momentum BMW................................ Houston, TX 1,104,000 10 years 5/5 year options
Momentum Volvo.............................. Houston, TX 420,000 10 years 5/5 year options
Momentum Motorcars.......................... Houston, TX 420,000 10 years 5/5 year options
-------------
Sub-Total.............................. $ 3,684,000
=============

Len Stoler Automotive Len Stoler Chrysler/Plymouth
Group Len Stoler Lexus
Len Stoler Mitsubishi..................... Owings Mills, MD $ 890,000 10 years 2/5 year options
Len Stoler Ford
Len Stoler Nissan
Len Stoler Porsche/Audi................... Owings Mills, MD 650,000 10 years 2/5 year options
Len Stoler Chevrolet/Oldsmobile/Cadillac.... Owings Mills, MD 320,000 10 years 2/5 year options
Len Stoler Jeep Eagle Suzuki .............. Westminister, MD 250,000 10 years 2/5 year options
-------------
Sub-Total.............................. $ 2,110,000
=============
</TABLE>

<PAGE> 56
<TABLE>
<CAPTION>
Founding Initial Annual Fixed Extended Term
Dealer Groups Initial Dealer Lessees Location Base Rent Term (Options/Years)
- ------------- ---------------------- -------- --------- ----- ---------------
<S> <C> <C> <C> <C> <C>
Group Town & Country Jaguar . . . . . . . . . Chattanooga, TN 289,224 10 years 2/5 year options
Sonic Automotive of Chattanooga . . . . Chattanooga, TN 279,840 10 years 2/5 year options
Nebco of Cleveland, Inc. . . . . . . . Cleveland, TN 252,000 10 years 2/5 year options
Abra Auto Body & Glass . . . . . . . . Chattanooga, TN 198,000 10 years 2/5 year options
Town & Country Ford of Cleveland . . . Cleveland, TN 191,424 10 years 2/5 year options
Sonic Automotive 2490 South Lee
Highway . . . . . . . . . . . . . . . Cleveland, TN 154,296 10 years 2/5 year options
Sonic International Drive . . . . . . . Chattanooga, TN 132,840 10 years 2/5 year options
Town & Country Ford of Cleveland . . . Cleveland, TN 90,000 10 years 2/5 year options
Town & Country Jaguar . . . . . . . . . Chattanooga, TN 45,000 10 years 2/5 year options
-------------
Sub-Total . . . . . . . . . . . . . $ 1,957,272
=============
Sterling McCall
Group Group One: SMC Luxury Cars . . . . . . Houston, TX $ 840,000 0 years(1) None
Group One: Southwest Toyota . . . . . . Houston, TX 840,000 0 years(1) None
Group One: Southwest Toyota . . . . . . Houston, TX 84,000 0 years(1) None
Group One: Southwest Toyota . . . . . . Houston, TX 84,000 0 years(1) None
Group One: SMC Luxury Cars . . . . . . Houston, TX 78,000 0 years(1) None
-------------
Sub-Total . . . . . . . . . . . . $ 1,926,000
=============

Frankel Automotive Frankel Cadillac . . . . . . . . . . . Baltimore, MD $ 628,620 10 years 2/5 year options
Group Chesapeake Cadillac . . . . . . . . . . Cockeysville, MD 516,000 10 years 2/5 year options
Frankel Acura . . . . . . . . . . . . . Cockeysville, MD 480,000 10 years 2/5 year options
Chesapeake Cadillac . . . . . . . . . . Cockeysville, MD 283,200 10 years 2/5 year options
-------------
Sub-Total . . . . . . . . . . . . . $ 1,907,820
=============
Lindsay Automotive
Group Lindsay Cadillac . . . . . . . . . . . Alexandria, VA $ 900,000 10 years 2/5 year options
Lindsay Lexus . . . . . . . . . . . . . Alexandria, VA 600,000 10 years 2/5 year options
Saturn of Alexandria . . . . . . . . . Alexandra, VA 360,000 10 years 2/5 year options
-------------
Sub-Total . . . . . . . . . . . . . $ 1,860,000
=============

Bell Automotive
Group Bob Bell Ford . . . . . . . . . . . . . Glen Burnie, MD $ 684,000 10 years 2/5 year options
Bob Bell Chevrolet Nissan . . . . . . . Baltimore, MD 564,000 10 years 2/5 year options
Bob Bell of Bel Air Chevrolet . . . . . Bel Air, MD 252,000 10 years 2/5 year options
-------------
Sub-Total . . . . . . . . . . . . . $ 1,500,000
=============

Miller Automotive
Group Miller Infiniti . . . . . . . . . . . . Van Nuys, CA $ 543,000 25 years None
Miller Honda . . . . . . . . . . . . . Van Nuys, CA 372,000 10 years 2/5 year options
Miller Mitsubishi . . . . . . . . . . . Van Nuys, CA 288,000 10 years 2/5 year options
Miller Honda . . . . . . . . . . . . . Van Nuys, CA 276,000 10 years 2/5 year options
-------------
Sub-Total . . . . . . . . . . . . . $ 1,479,000
=============
Lustine Automotive
Group Lustine Chevrolet . . . . . . . . . . . Hyattsville, MD $ 600,000 10 years 2/5 year options
Saturn of Woodbridge . . . . . . . . . Woodbridge, VA 240,000 10 years 2/5 year options
Lustine Toyota/Dodge . . . . . . . . . Woodbridge, VA 240,000 10 years 2/5 year options
Lustine Nissan . . . . . . . . . . . . Lanham, MD 240,000 10 years 2/5 year options
-------------
Sub-Total . . . . . . . . . . . . . $ 1,320,000
=============

The Motorcars
Group Motorcars West . . . . . . . . . . . . North Olmsted, OH $ 480,000 10 years 2/10 year options
Motorcars, Inc. Honda . . . . . . . . . Cleveland Heights, OH 474,000 10 years 2/10 year options
Motorcars Oldsmobile/Pontiac . . . . . Cleveland Heights, OH 240,000 10 years 2/10 year options
Motorcars Cleveland . . . . . . . . . . Cleveland Heights, OH 90,000 10 years 2/10 year options
-------------
Sub-Total . . . . . . . . . . . . . $ 1,284,000
=============
Lynn Alexander
Auto Group All American Chevrolet . . . . . . . . San Angelo, TX $ 400,000 10 years 2/5 year options
Lynn Alexander Lincoln Mercury Dodge
Nissan . . . . . . . . . . . . . . . San Angelo, TX 260,000 10 years 2/5 year options
Lynn Alexander Chrysler Plymouth Jeep
Eagle . . . . . . . . . . . . . . . . San Angelo, TX 140,000 10 years 2/5 year options
Fiesta Dodge Chrysler Plymouth . . . . Big Spring, TX 100,000
-------------
Sub-Total . . . . . . . . . . . . . $ 900,000
=============
Sunnyside
Automotive Sunnyside Toyota . . . . . . . . . . . North Olmsted, OH $ 494,400 10 years 2/5 year options
Saturn of North Olmsted . . . . . . . . North Olmsted, OH 240,000 10 years 2/5 year options
-------------
Sub-Total . . . . . . . . . . . . . $ 734,400
=============
</TABLE>

49
<PAGE> 57
<TABLE>
<CAPTION>
Founding Initial Annual Fixed Extended Term
Dealer Groups Initial Dealer Lessees Location Base Rent Term (Options/Years)
- ------------- ---------------------- -------- --------- ----- ---------------
<S> <C> <C> <C> <C> <C>
Chase Chevrolet Chase Chevrolet . . . . . . . . Stockton, CA $ 720,000 10 years 2/5 year options
=============
Towson Ford Towson Ford . . . . . . . . . . Towson, MD $ 420,000 10 years 2/5 year options
=============
FUS, Inc. Neviaser Motors . . . . . . . . Easton, MD $ 232,800 10 years 2/5 year options
=============
TOTAL . . . . . . . . . . . . . $ 33,346,492
=============
</TABLE>

- --------------------

(1) Subject to earlier termination by the tenant upon written notice
delivered to the landlord no less than six months prior to the
Early Termination Date (as defined in the lease) or December 3,
2007, 2012, 2017 or 2022, as designated by tenant, in tenant's
sole discretion).

Use of the Properties. Pursuant to the terms of the respective Initial
Leases, most of the Initial Properties may be used and occupied by an Initial
Dealer Lessee thereof solely for the operation of an automobile dealership and
for no other purpose whatsoever. A limited number of the Initial Properties
are occupied by businesses related to the automotive industry, including body
shops, make-ready facilities and technical centers. The Company believes that
each of the Initial Properties is suitable and adequate for such use.

Triple-Net Operating Leases. The Initial Leases are structured as
triple-net operating leases under which each Initial Dealer Lessee will be
required to pay all real estate and personal property taxes, insurance,
utilities and services, maintenance and repair costs and other operating
expenses, except as otherwise noted below.

Maintenance, Alterations, Capital Additions or Improvements. Except in
the case of the Sterling McCall Group, each Initial Dealer Lessee will agree,
at its sole cost and expense, to maintain its Initial Property (including all
structural components of the Initial Property) in good condition and repair and
in accordance with all applicable laws. The Operating Partnership will not be
required to maintain, replace or repair the Initial Property except as
described in "-- Damage; Eminent Domain." The Initial Dealer Lessees are
responsible for capital expenditures with respect to the leased premises, with
the exception of the Sterling McCall Group. Although required to pay
substantially all ongoing maintenance and capital expenditures, the Initial
Lessees in the Sterling McCall Group are not required to pay for maintenance
and capital expenses for the structural portions of the Initial Properties
(including the foundation and structural supports relating to the roof). In
the event that such Initial Lessee exercises its right to terminate the Initial
Lease, the Operating Partnership will be required to reimburse the Initial
Lessees in the Sterling McCall Group for the unamortized portion of any
expenses incurred by them in connection with roof replacement, which
replacement will be amortized monthly over a 120 month period.

An Initial Dealer Lessee may make alterations and improvements to an
Initial Property. Alterations which alter or affect the structure or
mechanical or life safety systems or which would constitute a demolition of or
such addition to an Initial Property require the Operating Partnership's
consent. All machinery, equipment, furniture, furnishings and other personal
property installed at the expense of an Initial Dealer Lessee on any Initial
Property will remain the property of such Initial Dealer Lessee and may be
removed by such Initial Dealer Lessee at the expiration or earlier termination
of the Initial Lease. Each Initial Dealer Lessee generally will be responsible
for any accommodations or alterations required to its Initial Property to
comply with the ADA and similar state laws.

Damage; Eminent Domain. Each of the Initial Leases will require the
Initial Dealer Lessee to rebuild and repair its Initial Property in the event
that it is damaged or destroyed by fire or other casualty regardless of whether
the damage was caused by a risk insured against under the Initial Lease or
whether insurance proceeds are available for such rebuilding or repair. In
many Initial Leases, if 50% or more of the improvements on an Initial Property
should be damaged or destroyed during the last two years of the term of the
Initial Lease, including any renewal term, then either the Initial Dealer
Lessee or the Operating Partnership may elect to terminate such Initial Lease.
In some cases only the Initial Dealer Lessee may terminate the Initial Lease
under such circumstances. Some Initial Leases provide that if no such election
is made, the Initial Dealer Lessee may be required to rebuild and repair such
Initial Property. In the Initial Leases pertaining to nine of the Founding
Dealers, the Initial Dealer Lessees have the option to terminate the Initial
Lease if the Initial Property is damaged to such an extent that it cannot be
restored within a specific period after the casualty. In addition, each
Initial Lease will terminate under certain circumstances specified in such
Initial Lease that result in a taking of the Initial Property by a public
authority. The

50
<PAGE> 58

Operating Partnership is obligated under the Initial Leases to make the proceeds
of insurance and condemnation awards available for repair and restoration if the
lease is not terminated.

Indemnification. Under each Initial Lease (with the exception of the
Initial Leases pertaining to the Bowers Group and the Sterling McCall Group),
the Initial Dealer Lessee has agreed to indemnify, defend and hold harmless the
Operating Partnership and its partners, subsidiaries and affiliates and the
officers, directors, shareholders, partners, members, employees, managers,
independent contractors, attorneys and agents of any of the foregoing
(collectively, the "Indemnitees") from and against any and all claims, demands,
causes of action, judgments, costs and expenses and all losses and damages
arising from the condition of the Initial Properties or any improvements or
personal property located thereon, from such Initial Dealer Lessee's use of the
applicable Initial Property or from the conduct of its business or from any
activity, work or other acts or things done, permitted or suffered by such
Initial Dealer Lessee in or about such Initial Property, and will further
indemnify, defend and hold harmless the Indemnitees from and against any and all
claims arising from any breach or default in the performance of any obligation
on such Initial Dealer Lessee's part to be performed under the terms of such
Initial Lease, or arising from any act or omission or negligence or willful or
criminal misconduct of the Initial Dealer Lessee, or any officer, agent,
employee, independent contractor, guest or invitee thereof, and from all costs,
attorneys' fees and disbursements and liabilities incurred in the defense of any
such claim or any action or proceeding that may be brought against, out of or in
any way related to such Initial Lease.

Initial Dealer Lessees have also agreed to defend, indemnify and hold
harmless the Indemnitees from and against all obligations (including removal and
remedial actions), losses, claims, suits, judgments, liabilities, penalties,
damages, costs and expenses of any kind or nature that may at any time be
incurred by, imposed on or asserted against such Indemnitees directly or
indirectly based on, or arising or resulting from (a) the actual or alleged
presence of certain hazardous materials on the property and (b) any
environmental claims relating in any way to such Initial Dealer Lessees'
operation or use of such Initial Property.

The Initial Dealer Leases with respect to the Bowers Group require the
Operating Partnership to indemnify the Initial Dealer Lessee for liability
incurred as a result of hazardous materials if the Operating Partnership is
responsible therefor; the Initial Dealer Lessee is required to indemnify the
Operating Partnership for liability incurred as a result of hazardous materials
if the tenant is responsible therefor. Such Initial Dealer Leases contain
indemnification provisions applicable to both the Initial Dealer Lessees and the
Operating Partnership with respect to broker's fees.

The Initial Dealer Leases with respect to the Sterling McCall Group
require the Operating Partnership to indemnify the Initial Dealer Lessee for
claims attributable to events that (i) existed prior to the Initial Dealer
Lessee's occupation of the leased premises, (ii) arise out of the breach or
failure of the warranties and representations of the Operating Partnership or
(iii) relate to asbestos present on the leased premises prior to the
commencement of such lease. The Initial Dealer Lessee is required to indemnify
the Operating Partnership for claims arising out of default by the Initial
Dealer Lessee, and injuries or damages to persons or property relating thereto.
Such indemnification does not extend to events occurring or existing prior to
the commencement of the occupancy of the Initial Dealer Lessee or to claims
relating to structural components which the Operating Partnership is required to
maintain.

Insurance. Generally, the Initial Leases provide that the Initial
Dealer Lessee will maintain property insurance on the related Initial Property
covering fire and other hazards under "extended coverage" or "all risk"
endorsements. With the exception of the Bowers Group, the foregoing insurance
policies are required to name the Operating Partnership as an additional insured
or loss payee, as applicable. In the opinion of the Company, the properties are
adequately covered by insurance.

Assignment and Subletting. With the exception of the Initial Leases
pertaining to the Bowers Group and the Sterling McCall Group, which permit
assignment and subletting (however, the tenant generally remains liable for
obligations under the Initial Lease), the Initial Leases generally provide that
each Initial Dealer Lessee may not, without the prior written consent of the
Operating Partnership (which may not be withheld in an arbitrary or unreasonable
way), assign or otherwise transfer any Initial Lease or sublease any Initial
Property, in whole or in part, except to an affiliate. In deciding whether to
grant or withhold its consent, the Operating Partnership may take into account
the prospective transferee's business reputation and net worth or financial
condition.

Generally, even after an assignment of the lease or a subletting of an
Initial Property, the Initial Dealer Lessee will continue to be primarily liable
under the Initial Lease with respect thereto. Any assignment or other transfer
of all or any portion of the Initial Dealer Lessee's interest in an Initial
Lease in violation of the restrictions on assignment or subletting will be
voidable at the Company's option.

In addition to any other restrictions on assignment or subletting set
forth in a lease, an Initial Dealer Lessee (other than the Initial Dealer
Lessees in the Sterling McCall Group and the Bowers Group) will be required to
obtain the Company's prior approval before

<PAGE> 59

entering into any sublease, license agreement or other arrangement which would
have the effect of causing all or a portion of the amount received or accrued by
the Company under the applicable Initial Lease to be treated as other than
"rents from real property" within the meaning of Section 856(d) of the Code.

Environmental Matters. The Contribution Agreements provide for various
representations and warranties by the Founding Dealers relating to environmental
matters with respect to each Initial Property. Each Initial Lease also generally
requires the Initial Dealer Lessee to indemnify and hold harmless the Company
from and against all liabilities, costs and expenses imposed upon or asserted
against the Company, and the Initial Dealer Lessee or the Initial Property, on
account of, among other things, any federal, state or local law, ordinance,
regulation, order or decree relating to the protection of human health or the
environment in respect of the Initial Property (irrespective of whether there
has occurred any violation of any Environmental Law). Each Initial Dealer Lessee
is required to comply with all Environmental Laws. See "Risk Factors --
Environmental and Other Regulations."

Default by an Initial Dealer Lessee. Each Initial Lease describes
certain events which will be deemed to be "events of default" by an Initial
Dealer Lessee thereunder. Generally, such events of default include the
following:

(a) failure of an Initial Dealer Lessee to pay any installment of
rent or any other obligation involving the payment of money and the
continuation of such failure for a period of ten days after such
payment becomes due and payable (and in some cases, following written
notice of such failure);

(b) failure of an Initial Dealer Lessee to comply with any
provision of such Initial Lease, other than as described in section (a)
above, and the failure to cure same within a specified period ranging
from 15 to 30 days after written notice thereof (and in some cases, an
extended cure period is provided if the Initial Dealer Lessee timely
commences a cure and diligently pursues the same);

(d) the vacation or desertion, or the commencement thereof, of
the Initial Property or any substantial portion thereof by the Initial
Dealer Lessee, or the removal or attempt to remove by the Initial
Dealer Lessee at any time prior to the last month of the lease term,
without the prior written consent of the Operating Partnership, of all
or a substantial amount of such Initial Dealer Lessee's goods, wares,
equipment, fixtures, furniture or other personal property;

(e) the creation of a lien that, in some cases, remains uncured
for a period ranging from 20 to 60 days after notice upon all or any
part of the Initial Property resulting from actions or failures to act
by the Initial Dealer Lessee;

(f) the default by a guarantor of the obligations of the Initial
Dealer Lessee, or any attempt by such guarantor to repudiate or revoke
its guaranty;

(g) the occurrence of any default or event of default (or in some
cases, a termination) under the Initial Dealer Lessee's franchise
agreement; and

(h) the occurrence of any default or event of default under any
pledge agreement.

However, under the Initial Leases pertaining to the Sterling McCall
Group and the Bowers Group, the events further set forth in items (e),
(f), (g) and (h) above do not expressly constitute an event of default.

The majority of the Initial Leases between the Company and the Initial
Dealer Lessees (representing 82% of the aggregate Initial Annual Base Rent) are
cross-defaulted with other Initial Leases within each particular Founding Dealer
or are guaranteed by other Initial Dealer Lessees within such Founding Dealer.
Of the remaining leases, (i) the obligations of Chase Chevrolet, Sunnyside
Automotive, Towson Ford and FUS, Inc. are guaranteed by one or more principals
(and in the case of FUS, Inc. is limited to 90% of the basic rental under the
Initial Lease and extends for a period of seven years), (ii) the obligations of
the Bowers Group are subject to a limited third-party guarantee, except for two
Initial Properties and (iii) the obligations of the Sterling McCall Group are
not subject to any such cross-default provisions or guarantees. Upon the
occurrence of any such event of default, the Operating Partnership generally
will have the option to pursue any one or more of certain remedies to the extent
permitted by law. Under one generally available alternative, the Operating
Partnership, subject to applicable law, may (i) terminate the Initial Lease,
(ii) exclude the Initial Dealer Lessee from possession of the Initial

<PAGE> 60

Property, and (iii) the Operating Partnership may use reasonable efforts to
lease such Initial Property to others. If an Initial Lease is terminated with
respect to all or a portion of the Initial Property, the Initial Dealer Lessee
will remain liable to the Operating Partnership for damages in an amount equal
to the rent and other sums which would have been owing by the Initial Dealer
Lessee as to the Initial Property for the balance of the fixed term or extended
term as if the Initial Lease had not been so terminated, less the net proceeds,
if any, of any re-letting of the Initial Property by the Operating Partnership
subsequent to such termination, after deducting all the Operating Partnership's
expenses in connection with such re-letting. Alternatively, under a second
generally available alternative, the Operating Partnership may maintain the
lease in effect and hold the lessee liable for rent as it accrues. In addition,
the Operating Partnership may exercise any other rights that it may have under
law or under the Initial Lease.

Governing Law. Each Initial Lease will be governed by and construed in
accordance with the law of the state in which the Initial Property is located.

Security Interest. As security for the Initial Dealer Lessee's
obligations under the Initial Lease, the Founding Dealers (with the exception of
those taking all cash in return for their contribution, the Braman Group, the
Bowers Group, the Sterling McCall Group and FUS, Inc.) will pledge to the
Operating Partnership 25% of the OP Units received by such Founding Dealers for
a one year period after the closing of the Formation Transaction pursuant to
which the OP Units are issued. Additional security is generally obtained under
the Initial Leases including security deposits, affiliated guarantees and/or
cross-defaults among related party leases. Under most of the Initial Leases, the
Operating Partnership has waived its statutory and common law landlord's lien in
the Initial Dealer Lessee's personal property.

Lock-out Periods. With the exception of Momentum Motorcars, the Bowers
Group, the Sterling McCall Group, the Lynn Alexander Auto Group, Sunnyside
Automotive, Chase Chevrolet and FUS, Inc., the agreements with the Founding
Dealers provide for lockout periods which are generally between 4 and 10 years
(in one case 20 years), during which the Company is generally prohibited from
selling their respective Initial Properties, the effect of which would be to
accelerate the recognition of taxable gain to the respective Founding Dealer.

Repurchase Options, Rights of First Refusal and Rights of First Offer.
Eleven of the Founding Dealers have a right to repurchase their respective
Initial Properties. Three of the Founding Dealers have an ongoing right of first
refusal upon the proposed sale of an Initial Property. Six of the Founding
Dealers have a right of first offer if the Company sells certain of the Initial
Properties during years one through 20. The repurchase options, rights of first
refusal and rights of first offer of each Founding Dealer are set forth below:

<TABLE>
<CAPTION>
REPURCHASE OPTION
----------------------------------------------------------------
RIGHT OF
REPURCHASE FIRST REFUSAL/RIGHT
FOUNDING DEALER GROUPS YEAR AMOUNT(1)(2) OF FIRST OFFER IN YEAR
- ---------------------- ---- ------------ ----------------------
<S> <C> <C> <C>
Braman Group 5-30 10 times the current base rent 1-30
Park Place Motorcars 10,20,30 greater of purchase price or 10 times --
the current base rent
Momentum Motorcars 35 greater of purchase price or 10 times --
the current base rent
Len Stoler Automotive Group 20 greater of FMV or purchase price 1-20
Bowers Transportation Group -- -- --
Sterling McCall Group -- -- 1-30
Frankel Automotive Group 20 greater of FMV or purchase price 1-20
Lindsay Automotive Group 20 greater of FMV or purchase price 1-20
Bob Bell Automotive Group 20 greater of FMV or purchase price 1-20
Miller Automotive Group -- -- --
Lustine Automotive Group(3) 20 greater of FMV or purchase price 1-20
The Motorcars Group 5-30 10 times the current base rent 1-30
Lynn Alexander Auto Group 10,15,20 greater of FMV or 10 times the --
current base rent
Sunnyside Automotive -- -- --
Chase Chevrolet -- -- --
Towson Ford 20 greater of FMV or purchase price 1-20
FUS, Inc. -- -- --

</TABLE>

<PAGE> 61

- -----------------
(1) "FMV" is fair market value.
(2) The "purchase price" is the purchase price of the property in
connection with the Formation Transactions by which the
Company purchases such property.
(3) The Initial Dealer Lessee of one Initial Property known as the
Hyattsville property has the right to repurchase such property
at any time for ten times the current base rent. If the option
is exercised during the first four years, the option price may
be paid by surrendering the OP Units received at the closing
of the Formation Transactions with respect to such property
and repaying to the Operating Partnership the amount of cash
consideration paid at such closing. After the first four
years, the option price is to be paid in cash.

Development Properties. The Braman Group intends to construct new car
facilities or refurbish/renovate existing lots at several of its Initial
Properties (referred to as the "Braman Construction Lots"). The aggregate
Initial Annual Base Rents of $6,311,200 paid by the Braman Group or affiliates
thereof with respect to the Initial Properties assumes completed construction
and renovation at the Braman Construction Lots. In connection with the closing
of the Formation Transactions, properties will be contributed with the described
refurbishment and renovation at no additional cost to the Operating Partnership
(except as described below). The Braman Construction Lots include the following:

(a) Braman Honda Miami, 7080 Coral Way, Miami, Florida
33155 -- These renovations are anticipated to cost $11,500,000, of
which $8,050,000 will be paid from a portion of the purchase price held
in escrow (from which withdrawals will be made upon the consent of the
Company).

(b) Palm Beach Property II, 2815 Okeechobee Boulevard,
West Palm Beach, Florida 33409 -- These renovations are anticipated to
cost an estimated $1,850,000, of which $945,000 will be paid from a
portion of the purchase price held in escrow (from which withdrawals
will be made upon the consent of the Company).

(c) Development property Porsche, 2801 Okeechobee
Boulevard, West Palm Beach, Florida 33409 -- The Operating Partnership
will not incur any expenditure in connection with this project.

(d) Palm Beach Greenacres Properties 5200, 5260-5270,
5300 Lake Worth Road, Lake Worth, Florida 33463 -- The improvements are
anticipated to cost $5,100,000, of which $3,570,000 will be paid from a
portion of the purchase price held in escrow (from which withdrawals
will be made upon the consent of the Company).

(e) Colorado Property, 9201 West Colfax Avenue, Lakewood,
Colorado 80215 -- The improvements are anticipated to cost $2,220,000,
of which $1,540,000 will be paid from a portion of the purchase price
held in escrow (from which withdrawals will be made upon the consent of
the Company).

(f) Downtown Miami Properties (former service and parts)
1930 NE 2nd Avenue, Miami, Florida 33137; Temple Lots, 64 NE 20th
Street, Miami, Florida 33137 -- These improvements are anticipated to
cost $2,650,000, of which $1,885,000 will be paid from portion of the
purchase price paid by the Company for such property held in escrow
(from which withdrawals will be made upon the consent of the Company) .

Park Place has ongoing construction activities with respect to some of
its Initial Properties (referred to herein as the "Park Place Construction
Lots"). The Initial Annual Base Rents paid by Park Place or its affiliates with
respect to the Park Place Construction Lots are based upon property values that
assume completed construction and renovation. Park Place plans to expand and
renovate its Plano Lexus dealership, to expand lot space, improve lighting and
expand the customer service area. These improvements will cost approximately
$3,372,000. Park Place also has renovation and improvement plans with respect to
two of its dealerships in Dallas (Mercedes and Porsche/Audi) that are contiguous
and known as the "North Oaklawn Properties." The cost of renovations and
improvements to the showrooms, service drives and garages, as well as the cost
of acquiring a building for the Park Place Porsche/Audi dealership, is
anticipated to total $5,302,000. Another Park Place location known as the
"Atwell" location, which serves as a body shop and a new car preparation center,
is undergoing $470,000 in renovations. Upon the closing of the Formation
Transactions with respect to each of these Park Place Construction Lots at the
election of the Company, (i) Park Place will draw on the unadvanced portion of
existing construction financing up to the amount anticipated to be necessary to
complete the foregoing construction (the "Build Out Amount"). The Company will
pay

<PAGE> 62

a portion of the purchase price attributable to the Park Place Construction Lots
to such construction lender in satisfaction of all amounts due and owing such
lender, or (ii) advance to Park Place a cash amount equal to the Build Out
Amount (which advance will be offset against the purchase price of the Park
Place Initial Properties).

The Frankel Automotive Group plans to improve one of its Cockeysville,
Maryland locations (Frankel Acura) by adding a body shop on such property. The
foregoing improvements will cost approximately $1,000,000 and will be financed
by a single construction loan. The Initial Annual Base Rents paid by the Frankel
Automotive Group or its affiliates with respect to the described improvements
are based upon a property value that assumes the completion of such
improvements.

The Motorcars Group plans to improve its North Olmsted location by
adding a Volvo showroom and by adding a service drive onto its existing Infiniti
showroom. These improvements will cost approximately $400,000 and will be
financed by existing operations. In connection with the closing of the Formation
Transactions, this property will be contributed with the described improvements
at no additional cost to the Operating Partnership. The Initial Annual Base
Rents paid by the Motorcars Group or its affiliates with respect to the North
Olmsted location are based on property values that assume the completion of such
improvements.

Momentum Motorcars plans to improve its 7300 SW Freeway location by
converting its existing Porsche-Saab showroom into a Volvo facility, at a cost
of approximately $400,000, to be financed by existing operations. Momentum
Motorcars is also in the process of constructing a Jaguar/Porsche/Saab facility
at its 10150 SW Freeway location, at a cost of approximately $10.5 million. The
improvements for the Jaguar/Porsche/Saab facility are being financed with a
third-party mortgage in the amount of $8 million and two loans totaling $900,000
secured by accounts of Momentum Motorcars, for a total construction financing
cost of approximately $8.9 million. In connection with the closing of the
Formation Transactions, these properties will be contributed with the described
improvements and construction at no additional cost to the Company. However, it
is anticipated that at the closing of the Formation Transactions with respect to
the Initial Properties of Momentum Motorcars, a portion of the purchase price
paid by the Company to Momentum Motorcars will be applied to satisfy the third
party loans encumbering such Initial Properties. Under its Contribution
Agreement, Momentum Motorcars is obligated to contribute its Initial Properties
free and clear of liens. The Initial Annual Base Rents paid by Momentum
Motorcars or its affiliates with respect to the described improvements are based
on property values that assume the completion of such improvements.

Because the Initial Annual Base Rents with respect to these Initial
Leases are based on property values that assume completion of these
improvements, failure to complete all or a portion of these improvements with
respect to a particular Initial Dealer Lessee could affect that Initial Dealer
Lessee's ability to make lease payments.

The Company has agreed to provide funds of up to $3,500,000 at a future
date under certain conditions to Lindsay Automotive Group, or an affiliate
thereof, to finance the construction of a Lexus dealership. There is no current
plan of development and hence, the date on which such funds will be provided has
not been determined.

INVESTMENT POLICIES

The Company will engage in the investment in Automotive Properties. The
Company has established no limit on the amount that can be invested in any one
property. The Company does not intend to acquire properties used by businesses
other than automobile dealerships and related businesses. The Company currently
does not intend to invest in mortgages (including participating and convertible
mortgages), the securities of other issuers, except in connection with
acquisitions of indirect interests in properties (normally through partnership
interests in special purpose partnerships owning title to properties) or
generally to make loans to third parties (except in connection with the
development of Automotive Properties). The Company does not intend to underwrite
the securities of other issuers. The Company currently has no plans to
repurchase or otherwise reacquire its shares or the securities of others. The
Company may change its policies with respect to the above activities without the
approval of its shareholders. In any event, the activities of the Company with
respect to investments in securities of other issuers will be subject to the
asset and gross income tests necessary for REIT qualification for federal income
tax purposes. See "Certain Policies and Objectives."

<PAGE> 63

MANAGEMENT

EXECUTIVE OFFICERS AND TRUST MANAGERS

The following table sets forth certain information concerning each of
the Company's executive officers and Trust Managers:

<TABLE>
<CAPTION>
Name Age Position
- ---- --- --------
<S> <C> <C>
Jack I. Tompkins 52 Chairman of the Board and Trust Manager

David L. Johnston 53 President, Chief Executive Officer and Trust Manager

Bert Wollen 52 Executive Vice President - Business Development,
Chief Acquisition Officer and Trust Manager

Lawrence E. Darst 47 Chief Financial Officer and Executive Vice President

Carrine Reilly (1) 42 Vice President - Accounting, Controller and Director
of Acquisitions

Nelson E. Bowers, II (2) 52 Trust Manager

Norman Braman (2) 65 Trust Manager

Gerald W. Haddock 50 Trust Manager

Douglas W. Schnitzer (2) 41 Trust Manager

_____________________ ____ Independent Trust Manager

</TABLE>

- ------------
(1) Lawrence E. Darst and Carrine Reilly have accepted offers of
employment subject to the execution and delivery of employment
agreements.
(2) Each of Messrs. Braman, Douglas W. Schnitzer and Bowers will
be appointed a Trust Manager by the Board of Trust Managers
upon the closing of the Offering and upon transfer of the
Initial Properties to be contributed by him or his affiliates
to the Operating Partnership upon consummation of the
Formation Transactions.

Jack I. Tompkins is a founder of the Company and has been the Company's
Chairman of the Board since January 1, 1998 and a Trust Manager since August
1997. Since 1996, Mr. Tompkins has served as a managing director of Raintree
Capital Company, LLC and Raintree Equity Advisors, LLP ("Raintree"), a merchant
banking concern. Prior to joining Raintree, he served as Senior Vice President,
Chief Information, Administrative & Accounting Officer at Enron Corporation
(from 1988 to 1996), where he also served as a member of Enron's Management
Committee (from 1989 to 1996). Prior thereto, Mr. Tompkins was a partner with
Arthur Andersen LLP (from 1981 to 1989). While at Arthur Andersen, he was in
charge of the Merger and Acquisition Program for the Houston office as well as
head of the Natural Gas Industry Group. Mr. Tompkins serves on the board of
directors of Michael Petroleum Corporation, an oil and gas exploration concern.
Mr. Tompkins holds an MBA degree from Baylor University.

David L. Johnston has been the President and Chief Executive Officer of
the Company, and a Trust Manager, since December 1997. Prior to joining the
Company, Mr. Johnston served as Senior Vice President of United Dominion Realty
Trust ("UDR") with

<PAGE> 64

responsibility for acquisition and development activities in the Western half of
the United States (from 1996 to 1998), where he also served as Co-Chairman of
the UDR Investment Committee. Prior thereto, Mr. Johnston served as Executive
Vice President and Chief Investment Officer of South West Property Trust, Inc.,
which merged with UDR in December 1996. From 1988 to 1992, Mr. Johnston was a
senior partner with Property Company of America, which acquired and developed
real estate in conjunction with institutional financial partners. Mr. Johnston
holds a BA degree from the University of Arizona and an MBA degree from Southern
Methodist University.

Bert Wollen is a founder of the Company and has been Chief Acquisitions
Officer since January 1, 1998 and a Trust Manager since August 1997. Since 1996,
Mr. Wollen has been a managing director of Raintree Capital Company, LLC and
Raintree Equity Advisors, LLP. From 1993 to 1996, Mr. Wollen was a partner of
Notre Capital Ventures, LLC, a merchant banking partnership involved in
consolidations. Prior thereto, Mr. Wollen served as Director, Executive Vice
President and Director of Capital Markets at Ladenburg Thalmann & Co. (from 1990
to 1993). From 1989 to 1990, he served as the Chief Executive Officer and a
Director of ENSR Corporation, an environmental consulting firm. Prior thereto,
Mr. Wollen served as Vice President and Syndicate Manager at Ladenburg Thalmann
& Co. (1985-1989). Mr. Wollen holds a BA degree from the University of
Washington.

Lawrence E. Darst will be the Company's Chief Financial Officer and
Executive Vice President upon the closing of the Offering. Since 1997, Mr. Darst
has been Chairman, President and Chief Executive Officer of Nationwide Staffing,
Inc., a consolidated staffing company. Prior thereto, Mr. Darst was a partner
with Ernst & Young, LLP (from 1983 to 1996). While at Ernst & Young, he served
as the Associate Regional Director of Accounting and Auditing (from 1995 to
1996). Mr. Darst is a certified public accountant in the State of Texas. Mr.
Darst holds a BBA degree from Lamar University.

Carrine Reilly will be the Company's Vice President - Accounting,
Controller and Director of Acquisitions upon the closing of the Offering. Since
1988, Ms. Reilly has been associated with the firm of Walpert Smullian &
Blumenthal, P.A., which has an accounting practice that specializes in the
automobile industry, where she provides tax and business consulting services for
automotive dealerships. Prior thereto, Ms. Reilly was associated with Arthur
Andersen LLP (from 1982 to 1987), where her accounting practice was focused on
tax and financial consulting for closely held businesses. Ms. Reilly is a
certified public accountant in the State of Maryland. Ms. Reilly holds a BBA
degree from the College of William and Mary.

Nelson E. Bowers, II will be elected as a Trust Manager upon the
closing of the Formation Transaction with respect to the property contributed by
the Bowers Group. Since 1992, Mr. Bowers has served Chief Executive Officer of
Bowers Group and its affiliates, a multi- franchised retail automotive concern
with $250 million in revenue. Mr. Bowers has worked in the retail automotive
industry since 1992. He serves as Executive Vice President and Director of Sonic
Automotive, Inc. (an operator of automobile dealerships). Mr. Bowers holds a BA
degree from the University of Georgia.

Norman Braman will be elected as a Trust Manager upon the closing of
the Formation Transaction with respect to the Braman Group. Since the early
seventies, Mr. Braman has been Chairman of the Braman Group of affiliated
dealerships in Miami, Florida, West Palm Beach, Florida and Denver, Colorado.
From 1985 to 1994, Mr. Braman was the owner of the Philadelphia Eagles. Mr.
Braman holds a BA degree from Temple University.

Gerald W. Haddock has been President and Chief Executive Officer of
Crescent Real Estate Equities Company ("Crescent"), a publicly held REIT, since
1996. From 1994 until 1996, Mr. Haddock was President of Crescent. From 1990 to
1993, Mr. Haddock was a partner with the law firm of Jackson & Walker, L.L.P.,
Fort Worth, Texas and in 1994, was of counsel to such firm. Mr. Haddock is also
a director of ENSCO International Incorporated, a publicly-held oil and natural
gas services company.

Douglas W. Schnitzer will be elected as a Trust Manager upon the
closing of the Formation Transaction with respect to the Park Place. Since 1995,
Mr. Schnitzer has served as Chairman, Chief Executive Officer and founding
partner of Senterra Real Estate Group, L.L.C., a real estate company dedicated
to leasing, management, property acquisition and development. Since 1989, he has
also served as President of Schnitzer Senterra Inc., the parent company of the
general partner or managing partner in numerous entities involving real estate,
automobile dealerships and various operating companies on the Houston Ship
Channel. From 1982 to 1987, Mr. Schnitzer served as Senior Vice President of
Marketing at Century Development Corp., where he had marketing responsibility
for more than 14 million square feet of office space in Houston and San Antonio.
From 1985 to 1987, he served as President of U.S. Commercial Brokerage, a
brokerage company involved in the acquisition and disposition of varied real
estate properties. Mr. Schnitzer serves on the Board of Trust Managers for
Weingarten Realty Investors, a publicly traded real estate investment trust
which is listed on the New York Stock Exchange since 1985. Mr. Schnitzer holds a
BBA degree from the University of Arizona.

<PAGE> 65

COMPENSATION OF TRUST MANAGERS

The Company intends to pay its Trust Managers who are not employees of
the Company on a meeting attended basis as follows: $2,000 per Board of Trust
Managers' meeting attended in person (both regular and special); $500 per Board
of Trust Managers' meeting attended by telephone; and $500 per committee meeting
attended. Employee Trust Managers will not be entitled to such compensation.

In addition, on the last day of each calendar year beginning with the
last day of 1998, each non-employee Trust Manager will receive a non-qualified
option to purchase ___ Common Shares.

EXECUTIVE COMPENSATION

The Company was organized in August 1997, did not conduct any prior
operations and, accordingly, did not pay any compensation to its Executive
Officers for the year ended December 31, 1997. Each Executive Officer will
receive an annual base salary and other compensation in 1998 as described under
" -- Employment Agreements" below. In addition, the Company's Executive Officers
will be eligible to receive incentive compensation at the discretion of the
Compensation Committee (as defined herein).

INCENTIVE SHARE PLAN

The Company has adopted the Employee and Trust Manager Incentive Share
Plan of Automotive Realty Trust of America (the "Incentive Share Plan") to (i)
furnish incentives to individuals chosen to receive share-based awards because
they are considered capable of improving operations and increasing profits; (ii)
encourage selected persons to accept or continue employment with the Company;
and (iii) increase the interest of Trust Managers in the Company's welfare
through their participation in the growth in value of the Common Shares. The
Incentive Share Plan provides for the award (subject to the Ownership Limit) to
full-time employees and Trust Managers of, and certain consultants to, the
Company of a broad variety of equity-based compensation alternatives such as
nonqualified share options, incentive share options, restricted shares,
appreciation rights, and dividend equivalent rights.

The total number of Common Shares that may be issued under the
Incentive Share Plan is an amount of shares equal to 10% of the outstanding
Common Shares on a fully-diluted basis, currently estimated at 1,642,600 Common
Shares, of which options to purchase 1,000,000 Common Shares will be outstanding
at the closing of the Offering.

Options entitle the optionees to purchase Common Shares from the
Company for a specified exercise price during a specified period. Under the
Plan, the Company may grant options that are intended to be incentive stock
options within the meaning of Section 422 of the Code ("incentive stock
options") or options that are not incentive stock options ("nonqualified stock
options"). Incentive stock options and nonqualified stock options generally may
not have an exercise price less than 100% of the fair market value of the Common
Shares on the date of grant and will expire, with certain exceptions, ten years
after such date. Under the Incentive Share Plan, any option or portion thereof
that has not vested on or before the termination of employment of an optionee
expires on the date of such termination.

The options that will be granted to directors and officers will vest in
three equal installments, the first installment to vest at the time of grant and
the remaining installments to vest on the second and third anniversaries of
grant, respectively.

Restricted share awards entitle the recipient to purchase Common Shares
from the Company in consideration of a specified exercise price under terms that
provide for vesting over a specified period of time and forfeiture to the
Company with respect to the unvested shares upon the termination of the
recipient's employment or other relationship with the Company. Restricted shares
may not be issued to non-employee Trust Managers. Restricted shares may not, in
general, be sold or otherwise transferred until restrictions are removed and the
shares have vested. Holders of restricted shares will receive distributions
prior to the time when the restrictions lapse.

Share appreciation rights entitle the recipient to receive from the
Company at the time of exercise a per share amount equal to the excess of the
fair market value at the date of exercise of a Common Share over a price
specified at the time of grant, which cannot be less than the fair market value
of the Common Shares on the grant date. Share appreciation rights may not be
issued to non-employee Trust Managers.

Dividend equivalent rights entitle the recipient to receive, for a
specified period, a payment equal to the quarterly dividend declared and paid by
the Company on one Common Share. Dividend equivalent rights may not be granted
to non-employee Trust Managers and are forfeited to the Company upon the
termination of the recipient's employment or other relationship with the
Company.

<PAGE> 66

The Plan will be administered by a compensation committee appointed by
the Board of Trust Managers (the "Compensation Committee"), which is authorized
to determine the eligible persons to whom, and the time or times at which,
awards under the Plan will be granted and to determine the number of shares to
be subject thereto and the terms and conditions thereof. The Compensation
Committee is also authorized to adopt, amend and rescind administrative and
interpretive rules and regulations relating to the Plan. The members of the
Compensation Committee are required to be non-employee Trust Managers.

EMPLOYMENT AGREEMENTS

The Company has entered into employment agreements (collectively, the
"Employment Agreements" and individually, an "Employment Agreement") with Jack
I. Tompkins, Chairman of the Board, David L. Johnston, President and Chief
Executive Officer, and Bert Wollen, Executive Vice President - Business
Development and Chief Acquisition Officer. Mr. Wollen will be a full-time Chief
Acquisition Officer, and he has agreed to devote substantially all of his
business time to the affairs of the Company, and Mr. Johnston has agreed to
devote all of his business time, to the affairs of the Company. Mr. Tompkins has
agreed to devote a majority of his business time to the Company. In addition,
Mr. Tompkins has agreed not to engage in any other activities with any other
real estate investment trust. Each Employment Agreement is for a three year
term. Mr. Johnston's annual base salary under his Employment Agreement is
$300,000. In connection with his employment, Mr. Johnston also received 16,666
Common Shares and options (subject to certain vesting periods) to purchase
33,334 Common Shares at $0.40 per share (the "Founder's Option"). Further, Mr.
Johnston will be eligible for a bonus of up to $150,000 per 12 month period of
employment. The annual base salaries of Messrs. Tompkins and Wollen under each
of their Employment Agreements are $100,000 and $200,000, respectively. The
Employment Agreements permit the Company to terminate each Executive Officer's
employment with appropriate notice with or without Cause (as defined in each
Employment Agreement). In addition, each Employment Agreement may be terminated
by the Company upon a "Change in Control" (which is generally defined to include
certain mergers, consolidations, reorganizations, sales of Company assets,
substantial acquisitions of Company shares and changes in the composition of the
Board of Trust Managers.)

If an Executive Officer's employment terminates for any reason, the
Company will pay him accrued salary, bonuses already determined, and other
existing obligations. In addition, if the Company terminates an Executive
Officer without Cause, the Company will be obligated to pay him a Severance
Payment (as defined in the Employment Agreement) equal to the amount of his then
monthly base salary, payable in equal monthly installments through the fifth
anniversary of the effective date of the Employment Agreement (or at its option,
the Company may pay the terminated Executive Officer the then present value
thereof in a single installment). In addition, upon the termination of Mr.
Johnston without cause, any unvested portion of the Founder's Option will vest.
If, following a Change in Control (as defined in the Employment Agreement), an
Executive Officer's employment is terminated by the Company for a reason other
than for Cause or disability, then beginning upon the date of such Change in
Control and continuing until the earliest of (i) the expiration of three years,
(ii) the Executive Officer's death, or (iii) the attainment of age 65 (the
"Severance Period"), the Executive Officer will continue to receive welfare
benefits from the Company and will be entitled to additional severance benefits
(the "Severance Benefits"). The Severance Benefit payable under such
circumstances to Mr. Johnston is equal to three times the greater of (i) Mr.
Johnston's annualized base salary at the time of the Change in Control, or (ii)
the highest base salary received by Mr. Johnston in any year during the three
full calendar years preceding the Change of Control. The Severance Benefit
payable to each of Messrs. Tompkins and Wollen under such circumstances is equal
to three times the greater of (i) the aggregate compensation (including salary
and bonuses) paid to such Executive Officer during the 12 month period preceding
the Change of Control, or (ii) the greatest amount of compensation (including
salary and bonuses) paid to such Executive Officer in any year during the three
full calendar years preceding the Change of Control. The Severance Benefit paid
to an Executive Officer upon a Change of Control will be increased by the amount
of any excise or similar taxes payable by the recipient due to the receipt of
the Severance Benefit by the Executive Officer.

Following a Change of Control, each Executive Officer generally may
terminate his employment during the Severance Period and receive the benefits
described above with regard to the Company's termination of the Executive
Officer following a Change of Control, upon the occurrence of certain additional
events including a failure to maintain the Executive Officer in his office or
position with the Company, certain adverse changes in the nature or scope of his
authority, powers, functions, responsibilities or duties, certain reductions or
changes in the travel requirements applicable to the Executive Officer, as well
as in the Executive Officer's base pay and incentive pay, or employee benefits
("Employee Benefits"); the determination by the Executive Officer that certain
changes in circumstances have occurred following a Change in Control; certain
liquidations, dissolutions, mergers, consolidations or reorganizations of the
Company or transfers of all or substantially all of its business and/or assets;
the Company's relocation of the principal executive offices or of the Executive
Officer's principal location of work or; any material breach of the Employment
Agreement by the Company.

<PAGE> 67

The Employment Agreements provide that during the period of each
Executive Officer's employment and for an additional two-year period thereafter,
each Executive Officer will not compete with the Company in the automotive real
estate investment trust business.

LIMITATION OF LIABILITY AND INDEMNIFICATION

Section 9.20 of the Texas REIT Act, as amended, subject to procedures
and limitations stated therein, allows the Company to indemnify any person who
was, is or is threatened to be made a named defendant or respondent in any
threatened, pending or completed action, suit or proceeding (hereinafter
"Proceeding") because the person is or was a Trust Manager or officer against
judgments, penalties (including excise and similar taxes), fines, settlements
and reasonable expenses actually incurred by the person in connection with the
Proceeding. The Company is required by Section 9.20 to indemnify a Trust Manager
or officer against reasonable expenses incurred by him or her in connection with
a Proceeding in which he is a named defendant or respondent because he or she is
or was a Trust Manager or officer if he or she has been wholly successful, on
the merits of otherwise, in the defense of the proceeding. Under the Texas REIT
Act, the indemnification of Trust Managers and officers found liable to the REIT
or found liable on the basis that personal benefit was improperly received by
them is limited to the reasonable expenses actually incurred by the Trust
Managers or officers in connection with the Proceeding. Moreover, Trust Managers
and officers found liable for willful or intentional misconduct in the
performance of their duties to the REIT are denied indemnification altogether.
The statute provides that indemnification pursuant to its provisions is not
exclusive of the rights of indemnification to which a person may be entitled
under any provision of a Texas REIT's declaration of trust, bylaws, agreements,
or otherwise. In addition, the Company has, pursuant to Section 15.10 of the
Texas REIT Act, provided in its Declaration of Trust that, to the fullest extent
permitted by applicable law, a Trust Manager of the Company shall not be liable
for any act, omission, loss, damage or expense arising from the performance of
his or her duties except for his or her own willful misfeasance, malfeasance or
negligence. Further, the Company intends to obtain director's and officer's
insurance with limits of $10 million to $20 million.

COMPENSATION AND AUDIT COMMITTEE

The Company has not had a Compensation or Audit Committee prior to this
Offering; instead the functions of the Compensation and Audit Committees have
been performed by the Board of Trust Managers as a whole. Immediately following
the closing of this Offering, the Company will establish a Compensation
Committee, a majority of which will be independent Trust Managers, and an Audit
Committee, a majority of which will be independent Trust Managers.

INDEMNIFICATION OF TRUST MANAGERS AND OFFICERS

The Company has entered into indemnification agreements
("Indemnification Agreements") with its Trust Managers, Executive Officers and
certain key employees. Each such Indemnification Agreement provides for
indemnification of the Company's Trust Managers, Executive Officers and certain
key employees to the fullest extent permitted by the Texas REIT Act.

To the extent that the Board of Trust Managers of the Company or the
respective shareholders may in the future wish to limit or repeal the ability of
the Company to indemnify Trust Managers, Executive Officers and key employees,
such repeal or limitation may not be effective as to Trust Managers, Executive
Officers and key employees who are parties to such Indemnification Agreements
because their rights to full protection will be contractually assured by the
Indemnification Agreements. It is anticipated that similar contracts may be
entered into, from time to time, with future trust managers, executive officers
and key employees of the Company.

TRANSACTIONS WITH CERTAIN OFFICERS AND TRUST MANAGERS

The closing of the Formation Transactions will result in benefits to
certain Executive Officers, Trust Managers and Founding Dealers.

Nelson E. Bowers, II (affiliated with the Bowers Group), Norman Braman
(affiliated with the Braman Group) and Douglas W. Schnitzer (affiliated with
Park Place), each of whom is a Founding Dealer or an affiliate thereof, have
agreed to serve as Trust Managers of the Company upon the closing of the
Offering and the Formation Transactions with respect to their respective
affiliated dealer groups. In regard to Park Place, Kenneth L. Schnitzer, the
brother of Douglas W. Schnitzer, is primarily responsible for the operations of
Park Place. Douglas W. Schnitzer has responsibility for the real estate
operations of Senterra Real Estate Group, L.L.C. and certain affiliates of Park
Place. Douglas W. Schnitzer has also agreed to serve as the Chairman of the
Executive Committee of the Board of Trust Managers upon his election to the
Board of Trust Managers. In consideration for the contribution of the Initial
Properties owned by affiliates of Messrs. Bowers, Braman and Douglas W.
Schnitzer , Messrs. Bowers, Braman and Douglas W. Schnitzer, or their
affiliates, will receive

<PAGE> 68

cash and OP Units as set forth in "Business and Properties -- Property
Descriptions and Lease Terms -- The Leases." The Initial Properties owned by
affiliates of Messrs. Bowers, Braman and Douglas W. Schnitzer will be leased
back to their affiliates who will continue the operation of dealerships located
upon such Initial Properties. See "Business and Properties -- Property
Descriptions and Lease Terms -- The Leases." In connection with the Formation
Transactions, due to potential adverse tax consequences to these Founding
Dealers, the Company has agreed not to sell certain Initial Properties owned by
affiliates of Messrs. Bowers, Braman and Douglas W. Schnitzer prior to the
expiration of certain lock-out periods. The lock-out periods applicable to
Initial Properties contributed by affiliates of Messrs. Braman and Douglas W.
Schnitzer are generally the earlier of ten years (20 years with respect to one
property owned by an affiliate of Mr. Braman), the sale or conversion of 75% of
the OP Units held by Messrs. Braman or Douglas W. Schnitzer, or their
affiliates, respectively, or the termination by their affiliated Initial Dealer
Lessees of their respective leases. The lock-out period applicable to Mr. Bowers
is generally the earlier of December 31, 2002 or the date upon which 75% of the
OP Units held by Mr. Bowers have been converted or sold. In addition, upon the
closing of the Formation Transactions (i) with respect to the Initial Properties
to be contributed by the Braman Group, Mr. Braman and his affiliates will
receive five-year warrants to purchase an aggregate of 70,000 Common Shares at
the initial public offering price and a cash payment (which is a transaction
cost to the Company) of approximately $631,000 in connection with the transfer
of such properties to the Operating Partnership and (ii) with respect to the
Initial Properties to be contributed by Momentum Motorcars, Douglas W. Schnitzer
or his affiliates, will receive a cash fee equal to 1% of the total purchase
price paid by the Company for such Initial Properties. The warrants to be issued
to Mr. Braman and affiliates may not be exercised for a period of one year after
the closing of the Formation Transaction with respect to the Braman Group.

The Company has entered into employment agreements with Jack I.
Tompkins, David L. Johnston and Bert Wollen, who are Executive Officers and
Trust Managers. Messrs. Tompkins, Johnston and Wollen, in connection with their
employment, Gerald W. Haddock, in connection with his appointment as a Trust
Manager, and Douglas W. Schnitzer, in connection with his appointment as a Trust
Manager and as the Chairman of the Executive Committee, will receive options
under the Company's Incentive Share Plan. See "-- Incentive Share Plan" and "--
Employment Agreements." The actual number of OP Units issued to each Founding
Dealer will be determined at the closing of the Formation Transactions by
dividing the purchase price of the Initial Properties contributed by such
Founding Dealer to the Operating Partnership (less the cash portion of the
purchase price and any Assumed Debt) by the initial public offering price per
Common Share. The number of Common Shares held by Jack I. Tompkins, Bert Wollen
and WS&B, the founding shareholders of the Company, will depend upon the actual
amount of OP Units issued in the Formation Transactions. Assuming an initial
offering price of $20 per Common Share, 7,934,818 OP Units will be issued in the
Formation Transactions, and the number of Common Shares held by Messrs. Tompkins
and Wollen and WS&B (excluding the Placement Shares) will be 179,250, 119,250
and 238,500 respectively. If the initial public offering price per Common Share
is $21, the number of OP Units issued will be 7,556,970, and the number of
Common Shares held by Messrs. Tompkins and Wollen and WS&B (excluding the
Placement Shares) will be 273,712, 213,712 and 427,424, respectively. If the
initial public offering price is $19, the number of OP Units issued will be
8,352,440, and the number of Common Shares held by Messrs. Tompkins and Wollen
and WS&B (excluding the Placement Shares) will be 74,845, 14,844 and 29,689,
respectively. As a result, notwithstanding the initial public offering price per
Common Share, an aggregate of 16,425,984 Common Shares and OP Units will be
outstanding on the closing of the Offering. In connection with his employment
agreement, David L. Johnston received 16,666 Common Shares and options to
purchase 33,334 Common Shares for $0.40 per share (such options to vest over a
two-year period). See "-- Employment Agreements."

<PAGE> 69

CERTAIN POLICIES AND OBJECTIVES

The following is a discussion of the Company's current policies with
respect to investments, financings and certain other activities. The Company's
policies with respect to these activities have been determined by management and
may be amended or revised from time to time at the discretion of the Board of
Trust Managers without a vote of the shareholders of the Company. No assurance
can be given that the Company's investment objectives will be attained or that
the value of the Company will not decrease. See "Risk Factors -- Changes in
Policies."

As the sole general partner of the Operating Partnership, the Company
will also determine the investment policies of the Operating Partnership. Under
the Partnership Agreement, future investments must generally be made through the
Operating Partnership. See "Partnership Agreement."

INVESTMENT POLICIES

Investment in Real Estate or Interests in Real Estate. The Company's
investment objectives are to provide quarterly cash distributions to its
shareholders and to achieve long-term capital appreciation in its shares through
increases in cash flows and the value of the Initial Properties and future
acquisitions. See "Business and Properties -- Business and Growth Strategy" and
" -- Property Descriptions and Lease Terms" for a discussion of the Initial
Properties and the Company's acquisition and other strategic objectives.

The Company intends to pursue its investment objectives primarily
through the ownership by the Operating Partnership of the Initial Properties and
additional Automotive Properties. Although the Company intends to focus its
activities on Automotive Properties in its target markets, future activity is
not limited to any geographic area or to a specified percentage of the Company's
assets. There is no limit on the amount or percentage of the Company's assets
that may be invested in any one property or any one geographic area. The Company
intends to engage in such activities in a manner consistent with its investment
objectives and the maintenance of its status as a REIT for federal income tax
purposes.

The Company also may participate with third parties in property
ownership through joint ventures or other types of co-ownership. Such
investments may permit the Company to own interests in larger assets without
unduly restricting diversification and, therefore, add flexibility in
structuring its portfolio. Equity investments may be subject to existing
mortgage financing and other indebtedness or such financing or indebtedness as
may be incurred in connection with acquiring or refinancing these investments.
Debt service with respect to such financing or indebtedness, as well as
indebtedness under Assumed Debt and advances under the Line of Credit, will have
priority over any distributions with respect to capital stock. The Company
intends to make investments in such a way that it will not be treated as an
investment company under the Investment Company Act of 1940, as amended.

Investments in Real Estate Mortgages. Although the Company's current
portfolio is anticipated to consist of, and the Company's business objectives
will emphasize, investments in Automotive Properties, the Company may, in the
discretion of the Board of Trust Managers, invest in mortgages and other types
of real estate interests consistent with the Company's qualification as a REIT.
Investments in real estate mortgages present the risk that one or more borrowers
may default under such mortgages and that the collateral securing such mortgages
may not be sufficient to enable the Company to recover its investment. The
Company may also, from time to time, retain a purchase money mortgage for a
portion of the sale price in connection with the disposition of a property.

Investments in Securities or Interests in Persons Primarily Engaged in
Real Estate Activities and Other Issuers. Although the Company has no present
intention to do so, it also may invest in securities of other REITs, other
entities engaged in real estate activities, or securities of other issuers
(including for the purpose of exercising control over such entities), subject to
the percentage ownership limitations, limitations on ownership of certain types
of assets and the gross income tests necessary for REIT qualification. See
"Federal Income Tax Considerations -- Taxation of the Company." The Company will
not engage in trading, underwriting or the distribution or sale of securities of
other issuers.

DISPOSITION POLICY

Management will periodically review the assets comprising the Company's
portfolio. The Company has no current intention to dispose of any of the Initial
Properties, although it reserves the right to do so. See "Business and
Properties -- Property Descriptions and Lease Terms." Disposition decisions
relating to the Company's assets will be made based upon several factors,
including, but not limited to: (i) the potential for continuing increases in
cash flow and value, (ii) the sales price, (iii) the strategic fit of the
properties with the

<PAGE> 70

Company's portfolio, (iv) the potential for, or the existence of, any
environmental or regulatory issues, (v) alternative uses of capital, (vi)
maintaining qualification as a REIT and other tax-related considerations and
(vii) the terms of any lock-out agreements in connection with the contribution
of such assets which may limit the ability of the Company to sell such assets.
See "Federal Income Tax Considerations -- Taxation of the Company."

FINANCING POLICIES

The Company intends to make additional investments in Automotive
Properties and may incur indebtedness to make such investments or to meet the
distribution requirements imposed by the REIT provisions of the Code to the
extent that cash flows from the Company's investments and working capital are
insufficient to finance such acquisitions. The Company has adopted a policy to
limit its total consolidated indebtedness so that, at the time any debt is
incurred, the Company's debt to total market capitalization ratio does not
exceed 40%. Upon the closing of the Offering and the Formation Transactions, the
Company's debt to total market capitalization ratio is anticipated to be
approximately 10.9%. The Declaration of Trust and Bylaws, however, do not limit
the amount or percentage of indebtedness that the Company may incur. The Company
may, from time to time, modify its debt policy in light of current economic
conditions, relative costs of debt and equity capital, market values of its
properties, general conditions in the market for debt and equity securities,
fluctuations in the market price of the Common Shares, growth and acquisition
opportunities, the Company's continued REIT qualification requirements and other
factors. Accordingly, the Company may increase or decrease its debt to total
market capitalization ratio beyond the limits described above. If these policies
were changed, the Company could become more highly leveraged, resulting in an
increased risk of default on its obligations and a related increase in debt
service requirements that could have a material adverse effect on the business,
financial condition and results of operations of the Company and its ability to
make distributions to shareholders. See "Risk Factors -- Risks of Leverage; No
Limitation on Indebtedness" and "-- Changes in Policies."

The Company has established its debt policy relative to the total
market capitalization of the Company computed at the time debt is incurred,
rather than relative to the book value of its assets. The Company believes that
the book value of its assets does not accurately reflect its ability to borrow
and to meet debt service requirements and that a debt to total market
capitalization ratio, therefore, provides a more appropriate indication of
leverage. A debt to total market capitalization ratio, however, is based, in
part, upon the aggregate market value of the outstanding Common Shares and will
fluctuate with changes in the price of the Common Shares (and the issuance of
additional Common Shares). Accordingly, because the measurement of the Company's
total consolidated indebtedness to total market capitalization is made at the
time debt is incurred, the debt to total market capitalization ratio could later
exceed the 40% level. The debt to total market capitalization ratio is subject
to change at the discretion of the Trust Managers.

To the extent that the Board of Trust Managers desires to obtain
additional capital, the Company may raise such capital through additional public
and private equity offerings, debt financings (including the borrowing of funds
pursuant to the Line of Credit, if obtained), retention of cash flow (subject to
satisfying the Company's distribution requirements under the REIT provisions of
the Code) or a combination of these methods. The Company's debt may consist of a
combination of property level debt and corporate level debt, and financing may
consist of floating and/or fixed rate debt. Borrowings may be unsecured or
secured by any or all of the assets of the Company and may have full or limited
recourse to all or any portion of the assets of the Company. Indebtedness may be
in the form of bank borrowings, purchase money obligations to sellers of
properties, publicly or privately placed debt instruments or financing from
institutional investors or other lenders. The proceeds from any borrowings by
the Company may be used (subject to limitations that may be contained in the
instruments governing such indebtedness) to pay distributions, to provide
working capital, to pay existing indebtedness or to finance acquisitions,
expansions or selective development of new properties. The Company has not
established any limit on the number or amount of mortgages that may be placed on
any single property or on its portfolio.

CONFLICT OF INTEREST POLICIES

The Company's policy is to require that all transactions between the
Company and its Trust Managers, officers and other affiliates be on terms no
less favorable to the Company than could be obtained from unaffiliated third
parties, and that all such transactions be approved by a majority of the
disinterested members of the Board of Trust Managers. Under Texas law, any
contract or other transaction between a REIT and one or more of the trust
managers or officers of the REIT, or between a REIT and any other REIT,
corporation, partnership, association or other organization, is not void or
voidable solely because one or more of the trust managers or officers of the
REIT are trust managers, directors or officers or have a financial interest in
the other REIT, corporation, partnership, association or other organization;
solely because the trust manager or officer is present at or participates in the
meeting of the trust managers or committee of trust managers that authorizes the
contract or transaction; or solely because the trust manager's or officer's
votes are counted for the authorization if: (i) the material facts as to the
trust manager's or officer's relationship or interest as to the contract or
transaction are

<PAGE> 71

disclosed or are known to the trust managers or the committee, and the trust
managers or committee in good faith authorizes the contract or transaction by
the affirmative vote of a majority of the disinterested trust managers, even
though the number of disinterested trust managers is less than a quorum; (ii)
the material facts as to the trust manager's or officer's relationship or
interest as to the contract or transaction are disclosed or are known to the
shareholders entitled to vote on the contract or transaction, and the contract
or transaction is specifically approved in good faith by the vote of the
shareholders; or (iii) the contract or transaction is fair as to the real estate
investment trust as of the time the contract or transaction is authorized,
approved or ratified by the trust managers a committee of trust managers or the
shareholders.

CERTAIN OTHER POLICIES

The Company has authority to offer Common Shares, Preferred Shares or
options to purchase shares of beneficial interest in exchange for property and
may authorize repurchases of Common Shares or other securities in the open
market or otherwise and may engage in such activities in the future. The Board
of Trust Managers, however, has no present intention of causing the Company to
repurchase any shares of beneficial interest. The Company may issue Preferred
Shares from time to time, in one or more series, as authorized by the Board of
Trust Managers without shareholder approval. See "Description of Shares of
Beneficial Interest -- Preferred Shares." The Company has not engaged in the
trading of securities of other issuers for the purposes of exercising control,
and does not presently intend to do so. The Company has not made any loans to
third parties, although the Company may in the future make loans to third
parties, including, without limitation, to joint ventures in which it
participates. The Company intends to make investments in such a manner as to
maintain its qualification as a REIT, unless because of circumstances or changes
in the Code (or the Treasury Regulations), the Board of Trust Managers
determines that it is no longer in the best interest of the Company to continue
to qualify as a REIT.

The Company will be required to file reports and other information with
the Securities and Exchange Commission (the "Commission") pursuant to the
Exchange Act. In addition to applicable legal or New York Stock Exchange
requirements, if any, holders of Common Shares will receive annual reports
containing audited financial statements with a report thereon by the Company's
independent certified public accountants.

<PAGE> 72

PARTNERSHIP AGREEMENT

The following summarizes certain provisions of the First Amended and
Restated Agreement of Limited Partnership of ARTA Operating Limited Partnership,
dated as of the closing of the Formation Transactions, among the Company and the
Founding Dealers (the "Partnership Agreement"), and is qualified in its entirety
to the Partnership Agreement, which is filed as an exhibit to the Registration
Statement of which this Prospectus is a part.

MANAGEMENT

The Operating Partnership is organized as a Delaware limited
partnership pursuant to the terms of the Partnership Agreement. Pursuant to the
Partnership Agreement, the Founding Dealers and any subsequent contributor who
becomes a party to the Partnership Agreement (collectively, the "Limited
Partners" and, together with the Company, the "Partners") are Limited Partners,
and the Company is the sole general partner, of the Operating Partnership. The
Company, in its capacity as general partner, will be the sole manager of the
Operating Partnership's business and, subject to certain protective rights of
the Limited Partners described below, will have the right and power to make all
decisions and take any and every action with respect to the property, business
and affairs of the Operating Partnership, including, but not limited to, the
power and authority to acquire, encumber or dispose of any or all of the assets
of the Operating Partnership.

The approval by Limited Partners who own more than 50% of the interests
in the Operating Partnership held by the limited partners is required to: (a) do
any act in contravention of the Partnership Agreement or any amendment thereto;
(b) do any act that would make it impossible to carry on the ordinary business
of the Operating Partnership, except to the extent that such act is specifically
permitted by the terms of the Partnership Agreement; or (c) confess a judgment
against the Operating Partnership.

AMENDMENTS

Generally, the Company, as general partner of the Operating
Partnership, is granted a power of attorney (by the Limited Partners) to amend
the Partnership Agreement. However, the consent of Limited Partners holding 67%
or more of the limited partnership interests in the Operating Partnership is
required with respect to certain amendments to the Partnership Agreement,
including amendments which (i) modify the allocation of profits, losses or
distributions among the Partners, (ii) modify the issuance and conversion of OP
Units, and (iii) modify the provisions related to the transfer of OP Units. The
written consent of the general partner and any Partner adversely affected is
required to amend the Partnership Agreement so as to enlarge the obligation of
any Partner to make capital contributions to the Operating Partnership. The
written consent of all the Partners is required to amend these amendment
limitations.

TRANSFERS OF OP UNITS

The Partnership Agreement generally provides that the Limited Partners
may not sell, assign, distribute or otherwise transfer any of their OP Units
without the consent of the Company.

INITIAL AND ADDITIONAL CAPITAL CONTRIBUTIONS

The Company will contribute to the Operating Partnership substantially
all of the net proceeds of the Offering, in consideration of which the Company
will receive a 1% general partnership interest and an approximate 51% limited
partnership interest (54% if the Underwriter's over-allotment option is
exercised in full) in the Operating Partnership. Pursuant to the Partnership
Agreement, the Limited Partners will receive OP Units, which are units of
ownership interest in the Operating Partnership, in exchange for the
contribution of properties to the Operating Partnership.

The Partnership Agreement provides that if the Operating Partnership
requires additional funds or other property, as determined by the Company,
additional funds may be contributed by the Company or any Limited Partner
(provided that such Limited Partner is willing to do so and the Company consents
thereto) as additional capital contributions. If and as any Partner makes
additional capital contributions to the Operating Partnership, such Partner will
receive additional OP Units and/or other securities of the Operating
Partnership. The Company also has the right (i) to loan to the Operating
Partnership the net proceeds of loans obtained or debt securities issued by the
Company so long as the terms of such loan to the Operating Partnership are
substantially equivalent to the corresponding loan obtained or debt securities
issued by the Company and/or (ii) to raise additional funds required for the
Operating Partnership by causing the Operating Partnership to borrow the
necessary funds from third parties on such terms and conditions as the Company
deems appropriate.

<PAGE> 73

The Partnership Agreement also provides that, if the Company elects to cause the
Operating Partnership to borrow the additional funds, or if the Operating
Partnership issues a guaranty, indemnity or similar undertaking in connection
with the indebtedness of the Company, one or more of the Operating Partnership's
assets may be encumbered to secure the loan or undertaking.

REDEMPTION OF OP UNITS

Pursuant to the Partnership Agreement, the Company has granted each
holder of OP Units the right to request the redemption of any or all of its OP
Units for cash (in a per OP Unit amount based upon a ten-day average of the last
reported sale price per share of Common Shares) (the "Redemption Rights"). Such
right may be exercised by a Limited Partner at any time after the first
anniversary of the closing of this Offering, upon not less than ten days' prior
written notice to the Operating Partnership and the Company. Upon receipt of
such a request, the Company may, in its discretion, in lieu of causing the
Operating Partnership to redeem such Limited Partner's OP Units for cash, issue
to such Limited Partner a number of Common Shares equal to the OP Units offered
by such Limited Partner for redemption. The Partnership Agreement also provides
that, in the event of any change in the outstanding Common Shares by reason of
any share dividend, split, recapitalization, merger, consolidation, combination,
exchange of shares or other similar change, each holder's OP Units will be
proportionately adjusted so that one OP Unit remains exchangeable for one Common
Share. However, Limited Partners will not have the right to redeem their OP
Units if, upon issuance of Common Shares for such OP Units, (i) the Company
would, as a result thereof, no longer qualify (or it would be likely that the
Company no longer would qualify) as a REIT under the Code or (ii) such exchange
would constitute or be likely to constitute a violation of applicable federal or
state securities laws or would violate any applicable provisions of the
organizational documents of the Company (including without limitation the
restrictions on ownership of Common Shares set forth in the Declaration of
Trust). See "Description of Shares of Beneficial Interest -- Certain Provisions
of Texas Law and the Company's Declaration of Trust and Bylaws."

TERM

The Operating Partnership will be dissolved and its affairs wound up
upon the earliest to occur of the following events: (a) December 31, 2097; (b)
the sale of all or substantially all of the assets of the Operating Partnership;
(c) the agreement of those Partners holding a majority-in-interest of the
interests in the Operating Partnership determining that the Operating
Partnership should be dissolved; or (d) unless reconstituted upon bankruptcy,
the entry of a final judgment, order or decree of a court of competent
jurisdiction adjudicating as bankrupt either the Operating Partnership or the
general partner, and the expiration without appeal of the period, if any,
allowed by applicable law to appeal therefrom.

<PAGE> 74

PRINCIPAL SHAREHOLDERS

The following table sets forth certain information regarding the
beneficial ownership of Common Shares, as adjusted to give effect to this
Offering, and the Formation Transactions, by each Trust Manager, by each
Executive Officer, by all Trust Managers (including persons who have agreed to
become Trust Managers upon the closing of Formation Transactions) and Executive
Officers of the Company as a group and by each person who is expected to be the
beneficial owner of 5% or more of the outstanding Common Shares immediately
following the completion of this Offering and the Private Placement. Except as
otherwise indicated, the beneficial owners listed below, based on information
furnished by such owners, have sole voting and investment power with respect to
all of the Common Shares shown as beneficially owned by such person, subject to
community property laws where applicable. The number of shares represents the
number of Common Shares held by the person indicated or, if applicable, the
number of Common Shares for which OP Units held by such person may be exchanged
(if the Company so elects to exchange Common Shares in redemption of OP Units).
Jack I. Tompkins, David L. Johnston, Bert Wollen and Douglas W. Schnitzer have
agreed not to sell Common Shares (including Common Shares issued in exchange for
OP Units) for a period of two years following the closing of the Offering
without the consent of Smith Barney Inc. See "Shares Eligible for Future Sale --
Lock-up Agreements."

Number of Common Number of Common
Shares Beneficially Owned Shares Beneficially Owned
Prior to the Offering (1) After the Offering (1)
----------------------------- ----------------------------
Percent Percent
Name and Address of Beneficial Owner Shares of Class Shares of Class
- ------------------------------------ -------- -------- -------- --------
<S> <C> <C> <C> <C>
Jack I. Tompkins (2)(3) 179,250 ___% 329,250 ___%
David L. Johnston (2)(3) 16,666 ___ 27,777 *
Bert Wollen (2)(3) 119,250 ___ 194,250 ___
Nelson E. Bowers, II (2)(4)(5) -- -- -- *
Norman Braman (2)(4)(5) -- -- 70,000 --
Douglas W. Schnitzer (2)(4)(5) -- -- _______ *
Gerald W. Haddock (2)(3) -- -- _______ *
All Trust Managers and Executive Officers as a
group (7 persons) (3)(4)(5) _______ ___% _______ ___%

</TABLE>

- ------------
* Less than 1%.

(1) The Operating Partnership will have _____ OP Units outstanding as of
the closing of this Offering (assuming an initial public offering price
of $20 per Common Share), of which_____ will be owned by the Company.
At the Company's option, OP Units (other than those owned by the
Company) offered for redemption may be exchanged for Common Shares on a
one-for-one basis after the first anniversary of the closing of this
Offering. The total number of outstanding Common Shares used in
calculating the foregoing percentages assumes that no OP Units are
exchanged for Common Shares.

(2) The address for the Trust Managers and Executive Officers of the
Company is Campbell Centre II, 8150 N. Central Expressway, Suite 1233,
Dallas, Texas 75206.

(3) Includes Common Shares to be purchased in the Private Placement, as
follows: Mr. Tompkins, 150,000 Common Shares; and Mr. Wollen, 75,000
Common Shares. See "Organizations and Formation Transactions." Includes
options and warrants to purchase Common Shares which are exercisable
within 60 days from the date of this Prospectus, as follows: Mr.
Tompkins, ___ Common Shares; Mr. Johnston, 11,111 Common Shares; Mr.
Wollen ___ Common Shares; Mr. Braman, 70,000 Common Shares; Mr.
Schnitzer, ___ Common Shares; and Mr. Haddock, ___ Common Shares.
Excludes options to purchase Common Shares which are not exercisable
within 60 days from the date of this Prospectus as follows: Mr.
Tompkins, ___ Common Shares; Mr. Johnston, 22,223 Common Shares; and
Mr. Wollen, ___ Common Shares; Mr. Schnitzer, ___ Common Shares; and
Mr. Haddock, ___ Common Shares.

(4) Messrs. Bowers, Braman and Douglas W. Schnitzer have agreed to become
Trust Managers upon the closing of Formation Transactions with respect
to their affiliates, the Bowers Group, the Braman Group and Park Place,
respectively. Upon the closing of Formation Transactions with the
Bowers Group, the Braman Group and Park Place, respectively, affiliates
of Messrs. Bowers, Braman and Douglas W. Schnitzer will own an
aggregate of ___, ___ and ___ OP Units, respectively, that, upon tender
for redemption by the holders thereof, at the Company's option may be
exchanged for Common Shares on a one-for-one basis after the first
anniversary of the closing of this Offering. However, the aggregate
number of OP Units that may be exchanged for Common Shares is subject
to the Ownership Limit and certain other limitations.

(5) Does not include the Common Shares that may be issued in exchange for
OP Units issued to affiliates of Messrs. Bowers, Braman or Douglas W.
Schnitzer in connection with the Formation Transactions. Assuming the
exchange of OP Units issued upon acquisition of Initial Properties from
the Bowers Group, the Braman Group and Park Place. Messrs. Bowers,
Braman and Douglas W. Schnitzer and their respective affiliates will
beneficially own ____, ____ and ____ Common Shares at the closing of
the Offering, respectively, representing ___%, ___% and ___% of the
outstanding Common Shares,

<PAGE> 75

respectively, on a fully-diluted and exchanged basis. The total number
of outstanding Common Shares used in calculating the foregoing
percentages assumes that all Formation Transactions are consummated and
all OP Units issued in the Formation Transactions are exchanged for
Common Shares.

DESCRIPTION OF SHARES OF BENEFICIAL INTEREST

GENERAL

The authorized shares of beneficial interest of the Company consist of
200,000,000 Common Shares and 20,000,000 Preferred Shares. As of the date of
this Prospectus, there were outstanding 1,629,166 Common Shares held by 16
shareholders of record. Under the Texas REIT Act, shareholders are generally not
liable for a REIT's obligations or liabilities.

The following summarizes certain provisions of the Common Shares, the
Preferred Shares, the Declaration of Trust and the Bylaws. For further details,
see the Declaration of Trust and the Bylaws, which are included as exhibits to
the Registration Statement of which this Prospectus is a part.

COMMON SHARES

Subject to the provisions of the Declaration of Trust regarding the
restrictions on transfer of Common Shares, each outstanding Common Share is
entitled to one vote per share on all matters submitted to a vote of
shareholders, including the election of Trust Managers, and, except as otherwise
specifically required by law or the Declaration of Trust or as specifically
provided in any resolution or resolutions of the Trust Managers providing for
the issuance of any particular series of Preferred Shares, the exclusive voting
power of the Company is vested in the Common Shares. The Declaration of Trust
prohibits cumulative voting for the election of Trust Managers. All Common
Shares issued in this Offering will be, when issued and paid for, fully paid and
nonassessable, and the holders thereof will not have preemptive rights. Subject
to the provisions of the Declaration of Trust regarding the restrictions on
transfer of Shares, holders of Common Shares are entitled to such distributions
as may be declared from time to time by the Trust Managers out of funds legally
available therefor and to share ratably in the assets of the Company legally
available for distribution to shareholders in the event of the Company's
liquidation or dissolution or a winding up after payment on or adequate
provision for all known debts and liabilities of the Company. See "Distribution
Policy." The rights, preferences and privileges of holders of Common Shares are
subject to, and may be adversely affected by, the rights of holders of Preferred
Shares of any series that the Company may designate and issue in the future.
Holders of Common Shares have no preference, conversion, exchange or redemption
rights.

PREFERRED SHARES

The Company is authorized, without the approval of shareholders of the
Company, to issue one or more series of Preferred Shares, and the number of
shares in each series, designations, preferences, conversion, exchange or other
rights, participations, voting powers, options, restrictions, limitations,
special rights or relations, limitations as to dividends, qualifications or
terms, or conditions of redemption thereof will be determined by resolution of
the Trust Managers. The issuance of Preferred Shares, while providing desirable
flexibility in connection with possible acquisitions and other corporate
purposes, could have the effect of making it more difficult for a third party to
acquire, or of discouraging a third party from attempting to acquire, a majority
of the outstanding voting shares of the Company. The Company has no present
intention to issue Preferred Shares.

CERTAIN PROVISIONS OF TEXAS LAW AND THE COMPANY'S DECLARATION OF TRUST AND
BYLAWS

Permitted Investments. While the Company plans to concentrate its
investments in Automotive Properties, under the Declaration of Trust, the
Company may purchase, hold, lease, manage, sell, exchange, develop, subdivide
and improve other real property and interests in real property. Such
diversification, if it should occur, may serve as a hedge against the risk of
having all of the Company's investments limited to a single asset group, but
will also expose the Company to the risk of owning and operating assets not
directly related to its primary business. See "Certain Policies and Objectives
- -- Investment Policies."

Management Liability and Indemnification. The Declaration of Trust
contains certain provisions permitted under Texas law relating to the liability
of trust managers and officers. Such provisions eliminate the liability of Trust
Managers and officers to the Company for any act, omission, loss, damage or
expense arising from the performance of their duties for the Company except for
their own willful misfeasance or malfeasance or negligence. The Declaration of
Trust also contains provisions obligating the Company to indemnify its Trust
Managers and officers to the fullest extent permitted by Texas law. The Company
believes that these provisions should assist the Company

<PAGE> 76

in attracting and retaining qualified individuals to serve as Trust Managers and
officers. See "Management -- Indemnification of Trust Managers and Officers."

Restrictions on Transfer. For the Company to qualify as a REIT under
the Code: (i) not more than 50% in value of its outstanding capital stock may be
owned, directly or indirectly, by five or fewer individuals (as defined in the
Code to include certain entities) during the last half of a taxable year; (ii)
the capital stock of the Company must be beneficially owned by 100 or more
persons during at least 335 days of a taxable year of 12 months or during a
proportionate part of a shorter taxable year; and (iii) certain percentages of
the Company's gross income must be from particular activities. See "Federal
Income Tax Considerations." Because the Trust Managers believe it is essential
for the Company to continue to qualify as a REIT, the Declaration of Trust,
subject to certain exceptions, provides that no holder other than a person
approved by the Trust Managers, in their sole discretion (provided that such
approval will not result in the termination of the status of the Company as a
REIT), may own, or be deemed to own by virtue of the attribution provisions of
the Code, more than the Ownership Limit of the lesser of the number or value (in
either case as determined in good faith by the Trust Managers) of the total
outstanding Common Shares. The Trust Managers may waive the Ownership Limit if
evidence satisfactory to the Trust Managers is presented that such ownership
will not then or in the future jeopardize the Company's status as a REIT. The
foregoing restrictions on transferability and ownership will not apply if the
Trust Managers determine that it is no longer in the best interests of the
Company to attempt to qualify, or to continue to qualify, as a REIT. Any
transfer or issuance of Common Shares or any security convertible into Common
Shares that would (x) create a direct or indirect ownership of Common Shares in
excess of the Ownership Limit, (y) with respect to transfers only, result in the
Common Shares being owned by fewer than 100 persons, or (z) result in the
Company being "closely held" within the meaning of Section 856(h) of the Code,
will be null and void, and the intended transferee will acquire no rights to the
Common Shares. The Company's Declaration of Trust provides that any or all
Excess Securities that are proposed to be transferred pursuant to a transfer
which, if consummated, would result in the intended transferee owning Common
Shares in excess of the Ownership Limit, or would otherwise jeopardize the REIT
status of the Company, will be deemed to be transferred to a trust ("Beneficial
Trust") to be held for the exclusive benefit of a charitable beneficiary. The
trustee of the Beneficial Trust, as record holder of the Excess Securities, will
be entitled to receive all dividends and distributions as may be declared by the
Board of Trust Managers on such Excess Securities for the benefit of the
charitable beneficiary. The trustee of the Beneficial Trust may select a
transferee to whom the Excess Securities may be sold without exceeding the
Ownership Limit, and the intended transferee (as to whom the transfer of the
Excess Securities would violate the Ownership Limit) will receive from the
trustee of the Beneficial Trust the lesser of (i) such sale proceeds or (ii) the
price per share the intended transferee paid for the Excess Securities (or, in
the case of a gift or devise to the intended transferee, the price per share
equal to the market value per share on the proposed date of transfer to the
intended transferee). In addition, the Company has the right to purchase any
Excess Securities for a period of 90 days after the transfer that created such
Excess Securities. Any dividend or distribution paid to a proposed transferee on
Excess Securities prior to the discovery by the Company that such Excess
Securities have been transferred in violation of the provisions of the
Declaration of Trust will be paid to the trustee of the Beneficial Trust for the
benefit of the charitable beneficiary. The trustee of the Beneficial Trust shall
be entitled to vote all Excess Securities. If the foregoing transfer
restrictions are determined to be void or invalid by virtue of any legal
decision, statute, rule or regulation, then the intended transferee of any
Excess Securities may be deemed, at the option of the Company, to have acted as
an agent on behalf of the Company in acquiring such Excess Securities and to
hold such Excess Securities on behalf of the Company.

Annual Shareholder Meetings. Pursuant to the Texas REIT Act and the
Bylaws, annual meetings of shareholders may be called by the Trust Managers to
elect Trust Managers and transact such other business as may properly be brought
before such meetings.

Special Shareholder Meetings. Pursuant to the Texas REIT Act and the
Bylaws, special meetings of shareholders may be called by the Trust Managers,
any officer of the Company or the holders of at least 10% of all of the shares
entitled to vote at such meeting. The effect of this provision permitting
holders of 10% of the shares to call a special meeting combined with the
restrictions on transfer described above might deter or prevent special meetings
from being called by shareholders of the Company.

Distributions. The Declaration of Trust authorizes the Trust Managers
from time to time to declare, and the Company to pay, distributions on
outstanding shares in cash, property or in shares, except when (i) the Company
is unable, or when the payment of such dividend would result in the Company
being unable, to pay its debts as they become due in the usual course of its
business or (ii) the amount of the distribution would exceed the surplus of the
Company, except as set forth in the Texas REIT Act. The term "surplus" is
defined by reference to the Texas Business Corporation Act, as amended, as the
excess of the net assets over stated capital. The general effect of this
provision is to afford the Company greater flexibility in the means by which it
may pay distributions to shareholders.

Redemption of Shares. Pursuant to the Declaration of Trust, the Company
may purchase or redeem its own shares, subject to the limitations of the Texas
REIT Act, which allows REITs formed thereunder to redeem or repurchase shares,
unless (i) after giving effect

<PAGE> 77

thereto, the Company would be insolvent or (ii) the amount paid therefor would
exceed the surplus of the Company. This provision affords the Company with a
means of distributing assets by acquiring shares, as well as the ability to
redeem shares in transactions in which such a redemption may be beneficial to
the Company and its shareholders.

Voting Rights. The Bylaws provide that each shareholder will be
entitled at each meeting of shareholders to one vote on each matter submitted to
a vote at such meeting for each Share having voting rights registered in his,
her or its name on the books of the Company at the time of the closing of the
share transfer books (or the record date) for such meeting. When a quorum is
present at any meeting (and notwithstanding the subsequent withdrawal of enough
shareholders to leave less than a quorum present), the votes of a majority of
the shares entitled to vote, present in person or represented by proxy, will
decide any matter submitted to such meeting, unless the matter is one upon which
by law or by express provision of the Declaration of Trust or the Bylaws the
vote of a greater number is required, in which case the vote of such greater
number will govern and control the decision of such matter. In determining the
number of shares entitled to vote, shares abstaining from voting or not voted on
a matter (including elections) will not be treated as entitled to vote.

Shareholder Action Without a Meeting. The Bylaws provide that any
action to be taken at a meeting of shareholders may be taken without a meeting
if a consent in writing is signed by all of the shareholders entitled to vote
with respect to the subject matter thereof. This requirement for unanimity will
make it more difficult for shareholders to take actions that are opposed by the
Board of Trust Managers and will make removal of Trust Managers more difficult.

Election and Removal of Trust Managers. The Bylaws provide that
vacancies on the Board of Trust Managers may be filled by successor Trust
Managers either appointed by a majority of the remaining Trust Managers or
elected by the vote of the holders of at least two-thirds of the outstanding
shares at an annual or special meeting of shareholders. The Bylaws also provide
that nominations of persons for election as Trust Managers may be made at any
annual meeting of shareholders (i) by or at the direction of the Trust Managers
or (ii) by any shareholder of the Company who is a shareholder of record on the
date of the giving of notice provided for in the Bylaws and on the record date
for the determination of shareholders entitled to vote at such annual meeting
and who complies with the notice procedures set forth in the Bylaws. The Bylaws
require Trust Manager nominees who have not been previously elected as Trust
Managers by the shareholders of the Company to be elected at the annual meeting
of shareholders by the affirmative vote of two-thirds of the outstanding shares
entitled to vote thereon. The Bylaws also require the affirmative vote of
two-thirds of the total votes authorized to be cast by shares then outstanding
and entitled to vote thereon to remove a Trust Manager.

Business Combinations. The Declaration of Trust requires that, except
in certain circumstances, a Business Combination (as defined below) between the
Company and a Related Person (as defined below) must be approved by the
affirmative vote of the holders of 80% of the outstanding Common Shares,
including the affirmative vote of the holders of not less than 50% of the
outstanding Common Shares not owned by the Related Person. However, the 50%
voting requirement referred to is not applicable if the Business Combination is
approved by the affirmative vote of the holders of not less than 90% of the
outstanding Common Shares.

The Declaration of Trust provides that a "Business Combination" is: (i)
any merger or consolidation, if and to the extent permitted by law, of the
Company or a subsidiary, with or into a Related Person; (ii) any sale, lease,
exchange, mortgage, pledge, transfer or other disposition of more than 35% of
the book value of the total assets of the Company and its subsidiaries (taken as
a whole) as of the end of the fiscal year ending prior to the time the
determination is being made, to or with a Related Person; (iii) the issuance or
transfer by the Company or a subsidiary (other than by way of a pro rata
distribution to all shareholders) of any securities of the Company or a
subsidiary of the Company to a Related Person; (iv) any reclassification of
securities (including any reverse Share split) or recapitalization by the
Company, the effect of which would be to increase the voting power of the
Related Person; (v) the adoption of any plan or proposal for the liquidation or
dissolution of the Company proposed by or on behalf of a Related Person which
involves any transfer of assets, or any other transaction, in which the Related
Person has any direct or indirect interest (except proportionally as a
shareholder); (vi) any series or combination of transactions having, directly or
indirectly, the same or substantially the same effect as any of the foregoing;
and (vii) any agreement, contract or other arrangement providing, directly or
indirectly, for any of the foregoing.

A "Related Person" generally is defined in the Declaration of Trust to
include any individual, corporation, partnership or other person and the
affiliates and associates thereof which individually or together is the
beneficial owner in the aggregate of more than 50% of the outstanding Common
Shares.

The 80% and 50% voting requirements outlined above will not apply,
however, if: (i) the Trust Managers by a vote of not less than 80% of the Trust
Managers then holding office (a) have expressly approved in advance the
acquisition of shares that caused the Related Person to become a Related Person,
or (b) have expressly approved the Business Combination prior to the date on
which the Related Person

<PAGE> 78

involved in the Business Combination becomes a Related Person; or (ii) the
Business Combination is solely between the Company and another entity, 100% of
the voting shares, or comparable interests, of which is owned directly or
indirectly by the Company; or (iii) the Business Combination is proposed to be
consummated within one year after the consummation of a Fair Tender Offer (as
defined in the Declaration of Trust) by the Related Person in which Business
Combination the cash or fair market value of the property, securities or other
consideration to be received per Common Share by all remaining holders of Common
Shares in the Business Combination is not less than the price offered in the
Fair Tender Offer; or (iv) all of the following conditions shall have been met:
(A) the Business Combination is a merger or consolidation, the consummation of
which is proposed to take place within one year of the date of the transaction
pursuant to which such person became a Related Person and the cash or fair
market value of the property, securities or other consideration to be received
per share by all remaining holders of Common Shares in the Business Combination
is not less than the highest per-share price, with appropriate adjustments for
recapitalization and for share splits and share dividends, paid by the Related
Person in acquiring any of its holdings of Common Shares; (B) the consideration
to be received by such holders is either cash or, if the Related Person has
acquired the majority of its holdings of Common Shares for a form of
consideration other than cash, in the same form of consideration with which the
Related Person acquired such majority; (C) after such person has become a
Related Person and prior to consummation of such Business Combination: (1) there
has been no reduction in the annual per share rate of dividends, if any, paid on
the Shares (adjusted as appropriate for recapitalizations and for share splits,
reverse share splits and share dividends), except any reduction in such rate
that is made proportionately with any decline in the Company's net income for
the period for which such dividends are declared and except as approved by a
majority of the Trust Managers continuing in office and (2) such Related Person
has not received the benefit, directly or indirectly (except proportionately as
a shareholder), of any loans, advances, guarantees, pledges or other financial
assistance or any tax credits or other tax advantages provided by the Company
prior to the consummation of such Business Combination (other than in connection
with financing a Fair Tender Offer); and (D) a proxy statement that conforms in
all respect with the provisions of the Exchange Act and the rules and
regulations thereunder is mailed to holders of the Common Shares at least 45
days prior to the consummation of the Business Combination for the purpose of
soliciting shareholder approval of the Business Combination; or (v) the Rights
(as hereinafter defined) have become exercisable.

If a person has become a Related Person and within one year after the
date of transaction pursuant to which the Related Person became a Related Person
(the "Acquisition Date"), (x) a Business Combination meeting all of the
requirements of clause (iv) above regarding the applicability of the 80% voting
requirement has not been consummated, (y) a Fair Tender Offer has not been
consummated and (z) the Company has not been dissolved and liquidated, then, in
such event the beneficial owner of each Common Share (not including shares
beneficially owned by the Related Person) will have the right (individually, a
"Right" and collectively, the "Rights"), which may be exercised subject to
certain conditions, commencing at the opening of business on the one-year
anniversary of the Acquisition Date and continuing for a period of 90 days
thereafter (the "Exercise Period"), subject to certain extensions, to sell to
the Company on the terms set forth therein one Common Share upon exercise of
such Right. At 5:00 P.M., Dallas, Texas time, on the last day of the Exercise
Period, each Right not exercised will become void and all rights in respect
thereof shall cease as of such time.

These provisions may delay, deter or prevent a change in control of the
Company, even where such change in control could be beneficial to the Company's
shareholders, and may also deter tender offers for Common Shares, even where
such offers may be attractive to shareholders, or limit the opportunity of
shareholders to receive a premium for their Common Shares that might otherwise
exist if an investor were attempting to effect a change in control of the
Company. See "Risk Factors -- Ownership Limits" and "-- Anti-Takeover
Provisions."

Approval of Limited Partners. Certain actions relating to the Operating
Partnership and the Company's interest therein require approval of the Limited
Partners. See "Partnership Agreement -- Management."

Amendments to the Declaration of Trust and the Bylaws. The Declaration
of Trust may be amended from time to time by the affirmative vote of the holders
of at least two-thirds of the outstanding voting Shares. However, the provisions
of the Declaration of Trust that relate to (i) the prohibition against engaging
in non-real estate investment trust businesses, (ii) approval of Business
Combinations, (iii) the number and removal of Trust Managers, (iv) Share
ownership requirements and (v) the amendment of the Declaration of Trust, may
not be amended or repealed, and provisions inconsistent therewith may not be
adopted, except with the affirmative vote of the holders of at least 80% of the
outstanding voting Shares.

The Bylaws may be amended: (a) with respect to all Bylaw provisions, by
the affirmative vote of a majority of the Trust Managers or (b)(1) with respect
to the provisions of the Bylaws that relate to business at the annual meeting,
the election, nomination and removal of Trust Managers, vacancies on the Board
of Trust Managers and amendment of the Bylaws, by the affirmative vote of the
holders of two-

<PAGE> 79

thirds of the outstanding Shares or (2) with respect to all other provisions of
the Bylaws, by the affirmative vote of the holders of a majority of the
outstanding Shares.

TRANSFER AGENT

The transfer agent and the registrar for the Common Shares is
__________________.

SHARES ELIGIBLE FOR FUTURE SALE

Prior to the date of this Prospectus, there has been no public market
for the Common Shares. The Company will apply to the New York Stock Exchange to
have the Common Shares listed thereon, subject to official notice of issuance.
No prediction can be made as to the effect, if any, that future sales of Common
Shares (including sales pursuant to Rule 144) or the availability of Common
Shares for future sale will have on the market price prevailing from time to
time. Sales of substantial amounts of Common Shares (including Common Shares
issued upon the exercise of options or the exchange of OP Units), or the
perception that such sales could occur, could adversely affect prevailing market
prices of the Common Shares and impair the Company's ability to obtain
additional capital through the sale of equity securities. See "Risk Factors --
Shares Eligible for Future Sale." For a description of certain restrictions on
transfers of Common Shares held by certain shareholders of the Company, see
"Underwriting" and "Description of Shares of Beneficial Interest."

Upon the closing of this Offering and of the Formation Transactions,
the Company will have outstanding 8,491,166 Common Shares (9,631,166 Common
Shares upon exercise of the Underwriters' over-allotment option in full). All of
such Common Shares will be freely tradeable without restriction under the
Securities Act, subject to the limitations on ownership set forth in the
Declaration of Trust, and except that shares owned by "affiliates" of the
Company will be subject to certain restrictions. See "Description of Shares of
Beneficial Interest -- Certain Provisions of Texas Law and the Company's
Declaration of Trust and Bylaws -- Restrictions on Transfer." In addition to the
Common Shares issued in this Offering, the Company may issue additional Common
Shares if the Founding Dealers exercise their Redemption Rights. Under the
Partnership Agreement, the Founding Dealers will have the right to request the
Operating Partnership to redeem their OP Units for Common Shares on a
one-for-one basis beginning one year after the completion of this Offering. See
"Partnership Agreement -- Redemption of OP Units." Certain of the Common Shares
held by or which may be issued to the Founding Dealers may be subject to
limitations on resale under Rule 145 promulgated under the Securities Act.

LOCK-UP AGREEMENTS

Pursuant to terms of lock-up agreements with the Underwriters, (x) the
Company has agreed not to offer, sell, offer to sell, contract to sell, assign,
pledge, grant any option to purchase or otherwise dispose of or transfer any
Common Shares or any other security of the company convertible into, or
exchangeable or exercisable for Common Shares for a period of six months after
the effective date of the Registration Statement of which this Prospectus is a
part, (y) Jack I. Tompkins, David L. Johnston, Bert Wollen and Douglas W.
Schnitzer, who hold in the aggregate ______ Common Shares, have agreed not to
offer, sell, offer to sell, contract to sell, assign, pledge, grant any option
to purchase or otherwise dispose of or transfer any Common Shares, or any other
security of the Company convertible into, or exchangeable or exercisable for,
Common Shares for a period of two years after the effective date of the
Registration Statement of which this Prospectus is a part, and (z) Nelson E.
Bowers, II, and Norman Braman have agreed not to offer, sell, offer to sell,
contract to sell, assign, pledge, grant any option to purchase or otherwise
dispose of or transfer any Common Shares, or any other security of the Company
convertible into, or exchangeable or exercisable for, Common Shares for a period
of one year after the effective date of the Registration Statement of which this
Prospectus is a part, without the prior written consent of Smith Barney Inc.,
except that (a) the Company may issue (i) Common Shares or options to purchase
Common Shares under the Incentive Share Plan and (ii) Common Shares or OP Units
in connection with the Company's acquisitions of additional Automotive
Properties, and (b) Messrs. Tompkins, Johnston, Wollen and Douglas W. Schnitzer
may make bona fide gifts to donees who agree to be bound by the foregoing
restrictions. See "Underwriting."

Pursuant to the Partnership Agreement, holders of OP Units may not
request redemption of OP Units until the first anniversary of the closing of the
Offering. See "Partnership Agreement -- Redemption of OP Units."

The Company and the Underwriters have agreed to indemnify each other
against certain liabilities, including liabilities under the Securities Act of
1933, as amended.

<PAGE> 80

Smith Barney Inc., at any time and without notice, may release all or
any portion of the Common Shares subject to the foregoing lock-up agreements.

REGISTRATION RIGHTS

The Founding Dealers who are to receive OP Units in connection with the
Formation Transactions, who together will own an aggregate of 7,934,818 OP Units
(based on an initial public offering price of $20), which are convertible into
the same number of Common Shares (the "Registrable Securities"), upon the
closing of this Offering (assuming consummation of each of the Formation
Transactions), are parties to agreements with the Company under which they have
certain rights with respect to the registration of sufficient Common Shares to
allow for the transfer by the Company of Common Shares in exchange for their OP
Units. Pursuant to these agreements, the Company has agreed to file, as soon as
practicable (and in no event later than 90 days) after the expiration of 12
months after the closing of the Formation Transactions, a registration statement
under the Securities Act with respect to the offer and sale of Common Shares
issuable on exchange of OP Units and to use its best efforts to keep the
registration effective thereafter. The Company is required to bear the expenses
of satisfying the registration requirements, except that the expenses shall not
include any underwriting discounts or commissions, Blue Sky registration fees or
transfer taxes relating to the shares.

The Company intends to file a registration statement under the
Securities Act registering the offer and sale of Common Shares reserved for
issuance under the Incentive Share Plan within 90 days after the completion of
this Offering. See "Management -- Incentive Share Plan."

FEDERAL INCOME TAX CONSIDERATIONS

The following summary of material federal income tax considerations
regarding this Offering that may be relevant to a prospective holder of Common
Stock in the Company is based on current law. The information set forth below,
to the extent that it constitutes matters of law, summaries of legal matters or
legal conclusions, is the opinion of Liddell, Sapp, Zivley, Hill & LaBoon,
L.L.P., legal counsel to the Company. This discussion does not purport to deal
with all aspects of taxation that may be relevant to particular shareholders in
light of their personal investment or tax circumstances, or to certain types of
shareholders (including insurance companies, tax-exempt organizations, financial
institutions or broker-dealers, foreign corporations and persons who are not
citizens or residents of the United States) subject to special treatment under
the federal income tax laws.

The statements in this discussion and the opinion of Liddell, Sapp,
Zivley, Hill & LaBoon, L.L.P. with respect thereto are based on current
provisions of the Code, existing, temporary, and currently proposed Treasury
Regulations promulgated under the Code, the legislative history of the Code,
existing administrative rulings and practices of the Service, and judicial
decisions. No assurance can be given that future legislative, judicial, or
administrative actions or decisions, which may be retroactive in effect, will
not affect the accuracy of any statements in this Prospectus with respect to the
transactions entered into or contemplated prior to the effective date of such
changes.

EACH PROSPECTIVE PURCHASER IS ADVISED TO CONSULT HIS OWN TAX ADVISOR
REGARDING THE SPECIFIC TAX CONSEQUENCES TO HIM OF THE PURCHASE, OWNERSHIP AND
SALE OF THE COMMON STOCK AND OF THE COMPANY'S ELECTION TO BE TAXED AS A REAL
ESTATE INVESTMENT TRUST, INCLUDING THE FEDERAL, STATE, LOCAL, FOREIGN AND OTHER
TAX CONSEQUENCES OF SUCH PURCHASE, OWNERSHIP, SALE AND ELECTION AND OF POTENTIAL
CHANGES IN APPLICABLE TAX LAWS.

TAXATION OF THE COMPANY

General. The Company plans to make an election to be taxed as a REIT
under Sections 856 through 859 of the Code, commencing with its taxable year
ending on December 31, 1998. The Company believes that, commencing with its
initial taxable year, it will be organized and will operate in such a manner as
to qualify for taxation as a REIT under the Code, and the Company intends to
operate in such a manner, but no assurance can be given that it will operate in
a manner so as to qualify or remain qualified as a REIT.

These sections of the Code are highly technical and complex. The
following sets forth the material aspects of the sections that govern the
federal income tax treatment of a REIT and its shareholders. This summary is
qualified in its entirety by the applicable Code provisions, rules and
regulations promulgated thereunder, and administrative and judicial
interpretations thereof. Liddell, Sapp, Zivley, Hill & LaBoon, L.L.P. has acted
as tax counsel to the Company in connection with this Offering.

<PAGE> 81
In the opinion of Liddell, Sapp, Zivley, Hill & LaBoon, L.L.P.,
commencing with the Company's taxable year ending December 31, 1998, the Company
will be organized in conformity with the requirements for qualification as a
REIT, and its proposed method of operation will enable it to meet the
requirements for qualification and taxation as a REIT under the Code. It must be
emphasized that this opinion is based on various assumptions and is conditioned
upon certain representations made by the Company as to factual matters. In
addition, this opinion is based upon the factual representations of the Company
concerning its business and properties as set forth in this Prospectus and
assumes that the actions described in this Prospectus are completed in a timely
fashion. Moreover, such qualification and taxation as a REIT depends upon the
Company's ability to meet, through actual annual operating results, distribution
levels, diversity of stock ownership, and the various other qualification tests
imposed under the Code discussed below, the results of which will not be
reviewed by Liddell, Sapp, Zivley, Hill & LaBoon, L.L.P. Accordingly, no
assurance can be given that the actual results of the Company's operations for
any particular taxable year will satisfy such requirements. See "-- Failure to
Qualify."

In any year in which the Company qualifies as a REIT, in general it
will not be subject to federal income tax on that portion of its taxable income
or capital gain which is distributed to shareholders in the form of
non-preferential dividends. The Company will, however, be subject to tax at
normal corporate rates upon any taxable income or capital gain not distributed.

Notwithstanding its qualification as a REIT, the Company may also be
subject to taxation in certain other circumstances. If the Company should fail
to satisfy the 75% or the 95% gross income test (as discussed below), and
nonetheless maintains its qualification as a REIT because certain other
requirements are met, it will be subject to a 100% tax on the greater of the
amount by which the Company fails either the 75% or the 95% test, multiplied by
a fraction intended to reflect the Company's profitability. The Company will
also be subject to a tax of 100% on net income from "prohibited transactions"
(which are, in general, certain sales or other dispositions of property held
primarily for sale to customers in the ordinary course of business, other than
foreclosure property) and, if the Company has (i) net income from the sale or
other disposition of "foreclosure property" (generally, property acquired by
reason of a default on indebtedness or a lease) which is held primarily for sale
to customers in the ordinary course of business or (ii) other non-qualifying
income from foreclosure property, it will be subject to tax on such income from
foreclosure property at the highest corporate rate. In addition, if the Company
should fail to distribute during each calendar year at least the sum of (i) 85%
of its REIT ordinary income for such year, (ii) 95% of its REIT capital gain net
income for such year, and (iii) any undistributed taxable income from prior
years, the Company would be subject to a 4% excise tax on the excess of such
required distribution over the amounts actually distributed. The Company may
also be subject to the corporate "alternative minimum tax," on its items of tax
preference, as well as tax in certain situations not presently contemplated. If
the Company acquires any asset from a C corporation (i.e., generally a
corporation subject to full corporate-level tax) in certain transactions in
which the basis of the asset in the hands of the Company is determined by
reference to the basis of the asset (or any other property) in the hands of the
C corporation, and the Company recognizes gain on the disposition of such asset
during the ten-year period beginning on the date on which such asset was
acquired by the Company (the "Recognition Period"), then, pursuant to Treasury
Regulations that have not yet been issued and to the extent of the excess of the
fair market value of the asset as of the date of the Company's acquisition over
the Company's adjusted basis in such asset on such date, such gain will be
subject to tax at the highest regular corporate rate. The results described
above with respect to assets acquired from a C corporation assume that the
Company will make an election pursuant to Internal Revenue Service Notice 88-19
and that the availability or nature of such election is not modified as proposed
in President Clinton's 1999 federal budget proposal.

Requirements for Qualification. The Code provides a definition of a
REIT that the Company must satisfy to qualify or maintain its qualification as a
REIT. The Code defines a REIT as a corporation, trust or association (i) which
is managed by one or more trustees or directors; (ii) the beneficial ownership
of which is evidenced by transferable shares, or by transferable certificates of
beneficial interest; (iii) which would be taxable as a domestic corporation, but
for Sections 856 through 859 of the Code; (iv) which is neither a financial
institution nor an insurance company subject to certain provisions of the Code;
(v) the beneficial ownership of which is held by 100 or more persons; (vi)
during the last half of each taxable year not more than 50% in value of the
outstanding stock of which is owned, directly or constructively, by five or
fewer individuals (as defined in the Code to include certain entities); and
(vii) which meets certain other tests, described below, regarding the nature of
its income and assets. The Code provides that conditions (i) to (iv), inclusive,
must be met during the entire taxable year and that condition (v) must be met
during at least 335 days of a taxable year of 12 months, or during a
proportionate part of a taxable year of less than 12 months. Conditions (v) and
(vi) will not apply until after the first taxable year for which an election is
made to be taxed as a REIT.

The Company believes that it will have issued sufficient shares
pursuant to this Offering to allow it to satisfy conditions (v) and (vi). In
addition, the Declaration of Trust provides for restrictions regarding the
transfer and ownership of shares, which restrictions are intended to assist the
Company in continuing to satisfy the share ownership requirements described in
(v) and (vi) above. Those restrictions may not ensure that the Company in all
cases will be able to satisfy the share ownership requirements described above.
If the Company

<PAGE> 82

fails to satisfy those share ownership requirements, the Company's status as a
REIT will terminate. See "-Failure to Qualify". Pursuant to the Taxpayer Relief
Act of 1997, enacted August 5, 1997, starting with a REIT's first taxable year
that begins after August 5, 1997, a REIT that complies with Treasury Regulations
for ascertaining the ownership of its shares and that does not know or,
exercising reasonable diligence would not have known, whether it failed
condition (vi) will be treated as meeting condition (vi). The provisions of the
Taxpayer Relief Act of 1997 will apply to each of the Company's taxable years
since its first taxable year will begin after August 5, 1997. In addition,
pursuant to the Taxpayer Relief Act of 1997, if the Company fails to comply with
regulations to ascertain its ownership it will be subject to a penalty for
failing to do so. The penalty is $25,000 ($50,000 for intentional violations)
for any year in which the Company does not comply with the ownership
regulations. The Company will also be required, when requested by the IRS, to
send curative demand letters.

Code Section 856(i) provides that a corporation that is a "qualified
REIT subsidiary" shall not be treated as a separate corporation, and all assets,
liabilities, and items of income, deduction, and credit of a "qualified REIT
subsidiary" shall be treated as assets, liabilities, and items of income,
deduction, and credit of the REIT. A "qualified REIT subsidiary" is a
corporation, 100% of the stock of which is held by the REIT. Thus, in applying
the requirements described herein, any "qualified REIT subsidiaries" acquired or
formed by the Company will be ignored, and all assets, liabilities, and items of
income, deduction, and credit of such subsidiaries will be treated as assets,
liabilities and items of income, deduction, and credit of the Company. Each of
the Company's current subsidiaries is a "qualified REIT subsidiary." The
Company's subsidiaries therefore will not be subject to federal corporate income
taxation, although they may be subject to state and local taxation.

In the case of a REIT which is a partner in a partnership, Treasury
Regulations provide that the REIT will be deemed to own its proportionate share
of the assets of the partnership and will be deemed to be entitled to the income
of the partnership attributable to such share. In addition, the assets and gross
income of the partnership retain the same character in the hands of the REIT for
purposes of Section 856 of the Code, including satisfying the gross income tests
and the asset tests. Thus, the Company's proportionate share of the assets,
liabilities and items of income of the Operating Partnership will be treated as
assets, liabilities and items of income of the Company for purposes of applying
the requirements described herein. A summary of the rules governing the federal
income taxation of partnerships and their partners is provided below in "Federal
Income Tax Consideration -- Tax Aspects of the Operating Partnership."

Income Tests. In order to qualify and maintain qualification as a REIT,
the Company annually must satisfy two gross income requirements. First, at least
75% of the Company's gross income (excluding gross income from prohibited
transactions) for each taxable year must be derived directly or indirectly from
investments relating to real property or mortgages on real property (including
"rents from real property" and, in certain circumstances, interest) or from
certain types of temporary investments. Second, at least 95% of the Company's
gross income (excluding gross income from prohibited transactions) for each
taxable year must be derived from such real property investments, dividends,
interest and gain from the sale or disposition of stock or securities (or from
any combination of the foregoing). Pursuant to the Initial Leases, the Initial
Dealer Lessees lease from the Company the land, buildings, improvements and
equipment comprising the properties for, generally, a 10-year period, with
options to extend for two additional terms of five years each. The leases
provide that the Initial Dealer Lessees will be obligated to pay to the Company
(i) lease payments and (ii) certain other additional charges.

Rents received by the Company will qualify as "rents from real
property" in satisfying the gross income requirements for a REIT described above
only if several conditions are met. First, the amount of rent must not be based
in whole or in part on the income or profits of any person. However, an amount
received or accrued generally will not be excluded from the term "rents from
real property" solely by reason of being based on a fixed percentage or
percentages of receipts or sales. Second, the Code provides that rents received
from a tenant will not qualify as "rents from real property" in satisfying the
gross income tests if the REIT, or an owner of 10% or more of the REIT, directly
or constructively owns 10% or more of such tenant (a "Related Party Tenant").
The Declaration of Trust provides that no person may own, directly or
constructively, in excess of 9.8% of the Common Shares. Third, if rent
attributable to personal property, leased in connection with a lease of real
property, is greater than 15% of the total rent received under the lease, then
the portion of rent attributable to such personal property will not qualify as
"rents from real property." Finally, for rents received to qualify as "rents
from real property," the REIT generally must not operate or manage the property
or furnish or render services to the tenants of such property, other than
through an independent contractor from whom the REIT derives no revenue,
provided, however, the Company may directly perform certain services that are
"usually or customarily rendered" in connection with the rental of space for
occupancy only and are not otherwise considered "rendered to the occupant" of
the property. Moreover, pursuant to the Taxpayer Relief Act of 1997, income
derived by a REIT from property with respect to which non-qualifying services
are provided to tenants will not be treated as rent from real property unless
income from such sources does not exceed one percent of the REIT's gross income
from the property. The Company does not and will not (i) charge rent for any
property that is based in whole or in part on the income or profits of any
person (except by reason of being based on a percentage of receipts or sales, as
described above), (ii) rent any property to a Related Party Tenant, (iii) derive
rental income attributable

<PAGE> 83
to personal property (other than personal property leased in connection with the
lease of real property, the amount of which is less than 15% of the total rent
received under the lease), or (iv) perform services considered to be rendered to
the occupant of the property (unless the income from those services qualifies as
rent from real property pursuant to the Taxpayer Relief Act of 1997) other than
through an independent contractor from whom the Company derives no revenue. The
Company believes that the aggregate amount of any non-qualifying income in any
taxable year will not exceed the limit on non-qualifying income under the gross
income tests.

In order for the lease payments and the additional charges to
constitute "rents from real property," the leases must be respected as true
leases for federal income tax purposes and not treated as service contracts,
joint ventures or some other type of arrangement. The determination of whether
the leases are true leases depends on an analysis of all the surrounding facts
and circumstances. In making such a determination, courts have considered a
variety of factors, including the following: (i) the intent of the parties, (ii)
the form of the agreement, (iii) the degree of control over the property that is
retained by the property owner (e.g., whether the lessee has substantial control
over the operation of the property or whether the lessee was required simply to
use its best efforts to perform its obligations under the agreement), and (iv)
the extent to which the property owner retains the risk of loss with respect to
the property (e.g., whether the lessee bears the risk of increases in operating
expenses or the risk of damage to the property).

In addition, Code Section 7701(e) provides that a contract that
purports to be a service contract (or a partnership agreement) is treated
instead as a lease of property if the contract is properly treated as such,
taking into account all relevant factors, including whether or not: (i) the
service recipient is in physical possession of the property, (ii) the service
recipient controls the property, (iii) the service recipient has a significant
economic or possessory interest in the property (e.g., the property's use is
likely to be dedicated to the service recipient for a substantial portion of the
useful life of the property, the recipient shares the risk that the property
will decline in value, the recipient shares in any appreciation in the value of
the property, the recipient shares in savings in the property's operating costs,
or the recipient bears the risk of damage to or loss of the property), (iv) the
service provider does not bear any risk of substantially diminished receipts or
substantially increased expenditures if there is non-performance under the
contract, (v) the service provider does not use the property concurrently to
provide significant services to entities unrelated to the service recipient, and
(vi) the total contract price does not substantially exceed the rental value of
the property for the contract period. Since the determination whether a service
contract should be treated as a lease is inherently factual, the presence or
absence of any single factor may not be dispositive in every case.

Liddell, Sapp, Zivley, Hill & LaBoon, L.L.P. is of the opinion that
each Initial Lease will be treated as a true lease for federal income tax
purposes. Such opinion is based, in part, on the following facts: (i) the
Operating Partnership and the Initial Dealer Lessees intend for their
relationship to be that of a lessor and lessee and such relationship is
documented by lease agreements; (ii) the Initial Dealer Lessees have the right
to exclusive possession and use and quiet enjoyment of the Initial Properties
during the term of the Initial Leases; (iii) the Initial Dealer Lessees bear the
cost of, and are responsible for, day-to-day maintenance and repair of the
Initial Properties and dictate how the Initial Properties are operated,
maintained and improved; (iv) the Initial Dealer Lessees bear all of the costs
and expenses of operating the Initial Properties during the term of the Initial
Leases; (v) the Initial Dealer Lessees benefit from any savings in the costs of
operating the Initial Properties during the term of the Initial Leases; (vi) the
Initial Dealer Lessees have indemnified the Operating Partnership against all
liabilities imposed on the Operating Partnership during the term of the Initial
Leases by reason of (A) injury to persons or damage to property occurring on the
Initial Properties or (B) the Initial Dealer Lessee's use, management,
maintenance or repair of the Initial Properties; (vii) the Initial Dealer
Lessees are obligated to pay substantial fixed rent for the period of use of the
Initial Properties; and (viii) the Initial Dealer Lessees stand to incur
substantial losses (or reap substantial gains) depending on how successfully
they operate the Initial Properties; (ix) the useful lives of the Initial
Properties are significantly longer than the terms of the Initial Leases; and
(x) the Operating Partnership will receive the benefit of any increase in value,
and will bear the risk of any decrease in value of the Initial Properties during
the terms of the Initial Leases.

Investors should be aware that there are no controlling Treasury
Regulations, published rulings, or judicial decisions involving leases with
terms substantially the same as the leases that discuss whether such leases
constitute true leases for federal income tax purposes. Therefore, the opinion
of Liddell, Sapp, Zivley, Hill & LaBoon, L.L.P. with respect to the relationship
between the Operating Partnership and the tenants under the Initial Leases is
based upon all of the facts and circumstances and upon rulings and judicial
decisions involving situations that are considered to be analogous. Opinions of
counsel are not binding upon the Service or any court, and there can be no
complete assurance that the Service will not asset successfully a contrary
position. If the Internal Revenue Service were to successfully challenge the
characterization of the Initial Leases as true leases and instead treat them as
loans, the Operating Partnership would not be treated as the owner of the
Initial Properties in question for federal income tax purposes and the Operating
Partnership would lose tax depreciation and cost recovery deductions with
respect to such Initial Properties which, in turn, could cause the Company to
fail to qualify as a REIT. If the Initial Leases are recharacterized as service
contracts or partnership agreements, rather than true leases, part or all of the
payments that the Operating Partnership receives from the tenants may not be
considered rent or may not otherwise satisfy the various

<PAGE> 84

requirements for qualification as "rents from real property." In that case, the
Company would likely be unable to satisfy either the 75% or 95% gross income
tests and, as a result, would likely lose its REIT status.

The term "interest" generally does not include any amount received or
accrued (directly or indirectly) if the determination of such amount depends in
whole or in part on the income or profits of any person. However, an amount
received or accrued generally will not be excluded from the term "interest"
solely by reason of being based on a fixed percentage or percentages of receipts
or sales.

If the Company fails to satisfy one or both of the 75% or 95% gross
income tests for any taxable year, it may nevertheless qualify as a REIT for
such year if it is entitled to relief under certain provisions of the Code.
These relief provisions will be generally available if the Company's failure to
meet such tests was due to reasonable cause and not due to willful neglect, the
Company attaches a schedule of the sources of its income to its return, and any
incorrect information on the schedule was not due to fraud with intent to evade
tax. It is not possible, however, to state whether in all circumstances the
Company would be entitled to the benefit of these relief provisions. As
discussed above in "General," even if these relief provisions apply, a tax would
be imposed with respect to the excess net income.

Asset Tests. The Company, at the close of each quarter of its taxable
year, must also satisfy three tests relating to the nature of its assets. First,
at least 75% of the value of the Company's total assets must be represented by
real estate assets (including (i) its allocable share of real estate assets held
by partnerships in which the Company owns an interest and (ii) stock or debt
instruments held for not more than one year purchased with the proceeds of a
stock offering or long-term (at least five years) debt offering of the Company),
cash, cash items and government securities. Second, not more than 25% of the
Company's total assets may be represented by securities other than those in the
75% asset class. Third, of the investments not included in the 75% asset class,
the value of any one issuer's securities owned by the Company may not exceed 5%
of the value of the Company's total assets and the Company may not own more than
10% of any one issuer's outstanding voting securities (except for its ownership
interest in the stock of a qualified REIT subsidiary). If the Company should
fail to satisfy the asset tests at the end of a calendar quarter, such a failure
would not cause it to lose its REIT status if (i) it satisfied all of the asset
tests at the close of the preceding calendar quarter and (ii) the discrepancy
between the value of the Company's assets and the asset requirements either did
not exist immediately after the acquisition of any particular asset or was not
wholly or partly caused by such an acquisition (i.e., the discrepancy arose from
changes in the market values of its assets). If the condition described in
clause (ii) of the preceding sentence were not satisfied, the Company still
could avoid disqualification by eliminating any discrepancy within 30 days after
the close of the quarter in which it arose.

Annual Distribution Requirements. In order to maintain its REIT status,
the Company must satisfy certain distribution requirements prescribed by the
Code. The Company, in order to qualify as a REIT, is required to distribute
dividends (other than capital gain dividends) to its shareholders in an amount
at least equal to (i) the sum of (a) 95% of the Company's "REIT taxable income"
(computed without regard to the dividends paid deduction and the Company's net
capital gain) and (b) 95% of the net income (after tax), if any, from
foreclosure property, minus (ii) the sum of certain items of noncash income. In
addition, if the Company disposes of any asset acquired from a C corporation in
a carryover basis transaction during its Recognition Period, the Company will be
required, pursuant to Treasury Regulations which have not yet been promulgated,
to distribute at least 95% of the built-in gain (after tax), if any, recognized
on the disposition of such asset. Such distributions must be paid in the taxable
year to which they relate, or in the following taxable year if declared before
the Company timely files its tax return for such year and if paid on or before
the first regular dividend payment after such declaration. To the extent that
the Company does not distribute all of its net capital gain or distributes at
least 95%, but less than 100%, of its "REIT taxable income," as adjusted, it
will be subject to tax thereon at regular ordinary and capital gain corporate
tax rates. Furthermore, if the Company should fail to distribute during each
calendar year at least the sum of (i) 85% of its REIT ordinary income for such
year, (ii) 95% of its REIT capital gain income for such year, and (iii) any
undistributed taxable income from prior periods, the Company will be subject to
a 4% excise tax on the excess of such required distribution over the amounts
actually distributed. The Company intends to make timely distributions
sufficient to satisfy this annual distribution requirement.

The Company may elect to retain and pay income tax on the net long-term
capital gain it receives in a taxable year. In that case, the Company's
shareholders would include in income their proportionate share of the Company's
undistributed long-term capital gain. In addition, the shareholders would be
deemed to have paid their proportionate share of the tax paid by the Company,
which would be credited or refunded to the shareholders. Each shareholder's
basis in his shares would be increased by the amount of the undistributed
long-term capital gain included in the shareholder's income, less the
shareholder's share of the tax paid by the Company. Such amount would be treated
as having been distributed for purposes of the 4% excise tax described above.

It is possible that the Company, from time to time, may not have
sufficient cash or other liquid assets to meet the 95% distribution requirement
due to timing differences between (i) the actual receipt of income and actual
payment of deductible expenses and (ii) the

<PAGE> 85

inclusion of such income and deduction of such expenses in arriving at taxable
income of the Company. In the event that such timing differences occur, in order
to meet the 95% distribution requirement, the Company may find it necessary to
arrange for short-term, or possibly long-term, borrowings or to pay dividends in
the form of taxable stock dividends.

Under certain circumstances, the Company may be able to rectify a
failure to meet the distribution requirement for a year by paying "deficiency
dividends" to shareholders in a later year, which may be included in the
Company's deduction for dividends paid for the earlier year. Thus, the Company
may be able to avoid being taxed on amounts distributed as deficiency dividends;
however, the Company will be required to pay interest based upon the amount of
any deduction taken for deficiency dividends. The Company intends to calculate
its "REIT taxable income" based upon the conclusion that the Operating
Partnership is the owner for federal income tax purposes of all of the
properties. As a result, the Company expects that depreciation deductions with
respect to all such properties will reduce its "REIT taxable income". This
conclusion is consistent with the leases with respect to the properties being
treated as leases for federal income tax purposes. If the Service were to
successfully challenge this position, the Company might be deemed retroactively
to have failed to meet the distribution requirement and would have to rely on
the payment of a "deficiency dividend" in order to retain its REIT status.
Further, the Company would be subject to the 4% excise tax as described above.

FAILURE TO QUALIFY

If the Company fails to qualify for taxation as a REIT in any taxable
year, and the relief provisions do not apply, the Company will be subject to tax
(including any applicable alternative minimum tax) on its taxable income at
regular corporate rates. Distributions to shareholders in any year in which the
Company fails to qualify will not be deductible by the Company nor will they be
required to be made. In such event, to the extent of current and accumulated
earnings and profits, all distributions to shareholders will be taxable as
ordinary income, and, subject to certain limitations of the Code, corporate
distributees may be eligible for the dividends received deduction. Unless
entitled to relief under specific statutory provisions, the Company will also be
disqualified from taxation as a REIT for the four taxable years following the
year during which qualification was lost. It is not possible to state whether in
all circumstances the Company would be entitled to such statutory relief. In
addition, a recent federal budget proposal contains a provision which, if
enacted in its present form, would result in the immediate taxation of all gain
interest in a C corporation's assets upon an election by the corporation to
become a REIT in taxable years beginning after January 1, 1999, and this could
effectively preclude the Company from re-electing to be taxed as a REIT
following a loss of its REIT status.

PARTNERSHIP ANTI-ABUSE RULE

The United States Treasury Department has issued a regulation (the
"Anti-Abuse Rule") under the partnership provisions of the Code (the
"Partnership Provisions") that authorizes the Service, in certain "abusive"
transactions involving partnerships, to disregard the form of the transaction
and recast it for federal tax purposes as the Service deems appropriate. The
Anti-Abuse Rule applies where a partnership is formed or utilized in connection
with a transaction (or series of related transactions) with a principal purpose
of substantially reducing the present value of the partners' aggregate federal
tax liability in a manner inconsistent with the intent of the Partnership
Provisions. The Anti-Abuse Rule states that the Partnership Provisions are
intended to permit taxpayers to conduct joint business (including investment)
activities through a flexible economic arrangement that accurately reflects the
partners' economic agreement and clearly reflects the partners' income without
incurring any entity-level tax. The purposes for structuring a transaction
involving a partnership are determined based on all of the facts and
circumstances, including a comparison of the purported business purpose for a
transaction and the claimed tax benefits resulting from the transaction. A
reduction in the present value of the partners' aggregate federal tax liability
through the use of a partnership does not, by itself, establish inconsistency
with the intent of the Partnership Provisions.

The Anti-Abuse Rule contains an example in which a corporation that
elects to be treated as a REIT contributes substantially all of the proceeds
from a public offering to a partnership in exchange for a general partner
interest. The limited partners of the partnership contribute real property
assets to the partnership, subject to liabilities that exceed their respective
aggregate bases in such property. In addition, the limited partners have the
right, beginning one year after the formation of the partnership, to require the
redemption of their limited partnership interests in exchange for cash or REIT
stock (at the Company's option) equal to the fair market value of their
respective interests in the partnership at the time of the redemption. The
example concludes that the use of the partnership is not inconsistent with the
intent of the Partnership Provisions and, thus, cannot be recast by the Service.
Based on the foregoing, the Company believes that the Anti-Abuse Rule will not
have any adverse impact on the Company's ability to qualify as a REIT. However,
the Anti-Abuse Rule is extraordinarily broad in scope and is applied based on an
analysis of all of the facts and circumstances. As a result, there can be no
assurance that the Service will not attempt to apply the Anti-Abuse Rule to the
Company. If the conditions of the Anti-Abuse Rule are

<PAGE> 86

met, the Service is authorized to take appropriate enforcement action, including
disregarding the Operating Partnership for federal tax purposes or treating one
or more of its partners as nonpartners.

TAXATION OF TAXABLE DOMESTIC SHAREHOLDERS

As long as the Company qualifies as a REIT, distributions made to the
Company's taxable domestic shareholders out of current or accumulated earnings
and profits (and not designated as capital gain dividends) will be taken into
account by them as ordinary income and will not be eligible for the dividends
received deduction for corporations. Distributions made by the Company that are
properly designated by the Company as capital gain dividends will be taxable to
taxable domestic shareholders as gains (to the extent that they do not exceed
the Company's actual net capital gain for the taxable year) from the sale or
disposition of a capital asset. Depending on the period of time the Company held
the assets which produced such gains, and on certain designations, if any, which
may be made by the Company, such gains may be taxable to non-corporate domestic
shareholders at a 20%, 25% or 28% rate. However, corporate shareholders may be
required to treat up to 20% of certain capital gain dividends as ordinary
income. Pursuant to the Taxpayer Relief Act of 1997, a REIT may elect to retain
and pay income tax on net long-term capital gains that it receives during a
taxable year. If a REIT makes this election, its shareholders are required to
include in their income as long-term capital gain their proportionate share of
the undistributed long-term capital gains so designated by the REIT. A
shareholder will be treated as having paid his or her share of the tax paid by
the REIT in respect of long-term capital gains so designated by the REIT, for
which the shareholder will be entitled to a credit or refund. In addition, the
shareholder's basis in his or her REIT shares will be increased by the amount of
the REIT's designated undistributed long-term capital gains that are included in
the shareholder's long-term capital gains, reduced by the shareholder's
proportionate share of tax paid by the REIT on those gains that the shareholder
is treated as having paid. The earnings and profits of the REIT will be reduced,
and the earnings and profits of any corporate shareholder of the REIT will be
increased, to take into account amounts designated by the REIT pursuant to this
rule. A REIT must pay its tax on its designated long-term capital gains within
30 days of the close of any taxable year in which it designates long-term
capital gains pursuant to this rule, and it must mail a written notice of its
designation to its shareholders within 60 days of the close of the taxable year.
Distributions in excess of current and accumulated earnings and profits will not
be taxable to a shareholder to the extent that they do not exceed the adjusted
basis of the shareholder's shares, but rather will reduce the adjusted basis of
such shares. To the extent that such distributions exceed the adjusted basis of
a shareholder's shares they will be included in income as long-term capital gain
(or short-term capital gain if the shares have been held for one year or less)
assuming the shares are a capital asset in the hands of the shareholder. In
addition, any dividend declared by the Company in October, November or December
of any year payable to a shareholder of record on a specified date in any such
month shall be treated as both paid by the Company and received by the
shareholder on December 31 of such year, provided that the dividend is actually
paid by the Company during January of the following calendar year. Shareholders
may not include in their individual income tax returns any net operating losses
or capital losses of the Company.

Upon any sale or other disposition of Common Shares, a shareholder will
recognize gain or loss for federal income tax purposes in an amount equal to the
difference between (i) the amount of cash and the fair market value of any
property received on such sale or other disposition, and (ii) the holder's
adjusted basis in the Common Shares for tax purposes. Such gain or loss will be
capital gain or loss if the Common Shares have been held by the shareholder as a
capital asset. Long-term capital gain of an individual shareholder is generally
subject to a maximum tax rate of 28% in respect of property held for more than
one year and the maximum rate is reduced to 20% in the case of property held in
excess of 18 months. In general, any loss upon a sale or exchange of shares by a
shareholder who has held such shares for six months or less (after applying
certain holding period rules), will be treated as a long-term capital loss to
the extent of distributions from the Company required to be treated by such
shareholder as long-term capital gain.

BACKUP WITHHOLDING

The Company will report to its domestic shareholders and the Service
the amount of dividends paid during each calendar year, and the amount of tax
withheld, if any. Under the backup withholding rules, a shareholder may be
subject to backup withholding at the rate of 31% with respect to dividends paid
unless such holder (a) is a corporation or comes within certain other exempt
categories and, when required, demonstrates this fact, or (b) provides a
taxpayer identification number, certifies as to no loss of exemption from backup
withholding, and otherwise complies with applicable requirements of the backup
withholding rules. A shareholder that does not provide the Company with his
correct taxpayer identification number may also be subject to penalties imposed
by the Service. Any amount paid as backup withholding will be creditable against
the shareholder's income tax liability.

<PAGE> 87

TAXATION OF TAX-EXEMPT SHAREHOLDERS

In Revenue Ruling 66-106, 1966-1 C.B. 151, the Service ruled that
amounts distributed by a REIT to a tax-exempt employees' pension trust did not
constitute "unrelated business taxable income" ("UBTI"). Revenue rulings are
interpretive in nature and subject to revocation or modification by the Service.
However, based upon Revenue Ruling 66-106 and the analysis therein,
distributions by the Company to a shareholder that is a tax-exempt entity should
not constitute UBTI, provided that the tax-exempt entity has not financed the
acquisition of its shares with "acquisition indebtedness" within the meaning of
the Code and the shares are not otherwise used in an unrelated trade or business
of the tax-exempt entity.

In certain circumstances, a pension trust that owns more than 10% of
the Company's stock will be required to treat a percentage of the dividends
received from the Company as UBTI (the "UBTI Percentage"). The UBTI Percentage
is the gross income derived by the Company from an unrelated trade or business
(determined as if the Company were a pension trust) divided by the gross income
of the Company for the year in which the dividends are paid. The UBTI Percentage
rule will apply to a pension trust holding more than 10% of the Company's stock
only if (i) the UBTI Percentage is at least 5%, (ii) the Company qualifies as a
REIT by reason of the modification of the 5/50 Rule that allows the
beneficiaries of the pension trust to be treated as holding shares of the
Company in proportion to their actuarial interests in the pension trust and
(iii) either (A) one pension trust owns more than 25% of the value of the
Company's stock or (B) a group of pension trusts individually holding more than
10% of the value of the Company's stock collectively owns more than 50% of the
value of the Company's stock.

TAXATION OF FOREIGN SHAREHOLDERS

The rules governing United States federal income taxation of
nonresident alien individuals, foreign corporations, foreign partnerships and
other foreign shareholders (collectively, "Non-U.S. Shareholders") are complex
and no attempt will be made herein to provide more than a summary of such rules.
Prospective Non-U.S. Shareholders should consult with their own tax advisors to
determine the impact of federal, state and local income tax laws with regard to
an investment in shares, including any reporting requirements.

Distributions by the Company that are not attributable to gain from
sales or exchanges by the Company of United States real property interests and
not designated by the Company as capital gains dividends will be treated as
dividends of ordinary income to the extent that they are made out of current or
accumulated earnings and profits of the Company. Such distributions, ordinarily,
will be subject to a withholding tax equal to 30% of the gross amount of the
distribution unless an applicable tax treaty reduces or eliminates that tax.
However, if income from the investment in the Common Shares is treated as
effectively connected with the conduct by the Non-U.S. Shareholder of a United
States trade or business, the Non-U.S. Shareholder generally will be subject to
a tax at graduated rates, in the same manner as U.S. shareholders are taxed with
respect to such dividends (and may also be subject to the 30% branch profits tax
in the case of a Non-U.S. Shareholder that is a foreign corporation). The
Company expects to withhold United States income tax at the rate of 30% on the
gross amount of any such dividends paid to a Non-U.S. Shareholder unless (i) a
lower treaty rate applies and the required form evidencing eligibility for that
reduced rate is filed with the Company or the appropriate withholding agent or
(ii) the Non-U.S. Shareholder files a Service Form 4224 with the Company
certifying that the investment to which the distribution relates is effectively
connected to a United States trade or business of such Non-U.S. Shareholder.
Pursuant to current Treasury Regulations, dividends paid to an address in a
country outside the United States are generally presumed to be paid to a
resident of such country for purposes of determining the applicability of
withholding discussed above and the applicability of a tax treaty rate. Under
the recently promulgated final Treasury Regulations that are proposed to be
effective for distributions made after December 31, 1999 (the "New Withholding
Regulations"), however, a Non-U.S. Shareholder who wishes to claim the benefit
of an applicable treaty rate would be required to satisfy applicable
certification requirements. In addition, under the final Treasury Regulations,
in the case of Common Shares held by a foreign partnership, (x) the
certification requirement would generally be applied to the partners in the
partnership and (y) the partnership would be required to provide certain
information, including a United States taxpayer identification number. The New
Withholding Regulations provide look- through rules in the case of tiered
partnerships. Shareholders that are partnerships or entities that are similarly
fiscally transparent for federal income tax purposes, and persons holding Common
Shares through such entities, may be subject to restrictions on their ability to
claim benefits under U.S. tax treaties and should consult a tax advisor.

The New Withholding Regulations also require a corporation that is a
REIT to treat as a dividend the portion of a distribution that is not designated
as a capital gain dividend or return of basis and apply the 30% withholding tax
(subject to any applicable deduction or exemption) to such portion, and to apply
the FIRPTA withholding rules (discussed below) with respect to the portion of
the distribution designated by the REIT as capital gain dividend. The New
Withholding Regulations will generally be effective for payments made after
December 31, 1999, subject to certain transition rules.

<PAGE> 88

In general, backup withholding and information reporting will not apply
to a payment of the proceeds of a sale of Common Shares to or through a foreign
office of a broker. If, however, such broker is, for U.S. federal income tax
purposes, a U.S. person, a controlled foreign corporation, or a foreign person
that derives 50% or more of its gross income for certain periods from the
conduct of a trade or business in the United States, such payments will not be
subject to backup withholding but will be subject to information reporting,
unless (i) such broker has documentary evidence in its records that the
beneficial owner is a Non-U.S. Shareholder (as defined below) and certain other
conditions are met, or (ii) the beneficial owner otherwise establishes an
exemption. Under the New Withholding Regulations, such payments by a
U.S.-related broker will be subject to backup withholding if such broker has
actual knowledge that the payee is a U.S. person.

Payment to or through a U.S. office of a broker of the proceeds of a
sale of Common Shares is subject to both backup withholding and information
reporting unless the beneficial owner certifies under penalties of perjury that
it is a Non-U.S. Shareholder (as defined below) or otherwise establishes an
exemption.

Any amounts withheld under the backup withholding rules will be allowed
as a refund or a credit against such holder's U.S. federal income tax liability
provided the required information is furnished to the Service.

Distributions to a Non-U.S. Shareholder that are designated by the
Company at the time of distribution as capital gain dividends which are not
attributable to or treated as attributable to the disposition by the Company of
a U.S. real property interest generally will not be subject to U.S. federal
income taxation, except as described below.

Distributions in excess of current and accumulated earnings and profits
of the Company, which are not treated as attributable to the gain from
disposition by the Company of a U.S. real property interest, will not be taxable
to a Non-U.S. Shareholder to the extent that they do not exceed the adjusted
basis of the Non-U.S. Shareholder's Common Shares, but rather will reduce the
adjusted basis of such Common Shares. To the extent that such distributions
exceed the adjusted basis of a Non-U.S. Shareholder's Common Shares, they will
give rise to tax liability if the Non-U.S. Shareholder otherwise would be
subject to tax on any gain from the sale or disposition of its Common Shares, as
described below. If it cannot be determined at the time a distribution is made
whether such distribution will be in excess of current and accumulated earnings
and profits, the distribution will be subject to withholding at the rate
applicable to dividends. However, the Non-U.S. Shareholder may seek a refund of
such amounts from the Service if it is subsequently determined that such
distribution was, in fact, in excess of current and accumulated earnings and
profits of the Company.

For any year in which the Company qualifies as a REIT, distributions
that are attributable to gain from sales or exchanges by the Company of United
States real property interests will be taxed to a Non-U.S. Shareholder under the
provisions of the Foreign Investment in Real Property Tax Act of 1980, as
amended ("FIRPTA"). Under FIRPTA, these distributions are taxed to a Non-U.S.
Shareholder as if such gain were effectively connected with a United States
trade or business. Non-U.S. Shareholders would thus be taxed at the same capital
gain rates applicable to U.S. shareholders (subject to applicable alternative
minimum tax and a special alternative minimum tax in the case of nonresident
alien individuals). Also, distributions subject to FIRPTA may be subject to a
30% branch profits tax in the hands of a foreign corporate shareholder not
entitled to treaty relief or exemption. The Company is required by applicable
Treasury Regulations to withhold 35% of any distribution that could be
designated by the Company as a capital gains dividend. However, if the Company
designates as a capital gain dividend a distribution made prior to the day the
Company actually effects such designation, then (although such distribution may
be taxable to a Non-U.S. Shareholder) such distribution is not subject to
withholding under FIRPTA; rather, the Company must effect the 35% FIRPTA
withholding from distributions made on and after the date of such designation,
until the distributions so withheld equal the amount of the prior distribution
designated as a capital gain dividend. The amount withheld is creditable against
the Non-U.S. Shareholder's U.S. tax liability.

Gain recognized by a Non-U.S. Shareholder upon a sale of shares
generally will not be taxed under FIRPTA if the Company is a "domestically
controlled REIT," defined generally as a REIT in which at all times during a
specified testing period less than 50% in value of the stock was held directly
or indirectly by foreign persons. It is currently anticipated that the Company
will be a "domestically controlled REIT," and therefore the sale of shares will
not be subject to taxation under FIRPTA. However, because the shares will be
publicly-traded, no assurance can be given that the Company will continue to be
a "domestically-controlled REIT." In addition, gain not subject to FIRPTA will
be taxable to a Non-U.S. Shareholder if (i) investment in the shares is
effectively connected with the Non-U.S. Shareholder's United States trade or
business, in which case the Non-U.S. Shareholder will be subject to the same
treatment as U.S. shareholders with respect to such gain (except that a
shareholder that is a foreign corporation may also be subject to the 30% branch
profits tax), or (ii) the Non-U.S. Shareholder is a nonresident alien individual
who was present in the United States for 183 days or more during the taxable
year and has a "tax home" in the United States, in which case the nonresident
alien individual will be subject to a 30% tax on the individual's capital gains.
If the gain on the sale of shares were to be subject to taxation under FIRPTA,
the Non-U.S. Shareholder

<PAGE> 89

will be subject to the same treatment as U.S. shareholders with respect to such
gain (subject to applicable alternative minimum tax and a special alternative
minimum tax in the case of nonresident alien individuals and, in the case of
foreign corporations, subject to the possible application of the 30% branch
profits tax) and the purchaser of such Common Shares would be required to
withhold 10% of the gross purchase price.

EXCEPT WHERE SPECIFICALLY NOTED, THE DISCUSSION SET FORTH IN "TAXATION
OF FOREIGN SHAREHOLDERS" DOES NOT TAKE THE NEW WITHHOLDING REGULATIONS INTO
ACCOUNT. PROSPECTIVE NON-U.S. SHAREHOLDERS ARE STRONGLY URGED TO CONSULT THEIR
OWN TAX ADVISORS WITH RESPECT TO THE NEW WITHHOLDING REGULATIONS.

STATE AND LOCAL TAXES

The Company, any of its subsidiaries, the Operating Partnership or the
Company's shareholders may be subject to state and local tax in various states
and localities, including those states and localities in which it or they
transact business, own property, or reside. The state tax treatment of the
Company and the shareholders in such jurisdictions may differ from the federal
income tax treatment described above. Consequently, prospective shareholders
should consult their own tax advisors regarding the effect of state and local
tax laws upon an investment in the Common Stock.

TAX ASPECTS OF THE OPERATING PARTNERSHIP

The following discussion summarizes certain federal income tax
considerations applicable to the Company's investment in the Operating
Partnership. The discussion does not cover state or local tax laws or any
federal tax laws other than income tax laws.

Classification as a Partnership. The Company will be entitled to
include in its income its distributive share of the Operating Partnership's
income and to deduct its distributive share of the Operating Partnership's
losses only if the Operating Partnership is classified for federal income tax
purposes as a partnership rather than as a corporation or an association taxable
as a corporation. An organization formed as a partnership will be treated as a
partnership, rather than as a corporation, for federal income tax purposes if
(i) it is not expressly classified as a corporation under Section
301.7701-2(b)(1) through (8) of the Treasury Regulations; (ii) it does not elect
to be classified as an association taxable as a corporation; and (iii) it is not
treated as a corporation by virtue of being classified as a "publicly traded
partnership."

Under Section 7704 of the Code, a partnership is treated as a
corporation for federal income tax purposes if it is a "publicly traded
partnership" (except in situations in which 90% or more of the partnership's
gross income is of a specified type). A partnership is deemed to be publicly
traded if its interests are either (i) traded on an established securities
market, or (ii) readily tradable on a secondary market (or the substantial
equivalent thereof). While the OP Units will not be traded on an established
securities market, they could possibly be deemed to be traded on a secondary
market or its equivalent due to the Redemption Rights enabling the partners to
dispose of their OP Units.

Under Treasury Regulations governing the classification of partnerships
under Section 7704 (the "PTP Regulations"), the classification of partnerships
is generally based on a facts and circumstances analysis. However, the
regulations also provide limited "safe harbors" which preclude publicly traded
partnership status. Pursuant to one of those safe harbors, interests in a
partnership will not be treated as readily tradable on a secondary market or the
substantial equivalent thereof if (i) all interests in the partnership were
issued in a transaction (or transactions) that was not required to be registered
under the Securities Act, and (ii) the partnership does not have more than 100
partners at any time during the partnership's taxable year. In determining the
number of partners in a partnership for this purpose, a person owning an
interest in a flow through entity (i.e., a partnership, grantor trust, or S
corporation) that owns an interest in the partnership is treated as a partner in
such partnership only if (x) substantially all of the value of the person's
interest in the flow-through entity is attributable to the flow-through entity's
interest (direct or indirect) in the partnership and (y) a principal purpose of
the use of the tiered arrangement is to permit the partnership to satisfy the
100-partner limitation.

The Partnership Agreement requires the Operating Partnership to have
less than 100 partners (including persons owning interests through flow-through
entities) for purposes of the PTP Regulations. The Operating Partnership has not
issued any OP Units required to be registered under the Securities Act. Thus,
the Operating Partnership presently qualifies for the safe harbors provided in
the PTP Regulations. If the Operating Partnership were to have more than 100
partners (including, in certain circumstances, persons owning interests through
flow-through entities), it nevertheless would be treated as a partnership for
federal income tax purposes (rather than an

<PAGE> 90
association taxable as a corporation) if at least 90% of its gross income in
each taxable year (commencing with the year in which it is treated as a publicly
traded partnership) consists of "qualifying income" with the meaning of Section
7704(c)(2) of the Code (including interest, dividends, "real property rents" and
gains from the disposition of real property (the "90% Passive-Type Income
Exception"). For purposes of this test, rents received from greater than 10%
owners of lessees, which owners also own 5% or more of the interests in the
Operating Partnership would not qualify as rents from real property. Because of
the substantial ownership of the Operating Partnership by the Initial Dealer
Lessees (or their affiliates), the Operating Partnership currently would not be
eligible for the 90% Passive-Type Income Exception. Thus, if the Operating
Partnership were to have more than 100 partners (including, in certain
circumstances, persons owning interests through flow-through entities), the
Company would be required to place appropriate restrictions on the ability of
the Limited Partners to exercise their Redemption Rights as and if deemed
necessary to ensure that the Operating Partnership does not constitute a
publicly traded partnership. However, there is no assurance that the Operating
Partnership will at all times in the future be able to avoid treatment as a
publicly traded partnership. The opinion of Liddell, Sapp, Zivley, Hill &
LaBoon, L.L.P. as to the classification of the Partnership is based on an
assumption that the Operating Partnership will continue to fall within a safe
harbor from publicly traded partnership status.

If for any reason the Operating Partnership were taxable as a
corporation, rather than as a partnership, for federal income tax purposes, the
Company would not be able to satisfy the income and asset requirements for REIT
status. See "-- Taxation of the Company -- Requirements for Qualification," "--
Taxation of the Company -- Income Tests" and "-- Taxation of the Company --
Asset Tests." In addition, any change in the Operating Partnership's status for
tax purposes might be treated as a taxable event, in which case the Company
might incur a tax liability without any related cash distribution. See " --
Taxation of the Company -- Distribution Requirements." Further, items of income
and deduction of the Operating Partnership would not pass through to its
partners, and its partners would be treated as shareholders for tax purposes.
Consequently, the Operating Partnership would be required to pay income tax at
corporate tax rates on its net income, and distributions to its partners would
constitute dividends that would not be deductible in computing the Operating
Partnership's taxable income.

The following discussion assumes that the Operating Partnership will be
treated as a partnership for federal income tax purposes.

Partnership Allocations. Although a partnership agreement will
generally determine the allocation of income and losses among partners, such
allocations will be disregarded for tax purposes if they do not comply with the
provisions of Section 704(b) of the Code and the Treasury Regulations
promulgated thereunder. Generally, Section 704(b) and the Treasury Regulations
promulgated thereunder require that partnership allocations respect the economic
arrangement of the partners. If an allocation is not recognized for federal
income tax purposes, the item subject to the allocation will be reallocated in
accordance with the partners' interests in the partnership, which will be
determined by taking into account all of the facts and circumstances relating to
the economic arrangement of the partners with respect to such item. The
Operating Partnership's allocations of taxable income and loss are intended to
comply with the requirements of Section 704(b) of the Code and the Treasury
Regulations promulgated thereunder.

Tax Allocations With Respect to the Properties. Pursuant to Section
704(c) of the Code, income, gain, loss and deduction attributable to appreciated
or depreciated property (such as the properties contributed by Founding Dealers)
that is contributed to a partnership in exchange for an interest in such
partnership must be allocated in a manner such that the contributing partner is
charged with, or benefits from, respectively, the unrealized gain or unrealized
loss associated with the property at the time of the contribution. The amount of
such unrealized gain or unrealized loss is generally equal to the difference
between the fair market value of contributed property at the time of
contribution and the adjusted tax basis of such property at the time of
contribution (a "Book-Tax Difference"). Such allocations are solely for federal
income tax purposes and do not affect the book capital accounts or other
economic or legal arrangements among the partners. The Operating Partnership was
formed by way of contributions of appreciated property (including the
properties). Consequently, the Partnership Agreement will require such
allocations to be made in a manner consistent with Section 704(c) of the Code.
In general, the Founding Dealers will be allocated depreciation deductions for
tax purposes which are lower than such deductions would be if determined on a
pro rata basis. In addition, in the event of the disposition of any of the
contributed assets (including the properties) which have a Book-Tax Difference,
all income attributable to such Book-Tax Difference will generally be allocated
to the Founding Dealers and the Company will generally be allocated only its
share of capital gains attributable to appreciation, if any, occurring after the
closing of this Offering. This will tend to eliminate the Book-Tax Difference
over the life of the Operating Partnership. However, the special allocation
rules of Section 704(c) do not always entirely eliminate the Book-Tax Difference
on an annual basis or with respect to a specific taxable transaction such as a
sale. Thus, the carryover basis of the contributed assets in the hands the
Operating Partnership will cause the Company to be allocated lower depreciation
and other deductions, and possibly an amount of taxable income in the event of a
sale of such contributed assets in excess of the economic or book income
allocated to it as a result of such sale. This may cause the Company to
recognize taxable income in excess of cash proceeds, which might adversely
affect the Company's ability to comply with the REIT distribution requirements.
See "-- Taxation of the Company -- Annual Distribution Requirements." The
foregoing principles also apply

<PAGE> 91

in determining the earnings and profits of the Company for purposes of
determining the portion of distributions taxable as dividend income. The
application of these rules over time may result in a higher portion of
distributions being taxed as dividends than would have occurred had the Company
purchased the contributed assets entirely for cash.

The Treasury Regulations under Section 704(c) of the Code allow
partnerships to use any reasonable method of accounting for Book-Tax Differences
so that the contributing partner receives the tax benefits and burdens of any
built-in gain or loss associated with the contributed property. The Operating
Partnership has generally determined to use the "traditional method" with
"curative" allocations (which is specifically approved in the Treasury
Regulations) for accounting for Book-Tax Differences with respect to the Initial
Properties. The Operating Partnership has not determined which of the
alternative methods of accounting for Book-Tax Differences will be elected with
respect to any properties contributed to it in the future.

Basis in Operating Partnership Interest. The Company's adjusted tax
basis in its interest in the Operating Partnership generally (i) will be equal
to the amount of cash and the basis of any other property contributed to the
Operating Partnership by the Company, (ii) will be increased by (a) its
allocable share of the Operating Partnership's income and (b) its allocable
share of indebtedness of the Operating Partnership and (iii) will be reduced,
but not below zero, by the Company's allocable share of (a) losses suffered by
the Operating Partnership, (b) the amount of cash distributed to the Company and
(c) by constructive distributions resulting from a reduction in the Company's
share of indebtedness of the Operating Partnership.

If the allocation of the Company's distributive share of the Operating
Partnership's loss exceeds the adjusted tax basis of the Company's partnership
interest in the Operating Partnership, the recognition of such excess loss will
be deferred until such time and to the extent that the Company has adjusted tax
basis in its interest in the Operating Partnership. To the extent that the
Operating Partnership's distributions, or any decrease in the Company's share of
the indebtedness of the Operating Partnership (such decreases being considered a
cash distribution to the partners), exceeds the Company's adjusted tax basis,
such excess distributions (including such constructive distributions) constitute
taxable income to the Company. Such taxable income will normally be
characterized as a capital gain, and if the Company's interest in the Operating
Partnership has been held for longer than the long-term capital gain holding
period (currently one year), the distributions and constructive distributions
will constitute long-term capital gain. Under current law, capital gains and
ordinary income of corporations are generally taxed at the same marginal rates.

Sale of the Properties. The Company's share of any gain realized by the
Operating Partnership on the sale of any property held by the Operating
Partnership as inventory or other property held primarily for sale to customers
in the ordinary course of the Operating Partnership's trade or business will be
treated as income from a prohibited transaction that is subject to a 100%
penalty tax. See "-- Taxation of the Company -- Income Tests." Such prohibited
transaction income may also have an adverse effect upon the Company's ability to
satisfy the income tests for qualification as a REIT. See "-- Taxation of the
Company -- Income Tests." Under existing law, whether property is held as
inventory or primarily for sale to customers in the ordinary course of a
partnership's trade or business is a question of fact that depends on all the
facts and circumstances with respect to the particular transaction. The
Operating Partnership intends to hold the properties for investment with a view
to long-term appreciation, to engage in the business of acquiring, developing,
owning, and operating the properties (and other similar properties) and to make
such occasional sales of the properties, including peripheral land, as are
consistent with the Operating Partnership's investment objectives.

ERISA CONSIDERATIONS

Because the Common Shares should qualify as a "publicly-offered
security," plans subject to ERISA ("ERISA Plans"), individual retirement
accounts ("IRAs") and H.R. 10 Plans ("Keogh Plans") may purchase Common Shares
and treat such Common Shares, and not the Company's assets, as plan assets. A
fiduciary of an ERISA Plan should consider the fiduciary standards under ERISA
in the context of the plan's particular circumstances before authorizing an
investment of a portion of such plan's assets in the Common Shares. Accordingly,
among other factors, such fiduciary should consider (i) whether the plan's
aggregate investments (including such an investment) satisfy the diversification
requirements of section 404(a)(l)(C) of ERISA, (ii) whether the investment is in
accordance with ERISA, the Code and the documents and instruments governing the
plan (as required by section 404(a)(l)(D) of ERISA), and (iii) whether the
investment is prudent, considering the role such an investment plays in the
plan's portfolio, the nature of the Company's business, the possible limitations
on the marketability of Common Shares and the anticipated earnings of the
Company. Investors proposing to purchase Common Shares for their IRAs and Keogh
Plans should consider that an IRA and a Keogh Plan may only make investments
that are authorized by the appropriate governing instruments. Moreover, Keogh
Plans that cover common law employees are also subject to the ERISA fiduciary
standards described above.

<PAGE> 92

Any ERISA Plan or Keogh Plan covering common law employees should also
consider prohibitions in ERISA relating to improper delegation of control over
or responsibility for "plan assets," prohibitions in ERISA and in the Code
relating to a plan's engaging in certain transactions involving the "plan
assets" with persons who are "parties in interest" under ERISA or "disqualified
persons" under the Code with respect to the plan, and other provisions in ERISA
dealing with "plan assets." The Code provisions relating to a plan's engaging in
certain transactions involving "plan assets" with persons who are "disqualified
persons" under the Code with respect to the plan also apply to IRAs and Keogh
Plans.

If the assets of the Company were deemed to be "plan assets" of plans
that are holders of Common Shares, Subtitle A and Parts 1 and 4 of Subtitle B of
Title I of ERISA (the prudence and fiduciary standards) with respect to ERISA
Plans and Keogh Plans covering common law employees, and section 4975 of the
Code (the prohibitions on transactions involving disqualified persons) with
respect to ERISA Plans, IRAs and Keogh Plans, would extend to transactions
entered into and decisions made by the Company's management. Furthermore, the
Company's management would be deemed to be fiduciaries with respect to such
plans.

ERISA and the Code do not define "plan assets." On November 13, 1986,
the U.S. Department of Labor published a final regulation, amended on December
31, 1986 and effective March 13, 1987, relating to the definition of "plan
assets," under which the assets of an entity in which employee benefits plans,
including ERISA Plans, IRAs and Keogh Plans, acquire interests would be deemed
"plan assets" under certain circumstances (the "Regulation"). The Regulation
generally provides that when a plan acquires an equity interest in any entity
that is a "publicly-offered security," the plan's assets include only the
acquired equity interest and not any interest in the underlying assets of the
entity. The Regulation defines a "publicly-offered security" as a security that
is "widely held," freely transferable and registered pursuant to certain
provisions of the federal securities laws. The Company believes that the Common
Shares offered hereby will be a "publicly-offered security," and thus that the
Company's assets under the Regulation will not be deemed to be assets of any
employee benefit plan that is a holder of Common Shares.

FIDUCIARIES OF EMPLOYEE BENEFIT PLANS THAT ARE PROSPECTIVE SHAREHOLDERS
SHOULD CONSULT WITH THEIR OWN COUNSEL AND FINANCIAL ADVISORS TO DETERMINE THE
CONSEQUENCES UNDER ERISA OF AN INVESTMENT IN THE COMPANY, AND TO DETERMINE THE
PROPRIETY OF SUCH AN INVESTMENT IN LIGHT OF THE CIRCUMSTANCES OF THAT PARTICULAR
PLAN AND CURRENT APPLICABLE LAW.

<PAGE> 93

UNDERWRITING

Upon the terms and subject to the conditions stated in the Underwriting
Agreement dated to be effective as of the date hereof, each Underwriter named
below has severally agreed to purchase, and the Company has agreed to sell to
such Underwriter, the number of Common Shares set forth opposite the name of
such Underwriter.

Number of
Common Shares
-------------
<S> <C>

Smith Barney Inc......................................................................
NationsBanc Montgomery Securities LLC.................................................
Jefferies & Company, Inc..............................................................
Sanders Morris Mundy..................................................................

---------
Total........................................................................ 7,600,000
=========
</TABLE>

The Underwriting Agreement provides that the obligations of the several
Underwriters to pay for and accept delivery of the shares offered hereby are
subject to the approval of certain legal matters by counsel and to certain other
conditions. The Underwriters are obligated to take and pay for all of the Common
Shares offered hereby (other than those covered by the over-allotment option
described below) if any such shares are taken.

The Underwriters initially propose to offer part of the shares directly
to the public at the public offering price set forth on the cover page of this
Prospectus and part of the shares to the other Underwriters or to certain
dealers at a price which represents a concession not in excess of $ per share
under the public offering price. The Underwriters may allow, and such dealers
may re-allow, a concession not in excess of $ per share to certain other
dealers. After the initial offering of the shares to the public, the public
offering price and such concessions may be changed by the Underwriters. The
Underwriters have advised the Company that the Underwriters do not intend to
confirm any sales to any accounts over which they exercise discretionary
authority.

The Company has granted to the Underwriters an option, exercisable for
30 days from the date of this Prospectus, to purchase up to 1,140,000 additional
Common Shares at the price to public set forth on the cover page of this
Prospectus minus the underwriting discounts and commissions. The Underwriters
may exercise such option solely for the purpose of covering over-allotments, if
any, in connection with the Offering of the shares offered hereby. To the extent
such option is exercised, each Underwriter will be obligated, subject to certain
conditions, to purchase approximately the same percentage of such additional
shares as the number of shares set forth opposite under each Underwriter's name
in the preceding table bears to the total number of shares listed in such table.

In connection with this Offering and in compliance with applicable law,
the Underwriters may over-allot (i.e., sell more Common Shares than the total
amount shown on the list of Underwriters and participations which appears above)
and may effect transactions which stabilize, maintain or otherwise affect the
market price of the Common Shares at levels above those which might otherwise
prevail in the open market. Such transactions may include placing bids for the
Common Shares or effecting purchases of the Common Shares for the purpose of
pegging, fixing or maintaining the price of the Common Shares or for the purpose
of reducing a syndicate short position created in connection with the Offering.
A syndicate short position may be covered by exercise of the option described
above in lieu of or in addition to open market purchases. In addition, pursuant
to the contractual arrangements among the Underwriters, if an Underwriter
purchases Common Shares in the open market for the account of the underwriting
syndicate and the securities purchased can be traced to a particular Underwriter
or member of the selling group, the underwriting syndicate may require the
Underwriter or selling group member in question to purchase the Common Shares in
question at the cost price to the syndicate or may recover from (or decline to
pay to) the Underwriter or selling group member in question the selling
concession applicable to the securities in question. The Underwriters are not
required to engage in any of these activities and any such activities, if
commenced, may be discontinued at any time.

The Company has agreed not to offer, sell, offer to sell, contract to
sell, assign, pledge, grant any option to purchase or otherwise dispose of or
transfer any Common Shares or any other security of the Company convertible
into, or exchangeable or exercisable for Common Shares for a period of six
months after the date of this Prospectus, and Jack I. Tompkins, David L.
Johnston, Bert Wollen and Douglas W. Schnitzer have agreed not to offer, sell,
offer to sell, contract to sell, assign, pledge, grant any option to purchase or
otherwise dispose of or transfer any Common Shares, or any other security of the
Company convertible into, or exchangeable or exercisable for, Common Shares for
a period of two years after the date of this Prospectus, without the prior
written consent of Smith Barney Inc. Nelson E.

<PAGE> 94

Bowers, II, and Norman Braman have agreed not to offer, sell, offer to sell,
contract to sell, assign, pledge, grant any option to purchase or otherwise
dispose of or transfer any Common Shares, or any other security of the Company
convertible into, or exchangeable or exercisable for, Common Shares for a period
of one year after the date of this Prospectus, without the prior written consent
of Smith Barney Inc. Notwithstanding the foregoing, (a) the Company may issue
Common Shares or options to purchase Common Shares under the Incentive Share
Plan, (b) the Operating Partnership may issue OP Units in connection with
acquisition of additional Automotive Properties and (c) Messrs. Tompkins,
Johnston, Wollen and Douglas W. Schnitzer may make bona fide gifts to donees who
agree to be bound by the foregoing restrictions. Smith Barney Inc., at any time
and without notice, may release all or any portion of the Common Shares subject
to the foregoing restrictions.

The Company and the Underwriters have agreed to indemnify each other
against certain liabilities, including liabilities under the Securities Act of
1933, as amended.

Prior to the Offering, there has been no public trading market for the
Common Shares. Consequently, the initial public offering price will be
determined by negotiations between the Company and the Underwriters. Among the
factors to be considered in such negotiations are the history of and prospects
for the Company and the industry in which it operates, an assessment of the
Company's management, the prospects for future earnings of the Company, the
present state of the Company's development, the general condition of securities
markets at the time of the Offering and the market price of publicly traded
stock of comparable companies in recent periods.

NationsBank, N.A., an affiliate of NationsBanc Montgomery, has entered
into negotiations with the Company, with respect to the Line of Credit. See
"Prospectus Summary - The Company." Jefferies & Company, Inc. will receive an
advisory fee equal to 1% of the gross proceeds of the Offering (up to a maximum
advisory fee of $4 million) for providing financial advisory assistance in
connection with the Offering. Affiliates of Sanders Morris Mundy own an
aggregate of 25,000 Common Shares and have loaned an aggregate of $400,000 to
the Company at an interest rate of 8%, the repayment of which is due upon the
closing of the Offering.

LEGAL MATTERS

The validity of the Common Shares offered hereby will be passed upon
for the Company by Liddell, Sapp, Zivley, Hill & LaBoon, L.L.P., Dallas, Texas.
Certain legal matters in connection with this Offering will be passed upon for
the Underwriters by Latham & Watkins, San Francisco, California. In addition,
the description of federal income tax consequences contained in this Prospectus
entitled "Federal Income Tax Considerations" is based upon the opinion of
Liddell, Sapp, Zivley, Hill & LaBoon, L.L.P. As of the date of this Prospectus,
a partner of Liddell, Sapp, Zivley, Hill & LaBoon, L.L.P., participating in the
consideration of legal matters relating to this Offering was a partner in a
limited partnership that owned 5,000 Common Shares and had loaned the Company
$80,000 to be repaid from the proceeds of the Offering.

EXPERTS

The financial statement included in this Prospectus and elsewhere in
the Registration Statement have been audited by Arthur Andersen LLP, independent
public accountants, as indicated in their report with respect thereto, and is
included herein in reliance upon the authority of said firm as experts in giving
said report.

ADDITIONAL INFORMATION

The Company has filed with the Commission a Registration Statement on
Form S-11 under the Securities Act, and the rules and regulations promulgated
thereunder, with respect to the Common Shares offered hereby. This Prospectus
does not contain all of the information set forth in the Registration Statement
and the exhibits and schedules thereto, as permitted by the rules and
regulations of the Commission. For further information concerning the Company
and the Common Shares offered hereby, reference is made to such Registration
Statement, exhibits and schedules. Statements contained herein concerning the
provisions of any document are not necessarily complete, and, in each instance,
reference is made to the copy of such document filed as an exhibit to the
Registration Statement or otherwise filed with the Commission. Each such
statement is qualified in its entirety by such reference. A copy of the
Registration Statement may be examined without charge at the offices of the
Commission located at 450 Fifth Street, N.W., Washington, D.C. 20549 and will
also be available for inspection and copying at the regional offices of the
Commission located at 7 World Trade Center, 13th Floor,

<PAGE> 95

New York, New York 10048 and at Citicorp Center, Suite 1400, 500 West Madison
Street, Chicago, Illinois 60661. Copies of such material may also be obtained
form the Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549 at prescribed rates. The Commission also maintains a site
on the World Wide Web at http:www.sec.gov that contains reports, proxy and
information statements and other information regarding registrants that file
electronically with the Commission.

The Company intends to furnish to its shareholders with annual reports
containing audited financial statements accompanied by a report thereon by its
independent public accounting firm and quarterly reports containing unaudited
financial information for the first three quarters of each fiscal year.

<PAGE> 96
AUTOMOTIVE REALTY TRUST OF AMERICA

INTRODUCTION TO FINANCIAL STATEMENTS

The following pages present the audited financial statements of the Company.
Financial statements of the Initial Lessees have not been presented as no
purchase price of any single or related initial properties under lease represent
greater than 20 percent of the aggregate purchase price of all the initial
properties, and therefore are not considered significant. Financial statements
of the operating partnership have not been presented as it has not had any
significant activity since its inception. The operating partnership will
commence activity concurrent with the closing of the offering.

F-1
<PAGE> 97

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Automotive Realty Trust of America:

We have audited the accompanying balance sheet of Automotive Realty Trust of
America (a Texas real estate investment trust) as of December 31, 1997. This
financial statement is the responsibility of the Company's management. Our
responsibility is to express an opinion on this financial statement based on our
audit.

We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the balance sheet is free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the balance sheet. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.

In our opinion, the balance sheet referred to above presents fairly, in all
material respects, the financial position of Automotive Realty Trust of America
as of December 31, 1997, in conformity with generally accepted accounting
principles.

ARTHUR ANDERSEN LLP

Dallas, Texas,
March 12, 1998

F-2
<PAGE> 98

AUTOMOTIVE REALTY TRUST OF AMERICA

BALANCE SHEET--DECEMBER 31, 1997

<TABLE>
<CAPTION>
ASSETS
<S> <C>
CURRENT ASSETS:
Cash $ 29,184
Restricted cash 324,687
--------

Total current assets 353,871
--------

DEFERRED OFFERING COSTS 231,363

ORGANIZATIONAL COSTS AND OTHER ASSETS 7,000
--------

Total assets $592,234
========

LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:
Accounts payable-affiliates $ 15,534
Notes payable 400,000
--------

Total current liabilities 415,534
--------
SHAREHOLDERS' EQUITY:
Common stock, no par value, 1,596,666 shares issued and outstanding --
Additional paid-in capital 176,700
--------

Total shareholders' equity 176,700
--------

Total liabilities and shareholders' equity $592,234
========
</TABLE>

The accompanying notes are an integral part of this balance sheet.

F-3
<PAGE> 99

AUTOMOTIVE REALTY TRUST OF AMERICA

NOTES TO BALANCE SHEET

DECEMBER 31, 1997

1. ORGANIZATION:

Automotive Realty Trust of America (the "Company") was formed as a Texas real
estate investment trust on August 28, 1997, and was initially capitalized on
September 29, 1997 through the issuance of 1,500,000 common shares for $1,500.
The Company was formed to invest in the real property and improvements used by
operators of automobile dealerships and motor vehicle related businesses located
throughout the United States, through its ownership interest in ARTA Operating
Limited Partnership (the "Operating Partnership"). After the IPO, the Company
will consolidate the Operating Partnership due to its control as sole general
partner. The accompanying balance sheet includes all accounts of the Company.

The Company's sole activity through December 31, 1997, consisted of the
organization and start-up of the Company. Accordingly, no statement of
operations is presented.

The Company is in the process of filing a Registration Statement for
approximately 7,600,000 shares of common stock (the "IPO"). Additionally, the
Company will sell 225,000 shares of common stock in a private placement at the
IPO price. Contingent upon the consummation of the IPO, the Company will be
liable for organization and offering expenses in connection with the sale of the
shares of the common stock offered. In conjunction with the IPO, Private
Placement, and restructuring of the common shares outstanding at that date, the
Company will contribute the net proceeds from the IPO and the Private Placement
to the Operating Partnership in exchange for 8,491,166 units in the Operating
Partnership assuming an initial public offering price of $20 per share.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Restricted Cash

Restricted cash consists of amounts held in a money market fund securing a
letter of credit guaranteeing an employment agreement with the Company's Chief
Executive Officer (CEO).

Property and Equipment

Subsequent to completion of its pending acquisitions (see Note 4) the Company
will capitalize property and equipment at cost. Buildings and improvements will
be depreciated over a 20 year life using the straight-line method. Improvements
will be capitalized at cost, while maintenance and repairs will be charged to
operating expenses when incurred.

Income Taxes

The Company intends to qualify as a real estate investment trust ("REIT") under
the provisions of the Internal Revenue Code of 1986, as amended. As a REIT, the
Company is required to distribute at least 95% of its REIT taxable income to
shareholders and meet certain other requirements.

Use of Estimates

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and

F-4
<PAGE> 100

disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

Concentration of Risk

The Company is in the development stage, and therefore will be subject to
several risk factors, including the following:

o Risks affecting automobile dealerships generally, including, without
limitation, industry consolidation, competition, seasonally,
susceptibility to changing consumer preferences and unpredictability of
discretionary consumer spending, all of which could adversely affect a
lessee's ability to make its lease payments to the Company;

o Dependence on lease payments from the Company's lessees for
substantially all of the Company's income and the difficulties
associated with attracting replacement lessees;

o The lack of investment diversification among different industries;

o The limitations imposed by federal and state laws on the Company's
recourse against lessees who default under their leases;

o Risks associated with the long-term nature of the leases (with terms,
including options, of up to 35 years) together with lock-out periods
applicable to many of the Company's properties, which may have an
adverse effect on the Company's ability to sell a property;

o The lack of appraisals of the Initial Properties and the possibility
that the purchase prices paid for the Initial Properties may exceed the
fair market value of one or more of the Initial Properties;

o The risks associated with repurchase options allowing certain dealer
lessees to repurchase properties at prices that may be less than the
then existing fair market values thereof;

o The lack of control over the day-to-day operations and management of
the automobile dealerships and related businesses which lease property
from the Company;

o Dependence upon future acquisitions, and the related risks of
competition for acquisition opportunities and possible unavailability
of capital to make such acquisitions;

o The possible inability of the Company to maintain its proposed initial
distribution rate;

o The lack of an operating history for the Company; and

o Adverse tax consequences of failing to qualify as a REIT and in the
event of such failure, the decrease in funds available to pay
distributions to shareholders resulting from taxation as a regular
corporation.

3. NOTES PAYABLE:

Under the provisions of certain subscription agreements, the Company received
$500,000 from several investors, which is allocated between common stock and
notes payable in accordance with the subscription agreements. At December 31,
1997, such investors had collectively subscribed to 25,000 shares at $4 per
share for a total of $100,000. The remaining $400,000 is in the form of notes
payable. The notes payable accrue interest at 8%, with interest and principal
due on the earlier of December 31, 1998, or upon the effective date of the IPO.

The Company has a letter of credit with a bank securing up to $324,000 of the
funding of the employment agreement with the Company's CEO. No amounts were
outstanding at December 31, 1997.

F-5

<PAGE> 101

4. SUBSEQUENT EVENTS (UNAUDITED):

Acquisitions

Since August 28, 1997, the Company, through the Operating Partnership, has
committed to acquire real property and improvements from the affiliates of 17
motor vehicle dealers (the "Dealers") for a total purchase price of
approximately $334,485,000, for which approximately $158,696,000 will be paid
with units in the Operating Partnership (valued at the same price as the
Company's shares sold in the IPO), $125,024,000 will consist of mortgage debt
assumed by the Company, and the remaining $50,765,000 will be paid with the
proceeds of the IPO. Approximately $119,378,000 of the mortgage debt assumed
will be repaid with the proceeds of the IPO. These acquisitions are contingent
on the completion of the IPO as discussed above.

Rental Income

As part of the planned acquisitions described above, the Company will enter into
lease agreements (the "Leases") with the operators of the initial lessees. The
Leases generally have initial terms of ten years, and generally may be extended
for up to two additional five- or ten-year terms, at the option of the lessees.
During the third through fifth years of certain initial leases, certain Dealers
will have a revaluation option. An increase in the lease payment, as well as an
extension of the primary term to ten years after such exercise of the
revaluation option may also occur. Most of such Leases will be cross-defaulted
and/or guaranteed among affiliated properties operated within a dealer group.
The Leases are triple-net leases and require the lessees to pay substantially
all expenses associated with operations, including taxes, insurance, utilities,
service, maintenance and ground lease payments. Base rent generally will be
increased annually over the term of the Leases by a factor of the consumer price
index. Future minimum rental payments will be received as follows (in
thousands):

<TABLE>

<S> <C>
1998 $ 33,347
1999 33,347
2000 33,347
2001 33,347
2002 33,347
Thereafter 174,877
--------
$341,612
========
</TABLE>

Incentive Share Plan

The Company has adopted the Employee and Trust Manager Incentive Share Plan of
Automotive Realty Trust of America (the "Plan") to (i) furnish incentives to
individuals chosen to receive share-based awards because they are considered
capable of responding by improving operations and increasing profits; (ii)
encourage selected persons to accept or continue employment with the Company;
and (iii) increase the interests of Trust Managers in the Company's welfare
through their participation in the growth in value of the common shares. Each
option granted pursuant to the Plan shall be designated at the time of grant as
either an "incentive share option" or as a "non-qualified share option." The
number of shares that may be issued under the Plan is equal to 10 percent of the
aggregate number of the Company's outstanding shares on a fully-diluted basis,
currently estimated at 1,642,600 common shares, of which options to purchase
1,000,000 common shares will be outstanding at the closing of the IPO. Options
may, at the sole discretion of the Plan's administrative committee be
exercisable or vest, at varying times, as specified in each award and will have
terms of up to ten years.

Employment Agreements

The Company has entered into employment agreements with its Chairman of the
Board, President and Chief Executive Officer, and Executive Vice
President-Business Development and Chief Acquisition Officer. The President and
Chief Executive Officer has agreed to devote all of his business time to the
affairs of the Company.

F-6
<PAGE> 102

The Chairman of the Board has agreed to devote substantially all of his business
time to the Company. The Executive Vice President-Business Development and Chief
Acquisition Officer will be a full-time acquisition officer and devote
substantially all of his professional time to the Company. Each employment
agreement is for a three year term.

F-7
<PAGE> 103

AUTOMOTIVE REALTY TRUST OF AMERICA

PRO FORMA BALANCE SHEET AS OF DECEMBER 31, 1997,
AND PRO FORMA STATEMENT OF OPERATIONS FOR THE YEAR THEN ENDED

The following unaudited pro forma balance sheet gives effect to: (i) the
completion of the Offering and Private Placement, (ii) the acquisition of the
Initial Properties, (iii) the commencement of the Initial Leases, and (iv)
certain other transactions described in the notes hereto as though such
transactions occurred on December 31, 1997.

The following unaudited pro forma statement of operations gives effect to (i)
the completion of the Offering and Private Placement, (ii) the acquisition of
the Initial Properties, (iii) the commencement of the Initial Leases, and (iv)
certain other transactions described in the notes hereto as though such
transactions occurred at the beginning of the period presented.

The following unaudited pro forma data is not necessarily indicative of what the
actual financial position or results of operations of the Company would have
been as of the date or for the period indicated, nor does it purport to
represent the financial position or results of operations for the Company for
future periods.

F-8
<PAGE> 104

AUTOMOTIVE REALTY TRUST OF AMERICA
PRO FORMA BALANCE SHEET
AS OF DECEMBER 31, 1997
(unaudited)
(Dollars in Thousands)
<TABLE>
<CAPTION>
Proforma Pro
ASSETS Historical Adjustments Forma(G)
---------- ----------- --------
<S> <C> <C> <C>
CURRENT ASSETS:
Cash $ 29 $ 672 (A) $ 431
138,140 (B)
(701)(B)
(50,765)(C)
(85,024)(D)
(920)(L)
(1,000)(K)
Restricted cash 325 (325)(A) 770
770 (F)
----- --------
Total current assets 354 1,201
----- --------

LAND -- 234,138 (C) 234,138

BUILDING AND IMPROVEMENTS -- 100,347 (C) 100,347
----- --------

Total real estate -- 334,485

DEFERRED OFFERING COSTS AND OTHER ASSETS 238 1,015 (A) 1,013
(1,240)(B)
1,000 (K)
----- --------
Total assets $ 592 $336,699
===== ========

LIABILITIES AND SHAREHOLDERS' EQUITY

ACCOUNTS PAYABLE AND ACCRUED LIABILITIES $ 16 $ (16)(A) $ --
701 (A)
(701)(B)

SECURITY DEPOSITS PAYABLE -- 770 (F) 770

NOTES PAYABLE 400 520 (A) --
(920)(L)
----- --------
Total current liabilities 416 770

MORTGAGE NOTES PAYABLE -- 125,024 (C) 5,646
(119,378)(D)

LINE OF CREDIT -- 34,354 (D) 34,354
----- --------
Total liabilities 416 40,770

MINORITY INTEREST -- 158,696 (C)(E) 158,696

SHAREHOLDERS' EQUITY:
Common stock -- -- --
Additional paid-in capital 176 157 (A) 137,233
138,140 (B)
(1,240)(B)
----- --------
Total shareholders' equity 176 137,233
----- --------

Total liabilities and shareholders' equity $ 592 $336,699
===== ========
</TABLE>

The accompanying notes are an integral part of this unaudited
pro forma balance sheet.

F-9
<PAGE> 105

AUTOMOTIVE REALTY TRUST OF AMERICA

PRO FORMA STATEMENT OF OPERATIONS

FOR THE YEAR ENDED DECEMBER 31, 1997
(Unaudited)
(Dollars in thousands, except per share data)

<TABLE>
<CAPTION>
Pro
Historical Adjustments Forma(G)
---------- ----------- --------
<S> <C> <C> <C>
TOTAL REVENUE $ -- $ 33,347 (H) $ 33,347

DEPRECIATION AND AMORTIZATION -- 5,020 (C) 5,020

GENERAL AND ADMINISTRATIVE EXPENSE -- 2,585 (I) 2,585

INTEREST EXPENSE -- 3,052 (J)
333 (K) 3,385
------ --------

Total expenses -- 10,990

NET INCOME BEFORE MINORITY INTEREST -- 22,357

MINORITY INTEREST -- (10,731)(E) (10,731)
------ --------

NET INCOME APPLICABLE TO COMMON
SHAREHOLDERS -- $ 11,626
====== ========

EARNINGS PER SHARE:
BASIC -- $ 1.37
====== ========
FULLY DILUTED -- $ 1.36
====== ========

WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING:
BASIC -- 8,491 (M) 8,491
====== ========
FULLY DILUTED -- 8,524 8,524
====== ========
</TABLE>

The accompanying notes are an integral part of this unaudited
pro forma financial statement.

F-10
<PAGE> 106

AUTOMOTIVE REALTY TRUST OF AMERICA

NOTES TO PRO FORMA FINANCIAL STATEMENTS
(Unaudited)

(A) To record activity of the Company subsequent to December 31, 1997. The
following summarizes the net change (in thousands) in cash of $672:

<TABLE>

<S> <C>
Proceeds of private debt $ 520
Proceeds from private equity 157
Reduction in restricted cash 325
Increase in deferred offering costs (1,015)
Increase in accrued liabilities 701
Reduction in accrued liabilities (16)
-------
Net change in cash $ 672
=======
</TABLE>

(B) Represents 7,600,000 shares of common stock issued in the IPO, and
225,000 shares of common stock sold in the Private Placement, at $20
per share with no par value. Adjustments consist of the following (in
thousands):

<TABLE>
<S> <C>
Proceeds of offering $152,000
Underwriters discount (12,160)
Private placement 4,500
Offering expenses (6,200)
--------

Net proceeds $138,140
========

Common stock $ --
Additional paid-in capital 138,140
--------

Net proceeds $138,140
========
</TABLE>

The Company will utilize approximately $1.24 million of cash raised in
private equity and debt transactions (see Note A) to pay a portion of
offering costs.

(C) Represents contribution of the Initial Properties for units of the
Operating Partnership (assuming the IPO price of the Company's Common
Shares), assumption of mortgage debt, and cash. In the opinion of
management, the purchase price of the real property acquired
approximates the estimated fair value as of the date of commitment to
acquire. The purchase price of real property has been preliminarily
allocated 70%-30% between land and buildings, respectively, for
purposes of the unaudited pro forma financial statements. Final
allocations will be calculated and recorded by the Operating
Partnership upon closing. Adjustments are comprised of the following
(in thousands):

<TABLE>
<CAPTION>
Total Land Building
----- ---- --------
<S> <C> <C> <C>
Units issued-Minority interest $158,696 $111,087 $ 47,609
Cash paid 50,765 35,535 15,230
Mortgage debt assumed 125,024 87,516 37,508
-------- -------- --------

$334,485 $234,138 $100,347
======== ======== ========
</TABLE>

Depreciation is computed using the straight-line method assuming
estimated useful lives of 20 years for the buildings and improvements.

F-11
<PAGE> 107

(D) Represents the estimated $119.4 million repayment of the $125.0 million
mortgage debt assumed from the Initial Properties using $85.0 million
of proceeds from the Offering and $34.4 million of line of credit
indebtedness. See "Use of Proceeds" elsewhere in this Prospectus.

(E) The ownership of the Operating Partnership is as follows (in
thousands):

<TABLE>
<CAPTION>
$ Units %
------- ----- ---
<S> <C> <C> <C>
Partners' capital:
Certain Initial Sellers 158,696 7,935 48%
The Company 138,140 8,491 52
-------- ------ ---

Total $296,836 16,426 100%
======== ====== ===
</TABLE>

(F) Represents security deposits to be received from the Initial Lessees.

(G) The Company, as the sole general partner of the Operating Partnership,
will have, subject to certain protective rights of the Limited
Partners, full, exclusive and complete responsibility and discretion in
the management and unilateral control of the Operating Partnership.
Such responsibilities permit the Company to enter into certain major
transactions including acquisitions, dispositions and refinancings, and
to cause changes in the Operating Partnership's line of business and
distribution policies. Further, the Company may not be replaced as
general partner by the Limited Partners, except in certain limited
circumstances. Accordingly, for accounting purposes, the Company is
considered to control the Operating Partnership and the accompanying
unaudited pro forma financial statements consolidate the accounts of
the Company and the Operating Partnership. Financial statements of the
Operating Partnership have not been presented as it has not had any
activity since its inception.

(H) Represents payments of base rent from the Initial Lessees to the
Company calculated on a pro forma basis as if the beginning of the
period presented was the beginning of a lease year.

(I) Adjustment represents management's estimate for legal, audit, office
costs, salaries and other general and administrative expenses to be
paid by the Company, based on its current activity, as follows (in
thousands). This amount may increase based on additional acquisition
activity:

<TABLE>
<CAPTION>
Year Ended
December 31,
1997
------------
<S> <C>
Salaries and benefits--executive officers $1,421
Other salaries and benefits 254
Directors and officers insurance 175
Legal and accounting 250
Acquisition expenses 250
Directors fees and travel 100
Office rent, telephone, supplies and other
administrative 135
------
Total $2,585
======
</TABLE>

Salaries and benefits are based upon employment contracts with
executive management or estimates of amounts which will be paid. Other
amounts are based upon management's estimates of expenses to be
incurred given the Company's level of operations and related
administrative requirements.

(J) Represents interest on amounts outstanding under the line of credit and
mortgage note payable at a weighted average rate of 7.63 percent.

F-12
<PAGE> 108

(K) Represents deferred financing costs incurred in conjunction with
obtaining the line of credit and related amortization over a 3 year
term.

(L) Represents the repayment of the notes payable with proceeds of the IPO.

(M) Represents 7,600,000 common shares issued in conjunction with the IPO
and sale of the 225,000 Common Shares in the Private Placement, the
proceeds of which will be used to acquire the Initial Properties and
the contribution to the Company by shareholders of an aggregate of
963,000 common shares, resulting in total common shares outstanding of
666,166 immediately prior to the IPO.

F-13

<PAGE> 109

<TABLE>
<S> <C>
===================================================== =====================================================
No dealer, salesperson or any other person has been 7,600,00 Shares
authorized to give any information or to make any
representations other than those contained in this Prospectus
in connection with the offer contained herein and, if given or
made, such information or representations must not be relied
upon as having been authorized by the Company or by any
of the Underwriters. This Prospectus does not constitute an
offer of any securities other than those to which it relates or
an offer to sell, or a solicitation of an offer to buy, those to
which it relates in any state to any person to whom it is not [LOGO]
lawful to make such offer in such state. The delivery of this
Prospectus at any time does not imply that information
contained herein is correct as of any time subsequent to its
date.
Automotive Realty
Trust of America

Common Shares of
TABLE OF CONTENTS Beneficial Interest

Prospectus Summary..................................1 __________________________
Risk Factors.......................................13
Use of Proceeds....................................28 PROSPECTUS
Distribution Policy................................29 __________________________
Capitalization.....................................31
Dilution...........................................32
Selected Historical Financial Information..........33
Management's Discussion and Analysis of Salomon Smith Barney
Financial Condition and Results of Operations....34
Organization and Formation Transactions ...........37 NationsBanc Montgomery
Business and Properties............................39 Securities LLC
Management.........................................56
Certain Policies and Objectives....................62 Jefferies & Company, Inc.
Partnership Agreement .............................65
Principal Shareholders.............................67 Sanders Morris Mundy
Description of Shares of Beneficial Interest ......68
Shares Eligible for Future Sale....................72
Federal Income Tax Considerations..................73
ERISA Considerations...............................84 _________, 1998
Underwriting.......................................86
Legal Matters......................................87
Experts............................................87
Additional Information.............................87
Index to Financial Statements.....................F-1

------------------

Until , 1998 (25 days after the commencement of the offering),
all dealers effecting transactions in the Common Shares, whether
or not participating in this distribution, may be required to
deliver a Prospectus. This is in addition to the obligation of
dealers to deliver a Prospectus when acting as Underwriters
and with respect to their unsold allotments or subscriptions.
===================================================== =====================================================

</TABLE>

<PAGE> 110

PART II. INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 31. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The following table itemizes the expenses incurred by the Company in
connection with the offering of the Common Shares being registered. All of the
amounts shown are estimates except the Securities and Exchange Commission
registration fee and the New York Stock Exchange listing fee.

<TABLE>
<CAPTION>
Item Amount
---- ------
<S> <C>
Registration Fee - Securities and Exchange Commission $54,144

New York Stock Exchange Listing Fee 76,000

Transfer Agent's and Registrar's Fees *
-------
Printing and Engraving Fees *
-------
Legal Fees and Expenses (other than Blue Sky) *
-------
Accounting Fees and Expenses *
-------
Blue Sky Fees and Expenses (including fees of counsel) *
-------
Miscellaneous Expenses *
-------
TOTAL $ *
=======
</TABLE>

- ----------------
* To be filed by amendment.

ITEM 32. SALES TO SPECIAL PARTIES

Not applicable.

ITEM 33. RECENT SALES OF UNREGISTERED SECURITIES

During the past three years, the Registrant has sold the following
securities, the offer and sale of which were not registered under the
Securities Act:

(i) Effective September 29, 1997, the Registrant issued to Jack I.
Tompkins, Bert Wollen and WS&B Auto REIT, LLC, 375,000 Common Shares, 375,000
Common Shares and 750,000 Common Shares, respectively, in consideration of the
payment of cash in the amount of $0.001 per Common Share issued. Such issuances
were exempt from the registration provisions of the Securities Act pursuant to
Section 4(2) thereof. No commissions were paid in connection with such sales.
Prior to the closing of the Offering, Common Shares will be contributed to the
Company as follows: WS&B Auto REIT, LLC: 511,500 Common Shares; Mr. Tompkins:
195,750 Common Shares; and Mr. Wollen: 255,750 Common Shares.

(ii) Effective November 21, 1997, the Registrant issued to Dorothy
Barnes an aggregate of 5,000 Common Shares at a purchase price of $0.001 per
share. Such issuance was exempt from the registration provisions of the
Securities Act pursuant to Section 4(2) thereof. No commissions were paid in
connection with such sales.

(iii) Effective November 25, 1997, the Registrant issued to Brodie
Cobb an aggregate of 50,000 Common Shares at a purchase price of $0.05 per
share. Such issuance was exempt from the registration provisions of the

II-1
<PAGE> 111
Securities Act pursuant to Section 4(2) thereof. No commissions were paid in
connection with such sale.

(iv) Effective December 15, 1997, the Registrant issues to David L.
Johnston 16,666 Common Shares in consideration of personal services, and
granted to Mr. Johnston an option to purchase 33,334 Common Shares exercisable
at $0.40 per share. Such issuance and grant were exempt from the registration
provisions of the Securities Act pursuant to Section 4(2) thereof. No
commissions were paid in connection with such issuance and grant.

(v) Effective December 18, 1997, the Registrant issued to the
following persons an aggregate of 25,000 Common Shares at a purchase price of
$4.00 per share and borrowed from the following persons an aggregate of
$400,000, as follows:

<TABLE>
<CAPTION>
Common Amount
Shares Advanced
------- --------
<S> <C> <C>
John I. Mundy 1,250 $ 20,000
Don A. Sanders 11,250 180,000
Katherine U. Sanders 6,250 100,000
John Drury 6,250 100,000
</TABLE>

(vi) Effective February 1, 1998, the Registrant issued to the
following persons an aggregate of 27,500 Common Shares at a purchase price of
$4.00 per share and borrowed from the following persons an aggregate of
$440,000, as follows:

<TABLE>
<CAPTION>
Common Amount
Shares Advanced
------- --------
<S> <C> <C>
Thomas R. Powers 1,250 $ 20,000
Douglas Y. Bech 1,250 20,000
Allen B. Cobb 10,000 160,000
Harold Zlot and Mary Zlot 10,000 160,000
David Ward 5,000 80,000
</TABLE>

Such issuances were exempt from the registration provisions of the Securities
Act pursuant to Section 4(2) thereof. No commissions were paid in connection
with such sales.

(vii) Effective March 5, 1998, the Registrant issued to BG Holdings,
Ltd., an aggregate of 5,000 Common Shares at a purchase price of $4.00 per
share and borrowed from BG Holdings, Ltd., an aggregate of $80,000. Such
issuance was exempt from the registration provisions of the Securities Act
pursuant to Section 4(2) thereof. No commissions were paid in connection with
such sale.

(viii) Effective April 17, 1998, the Registrant agreed to sell to
Jack I. Tompkins and Bert Wollen 150,000 Common Shares and 75,000 Common
Shares, respectively, in consideration of a payment per share equal to the
initial public offering price. Such sales were exempt from the registration
provisions of the Securities Act pursuant to Section 4(2) thereof. No
commissions were paid in connection with such sales.

(ix) Effective ________, 1998, the Registrant granted to Carrine
Reilly options to purchase an aggregate of 30,000 Common Shares pursuant to the
Registrant's Employee and Trust Manager Incentive Share Plan. See "Management
- -- Incentive Share Plan." The grant of such options was exempt from the
registration provisions of the Securities Act pursuant to Section 4(2) thereof.
No commissions were paid in connection with such grants.

(x) Effective ________, 1998, the Registrant granted to Laurence A.
Darst options to purchase an aggregate of 50,000 Common Shares pursuant to the
Registrant's Employee and Trust Manager Incentive Share Plan. See "Management
- -- Incentive Share Plan." The grant of such options was exempt from the
registration provisions of the Securities Act pursuant to Section 4(2) thereof.
No commissions were paid in connection with such grants.

II-2
<PAGE> 112
ITEM 34. INDEMNIFICATION OF TRUST MANAGERS AND OFFICERS

Subsection (B) of Section 9.20 of the Texas Real Estate Investment
Trust Act, as amended (the "Texas REIT Act"), authorizes a real estate
investment trust ("REIT") to indemnify any person who was, is, or is threatened
to be made a named defendant or respondent in any threatened, pending, or
completed action, suit or proceeding, whether civil, criminal, administrative,
arbitrative or investigative, any appeal in such an action, suit or proceeding,
or any inquiry or investigation that can lead to such an action, suit or
proceeding because the person is or was a trust manager, officer, employee or
agent of the REIT or is or was serving at the request of the REIT as a trust
manager, director, officer, partner, venturer, proprietor, trustee, employee,
agent, or similar functionary of another REIT, corporation, partnership, joint
venture, sole proprietorship, trust, employee benefit plan, or other enterprise
against expenses (including court costs and attorney fees), judgments,
penalties, fines and settlements if he conducted himself in a good faith and
reasonably believed his conduct was in or not opposed to the best interests of
the REIT and, in the case of any criminal proceeding, had no reasonable cause
to believe that his conduct was unlawful.

The Texas REIT Act further provides that, except to the extent
otherwise permitted by the Texas REIT Act, a person may not be indemnified in
respect of a proceeding in which the person is found liable on the basis that
personal benefit was improperly received by him or in which the person is found
liable to the REIT. Indemnification pursuant to Subsection (B) of Section 9.20
of the Texas REIT Act is limited to reasonable expenses actually incurred and
may not be made in respect of any proceeding in which the person has been found
liable for willful or intentional misconduct in the performance of his duty to
the REIT.

Subsection (C) of Section 15.10 of the Texas REIT Act provides that a
trust manager shall not be liable for any claims or damages that may result
from his acts in the discharge of any duty imposed or power conferred upon him
by the REIT if, in the exercise of ordinary care, he acted in good faith and in
reliance upon information, opinions, reports or statements, including financial
statements and other financial data, concerning the REIT, that were prepared or
presented by officers or employees of the REIT, legal counsel, public
accountants, investment bankers or certain other professionals, or a committee
of trust managers of which the trust manager is not a member. In addition, no
trust manager shall be liable to the REIT for any act, omission, loss, damage
or expense arising from the performance of his duty to a REIT, save only for
his own willful misfeasance, willful malfeasance or gross negligence.

The Company's Declaration of Trust provides for indemnification by the
Company of its Trust Managers and officers to the fullest extent permitted by
the Texas REIT Act. In addition, the Company's Declaration of Trust provides
that the Company may pay or reimburse, in advance of final disposition of a
proceeding, reasonable expenses incurred by a present or former Trust Manager
or officer made a party to a proceeding by reason of his or her status as a
Trust Manager or officer provided that (i) the Trust Managers have consented to
the advancement of expenses (which consent shall not be unreasonably withheld)
and (ii) the Company shall have received (a) a written affirmation by the Trust
Manager or officer of his or her good faith belief that he or she has met the
standard of conduct necessary for indemnification by the Company under the
Texas REIT Act and (b) a written undertaking by or on his or her behalf to
repay the amount paid or reimbursed by the Company if it shall ultimately be
determined that the standard of conduct was not met or it is ultimately
determined that indemnification of the Trust Manager against expenses incurred
by him in connection with that proceeding is prohibited by Section 9.20 of the
Texas REIT Act.

The Company has entered into indemnification agreements requiring the
Company to indemnify its officers and Trust Managers, and advance expenses, to
the maximum extent permitted by Texas law.

The Company intends to obtain director and officer liability insurance
in the amount of $10,000,000.

The Company has agreed to indemnify the Underwriters against certain
liabilities, losses and expenses including liabilities under the Securities Act
of 1933, or to contribute to payments that the Underwriters may be required to
make in respect thereof.

II-3
<PAGE> 113

ITEM 35. TREATMENT OF PROCEEDS FROM COMMON SHARES BEING REGISTERED

Not applicable.

ITEM 36. FINANCIAL STATEMENTS AND EXHIBITS

a. FINANCIAL STATEMENTS

Report of Independent Public Accountants
Balance Sheet
Notes to Balance Sheet
Pro Forma Balance Sheet
Pro Forma Statement of Operations
Notes to Pro Forma Financial Statements

b. EXHIBITS

<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- -------- -----------
<S> <C>
*1.1 Form of Underwriting Agreement

**3.1 Form of Declaration of Trust

**3.2 Amended and Restated Bylaws of the Company

*4.1 Form of Common Share Certificate

*5.1 Opinion of Liddell, Sapp, Zivley, Hill & LaBoon, L.L.P. regarding
the legality of the Common Shares being registered

*8.1 Opinion of Liddell, Sapp, Zivley, Hill & LaBoon, L.L.P. regarding
certain federal income tax matters

*10.1 First Amended and Restated Agreement of Limited Partnership of
the Operating Partnership

*10.2 Employment Contract between the Company and David L. Johnston

*10.3 Employment Contract between the Company and Jack I. Tompkins

*10.4 Employment Contract between the Company and Bert Wollen

*10.5 Employee and Trust Manager Incentive Share Plan

*10.6 Form of Indemnification Agreement

*10.7 Asset Management Agreement by and between the Operating
Partnership and Elite Sports Properties

*10.8 Asset Management Agreement by and between the Operating
Partnership and David Sibits

*10.9 Asset Management Agreement by and between the Operating
Partnership and Robert Garfield
</TABLE>

II-4

<PAGE> 114
<TABLE>
<S> <C>
*10.10 Asset Management Agreement by and between the Operating
Partnership and Robert J. Jones

*10.11 Asset Management Agreement by and between the Operating
Partnership and Daniel C. Gaubatz, Sr.

*10.12 Asset Management Agreement by and between the Operating
Partnership and Robert Dilmore

*10.13 Asset Management Agreement by and between the Operating
Partnership and Dennis Puskaric

*10.14 Asset Management Agreement by and between the Operating
Partnership and S.I.E., Inc.

*10.15 Asset Management Agreement by and between the Operating
Partnership and Colliers Pinkard

*10.16 Contribution and Exchange Agreement by and among PPM Greenway
Land Company, Ltd., North Oak Lawn, L.P., Park Place LX Land
Company No. 1, Ltd. and PPM Specialists, Ltd. and the Operating
Partnership and the Company

*10.17 Form of Lease Agreement re Park Place Motorcars

*10.18 Agreement Regarding Property Matters by and among the Company,
the Operating Partnership, PPM Greenway Land Company, Ltd. and
Lamar Plaza

*10.19 North Oak Lawn, L.P. Side Agreement Regarding Property Matters by
and among the Company, the Operating Partnership, North Oak Lawn,
L.P. and MB Holdings, L.P.

*10.20 Extension of Side Agreement of MB Holdings, L.P.

*10.21 Park Place LX Land Company No. 1, Ltd. Side Agreement Regarding
Property Matters by and among the Company, the Operating
Partnership and Park Place LX Land Company No. 1, Ltd.

*10.22 PPM Specialists Ltd. Side Agreement Regarding Property Matters by
and among the Company, the Operating Partnership and PPM
Specialists, Ltd.

*10.23 Contribution and Exchange Agreement by and among 7300 Associates,
Ltd. and Diamante Properties, Ltd. and the Operating Partnership
and the Company

*10.24 Form of Lease Agreement re Momentum Motorcars

*10.25 Contribution and Exchange Agreement by and among Len Stoler,
Inc., Leonard Stoler, Colonial/Stoler Partnership, High Falcon
Realty Corporation and The One-Forty Corporation and the
Operating Partnership and the Company

*10.26 Form of Lease Agreement re Len Stoler Automotive Group

*10.27 Agreement Regarding Property Matters by and among the Operating
Partnership and Len Stoler, Inc.

*10.28 Agreement Regarding Property Matters by and among the Operating
Partnership, Colonial/Stoler Partnership and Leonard Stoler,
Harriet Berg and Barry Stoler
</TABLE>

II-5

<S> <C>
*10.29 Agreement Regarding Property Matters by and among the Operating
Partnership and High Falcon Realty Corporation

*10.30 Agreement Regarding Property Matters by and among the Operating
Partnership and Leonard Stoler

*10.31 Agreement Regarding Property Matters by and among the Operating
Partnership and The One-Forty Corporation

*10.32 Contribution and Exchange Agreement by and among ABRA Land
Development, LLC, Nelson E. Bowers, II, Cleveland Investments
G.P., Cleveland Properties, LLC, Bownel Euromo, LLC, JAG
Properties, LLC, and Bownel Satchat, Inc. and the Operating
Partnership and the Company

*10.33 Assumed Lease Agreements re Bowers Transportation Group

*10.34 Contribution and Exchange Agreement by and among SMC Investment,
Inc., SBM-L Family Limited Partnership, SBM-T Family Limited
Partnership, SBM-T-I&E Family Limited Partnership, Dodge
Financial Family Limited Partnership, Sterling B. McCall, Jr. and
Marianne O. McCall and the Operating Partnership and the Company

*10.35 Assumed Lease Agreements re Sterling McCall Group

*10.36 Contribution and Exchange Agreement by and among Robert E.
Frankel and the Operating Partnership and the Company

*10.37 Form of Lease Agreement re Frankel Automotive Group

*10.38 Agreement Regarding Property Matters by and among the Operating
Partnership and Robert E. Frankel

*10.39 Contribution and Exchange Agreement by and among Lindsay Motor
Car Co. and the Operating Partnership and the Company

*10.40 Form of Lease Agreement re Lindsay Automotive Group

*10.41 Agreement Regarding Property Matters by and among the Operating
Partnership and Lindsay Motor Car Co.

*10.42 Contribution and Exchange Agreement by and among Bob Bell Ford,
Robert L. Bell and Rosemarie C. Bell and the Operating
Partnership and the Company

*10.43 Form of Lease Agreement re Bob Bell Automotive Group

*10.44 Agreement Regarding Property Matters by and among the Operating
Partnership and Robert L. Bell and Rosemarie C. Bell

*10.45 Agreement Regarding Property Matters by and among the Operating
Partnership and Bob Bell Ford and Susan Powers Bell Trust,
Patricia Bell Trust, Teresa Bell Trust, Nancy Bell Trust and Mary
Bell Trust

*10.46 Contribution and Exchange Agreement by and among Miller
Automotive Properties L.P., Miller Trust of 1980, Fred and
Barbara Miller Family Partnership, Miller Investment Trust and
Miller Automotive Group and the Operating Partnership and the
Company
</TABLE>

II-6

<S> <C>
*10.47 Form of Lease Agreement re Miller Automotive Group

*10.48 Form of Agreement Regarding Property Matters by and among the
Operating Partnership and Miller Automotive Group affiliates

*10.49 Contribution and Exchange Agreement by and among Lustine
Oldsmobile-Buick, Inc., Lustine Chevrolet, Inc., L&B Investment
Partnership, L&K Partnership and B&L Partnership and the
Operating Partnership and the Company

*10.50 Form of Lease Agreement re Lustine Automotive Group

*10.51 Agreement Regarding Property Matters by and among the Operating
Partnership and Lustine Chevrolet, Inc.

*10.52 Agreement Regarding Property Matters by and among the Operating
Partnership and Lustine Oldsmobile-Buick, Inc.

*10.53 Agreement Regarding Property Matters by and among the Operating
Partnership and L & B Investment Partnership

*10.54 Agreement Regarding Property Matters by and among the Operating
Partnership and L & K Partnership, Burton Lustine and L.N. Kairys

*10.55 Agreement Regarding Property Matters by and among the Operating
Partnership and B & L Partnership, Burton Lustine and L.N. Kairys

*10.56 Purchase and Sale Agreement by and among Lee G. Seidman
Charitable Remainder Unitrust, Motor Cars, Inc., Coco Properties,
L.L.C. and the Operating Partnership and the Company

*10.57 Form of Lease Agreement re The Motorcars Group

*10.58 Contribution and Exchange Agreement by and among L & B Land &
Cattle Company and the Operating Partnership and the Company

*10.59 Form of Lease Agreement re Lynn Alexander Auto Group

*10.60 Purchase and Sale Agreement by and among John W. Chase and the
Operating Partnership and the Company

*10.61 Form of Lease Agreement re Chase Chevrolet

*10.62 Contribution and Exchange Agreement by and among Ferd Onnen and
Towson Ford Sales, Inc. and the Operating Partnership and the
Company

*10.63 Form of Lease Agreement Towson Ford

*10.64 Agreement Regarding Property Matters by and among the Operating
Partnership and Ferd Onnen

*10.65 Agreement Regarding Property Matters by and among the Operating
Partnership and Towson Ford Sales, Inc.

*10.66 Contribution and Exchange Agreement by and among FUS, Inc. and
the Operating Partnership and the Company

*10.67 Form of Lease Agreement re FUS, Inc.
</TABLE>

II-7

<S> <C>
*10.68 Contribution and Exchange Agreement by and among Norma and Irma
Braman, Braman Cadillac, Inc., Braman Motors, Inc., Braman
Imports, Inc., Palm Beach Imports, Inc., European Motor Cars of
Littleton, Inc., Braman Leibowitz Associates #2 and BHLM
Partnership and the Operating Partnership and the Company

*10.69 Form of Lease Agreement re Braman Automotive Group

*10.70 Form of Agreement Regarding Property Matters by and among the
Operating Partnership and Braman Automotive Group affiliates

*10.71 Purchase and Sale Agreement by and among Suncare, Ltd. and the
Operating Partnership and the Company

*10.72 Form of Lease Agreement re Sunnyside Automotive

*11.1 Statement Regarding Computation of Per Share Earnings

**23.1 Independent Auditors' Consent, Arthur Andersen LLP

*23.2 Consent of Liddell, Sapp, Zivley, Hill & LaBoon, L.L.P. Included
in response to Exhibits 5.1 and 8.1

**24.1 Power of Attorney (included herein on signature page)

*27.1 Financial Data Schedule

**99.1 Consent of Norman Braman to be named as Trust Manager

**99.2 Consent of Douglas W. Schnitzer to be named as Trust Manager

**99.3 Consent of Nelson E. Bowers, II to be named as Trust Manager

**99.4 Consent of Gerald W. Haddock to be named as Trust Manager
</TABLE>

- --------------------
* To be filed by amendment.
** Filed herewith.

ITEM 37. UNDERTAKINGS

(a) The undersigned Registrant hereby undertakes to provide to the
representatives of the underwriters at the closing specified
in the Underwriting Agreement certificates in such
denominations and registered in such names as required by the
representatives of the underwriters to permit prompt delivery
to each purchaser.

(b) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to Trust Managers, officers,
and controlling persons of the Registrant pursuant to the
foregoing provisions, or otherwise, the Registrant has been
advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a Trust Manager,
officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is
asserted by such Trust Manager, officer or controlling person
in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the
matter has been settled by

II-8

<PAGE> 118

controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it
is against public policy as expressed in the Securities Act
and will be governed by the final adjudication of such issue.

(1) For purposes of determining any liability under the Securities
Act, the information omitted from the form of prospectus filed
as part of this Registration Statement in reliance upon Rule
430A and contained in a form of prospectus filed by the
registrant pursuant to Rule 424(b)(1) or 497(h) under the
Securities Act shall be deemed to be part of this Registration
Statement as of the time it was declared effective.

(2) For purposes of determining any liability under the Securities
Act, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new Registration Statement
relating to the securities offered therein, and the offering
of such securities at that time shall be deemed to be the
initial bona fide offering thereof.

II-9

<PAGE> 119

SIGNATURES

Pursuant to the requirements of the Securities Act, Automotive Realty
Trust of America certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-11 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Dallas, State of Texas, on April 17, 1998.

AUTOMOTIVE REALTY TRUST OF AMERICA

By: /s/ David L. Johnston
------------------------------
David L. Johnston,
President and Chief
Executive Officer

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints Jack I. Tompkins and Bert Wollen
and each of them, his true and lawful attorneys-in-fact and agents, with full
power of substitution and resubstitution, for him, and on his behalf and in his
name, place and stead, in any and all capacities, to sign, execute and file this
Registration Statement under the Securities Act of 1933, as amended, and any or
all amendments (including, without limitation, post-effective amendments), with
all exhibits and any and all documents required to be filed with respect
thereto, with the Securities and Exchange Commission or any regulatory
authority, granting unto such attorneys-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises in order to
effectuate the same, as fully to all intents and purposes as he himself might or
could do if personally present, hereby ratifying and confirming all that such
attorneys-in-fact and agents, or any of them, or their substitute or
substitutes, may lawfully do or cause to be done.

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.

<TABLE>
<CAPTION>
Name Title Date
- ---- ----- ----

<S> <C> <C>
/s/ Jack I. Tompkins Chairman of the Board of Trust April 17, 1998
- --------------------------------------- Managers and Chief Financial
Jack I. Tompkins Officer

/s/ David L. Johnston President, Chief Executive April 17, 1998
- --------------------------------------- Officer and Trust Manager
David L. Johnston

/s/ Bert Wollen Executive Vice President - April 17, 1998
- --------------------------------------- Business Development, Chief
Bert Wollen Acquisition Officer and Trust
Manager

</TABLE>

II-10

<PAGE> 120

EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------

<S> <C>
*1.1 Form of Underwriting Agreement

**3.1 Form of Declaration of Trust

**3.2 Amended and Restated Bylaws of the Company

*4.1 Form of Common Share Certificate

*5.1 Opinion of Liddell, Sapp, Zivley, Hill & LaBoon, L.L.P. regarding
the legality of the Common Shares being registered

*8.1 Opinion of Liddell, Sapp, Zivley, Hill & LaBoon, L.L.P. regarding
certain federal income tax matters

*10.1 First Amended and Restated Agreement of Limited Partnership of
the Operating Partnership

*10.2 Employment Contract between the Company and David L. Johnston

*10.3 Employment Contract between the Company and Jack I. Tompkins

*10.4 Employment Contract between the Company and Bert Wollen

*10.5 Employee and Trust Manager Incentive Share Plan

*10.6 Form of Indemnification Agreement

*10.7 Asset Management Agreement by and between the Operating
Partnership and Elite Sports Properties

*10.8 Asset Management Agreement by and between the Operating
Partnership and David Sibits

*10.9 Asset Management Agreement by and between the Operating
Partnership and Robert Garfield

*10.10 Asset Management Agreement by and between the Operating
Partnership and Robert J. Jones

*10.11 Asset Management Agreement by and between the Operating
Partnership and Daniel C. Gaubatz, Sr.

*10.12 Asset Management Agreement by and between the Operating
Partnership and Robert Dilmore

*10.13 Asset Management Agreement by and between the Operating
Partnership and Dennis Puskaric

*10.14 Asset Management Agreement by and between the Operating
Partnership and S.I.E., Inc.

*10.15 Asset Management Agreement by and between the Operating
Partnership and Colliers Pinkard

</TABLE>

II-11

<S> <C>
*10.16 Contribution and Exchange Agreement by and among PPM Greenway
Land Company, Ltd., North Oak Lawn, L.P., Park Place LX Land
Company No. 1, Ltd. and PPM Specialists, Ltd. and the Operating
Partnership and the Company

*10.17 Form of Lease Agreement re Park Place Motorcars

*10.18 Agreement Regarding Property Matters by and among the Company,
the Operating Partnership, PPM Greenway Land Company, Ltd. and
Lamar Plaza

*10.19 North Oak Lawn, L.P. Side Agreement Regarding Property Matters by
and among the Company, the Operating Partnership, North Oak Lawn,
L.P. and MB Holdings, L.P.

*10.20 Extension of Side Agreement of MB Holdings, L.P.

*10.21 Park Place LX Land Company No. 1, Ltd. Side Agreement Regarding
Property Matters by and among the Company, the Operating
Partnership and Park Place LX Land Company No. 1, Ltd.

*10.22 PPM Specialists, Ltd. Side Agreement Regarding Property Matters
by and among the Company, the Operating Partnership and PPM
Specialists, Ltd.

*10.23 Contribution and Exchange Agreement by and among 7300 Associates,
Ltd. and Diamante Properties, Ltd. and the Operating Partnership
and the Company

*10.24 Form of Lease Agreement re Momentum Motorcars

*10.26 Form of Lease Agreement re Len Stoler Automotive Group

*10.27 Agreement Regarding Property Matters by and among the Operating
Partnership and Len Stoler, Inc.

*10.28 Agreement Regarding Property Matters by and among the Operating
Partnership, Colonial/Stoler Partnership and Leonard Stoler,
Harriet Berg and Barry Stoler

*10.29 Agreement Regarding Property Matters by and among the Operating
Partnership and High Falcon Realty Corporation

*10.30 Agreement Regarding Property Matters by and among the Operating
Partnership and Leonard Stoler

*10.31 Agreement Regarding Property Matters by and among the Operating
Partnership and The One-Forty Corporation

*10.33 Assumed Lease Agreements re Bowers Transportation Group
</TABLE>

II-12

<S> <C>
*10.34 Contribution and Exchange Agreement by and among SMC Investment,
Inc., SBM-L Family Limited Partnership, SBM-T Family Limited
Partnership, SBM-T-I&E Family Limited Partnership, Dodge
Financial Family Limited Partnership, Sterling B. McCall, Jr. and
Marianne O. McCall and the Operating Partnership and the Company

*10.35 Assumed Lease Agreements re Sterling McCall Group

*10.36 Contribution and Exchange Agreement by and among Robert E.
Frankel and the Operating Partnership and the Company

*10.37 Form of Lease Agreement re Frankel Automotive Group

*10.38 Agreement Regarding Property Matters by and among the Operating
Partnership and Robert E. Frankel

*10.39 Contribution and Exchange Agreement by and among Lindsay Motor
Car Co. and the Operating Partnership and the Company

*10.40 Form of Lease Agreement re Lindsay Automotive Group

*10.41 Agreement Regarding Property Matters by and among the Operating
Partnership and Lindsay Motor Car Co.

*10.42 Contribution and Exchange Agreement by and among Bob Bell Ford,
Robert L. Bell and Rosemarie C. Bell and the Operating
Partnership and the Company

*10.43 Form of Lease Agreement re Bob Bell Automotive Group

*10.44 Agreement Regarding Property Matters by and among the Operating
Partnership and Robert L. Bell and Rosemarie C. Bell

*10.47 Form of Lease Agreement re Miller Automotive Group

*10.48 Form of Agreement Regarding Property Matters by and among the
Operating Partnership and Miller Automotive Group affiliates

*10.50 Form of Lease Agreement re Lustine Automotive Group

*10.51 Agreement Regarding Property Matters by and among the Operating
Partnership and Lustine Chevrolet, Inc.

*10.52 Agreement Regarding Property Matters by and among the Operating
Partnership and Lustine Oldsmobile-Buick, Inc.
</TABLE>

II-13

<S> <C>
*10.53 Agreement Regarding Property Matters by and among the Operating
Partnership and L & B Investment Partnership

*10.54 Agreement Regarding Property Matters by and among the Operating
Partnership and L & K Partnership, Burton Lustine and L.N. Kairys

*10.55 Agreement Regarding Property Matters by and among the Operating
Partnership and B & L Partnership, Burton Lustine and L.N. Kairys

*10.56 Purchase and Sale Agreement by and among Lee G. Seidman
Charitable Remainder Unitrust, Motor Cars, Inc., Coco Properties,
L.L.C. and the Operating Partnership and the Company

*10.57 Form of Lease Agreement re The Motorcars Group

*10.58 Contribution and Exchange Agreement by and among L & B Land &
Cattle Company and the Operating Partnership and the Company

*10.59 Form of Lease Agreement re Lynn Alexander Auto Group

*10.60 Purchase and Sale Agreement by and among John W. Chase and the
Operating Partnership and the Company

*10.61 Form of Lease Agreement re Chase Chevrolet

*10.62 Contribution and Exchange Agreement by and among Ferd Onnen and
Towson Ford Sales, Inc. and the Operating Partnership and the
Company

*10.63 Form of Lease Agreement Towson Ford

*10.64 Agreement Regarding Property Matters by and among the Operating
Partnership and Ferd Onnen

*10.65 Agreement Regarding Property Matters by and among the Operating
Partnership and Towson Ford Sales, Inc.

*10.66 Contribution and Exchange Agreement by and among FUS, Inc. and
the Operating Partnership and the Company

*10.67 Form of Lease Agreement re FUS, Inc.

*10.68 Contribution and Exchange Agreement by and among Norma and Irma
Braman, Braman Cadillac, Inc., Braman Motors, Inc., Braman
Imports, Inc., Palm Beach Imports, Inc., European Motor Cars of
Littleton, Inc., Braman Leibowitz Associates #2 and BHLM
Partnership and the Operating Partnership and the Company

*10.69 Form of Lease Agreement re Braman Automotive Group

*10.70 Form of Agreement Regarding Property Matters by and among the
Operating Partnership and Braman Automotive Group affiliates

*10.71 Purchase and Sale Agreement by and among Suncare, Ltd. and the
Operating Partnership and the Company

*10.72 Form of Lease Agreement re Sunnyside Automotive

*11.1 Statement Regarding Computation of Per Share Earnings
</TABLE>

II-14

<S> <C>

**23.1 Independent Auditors' Consent, Arthur Andersen LLP

*23.2 Consent of Liddell, Sapp, Zivley, Hill & LaBoon, L.L.P. Included
in response to Exhibits 5.1 and 8.1

**24.1 Power of Attorney (included herein on signature page)

*27.1 Financial Data Schedule

**99.1 Consent of Norman Braman to be named as Trust Manager

**99.2 Consent of Douglas W. Schnitzer to be named as Trust Manager

**99.3 Consent of Nelson E. Bowers, II to be named as Trust Manager

**99.4 Consent of Gerald W. Haddock to be named as Trust Manager

</TABLE>

- --------------
* To be filed by amendment.
** Filed herewith.

II-15

<PAGE> 1
EXHIBIT 3.1

FIRST AMENDED AND RESTATED
DECLARATION OF TRUST
OF
AUTOMOTIVE REALTY TRUST OF AMERICA

The undersigned, acting as the Trust Managers of a real estate
investment trust organized under the Texas Real Estate Investment Trust Act, as
amended (the "Texas REIT Act"), hereby adopt the following First Amended and
Restated Declaration of Trust for such trust, which replaces in its entirety
the previously enacted Declaration of such trust. This First Amended and
Restated Declaration of Trust was adopted by the shareholders of such Trust on
____ __, 1998, pursuant to the affirmative vote of the holders of at least
two-thirds of the outstanding shares of beneficial interest in the Trust.

ARTICLE ONE

The name of the trust (the "Trust") is "Automotive Realty Trust of
America." An assumed name certificate setting forth such name has been filed
in the manner prescribed by law.

ARTICLE TWO

The Trust is formed pursuant to the Texas REIT Act and has the
following as its purpose:

To purchase, hold, lease, manage, sell, exchange, develop,
subdivide and improve real property and interests in real
property, and in general, to carry on any other business and
do any other acts in connection with the foregoing and to have
and exercise all powers conferred by the laws of the State of
Texas upon real estate investment trusts formed under the
Texas REIT Act, and to do any or all of the things hereinafter
set forth to the same extent as natural persons might or could
do. The term "real property" and the term "interests in real
property" for the purposes stated herein shall not include
severed mineral, oil or gas royalty interests.

ARTICLE THREE

The address of the Trust's principal office and place of business is
Campbell Centre II, 8150 N. Central Expressway, Suite 1233, Dallas, Texas
75206.
<PAGE> 2
ARTICLE FOUR

The street address of the Trust's registered office is Campbell Centre
II, 8150 N. Central Expressway, Suite 1233, Dallas, Texas 75206. The name of
the Trust's registered agent at that address is David L. Johnston.

ARTICLE FIVE

The names and business addresses of the Trust Managers adopting this
First Amended and Restated Declaration of Trust (the "Declaration of Trust")
are as follows:

<TABLE>
<CAPTION>
Name Mailing Address
---- ---------------
<S> <C>

Bert Wollen South Tower - Pennzoil Place
711 Louisiana Street, Suite 2310
Houston, Texas 77002

Jack I. Tompkins South Tower - Pennzoil Place
711 Louisiana Street, Suite 2310
Houston, Texas 77002

David L. Johnston Campbell Centre II
8150 N. Central Expressway
Suite 1233
Dallas, Texas 75206
</TABLE>

ARTICLE SIX

The period of the Trust's duration is perpetual. The Trust may be
sooner terminated by the vote of the holders of at least a majority of the
outstanding voting Shares (as defined in Article Seven).

ARTICLE SEVEN

The aggregate number of shares of beneficial interest which the Trust
shall have authority to issue is 200,000,000 common shares, no par value per
share ("Common Shares"), and 20,000,000 preferred shares, no par value per
share ("Preferred Shares"). All of the Common Shares shall be equal in all
respects to every other such Common Share, and shall have no preference,
conversion, exchange or preemptive rights.

2
<PAGE> 3
Unless otherwise specified, the term "Shares" in this Declaration of
Trust shall be deemed to refer to the Common Shares and, solely to the extent
specifically required by law or as specifically provided in any resolution or
resolutions of the Trust Managers providing for the issue of any particular
series of Preferred Shares, to the Preferred Shares. For purposes of Articles
Ten and Nineteen (other than paragraph (j) of Article Nineteen) of this
Declaration of Trust, the term Shares shall be deemed to refer to both the
Common Shares and the Preferred Shares and, for purposes of such Articles Ten
and Nineteen (other than paragraph (j) Article Nineteen), the number of
outstanding Shares shall be deemed to be equal to the value of the Trust's
outstanding Shares as determined from time to time by resolution of the Trust
Managers, such determination to include an allocation of relative value among
the Common Shares and any outstanding series of Preferred Shares.

The Trust may issue one or more series of Preferred Shares, each such
series to consist of such number of shares as shall be determined by resolution
of the Trust Managers creating such series. Each Series of Preferred Shares
shall have such designations, preferences, conversion, exchange or other
rights, participations, voting powers, options, restrictions, limitations,
special rights or relations, limitations as to dividends, qualifications or
terms, or conditions of redemption thereof, as shall be stated and expressed by
the Trust Managers in the resolution or resolutions providing for the issuance
of such series of Preferred Shares pursuant to the authority to do so which is
hereby expressly vested in the Trust Managers.

Except as otherwise specifically provided in any resolution or
resolutions of the Trust Managers providing for the issue of any particular
series of Preferred Shares, the number of shares of any such series so set
forth in such resolution or resolutions may be increased or decreased (but not
below the number of shares of such series then outstanding) by a resolution or
resolutions likewise adopted by the Trust Managers.

Except as otherwise specifically provided in any resolution or
resolutions of the Trust Managers providing for the issue of any particular
series of Preferred Shares, Preferred Shares redeemed or otherwise acquired by
the Trust shall assume the status of authorized but unissued Preferred Shares
and shall be unclassified as to series and may thereafter, subject to the
provisions of this Article Seven and to any restrictions contained in any
resolution or resolutions of the Trust Managers providing for the issuance of
any such series of Preferred Shares, be reissued in the same manner as other
authorized but unissued Preferred Shares.

Except as otherwise specifically provided in any resolution or
resolutions of the Trust Managers providing for the issue of any particular
series of Preferred Shares, holders of Preferred Shares shall have no
preemptive rights.

Except as otherwise specifically required by law or this Declaration
of Trust or as specifically provided in any resolution or resolutions of the
Trust Managers providing for the issuance of any particular series of Preferred
Shares, the exclusive voting power of the Trust shall be vested in the

3
<PAGE> 4
Common Shares of the Trust. Each Common Share entitles the holder thereof to
one vote at all meetings of the shareholders of the Trust.

ARTICLE EIGHT

The Trust shall issue Shares for consideration consisting of any
tangible or intangible benefit to the Trust, including cash, promissory notes,
services performed, contracts for services to be performed, or other securities
of the Trust, such consideration to be determined by the Trust Managers.

ARTICLE NINE

The Trust Managers shall manage all money and/or property received for
the issuance of Shares for the benefit of the shareholders of the Trust.

ARTICLE TEN

The Trust will not commence business until it has received for the
issuance of Shares consideration of at least $1,000 value.

ARTICLE ELEVEN

The Trust shall not engage in any activities beyond the scope of the
purpose of a real estate investment trust formed pursuant to the Texas REIT
Act, as such purpose is set forth in Article Two hereof.

ARTICLE TWELVE

Cumulative voting for the election of Trust Managers is prohibited.

ARTICLE THIRTEEN

(a) The affirmative vote of the holders of not less than 80% of
the outstanding Shares, including the affirmative vote of the holders of not
less than 50% of the outstanding Shares not owned, directly or indirectly, by
any "Related Person" (as hereinafter defined), shall be required for the
approval or authorization of any "Business Combination" (as hereinafter
defined); provided, however, that the 50% voting requirement referred to above
shall not be applicable if the Business Combination is approved by the
affirmative vote of the holders of not less than 90% of the

4
<PAGE> 5
outstanding Shares; provided further, that neither the 80% voting requirement
nor the 50% voting requirement referred to above shall be applicable if:

(i) The Trust Managers of the Trust by a vote of not less
than 80% of the Trust Managers then holding office (A) have expressly
approved in advance the acquisition of Shares that caused the Related
Person to become a Related Person or (B) have expressly approved the
Business Combination prior to the date on which the Related Person
involved in the Business Combination shall have become a Related
Person; or

(ii) The Business Combination is solely between the Trust
and another entity, 100% of the voting stock, shares or comparable
interests of which is owned directly or indirectly by the Trust; or

(iii) The Business Combination is proposed to be
consummated within one year after the consummation of a Fair Tender
Offer (as hereinafter defined) by the Related Person in which Business
Combination the cash or Fair Market Value (as hereinafter defined) of
the property, securities or other consideration to be received per
Share by all remaining holders of Shares in the Business Combination
is not less than the price offered in the Fair Tender Offer; or

(iv) All of conditions (A) through (D) of this
subparagraph (iv) shall have been met: (A) if and to the extent
permitted by law, the Business Combination is a merger or
consolidation, consummation of which is proposed to take place within
one year of the date of the transaction pursuant to which such person
became a Related Person and the cash or Fair Market Value of the
property, securities or other consideration to be received per share
by all remaining holders of Shares in the Business Combination is not
less than the Fair Price (as hereinafter defined); (B) the
consideration to be received by such holders is either cash or, if the
Related Person shall have acquired the majority of its holdings of
Shares for a form of consideration other than cash, in the same form
of consideration with which the Related Person acquired such majority;
(C) after such person has become a Related Person and prior to
consummation of such Business Combination: (1) there shall have been
no reduction in the annual per share rate of dividends, if any, paid
on the Shares (adjusted as appropriate for recapitalizations and for
Share splits, reverse Share splits and Share dividends) except any
reduction in such rate that is made proportionately with any decline
in the Trust's net income for the period for which such dividends are
declared and except as approved by a majority of the Continuing Trust
Managers (as hereinafter defined), and (2) such Related Person shall
not have received the benefit, directly or indirectly (except
proportionately as a shareholder), of any loans, advances, guarantees,
pledges or other financial assistance or any tax credits or other tax
advantages provided by the Trust prior to the consummation of such
Business Combination (other than in connection with financing a Fair
Tender Offer); and (D) a proxy statement that conforms in all respects
with the provisions of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and the rules and regulations thereunder (or any
subsequent provisions replacing the Exchange Act or the rules or
regulations thereunder)

5
<PAGE> 6
shall be mailed to holders of Shares at least 45 days prior to the
consummation of the Business Combination for the purpose of soliciting
shareholder approval of the Business Combination; or

(v) The "Rights" (as defined hereinafter) shall have
become exercisable.

(b) If a person has become a Related Person and within one year
after the date (the "Acquisition Date") of the transaction pursuant to which
the Related Person became a Related Person (x) a Business Combination meeting
all of the requirements of subparagraph (iv) of the proviso to paragraph (a) of
this Article Thirteen regarding the applicability of the 80% voting requirement
shall not have been consummated and (y) a Fair Tender Offer shall not have been
consummated and (z) the Trust shall not have been dissolved and liquidated,
then, in such event the beneficial owner of each Share (not including Shares
beneficially owned by the Related Person) (each such beneficial owner being
hereinafter referred to as a "Holder") shall have the right (individually a
"Right" and collectively the "Rights"), which may be exercised subject to the
provisions of paragraph (d) of this Article Thirteen, commencing at the opening
of business on the one-year anniversary of the Acquisition Date and continuing
for a period of 90 days thereafter, subject to extensions as provided in
paragraph (d) of this Article Thirteen (the "Exercise Period"), to sell to the
Trust on the terms set forth herein one Share upon exercise of such Right.
Within five business days after the commencement of the Exercise Period the
Trust shall notify the Holders of the commencement of the Exercise Period,
specifying therein the terms and conditions for exercise of the Rights. During
the Exercise Period, each certificate representing Shares beneficially owned by
a Holder (a "Certificate") shall also represent the number of Rights equal to
the number of Shares represented thereby and the surrender for transfer of any
Certificate shall also constitute the transfer of the Rights represented by
such Shares. At 5:00 P.M., Dallas, Texas time, on the last day of the Exercise
Period, each Right not exercised shall become void, all rights in respect
thereof shall cease as of such time and the Certificates shall no longer
represent Rights.

(c) The purchase price for a Share upon exercise of an
accompanying Right shall be equal to the then- applicable Fair Price paid by
the Related Person (plus, as an allowance for interest, an amount equal to the
prime rate of interest as published in the Wall Street Journal and as in effect
from time to time from the Acquisition Date until the date of the payment for
such Share but less the amount of any cash and the Fair Market Value of any
property or securities distributed with respect to such Shares as dividends or
otherwise during such time period), pursuant to the exercise of the Right
relating thereto. In the event the Related Person shall have acquired any of
its holdings of Shares for a form of consideration other than cash, the value
of such other consideration shall be the Fair Market Value thereof.

(d) Notwithstanding the foregoing in paragraph (b) of this Article
Thirteen, the Exercise Period will be deferred in the event (a "Deferral
Event") that the Trust is otherwise prohibited under applicable law from
repurchasing Shares pursuant to the Rights. In the event the Exercise Period
is deferred, or if at any time the Trust reasonably anticipates that a Deferral
Event will exist, the Trust will, as soon as reasonably practicable, notify the
Holders. If at the end of any fiscal quarter

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<PAGE> 7
during which the Deferral Event ceases to exist, notice shall be given to the
Holders of the commencement of the deferred Exercise Period, which Exercise
Period shall commence no sooner than 15 days nor more than 45 days from the
date of such notice and which shall continue in effect for a period of time
equal in duration to the previously unexpired portion of the Exercise Period.
Notwithstanding any other provision of this Declaration of Trust to the
contrary, during the Exercise Period (including during the existence of any
Deferral Event), neither the Trust nor any subsidiary may declare or pay any
dividend or make any distribution on its shares or to its shareholders (other
than dividends or distributions payable in its Shares or, in the case of any
subsidiary, dividends payable to the Trust) or purchase, redeem or otherwise
acquire or retire for value, or permit any subsidiary to purchase or otherwise
acquire for value, any Shares of the Trust if, upon giving effect to such
dividend, distribution, purchase, redemption, or other acquisition or
retirement, the aggregate amount expended for all such purposes (the amount
expended for such purposes, if other than in cash, to be determined by a
majority of the Continuing Trust Managers, whose determination shall be
conclusive) would prejudice the ability of the Trust to satisfy its maximum
obligation to purchase Shares upon exercise of the Rights.

(e) Rights may be exercised upon surrender to the Trust's
principal transfer agent (the "Transfer Agent") at its principal office of the
Certificate or Certificates evidencing the Shares to be tendered for purchase
by the Trust, together with the form on the reverse thereof completed and duly
signed in accordance with the instructions thereon. In the event that a Holder
shall tender a Certificate which represents greater than the number of Shares
which the Holder elects to require the Trust to purchase upon exercise of the
Rights, the Holder shall designate on the reverse side of such Certificate the
number of Shares to be sold from such Certificate. The Transfer Agent shall
thereupon issue a new Certificate or Certificates for the balance of the number
of Shares not sold to the Trust, which new Certificate or Certificates shall
also represent Rights for an equivalent number of Shares.

(f) For the purposes of this Article:

(i) The term "Business Combination" shall mean: (A) any
merger or consolidation, if and to the extent permitted by law, of the
Trust or a subsidiary, with or into a Related Person; (B) any sale,
lease, exchange, mortgage, pledge, transfer or other disposition, of
all or any Substantial Part (as hereinafter defined) of the assets of
the Trust and its subsidiaries (taken as a whole) (including, without
limitation, any voting securities of a subsidiary) to or with a
Related Person; (C) the issuance or transfer by the Trust or a
subsidiary (other than by way of a pro rata distribution to all
shareholders) of any securities of the Trust or a subsidiary of the
Trust to a Related Person; (D) any reclassification of securities
(including any reverse Share split) or recapitalization by the Trust,
the effect of which would be to increase the voting power (whether or
not currently exercisable) of the Related Person; (E) the adoption of
any plan or proposal for the liquidation or dissolution of the Trust
proposed by or on behalf of a Related Person which involves any
transfer of assets, or any other transaction, in which the Related
Person has any direct or indirect interest (except proportionately as
a shareholder); (F) any series or combination of transactions

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<PAGE> 8
having, directly or indirectly, the same or substantially the same
effect as any of the foregoing; and (G) any agreement, contract or
other arrangement providing, directly or indirectly, for any of the
foregoing.

(ii) The term "Continuing Trust Manager' shall mean (x)
any Trust Manager of the Trust who is not affiliated with a Related
Person and who was a Trust Manager immediately prior to the time that
the Related Person became a Related Person, and (y) any other Trust
Manager who is not affiliated with the Related Person and is
recommended either by a majority of the persons described in clause
(x) of this subparagraph (ii) or by persons described in this clause
(y) who are then Trust Managers of the Trust to succeed a person
described in either the said clause (x) or clause (y) as a Trust
Manager of the Trust.

(iii) The term "Fair Market Value" shall mean: (A) in the
case of securities, the highest closing sale price during the 30-day
period immediately preceding the date in question of such security on
the Composite Tape for New York Stock Exchange-listed stocks, or, if
such security is not quoted on the Composite Tape on the New York
Stock Exchange, or, if such security is not listed on such exchange,
on the principal United States securities exchange registered under
the Exchange Act on which such security is listed, or, if such
security is not listed on any such exchange, the highest closing sale
price (or if not available, the closing bid quotation) with respect to
such security during the 30-day period preceding the date in question
on the National Association of Securities Dealers, Inc. Automated
Quotation System or any system then in use, or if no such sale price
or quotation is available, the fair market value on the date in
question of such security as reasonably determined by an independent
appraiser selected by a majority of the Continuing Trust Managers (or,
if there are no Continuing Trust Managers, by the investment banking
firm most recently retained by the Trust) in good faith; and (B) in
the case of property other than cash or stock, the fair market value
of such property on the date in question as reasonably determined by
an independent appraiser selected by a majority of the Continuing
Trust Managers (or, if there are no Continuing Trust Managers, by the
investment banking firm most recently retained by the Trust) in good
faith. In each case hereunder in which an independent appraiser is to
be selected to determine Fair Market Value, (1) in the event (x) there
are no Continuing Trust Managers, and (y) the investment banking firm
most recently retained by the Trust is unable or elects not to serve
as such appraiser, or (2) in the event there are Continuing Trust
Managers that do not select an independent appraiser within ten days
of a request for such appointment made by a Related Person, such
independent appraiser may be selected by such Related Person.

(iv) The term "Fair Price" shall mean the highest
per-share price (which, to the extent not paid in cash, shall equal
the Fair Market Value of any other consideration paid), with
appropriate adjustments for recapitalizations and for share splits,
reverse share splits and share dividends, paid by the Related Person
in acquiring any of its holdings of Shares.

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<PAGE> 9
(v) The term "Fair Tender Offer" shall mean a bona fide
tender offer for all Shares outstanding (and owned by persons other
than a Related Person if the tender offer is made by the Related
Person), whether or not such offer is conditional upon any minimum
number of Shares being tendered, in which the aggregate amount of cash
or the Fair Market Value of any securities or other property to be
received by all Holders who tender their Shares for each Share so
tendered shall be at least equal to the then applicable Fair Price
paid by a Related Person or paid by the person making the tender offer
if such person is not a Related Person. In the event that at the time
such tender offer is commenced the terms and conduct thereof are not
directly regulated by Section 14(d) or 13(e) of the Exchange Act and
the general rules and regulations promulgated thereunder, then the
terms of such tender offer regarding the time such offer is held open
and regarding withdrawal rights shall conform in all respects with
such terms applicable to tender offers regulated by either of such
sections of the Exchange Act. A Fair Tender Offer shall not be deemed
to be "consummated" until Shares are purchased and payment in full has
been made for all duly tendered Shares.

(vi) The term "Related Person" shall mean and include any
individual, corporation, partnership or other "person" (as defined in
Section 13(d)(3) of the Exchange Act), and the "Affiliates" and
"Associates" (as defined in Rule 12b-2 of the Exchange Act) of any
such individual, corporation, partnership or other person) which
individually or together is the "Beneficial Owner" (as defined in Rule
13d-3 of the Exchange Act) in the aggregate of more than 50% of the
outstanding Shares, other than the Trust or any employee benefit
plan(s) sponsored by the Trust.

(vii) The term "Substantial Part" shall mean more than 35%
of the book value of the total assets of the Trust and its
subsidiaries (taken as a whole) as of the end of the fiscal year
ending prior to the time the determination is being made.

(viii) Any person (as such term is defined in paragraph
(f)(vi)) that has the right to acquire any Shares pursuant to any
agreement, or upon the exercise of conversion rights, warrants or
options, or otherwise, shall be deemed a Beneficial Owner of such
Shares for purposes of determining whether such person, individually
or together with its Affiliates and Associates, is a Related Person.

(ix) For purposes of paragraph (a)(iii) of this Article
Thirteen, the term "other consideration to be received" shall include,
without limitation, Shares retained by the Trust's existing public
shareholders in the event of a Business Combination in which the Trust
is the surviving entity.

(g) The affirmative vote of the holders of not less than 80% of
the outstanding Shares, including the affirmative vote of the holders of not
less than 50% of the outstanding Shares not owned, directly or indirectly, by
any Related Person (such 50% voting requirement shall not be applicable if such
amendment, alteration, change, repeal or rescission is approved by the
affirmative

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<PAGE> 10
vote of not less than 90% of the outstanding Shares) shall be required to
amend, alter, change, repeal or rescind, or adopt any provisions inconsistent
with, this Article Thirteen.

(h) The provisions of this Article Thirteen shall be subject to
all valid and applicable laws, including, without limitation, the Texas REIT
Act, and, in the event this Article Thirteen or any of the provisions hereof
are found to be inconsistent with or contrary to any such valid laws, such laws
shall be deemed to control, and this Article Thirteen shall be regarded as
modified accordingly, and, as so modified, to continue in full force and
effect.

ARTICLE FOURTEEN

The Trust Managers may from time to time declare, and the Trust may
pay, dividends or distributions on its outstanding Shares in cash, in property
or in its Shares, except that no dividend or distribution shall be declared or
paid when (i) the Trust is unable to pay its debts as they become due in the
usual course of its business, or when the payment of such dividend or
distribution would result in the Trust being unable to pay its debts as they
become due in the usual course of business, or (ii) the amount of the dividend
or distribution exceeds the surplus of the Trust, except as set forth in the
Texas REIT Act.

ARTICLE FIFTEEN

Upon resolution adopted by the Trust Managers, the Trust shall be
entitled to purchase or redeem, directly or indirectly, its own Shares, subject
to any limitations of the Texas REIT Act.

ARTICLE SIXTEEN

(a) In this Article:

(i) "Indemnitee" means: (A) any present or former Trust
Manager or officer of the Trust; (B) any person who while serving in
any of the capacities referred to in clause (A) hereof served at the
Trust's request as a trust manager, director, officer, partner,
venturer, proprietor, trustee, employee, agent or similar functionary
of another real estate investment trust or foreign or domestic
corporation, partnership, joint venture, sole proprietorship, trust,
employee benefit plan or other enterprise; and (C) any person
nominated or designated by (or pursuant to authority granted by) the
Trust Managers or any committee thereof to serve in any of the
capacities referred to in clauses (A) or (B) hereof.

(ii) "Official Capacity" means: (A) when used with respect
to a Trust Manager, the office of Trust Manager of the Trust; and (B)
when used with respect to a person other than a Trust Manager, the
elective or appointive office of the Trust held by such person or

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the employment or agency relationship undertaken by such person on
behalf of the Trust, but in each case does not include service for any
other real estate investment trust or foreign or domestic corporation
or any partnership, joint venture, sole proprietorship, trust,
employee benefit plan or other enterprise.

(iii) "Proceeding" means any threatened, pending or
completed action, suit or proceeding, whether civil, criminal,
administrative, arbitrative or investigative, any appeal in such an
action, suit or proceeding, and any inquiry or investigation that
could lead to such an action, suit or proceeding.

(b) The Trust shall indemnify every Indemnitee against all
judgments, penalties (including excise and similar taxes), fines, amounts paid
in settlement and reasonable expenses actually incurred by the Indemnitee in
connection with any Proceeding in which he or she was, is or is threatened to
be named defendant or respondent, or in which he or she was or is a witness
without being named a defendant or respondent, by reason, in whole or in part,
of his or her serving or having served, or having been nominated or designated
to serve, in any of the capacities referred to in paragraph (a)(i) of this
Article Sixteen, to the fullest extent that indemnification is permitted by
Texas law. An Indemnitee shall be deemed to have been found liable in respect
of any claim, issue or matter only after the Indemnitee shall have been so
adjudged by a court of competent jurisdiction after exhaustion of all appeals
therefrom. Reasonable expenses shall include, without limitation, all court
costs and all fees and disbursements of attorneys for the Indemnitee.

(c) Without limitation of paragraph (b) of this Article Sixteen
and in addition to the indemnification provided for in paragraph (b) of this
Article Sixteen, the Trust shall indemnify every Indemnitee against reasonable
expenses incurred by such person in connection with any proceeding in which he
or she is a witness or a named defendant or respondent because he or she served
in any of the capacities referred to in paragraph (a)(i) of this Article
Sixteen.

(d) Reasonable expenses (including court costs and attorneys'
fees) incurred by an Indemnitee who was or is a witness or was, is or is
threatened to be made a named defendant or respondent in a Proceeding shall be
paid or reimbursed by the Trust at reasonable intervals in advance of the final
disposition of such Proceeding after receipt by the Trust of a written
undertaking by or on behalf of such Indemnitee to repay the amount paid or
reimbursed by the Trust if it shall ultimately be determined that he or she is
not entitled to be indemnified by the Trust as authorized in this Article
Sixteen. Such written undertaking shall be an unlimited obligation of the
Indemnitee but need not be secured and it may be accepted without reference to
financial ability to make repayment. Notwithstanding any other provision of
this Article Sixteen, the Trust may pay or reimburse expenses incurred by an
Indemnitee in connection with his or her appearance as a witness or other
participation in a Proceeding at a time when he or she is not named a defendant
or respondent in the Proceeding.

(e) The indemnification provided by this Article Sixteen shall (i)
not be deemed exclusive of, or to preclude, any other rights to which those
seeking indemnification may at any time

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be entitled under the Trust's Bylaws, any law, agreement or vote of
shareholders or disinterested Trust Managers, or otherwise, or under any policy
or policies of insurance purchased and maintained by the Trust on behalf of any
Indemnitee, both as to action in his or her Official Capacity and as to action
in any other capacity, (ii) continue as to a person who has ceased to be in
such capacity by reason of which he or she was an Indemnitee with respect to
matters arising during the period he or she was in such capacity, and (iii)
inure to the benefit of the heirs, executors and administrators of such a
person.

(f) The provisions of this Article Sixteen (i) are for the benefit
of, and may be enforced by, each Indemnitee of the Trust, the same as if set
forth in their entirety in a written instrument duly executed and delivered by
the Trust and such Indemnitee and (ii) constitute a continuing offer to all
present and future Indemnitees. The Trust, by its adoption of this Declaration
of Trust, (x) acknowledges and agrees that each Indemnitee has relied upon and
will continue to rely upon the provisions of this Article Sixteen in becoming,
and serving in any of the capacities referred to in paragraph (a)(i) of this
Article Sixteen, (y) waives reliance upon, and all notice of acceptance of,
such provisions by such Indemnitees and (z) acknowledges and agrees that no
present or future Indemnitee shall be prejudiced in his or her right to enforce
the provisions of this Article Sixteen in accordance with their terms by any
act or failure to act on the part of the Trust.

(g) No amendment, modification or repeal of this Article Sixteen
or any provision of this Article Sixteen shall in any manner terminate, reduce
or impair the right of any past, present or future Indemnitees to be
indemnified by the Trust, nor the obligation of the Trust to indemnify any such
Indemnitees, under and in accordance with the provisions of this Article
Sixteen as in effect immediately prior to such amendment, modification or
repeal with respect to claims arising from or relating to matters occurring, in
whole or in part, prior to such amendment, modification or repeal, regardless
of when such claims may be asserted.

(h) If the indemnification provided in this Article Sixteen is
either (i) insufficient to cover all costs and expenses incurred by any
Indemnitee as a result of such Indemnitee being made or threatened to be made a
defendant or respondent in a Proceeding by reason of his or her holding or
having held a position named in paragraph (a)(i) of this Article Sixteen or
(ii) not permitted by Texas law, the Trust shall indemnify, to the fullest
extent that indemnification is permitted by Texas law, every Indemnitee with
respect to all costs and expenses incurred by such Indemnitee as a result of
such Indemnitee being made or threatened to be made a defendant or respondent
in a Proceeding by reason of his or her holding or having held a position named
in paragraph (a)(i) of this Article Sixteen.

(i) The indemnification provided by this Article Sixteen shall be
subject to all valid and applicable laws, including, without limitation, the
Texas REIT Act, and, in the event this Article Sixteen or any of the provisions
hereof or the indemnification contemplated hereby are found to be inconsistent
with or contrary to any such valid laws, such laws shall be deemed to control
and this Article Sixteen shall be regarded as modified accordingly, and, as so
modified, to continue in full force and effect.

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ARTICLE SEVENTEEN

No Trust Manager or officer of the Trust shall be liable to the Trust
for any act, omission, loss, damage or expense arising from the performance of
his or her duties under the Trust save only for his or her own willful
misfeasance or malfeasance or negligence. In discharging their duties to the
Trust, Trust Managers and officers of the Trust shall be entitled to rely upon
experts and other matters as provided in the Texas REIT Act and the Trust's
Bylaws.

This Article Seventeen shall be deemed to incorporate by reference any
future amendments to applicable law that further limit or eliminate the
personal liability of a Trust Manager or officer of the Trust.

Any repeal or modification of all or part of this Article Seventeen by
the shareholders of the Trust shall not adversely affect any right or
protection of a Trust Manager or officer of the Trust existing at the time of
such repeal or modification.

ARTICLE EIGHTEEN

The number of Trust Managers may be increased from time to time by the
affirmative vote of the majority of the Trust Managers or decreased by the
unanimous vote of the Trust Managers. Each Trust Manager shall serve until his
or her successor is elected and qualified or until his or her death,
retirement, resignation or removal.

A Trust Manager may be removed by the vote of the holders of
two-thirds of the outstanding Shares at a special meeting of the shareholders
called for such purpose pursuant to the Trust's Bylaws.

ARTICLE NINETEEN

(a) Beginning with the date of the Initial Public Offering and
prior to the Restriction Termination Date, no Person may actually, beneficially
or constructively own Shares of any class or series with an aggregate value in
excess of 9.8% of the aggregate value of all outstanding Shares of such class
or series of Shares or more than 9.8% of the number of outstanding Shares of
any class or series of Shares (the limitation on the ownership of outstanding
Shares is referred to in this Article Nineteen as the "Ownership Limit," and
the 9.8% threshold is referred to in this Article Nineteen as the "Percentage
Limit"), and no Securities (as hereinafter defined) shall be accepted,
purchased or in any manner acquired by any Person if such issuance or transfer
would result in that Person's ownership of Shares exceeding the Percentage
Limit. For purposes of determining if the Ownership Limit is exceeded by a
Person, Convertible Securities (as hereinafter defined) owned by such Person
shall be treated as if the Convertible Securities owned by such Person had been
converted into Shares

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<PAGE> 14
as of the date on which there occurs a determination as to whether the
Ownership Limit has been exceeded. The Ownership Limit shall not apply (i) to
the acquisition of Securities of the Trust by an underwriter in a public
offering of Securities of the Trust, or in any transaction involving the
issuance of Securities by the Trust, in which a majority of the Trust Managers
determines that the underwriter or other Person or party initially acquiring
such Securities will timely distribute such Securities to or among others so
that, following such distribution, none of such Securities will be Excess
Securities (as hereinafter defined), or (ii) to the acquisition of Securities
pursuant to an exception made pursuant to paragraph (h) hereof.

(b) Nothing in this Article Nineteen shall preclude the settlement
of any transaction in Securities entered into through the facilities of the New
York Stock Exchange. If any Securities are accepted, purchased or in any
manner acquired by any Person resulting in a violation of paragraph (a) or (e)
hereof, such issuance or transfer shall be valid only with respect to such
amount of Securities issued or transferred as does not result in a violation of
paragraph (a) or (e) hereof, and such acceptance, purchase or acquisition shall
be void ab initio with respect to the amount of Securities that results in a
violation of paragraph (a) or (e) hereof (the "Excess Securities"), and the
intended transferee of such Excess Securities shall acquire no rights in such
Excess Securities except as set forth in paragraph (d) below.

(c) Each shareholder shall, within ten days of demand by the
Trust, disclose to the Trust in writing such information with respect to his,
her or its ownership of Shares as the Trust Managers in their discretion deem
necessary or appropriate in order that the Trust may fully comply with all
provisions of the Internal Revenue Code of 1986, as amended (together with any
successor statute, the "Code") relating to REITs and all regulations, rulings
and cases promulgated or decided thereunder (the "REIT Provisions") and to
comply with the requirements of any taxing authority or governmental agency.
All Persons who actually, beneficially or constructively own in excess of 5%
(or such lower percentage as required pursuant to Treasury Regulations under
the Code) of the Shares must disclose in writing such ownership information to
the Trust no later than January 31 of each year.

(d) The Excess Securities, and the owners thereof, shall have the
following characteristics, rights and powers:

(i) Upon any purported purchase, sale, exchange,
acquisition, disposition or other transfer or upon any change in the
capital structure of the Trust (including any redemption of
Securities) that results in Excess Securities pursuant to paragraph
(a) or (e) of this Article Nineteen, such Excess Securities shall be
deemed to have been transferred to a trust "Beneficial Trust" for
registration in the name of the Trustee (as hereinafter defined) for
the exclusive benefit of the Charitable Beneficiary (as hereinafter
defined) to whom an interest in such Excess Securities may later be
transferred pursuant to subparagraph (d)(v) hereof. Such transfer to
a Beneficial Trust shall be effective as of the close of business on
the business day prior to the date of the transfer or other change in
the capital structure of the Trust. The Trust shall name a Trustee
and Charitable Beneficiary of each Beneficial Trust

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<PAGE> 15
within five days after discovery of the existence thereof. Any such
Excess Securities so held in a Beneficial Trust shall be issued and
outstanding shares of the Trust. The Purported Record Transferee (as
hereinafter defined) (or Purported Beneficial Transferee (as
hereinafter defined), if applicable) shall have no rights in such
Excess Securities except as provided in this paragraph (d).

(ii) The Trustee, as record holder of the Excess
Securities, shall be entitled to receive all dividends and
distributions as may be declared by the Board of Trust Managers on
such Excess Securities, and shall hold such dividends or distributions
in trust for the benefit of the Charitable Beneficiary. The Purported
Record Transferee (or Purported Beneficial Transferee, if applicable)
with respect to the Excess Securities shall repay to the Trustee the
amount of any dividends or distributions received by it that (A) are
attributable to any Excess Securities and (B) the record date of which
was on or after the date on which such shares became Excess
Securities. The Trust shall take all measures that it determines are
reasonably necessary to recover the amount of any such dividend or
distribution paid to the Purported Record Transferee (or Purported
Beneficial Transferee, if applicable), including, if necessary,
withholding any portion of future dividends or distributions payable
on Excess Securities beneficially owned or constructively owned by the
Person who, but for the provisions of paragraph (d)(i) hereof, would
constructively own or beneficially own the Excess Securities; and, as
soon as reasonably practicable following the Trust's receipt or
withholding thereof, shall pay over to the Trustee for the benefit of
the Charitable Beneficiary the dividends so received or withheld, as
the case may be.

(iii) In the event of any voluntary or involuntary
liquidation, dissolution or winding up of, or any distribution of the
assets of the Trust (other than a dividend), the Trustee of each
Beneficial Trust shall be entitled to receive, ratably with each other
holder of Securities of the same class or series, that portion of the
assets of the Trust which is available for distribution to the holders
of such class and series of Securities. The Trustee shall distribute
to the Purported Record Transferee the amounts received upon such
liquidation, dissolution, winding up or distribution; provided,
however, that the Purported Record Transferee shall not be entitled to
receive amounts pursuant to paragraph (d)(iii) hereof in excess of, in
the case of a purported transfer in which the Purported Record
Transferee gave value for Securities and which transfer resulted in
the transfer of Excess Securities to the Beneficial Trust, the price
per share or security, if any, that such Purported Record Transferee
paid for the Securities and, in the case of a transfer in which the
Purported Record Transferee did not give value for such Securities
(e.g., if the Securities were received through a gift or devise) and
which transfer resulted in the transfer of Excess Securities to the
Beneficial Trust, the price per share or security equal to the Market
Price (as hereinafter defined) on the date of such transfer. Any
remaining amount in such Beneficial Trust shall be distributed to the
Charitable Beneficiary.

(iv) The Trustee shall be entitled to vote all Excess
Securities. Any vote by a Purported Record Transferee as a holder of
Shares or Securities prior to the discovery by the

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Trust that the Securities are Excess Securities shall, subject to
applicable law, be rescinded and shall be void ab initio with respect
to such Excess Securities, and the Purported Record Transferee shall
be deemed to have given, as of the close of business on the business
day prior to the date of the purported transfer that results in the
transfer to the Beneficial Trust of Excess Securities under paragraph
(d)(i) hereof, an irrevocable proxy to the Trustee to vote the Excess
Securities in the manner in which the Trustee, in its sole and
absolute discretion, desires.

(v) The Trustee shall have the exclusive and absolute
right to designate a Permitted Transferee (as hereinafter defined) of
any Excess Securities. In an orderly fashion so as not materially and
adversely to affect the Market Price of the Excess Securities, the
Trustee may designate any Person as Permitted Transferee; provided,
however, that (A) the Permitted Transferee so designated purchases for
valuable consideration (whether in a public or private sale), at a
price as set forth in paragraph (d)(vii) hereof, the Excess Securities
and (B) the Permitted Transferee so designated may acquire such Excess
Securities without such acquisition resulting in a transfer to a
Beneficial Trust and the redesignation of such Securities so acquired
as Excess Securities under paragraph (d)(i) hereof. Upon the
designation by the Trustee of a Permitted Transferee in accordance
with the provisions of paragraph (a) or (e) hereof, the Trustee of a
Beneficial Trust shall (w) cause to be transferred to the Permitted
Transferee that number of Excess Securities acquired by the Permitted
Transferee, (x) cause to be recorded on the books of the Trust that
the Permitted Transferee is the holder of record of such number of
Securities, (y) cause the Excess Securities to be canceled, and (z)
distribute to the Charitable Beneficiary any and all amounts held with
respect to the Excess Securities after making that payment to the
Purported Record Transferee pursuant to paragraph (d)(vi) hereof.

(vi) Any Purported Record Transferee shall be entitled
(following discovery of the Excess Securities and subsequent
designation of the Permitted Transferee in accordance with paragraph
(d)(v) hereof to receive from the Trustee upon the sale or other
disposition of such Excess Securities the lesser of (A) in the case of
(1) a purported transfer in which the Purported Record Transferee (or
Purported Beneficial Transferee, if applicable) gave value for
Securities and which transfer resulted in the transfer of Excess
Securities to the Beneficial Trust, the price per share, if any, such
Purported Record Transferee (or Purported Beneficial Transferee, if
applicable) paid for the Securities, or (2) a transfer in which the
Purported Record Transferee (or Purported Beneficial Transferee, if
applicable) did not give value for such Securities (e.g., if the
Securities were received through a gift or devise) and which transfer
resulted in the transfer of Excess Securities to the Beneficial Trust,
the price per share equal to the Market Price on the date of such
transfer, and (B) the price per share received by the Trustee of the
Beneficial Trust from the sale or other disposition of such Excess
Securities in accordance with paragraph (d)(v) or (vii) hereof. Any
amounts received by the Trustee in respect of such Excess Securities
and in excess of such amounts to be paid the Purported Record
Transferee pursuant to paragraph (d)(vi) hereof shall be distributed
to the Charitable Beneficiary in accordance with the provisions of
paragraph (d)(v) hereof.

16
<PAGE> 17
Each Charitable Beneficiary and Purported Record Transferee (and
Purported Beneficial Transferee, if different) waives any and all
claims that each may have against the Trustee and the Beneficial Trust
arising out of the disposition of the Excess Securities, except for
claims arising out of the gross negligence or willful misconduct of,
or any failure to make payments in accordance with this paragraph (d)
hereof by such Trustee or the Trust

(vii) Excess Securities shall be deemed to have been
offered for sale to the Trust, or its designee, at a price per share
equal to the lesser of (A) the price per share in the transaction that
created such Excess Securities (or, in the case of devise or gift, the
Market Price at the time of such devise or gift) and (B) the Market
Price on the date the Trust, or its designee, accepts such offer. The
Trust shall have the right to accept such offer for a period of 90
days after the later of (y) the date of the transfer which resulted in
such Excess Securities and (z) the date the Trust determines in good
faith that a transfer resulting in Excess Securities has occurred, if
the Trust does not receive a notice of such transfer pursuant to
paragraph (d)(v) hereof.

(e) Any sale, transfer, gift, assignment, devise or other
disposition of Shares or of any interest in Shares, including a "transfer"
resulting from a change in the capital structure of the Trust or the grant of
an option to acquire Shares or any interest therein (collectively, a
"transfer") that, if effective, would result in (i) a violation of the
Ownership Limit shall be void ab initio as to the Shares that would cause such
violation, (ii) the Shares of the Trust being owned by less than 100 persons
(determined without reference to any rules of attribution) shall be void ab
initio as to the Shares which would otherwise be beneficially owned by the
transferee, (iii) the Trust being "closely held" within the meaning of Section
856(h) of the Code, shall be void ab initio as to the transfer of the Shares
that would cause the Trust to be "closely held" within the meaning of Section
856(h) of the Code, (iv) the Trust owning, directly or indirectly, 10% or more
of the ownership interest in any tenant or subtenant of the Trust's real
property within the meaning of Section 856(d)(2)(B) of the Code and the
Treasury Regulations thereunder, shall be void ab initio, or (v) the
disqualification of the Trust as a REIT shall be void ab initio as to the
transfer of the Shares that would cause the Trust to be disqualified as a REIT,
and, in the case of each of clauses (i), (ii), (iii), (iv) and (v) of this
paragraph (e), the intended transferee shall acquire no rights in such Shares
except as set forth in paragraph (d) above.

(f) For purposes of this Article Nineteen:

(i) The term "Charitable Beneficiary" means, with respect
to any Beneficial Trust, one or more organizations described in each
of Section 170(b)(1)(A) (other than clauses (vii) or (viii) thereof)
and Section 170(c)(2) of the Code that are named by the Trustee as the
beneficiary or beneficiaries of such Beneficial Trust, in accordance
with the provisions of paragraph (d)(i) hereof.

(ii) The term "Convertible Securities" means any
securities of the Trust that are convertible into Shares.

17
<PAGE> 18
(iii) The term "individual" means any natural person as
well as those organizations treated as natural persons under Section
542(a) of the Code.

(iv) The term "Initial Public Offering" means the sale of
shares pursuant to the Trust's first effective registration statement
for such shares filed under the Securities Act of 1933, as amended.

(v) The term "Market Price" means the average of the last
reported sales price of Common Shares reported on the New York Stock
Exchange on the five trading days immediately preceding the relevant
date, or if the Common Shares are not then traded on the New York
Stock Exchange, the last reported sales price of the Common Shares on
the five trading days immediately preceding the relevant date as
reported on any exchange or quotation system over which the Common
Shares may be traded, or if the Common Shares are not then traded over
any exchange or quotation system, then the market price of the Common
Shares on the relevant date as determined in good faith by the Board
of Trust Managers.

(vi) The term "ownership" (including "own" or "owns") of
Shares means beneficial ownership. Beneficial ownership for this
purpose shall be defined to include actual ownership by a Person, as
well as constructive ownership by such Person after application of
principles in accordance with or by reference to Sections 318, 544 or
856 of the Code or Section 13(d) of the Exchange Act.

(vii) The term "Permitted Transferee" means any Person
designated as a Permitted Transferee in accordance with the provisions
of paragraph (d)(v) of this Article Nineteen.

(viii) The term "Person" includes an individual,
corporation, partnership, association, joint stock company, limited
liability company, trust, unincorporated association or other entity
and also includes a "group," as that term is defined in Section
13(d)(3) of the Exchange Act.

(ix) The term "Purported Beneficial Transferee" means,
with respect to any purported transfer that results in Excess
Securities, the purported beneficial transferee for whom the Purported
Record Transferee would have acquired Securities of the Trust if such
transfer had been valid under paragraph (a) or (e) of this Article
Nineteen.

(x) The term "Purported Record Transferee" shall mean,
with respect to any purported transfer which results in Excess
Securities, the Person who would have been the record holder of the
Securities of the Trust if such transfer had been valid under
paragraph (a) or (e) of this Article Nineteen.

(xi) The term "REIT" means a "real estate investment
trust," as defined in Section 856 of the Code and applicable Treasury
Regulations.

18
<PAGE> 19
(xii) The term "Restriction Termination Date" means the
first day after the date of the Initial Public Offering on which the
Board of Trust Managers and the shareholders determine that it is no
longer in the best interests of the Trust to attempt to, or continue
to, qualify as a REIT.

(xiii) The term "Securities" means Shares and Convertible
Securities.

(g) If any of the restrictions on transfer set forth in this
Article Nineteen are determined to be void, invalid or unenforceable by virtue
of any legal decision, statute, rule or regulation, then the intended
transferee of any Excess Securities may be deemed, at the option of the Trust,
to have acted as an agent on behalf of the Trust in acquiring the Excess
Securities and to hold the Excess Securities on behalf of the Trust.

(h) The Percentage Limit set forth in paragraph (a) hereof shall
not apply to Securities which the Trust Managers in their sole discretion may
exempt from the Percentage Limit while owned by a Person who has provided the
Trust with evidence and assurances acceptable to the Trust Managers, in their
sole discretion, that the qualification of the Trust as a REIT would not be
jeopardized thereby. The Trust Managers, in their sole discretion, may at any
time revoke any exception pursuant to this paragraph (h) in the case of any
Person, and upon such revocation, the provisions of paragraph (a) hereof shall
immediately become applicable to such Person and all Securities which such
Person may own. A decision to exempt or refuse to exempt from the Percentage
Limit the ownership of certain designated Securities, or to revoke an exemption
previously granted, shall be made by the Trust Managers in their sole
discretion, based on any reason whatsoever, including, but not limited to, the
preservation of the Trust's qualification as a REIT.

(i) Subject to the provisions of the first sentence of paragraph
(b) hereof, nothing herein contained shall limit the ability of the Trust to
impose or to seek judicial or other imposition of additional restrictions if
deemed necessary or advisable to protect the Trust and the interests of its
security holders by preserving the Trust's status as a qualified REIT under the
Code.

(j) All Persons who own 5% or more of the Trust's outstanding
Shares (or such lower percentage as required pursuant to Treasury Regulations)
during any taxable year of the Trust shall file with the Trust an affidavit
setting forth the number of Shares during such taxable year (i) owned directly
(held of record by such Person or by a nominee or nominees of such Person) and
(ii) constructively owned (within the meaning of Section 544 of the Code or
considered beneficially owned for purposes of Section 13(d) of the Exchange
Act) by the Person filing the affidavit. The affidavit to be filed with the
Trust shall set forth all the information required to be reported (i) in
returns of shareholders under Section 1.857-9 of the Treasury Regulations or
similar provisions of any successor Treasury Regulations and (ii) in reports to
be filed under Section 13(d) of the Exchange Act. The affidavit or an
amendment to a previously filed affidavit shall be filed with the Trust
annually within 60 days after the close of the Trust's taxable year. A Person
shall have satisfied the requirements of this paragraph (j) if the person
furnishes to the Trust the information in such person's possession after such
person has made a good faith effort to determine the Shares

19
<PAGE> 20
it owns and to acquire the information required by Treasury Regulations Section
1.857-9 or similar provisions of any successor regulation.

ARTICLE TWENTY

The Board of Trust Managers shall use its best efforts to cause the
Trust and its shareholders to qualify for U.S. federal income tax treatment in
accordance with the provisions of the Code applicable to REITs. In furtherance
of the foregoing, the Board of Trust Managers shall use its best efforts to
take such actions as are necessary, and may take such actions as it deems
desirable (in its sole discretion), to preserve the status of the Trust as a
REIT.

ARTICLE TWENTY-ONE

This Declaration of Trust may be amended from time to time by the
affirmative vote of the holders of at least two-thirds of the outstanding
voting Shares, except that (i) Article Eleven hereof (relating to the
prohibition against engaging in non-real estate investment trust businesses);
(ii) Article Thirteen hereof (relating to the approval of Business
Combinations); (iii) Article Eighteen hereof (relating to the number and
removal of Trust Managers); (iv) Article Nineteen hereof (relating to Share
ownership requirements); and (v) this Article Twenty-One may not be amended or
repealed, and provisions inconsistent therewith and herewith may not be
adopted, except by the affirmative vote of the holders of at least 80% of the
outstanding voting Shares.

ARTICLE TWENTY-TWO

Special meetings of the shareholders for any purpose or purposes,
unless otherwise prescribed by law or by the Declaration of Trust, may be
called by the Trust Managers, any officer of the Trust or the holders of at
least 5% of all of the shares entitled to vote at such meeting.

ARTICLE TWENTY-THREE

If any provision of this Declaration of Trust or any application of
any such provision is determined to be invalid by any federal or state court
having jurisdiction over the issue, the validity of the remaining provisions
shall not be affected and other applications of such provision shall be
affected only to the extent necessary to comply with the determination of such
court. In lieu of such illegal, invalid or unenforceable provision, there
shall be added automatically as a part of this Declaration of Trust, a legal,
valid and enforceable provision as similar in terms to such illegal, invalid or
unenforceable provision as may be possible, and the parties hereto request the
court or any arbitrator to whom disputes relating to this Declaration of Trust
are submitted to reform the otherwise illegal, invalid or unenforceable
provision in accordance with this Article Twenty-Three.

20
<PAGE> 21
IN WITNESS WHEREOF, the undersigned Trust Managers do hereby execute
this First Amended and Restated Declaration of Trust as of the ___ day of
_____, 1998.

-----------------------------------------
BERT WOLLEN

-----------------------------------------
JACK I. TOMPKINS

-----------------------------------------
DAVID L. JOHNSTON

21
<PAGE> 22
STATE OF TEXAS Section
Section
COUNTY OF DALLAS Section

BEFORE ME, the undersigned Notary Public, duly commissioned and
qualified within and for the State and County aforesaid, personally came and
appeared David L. Johnston, in his capacity as Trust Manager of Automotive
Realty Trust of America, and acknowledged to me, Notary, in the presence of
_______________________ and __________________________, that he executed the
foregoing instrument in the presence of the witnesses on behalf of the said
Automotive Realty Trust of America, as his own free and voluntary act and deed,
for the uses, purposes and considerations therein expressed.

IN WITNESS WHEREOF, said Appearer has executed these presents together
with me, Notary, and the undersigned competent witnesses, at my office in the
County and State aforesaid, on the ____ day of _____, 1998.

----------------------------------------
My commission expires:

STATE OF TEXAS Section
Section
COUNTY OF DALLAS Section

BEFORE ME, the undersigned Notary Public, duly commissioned and
qualified within and for the State and County aforesaid, personally came and
appeared Jack I. Tompkins, in his capacity as Trust Manager of Automotive
Realty Trust of America, and acknowledged to me, Notary, in the presence of
_______________________ and __________________________, that he executed the
foregoing instrument in the presence of the witnesses on behalf of the said
Automotive Realty Trust of America, as his own free and voluntary act and deed,
for the uses, purposes and considerations therein expressed.

---------------------------------------
My commission expires:

22
<PAGE> 23
STATE OF TEXAS Section
Section
COUNTY OF DALLAS Section

BEFORE ME, the undersigned Notary Public, duly commissioned and
qualified within and for the State and County aforesaid, personally came and
appeared Bert Wollen, in his capacity as Trust Manager of Automotive Realty
Trust of America, and acknowledged to me, Notary, in the presence of
_______________________ and __________________________, that he executed the
foregoing instrument in the presence of the witnesses on behalf of the said
Automotive Realty Trust of America, as his own free and voluntary act and deed,
for the uses, purposes and considerations therein expressed.

----------------------------------------
My commission expires:

<PAGE> 1
EXHIBIT 3.2

AMENDED AND RESTATED

BYLAWS

AUTOMOTIVE REALTY TRUST OF AMERICA
<PAGE> 2
INDEX

<TABLE>
<S> <C>
ARTICLE I Offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Section 1.1 Principal Office. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 1.2 Other Offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

ARTICLE II Meetings of Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Section 2.1 Place of Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 2.2 Annual Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 2.3 Special Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 2.4 Notice of Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 2.5 Business at Annual Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 2.6 Voting Lists . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 2.7 Quorum . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 2.8 Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 2.9 Proxies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 2.10 Voting of Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 2.11 Voting of Shares by Certain Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 2.12 Election of Trust Managers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 2.13 Telephone Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 2.14 Action Without Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 2.15 Inspectors and Voting Procedures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

ARTICLE III Trust Managers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

Section 3.1 Powers and Responsibilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 3.2 Number and Qualification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 3.3 Election and Term of Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 3.4 Nomination of Trust Managers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 3.5 Resignation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 3.6 Removal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 3.7 Vacancies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 3.8 Bond Not Required; Time Commitment . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 3.9 Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 3.10 Execution of Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

ARTICLE IV Meetings of the Trust Managers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

Section 4.1 Place of Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 4.2 Annual Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 4.3 Regular Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 4.4 Special Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
Section 4.5 Quorum and Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 4.6 Presumption of Assent to Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 4.7 Telephone Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 4.8 Action Without Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 4.9 Minutes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 4.10 Interest of Trust Managers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 4.11 Right of Trust Managers and Officers to Own Shares
or Other Property and to Engage in Other Business . . . . . . . . . . . . . . . . . 12
Section 4.12 Transactions Between Trust Managers and the Trust . . . . . . . . . . . . . . . . . . . . . 13
Section 4.13 Persons Dealing with Trust Managers or Officers . . . . . . . . . . . . . . . . . . . . . . 13
Section 4.14 Reliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 4.15 Liability of Trust Managers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

ARTICLE V Committees of the Trust Managers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

Section 5.1 Membership and Authorities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 5.2 Minutes and Rules of Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 5.3 Vacancies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 5.4 Telephone Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 5.5 Action Without Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

ARTICLE VI Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

Section 6.1 Number . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 6.2 Election, Term of Office and Qualification . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 6.3 Subordinate Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 6.4 Resignation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 6.5 Removal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 6.6 Vacancies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 6.7 The Chairman of the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 6.8 The President . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 6.9 The Vice Presidents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 6.10 The Secretary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 6.11 Assistant Secretaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 6.12 The Treasurer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 6.13 Assistant Treasurers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 6.14 Treasurer's Bond . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 6.15 Salaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 6.16 Execution of Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

ARTICLE VII Trust Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

Section 7.1 Share Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 7.2 Lost Certificates, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 7.3 Transfer of Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
</TABLE>
<PAGE> 4
<TABLE>
<S> <C>
Section 7.4 Ownership of Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 7.5 Closing of Transfer Books . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 7.6 Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 7.7 Reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

ARTICLE VIII General Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

Section 8.1 General Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 8.2 Limited Liability of Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 8.3 Waiver of Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 8.4 Seal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 8.5 Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 8.6 Checks, Notes, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 8.7 Examination of Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 8.8 Voting of Voting Securities Held by the Trust . . . . . . . . . . . . . . . . . . . . . . . 19
Section 8.9 Number, Gender, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

ARTICLE IX Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

Section 9.1 Amendment of Bylaws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

ARTICLE X Subject to All Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

Section 10.1 Subject to All Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
</TABLE>
<PAGE> 5
AUTOMOTIVE REALTY TRUST OF AMERICA

AMENDED AND RESTATED

BYLAWS

ARTICLE I

OFFICES

SECTION 1.1 PRINCIPAL OFFICE. The principal office of the Trust
shall be in the City of Dallas, Dallas County, Texas, or at such other location
as the Trust Managers may from time to time determine.

SECTION 1.2 OTHER OFFICES. The Trust may also have offices at
such other places, both within and without the State of Texas, as the Trust
Managers may from time to time determine or the business of the Trust may
require.

ARTICLE II

MEETINGS OF SHAREHOLDERS

SECTION 2.1 PLACE OF MEETINGS. The Trust Managers may designate
any place, either within or without the State of Texas, as the place of meeting
for any annual meeting or for any special meeting called by the Trust Managers.
A waiver of notice signed by all shareholders entitled to vote at a meeting may
designate any place, either within or without the State of Texas, as the place
for the holding of such meeting. If no designation is made, or if a special
meeting be otherwise called, the place of meeting shall be the principal office
of the Trust.

SECTION 2.2 ANNUAL MEETING. The annual meeting of shareholders
shall be held at such time, on such day and at such place as may be designated
by the Trust Managers. At the annual meeting, the Shareholders shall, subject
to Section 2.5 and Section 3.3 of these Bylaws, elect Trust Managers and
transact such other business as may properly be brought before the meeting.
Failure to hold the annual meeting at the designated time shall not cause the
dissolution of the Trust.

SECTION 2.3 SPECIAL MEETINGS. Special meetings of the
shareholders for any purpose or purposes, unless otherwise prescribed by law or
by the Declaration of Trust, may be called by the Trust Managers, any officer
of the Trust or the holders of at least ten percent (10%) of all of the shares
entitled to vote at the meetings. Business transacted at all special meetings
shall be confined to the purpose or purposes stated in the notice of special
meeting.

SECTION 2.4 NOTICE OF MEETINGS. Written or printed notice of all
meetings of shareholders stating the place, day and hour thereof, and in the
case of a special meeting the purpose or purposes for which the meeting is
called, shall be personally delivered or mailed, not less than ten (10) days
nor more than fifty (50) days prior to the date of the meeting, to the
shareholders of record entitled to vote at such meeting. If mailed, such
notice shall be deemed to be delivered when deposited in the United States Mail
addressed to the shareholder at his address as it appears on the share transfer
books of the Trust and the postage shall be
<PAGE> 6
prepaid. Personal delivery of any such notice to any officer of a corporation
or association, or to any member of a partnership, shall constitute delivery of
such notice to such corporation, association or partnership.

SECTION 2.5 BUSINESS AT ANNUAL MEETING. No business may be
transacted at an annual meeting of shareholders, other than business that is
either (a) specified in the notice of meeting (or any supplement thereto) given
by or at the direction of the Trust Managers (or any duly authorized committee
thereof), (b) otherwise properly brought before the annual meeting by or at the
direction of the Trust Managers (or any duly authorized committee thereof) or
(c) otherwise properly brought before the annual meeting by any shareholder of
the Trust (i) who is a shareholder of record on the date of the giving of the
notice provided for in this Section 2.5 and on the record date for the
determination of shareholders entitled to vote at such annual meeting, and (ii)
who complies with the notice procedures set forth in this Section 2.5.

In addition to any other applicable requirements, for business to be
properly brought before an annual meeting by a shareholder, such shareholder
must have given timely notice thereof in proper written form to the Secretary
of the Trust. To be timely, a shareholder's notice to the Secretary must be
delivered to or mailed and received at the principal office of the Trust not
less than sixty (60) days nor more than ninety (90) days prior to the date of
the applicable annual meeting of shareholders; provided, however, that in the
event that less than seventy (70) days' notice or prior public disclosure of
the date of the meeting be given or made, notice by the shareholder to be
timely must be so received not later than the close of business on the tenth
(10th) day following the day on which such notice of the date of the applicable
annual meeting was mailed or such public disclosure of the date of such annual
meeting was made, whichever first occurs. For purposes of this Section 2.5,
the date of a public disclosure shall include, but not be limited to, the date
on which such disclosure is made in a press release reported by the Dow Jones
News Services, the Associated Press or any comparable news service or in a
document publicly filed by the Trust with the Securities and Exchange
Commission pursuant to Sections 13, 14 or 15(d) (or the rules and regulations
promulgated thereunder) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act").

To be in proper written form, a shareholder's notice to the Secretary
must set forth as to each matter such shareholder proposes to bring before the
annual meeting (i) a brief description of the business desired to be brought
before the annual meeting and the reasons for conducting such business at the
annual meeting, (ii) the name and record address of such shareholder, (iii) the
number of shares of the Trust that are owned beneficially or of record by such
shareholder, (iv) a description of all arrangements or understandings between
such shareholder and any other person or persons (including their names) in
connection with the proposal of such business by such shareholder and any
material interest of such shareholder in such business, and (v) a
representation that such shareholder intends to appear in person or by proxy at
the annual meeting to bring such business before the meeting.

No business shall be conducted at the annual meeting of shareholders
except business brought before the annual meeting in accordance with the
procedures set forth in this Section 2.5; provided, however, that, once
business has been properly brought before the annual meeting in accordance with
such procedures, nothing in this Section 2.5 shall be deemed to preclude
discussion by any shareholder of any such business. If the presiding officer
of an annual meeting determines that business was not properly brought before
the annual meeting in accordance with the foregoing procedures, the presiding
officer shall declare to the meeting that the business was not properly brought
before the meeting and such business shall not be transacted at such meeting.

SECTION 2.6 VOTING LISTS. The officer or agent having charge of
the share transfer books for shares of the Trust shall make available for
inspection by shareholders, at least ten (10) days before each

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<PAGE> 7
meeting of the shareholders, a complete list of shareholders entitled to vote
at such meeting or any adjournment thereof, arranged in alphabetical order,
with the address of each and the number of shares held by each. The list shall
be kept on file at the registered office of the Trust and shall be subject to
inspection by any shareholder at any time during usual business hours. Such
list shall also be produced and kept open at the time and place of the meeting
and shall be subject to the inspection of any shareholder for the duration of
the meeting. The original share transfer books shall be prima facie evidence
as to who are the shareholders entitled to examine such list or transfer books
or to vote at any meeting of shareholders. Failure to comply with this Section
2.6 with respect to any meeting of shareholders shall not affect the validity
of any action taken at such meeting.

SECTION 2.7 QUORUM. The holders of a majority of the shares
entitled to vote, present in person or represented by proxy, shall constitute a
quorum at all meetings of the shareholders for the transaction of business,
except as otherwise provided by law or by the Declaration of Trust. If,
however, such quorum shall not be present or represented at any meeting of the
shareholders, the shareholders entitled to vote at such meeting, present in
person or represented by proxy, shall have the power to adjourn the meeting
from time to time without notice other than announcement at the meeting until a
quorum shall be present or represented. At such adjourned meeting at which a
quorum shall be present or represented, any business may be transacted which
might have been transacted at the meeting as originally convened. The
shareholders present at a duly organized meeting at which a quorum was present
may continue to transact business until adjournment notwithstanding the
withdrawal of enough shareholders to leave less than a quorum present, provided
that there remain at such meeting the holder or holders of at least one-third
(1/3) of the shares issued and outstanding and entitled to vote thereat,
present in person or represented in the manner specified above. A holder of a
share shall be treated as being present at a meeting if the holder of such
share is (i) present in person at the meeting, or (ii) represented at the
meeting by a valid proxy, whether the instrument granting such proxy is marked
as casting a vote or abstaining, is left blank or does not empower such proxy
to vote with respect to some or all matters to be voted upon at the meeting.

SECTION 2.8 ORGANIZATION. (a) The Chairman of the Board, if one
shall be elected, shall preside at all meetings of the shareholders. In the
absence of the Chairman of the Board or should one not be elected, the
following officers shall preside in order of priority: President, Chief
Executive Officer, Chief Operating Officer, Chief Financial Officer, Vice
President-Legal, or Secretary. If no such officer is available, the meeting
shall be adjourned until such an officer is available to preside over the
meeting. The presiding officer shall set the agenda for the meeting, shall
conduct all aspects of the meeting and shall establish and interpret the rules
of order for the conduct of the meeting.

(b) The Secretary of the Trust shall act as secretary at all
meetings of the shareholders. In his absence, an Assistant Secretary shall so
act and in the absence of all of these officers, the presiding officer may
appoint any person to act as secretary of the meeting.

SECTION 2.9 PROXIES. (a) At any meeting of the shareholders,
every shareholder entitled to vote at such meeting shall be entitled to vote in
person or by proxy executed in writing by such shareholder or by his duly
authorized attorney-in-fact. Proxies shall be filed with the Secretary or
Trust Managers immediately after the meeting has been called to order.

(b) No proxy shall be valid after eleven (11) months from the date
of its execution unless such proxy otherwise provides.

6
<PAGE> 8
(c) A proxy shall be revocable unless the proxy form conspicuously
states that the proxy is irrevocable and the proxy is coupled with an interest,
but in no event shall it remain irrevocable for a period of more than eleven
(11) months. A proxy which is revocable as aforesaid may be revoked at any
time by filing with the Secretary an instrument revoking it or a duly executed
proxy bearing a later date. Any revocable proxy which is not so revoked shall,
subject to paragraph (b) above, continue in full force and effect.

(d) In the event that any instrument in writing shall designate
two (2) or more persons to act as proxies, a majority of such persons present
at the meeting or, if only one shall be present, then that one, shall have and
may exercise all of the powers conferred by such written instrument upon all
the persons so designated unless the instrument shall otherwise provide.

SECTION 2.10 VOTING OF SHARES. Except as otherwise provided by
law, the Declaration of Trust or these Bylaws, each shareholder shall be
entitled at each meeting of shareholders to one (1) vote on each matter
submitted to a vote at such meeting for each share having voting rights
registered in his name on the books of the Trust at the time of the closing of
the share transfer books (or at the record date) for such meeting. When a
quorum is present at any meeting (and notwithstanding the subsequent withdrawal
of enough shareholders to leave less than a quorum present) in accordance with
Section 2.7 of these Bylaws, the votes of holders of a majority of the shares
entitled to vote, present in person or represented by proxy, shall decide any
matter submitted to such meeting, unless the matter is one upon which by law or
by express provision of the Declaration of Trust or of these Bylaws the vote of
a greater number is required, in which case the vote of such greater number
shall govern and control the decision of such matter. In determining the
number of shares entitled to vote, shares abstaining from voting or not voted
on a matter (including elections) will not be treated as entitled to vote. The
provisions of this Section 2.10 will govern with respect to all votes of
shareholders except as otherwise provided for in these Bylaws or in the
Declaration of Trust or by some specific statutory provision superseding the
provisions contained in these Bylaws or the Declaration of Trust.

SECTION 2.11 VOTING OF SHARES BY CERTAIN HOLDERS.

(a) Shares standing in the name of another business organization
may be voted by such officer, agent or proxy as the organizational documents of
such organization may authorize or, in the absence of such authorization, as
may be determined by the governing body of such organization.

(b) Shares held by an administrator, executor, guardian or
conservator may be voted by him, either in person or by proxy, without a
transfer of such shares into his name so long as such shares forming a part of
an estate are in the possession and form a part of the estate being served by
him. Shares standing in the name of a trustee may be voted by him, either in
person or by proxy, but no trustee shall be entitled to vote shares held by him
without a transfer of such shares into his name as trustee.

(c) Shares standing in the name of a receiver may be voted by such
receiver, and shares held by or under the control of a receiver may be voted by
such receiver without the transfer thereof into his name if authority to do so
is contained in an appropriate order of the court by which such receiver was
appointed.

(d) A shareholder whose shares are pledged shall be entitled to
vote such shares until the shares have been transferred into the name of the
pledgee, and thereafter the pledgee shall be entitled to vote the shares so
transferred.

SECTION 2.12 ELECTION OF TRUST MANAGERS. At each election for
Trust Managers, each shareholder entitled to vote at such election shall,
unless otherwise provided by the Declaration of Trust or by applicable

7
<PAGE> 9
law, have the right to vote the number of shares owned by him for as many
persons as there are to be elected and for whose election he has a right to
vote. Unless otherwise provided by the Declaration of Trust, no shareholder
shall have the right or be permitted to cumulate his votes on any basis.

SECTION 2.13 TELEPHONE MEETINGS. Shareholders may participate in
and hold a meeting of the shareholders by means of conference telephone or
similar communications equipment by means of which all persons participating in
the meeting can hear each other, and participation in a meeting pursuant to
this Section shall constitute presence in person at such meeting, except where
a person participates in the meeting for the express purpose of objecting to
the transaction of any business on the ground that the meeting is not lawfully
called or convened.

SECTION 2.14 ACTION WITHOUT MEETING. Any action required by any
provision of law or of the Declaration of Trust or these Bylaws to be taken at
a meeting of the shareholders or any action which may be taken at a meeting of
the shareholders may be taken without a meeting if a consent in writing,
setting forth the action so taken, shall be signed by all of the shareholders
entitled to vote with respect to the subject matter thereof, and such consent
shall have the same force and effect as a unanimous vote of the shareholders.

SECTION 2.15 INSPECTORS AND VOTING PROCEDURES.

(a) The Trust shall, in advance of any meeting of shareholders,
appoint one or more inspectors to act at the meeting and make a written report
thereof. The Trust may designate one or more persons as alternate inspectors
to replace any inspector who fails to act. If no inspector or alternate is
able to act at a meeting of shareholders, the person presiding at the meeting
shall appoint one or more inspectors to act at the meeting. Each inspector,
before entering upon the discharge of his duties, shall take and sign an oath
faithfully to execute the duties of inspector with strict impartiality and
according to the best of his ability.

(b) The inspectors shall (i) ascertain the number of shares
outstanding and the voting power of each, (ii) determine the shares represented
at a meeting and the validity of proxies and ballots, (iii) count all votes and
ballots, (iv) determine and retain for a reasonable period a record of the
disposition of any challenges made to any determination by the inspectors, and
(v) certify their determination of the number of shares represented at the
meeting, and their count of all votes and ballots. The inspectors may appoint
or retain other persons or entities to assist the inspectors in the performance
of the duties of the inspectors.

(c) The date and time of the opening and closing of the polls for
each matter upon which the shareholders will vote at a meeting shall be
announced at the meeting. No ballots, proxies or votes, nor any revocations
thereof or changes thereto, shall be accepted by the inspectors after the
closing of the polls unless a court of appropriate jurisdiction, upon
application by a shareholder, shall determine otherwise.

(d) In determining the validity and counting of proxies and
ballots, the inspectors may examine and consider such records or factors as
allowed by the Texas Real Estate Investment Trust Act (the "Texas REIT Act").

8
<PAGE> 10
ARTICLE III

TRUST MANAGERS

SECTION 3.1 POWERS AND RESPONSIBILITIES. The business and
affairs of the Trust shall be managed under the direction of its Trust Managers
who may exercise all such powers of the Trust and do all such lawful acts and
things as are not by statute, the Declaration of Trust or these Bylaws directed
or required to be exercised or done by the shareholders. The enumeration of
any specific power or authority herein shall not be construed as limiting the
aforesaid powers or the general powers or authority or any other specified
power or authority conferred herein upon the Trust Managers.

SECTION 3.2 NUMBER AND QUALIFICATION. There shall at all times
be no less than two (2) nor more than ten (10) Trust Managers who, subject to
Section 3.3 below, shall be elected annually by the shareholders. Subject to
any limitations specified by law or in the Declaration of Trust, the number of
Trust Managers may be fixed from time to time by resolution adopted by a
majority of the Trust Managers. No decrease in the number of Trust Managers
shall have the effect of shortening the term of any incumbent Trust Manager. A
majority of the Trust Managers shall be natural persons. Trust Managers need
not be shareholders, must be at least eighteen (18) years of age, must not be
subject to any legal disability and need not be residents of the State of
Texas.

SECTION 3.3 ELECTION AND TERM OF OFFICE. The Trust Manager
nominees who have not been previously elected as Trust Managers by the
shareholders of the Trust shall be elected at the annual meeting of the
shareholders (except as provided in Section 3.7) by the affirmative vote of the
holders of two-thirds (2/3) of the outstanding shares of the Trust. Trust
Managers who have been previously elected as Trust Managers by the shareholders
of the Trust shall be re-elected at the annual meeting of the shareholders by
the affirmative vote of the holders of a majority of the shares of the Trust
present in person or represented by proxy at such meeting; provided, however,
that any Trust Manager that has been previously elected as a Trust Manager by
the shareholders who is not re-elected by such majority vote at a subsequent
annual meeting shall nevertheless remain in office until his successor is
elected and qualified. Each Trust Manager shall hold office until his
successor is elected and qualified, or until his death, resignation or removal
in the manner provided in these Bylaws.

SECTION 3.4 NOMINATION OF TRUST MANAGERS. Only persons who are
nominated in accordance with the following procedures shall be eligible for
election as Trust Managers of the Trust. Nominations of persons for election
as Trust Managers may be made at any annual meeting of shareholders (a) by or
at the direction of the Trust Managers (or any duly authorized committee
thereof) or (b) by any shareholder of the Trust (i) who is a shareholder of
record on the date of the giving of the notice provided for in this Section 3.4
and on the record date for the determination of shareholders entitled to vote
at such annual meeting, and (ii) who complies with the notice procedures set
forth in this Section 3.4.

In addition to any other applicable requirements, for a nomination to
be made by a shareholder, such shareholder must have given timely notice
thereof in proper written form to the Secretary of the Trust. To be timely, a
shareholder's notice to the Secretary must be delivered to or mailed and
received at the principal offices of the Trust not less than sixty (60) days
nor more than ninety (90) days prior to the date of the applicable annual
meeting of shareholders; provided, however, that in the event that less than
seventy (70) days' notice or prior public disclosure of the date of the meeting
is given or made, notice by the shareholder

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<PAGE> 11
to be timely must be so received not later than the close of business on the
tenth (10th) day following the day on which such notice of the date of the
applicable annual meeting was mailed or such public disclosure of the date of
such annual meeting was made, whichever first occurs. For purposes of this
Section 3.4, the date of a public disclosure shall include, but not be limited
to, the date on which such disclosure is made in a press release reported by
the Dow Jones News Services, the Associated Press or any comparable national
news service or in a document publicly filed by the Trust with the Securities
and Exchange Commission pursuant to Sections 13, 14 or 15(d) (or the rules and
regulations promulgated thereunder) of the Exchange Act.

To be in proper written form, a shareholder's notice to the Secretary
must set forth (a) as to each person whom the shareholder proposes to nominate
for election as a Trust Manager (i) the name, age, business address and
residence address of the person, (ii) the principal occupation or employment of
the person, (iii) the number of shares of the Trust that are owned beneficially
or of record by the person, and (iv) any other information relating to the
person that would be required to be disclosed in a proxy statement or other
filings required to be made in connection with solicitation of proxies for
election of Trust Managers pursuant to Section 14 of the Exchange Act, and (b)
as to the shareholder giving the notice (i) the name and record address of such
shareholder, (ii) the number of shares of the Trust that are owned beneficially
or of record by such shareholder, (iii) a description of all arrangements or
understandings between such shareholder and each proposed nominee and any other
person or persons (including their names) pursuant to which the nomination(s)
are to be made by such shareholders, (iv) a representation that such
shareholder intends to appear in person or by proxy at the meeting to nominate
the persons named in the notice, and (v) any other information relating to such
shareholder that would be required to be disclosed in a proxy statement or
other filings required to be made in connection with solicitations of proxies
for election of Trust Managers pursuant to Section 14 of the Exchange Act and
the rules and regulations promulgated thereunder. Such notice must be
accompanied by a written consent of each proposed nominee to being named as a
nominee and to serve as a Trust Manager if elected.

No person shall be eligible for election as a Trust Manager of the
Trust unless nominated in accordance with the procedures set forth in this
Section 3.4. If the presiding officer of the meeting determines that a
nomination was not made in accordance with the foregoing procedures, the
presiding officer shall declare to the meeting that the nomination was
defective and such defective nomination shall be disregarded.

SECTION 3.5 RESIGNATION. Any Trust Manager may resign at any
time by giving written notice to the remaining Trust Managers. Such
resignation shall take effect at the time specified therein, and unless
otherwise specified therein, the acceptance of such resignation shall not be
necessary to make it effective. A Trust Manager judged incompetent or for whom
a guardian or conservator has been appointed, shall be deemed to have resigned
as of the date of such adjudication or appointment.

SECTION 3.6 REMOVAL. Trust Manager may be removed at any time
with or without cause by the vote of holders of shares representing two-thirds
(2/3) of the total votes authorized to be cast by shares then outstanding and
entitled to vote thereon. Upon the resignation or removal of any Trust
Manager, or his otherwise ceasing to be a Trust Manager, he shall execute and
deliver such documents as the remaining Trust Managers shall require for the
conveyance of any Trust property held in his name, shall account to the
remaining Trust Managers as they require for all property which he holds as
Trust Manager and shall thereupon be discharged as Trust Manager. Upon the
incapacity or death of any Trust Manager, his legal representative shall
perform the acts set forth in the preceding sentence and the discharge
mentioned therein shall run to such legal representative and to the
incapacitated Trust Manager or the estate of the deceased Trust Manager, as the
case may be.

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<PAGE> 12
SECTION 3.7 VACANCIES. If there is an increase in the number of
Trust Managers or if any or all of the Trust Managers cease to be Trust
Managers hereunder, whether by reason of resignation, removal, incapacity,
death or otherwise, such event shall not terminate the Trust or affect its
continuity. Until vacancies are filled, the remaining Trust Manager or Trust
Managers may exercise the powers of the Trust Managers hereunder. Vacancies
may be filled by successor Trust Managers either appointed by a majority of the
remaining Trust Managers or elected by the vote of the holders of at least
two-thirds of the outstanding shares at an annual or special meeting of the
shareholders. Any Trust Manager elected to fill a vacancy shall hold office
until the next annual meeting for the election of Trust Managers. The election
of a successor Trust Manager shall be considered an amendment to the
Declaration of Trust.

SECTION 3.8 BOND NOT REQUIRED; TIME COMMITMENT. Unless
otherwise required by law, no Trust Manager shall be required to give bond,
surety or security in any jurisdiction for the performance of his duties or
obligations to the Trust. No Trust Manager shall be required to devote his
entire time to the business and affairs of the Trust.

SECTION 3.9 COMPENSATION. Trust Managers shall receive
compensation for their services to the Trust as may be determined from time to
time by the Trust Managers. The Trust Managers may delegate to any committee
the power to fix from time to time the compensation of Trust Managers.
Officers of the Trust who also serve as Trust Managers shall not receive
compensation for their service as Trust Managers.

SECTION 3.10 EXECUTION OF DOCUMENTS. Each Trust Manager and any
one of them is authorized to execute on behalf of the Trust any document or
instrument of any nature whatsoever, provided that the execution by the Trust
of any such document or instrument shall have been previously authorized by
such action of the Trust Managers as may be required by statute, the
Declaration of Trust or these Bylaws.

ARTICLE IV

MEETINGS OF THE TRUST MANAGERS

SECTION 4.1 PLACE OF MEETINGS. The Trust Managers of the Trust
may hold their meetings, both regular and special, either within or without the
State of Texas.

SECTION 4.2 ANNUAL MEETING. The annual meeting of the Trust
Managers shall be held immediately following the adjournment of the annual
meeting of the shareholders and no notice of such meeting shall be necessary to
the Trust Managers in order to legally constitute the meeting, provided a
quorum shall be present, or they may meet at such time and place as shall be
fixed by the consent in writing of all of the Trust Managers.

SECTION 4.3 REGULAR MEETINGS. Regular meetings of the Trust
Managers, in addition to the annual meetings referred to in Section 4.2, may be
held without notice at such time and place as shall from time to time be
determined by the Trust Managers.

SECTION 4.4 SPECIAL MEETINGS. Special meetings of the Trust
Managers may be called by the Chairman of the Board, if one shall be elected,
or by the President, if a Chairman of the Board is not elected, on three (3)
business day's notice (oral or written) to each Trust Manager. Special
meetings shall be called by the Chairman of the Board (if one shall be
elected), the President or the Secretary on like notice on the written request
of any Trust Manager. Neither the purpose of, nor the business to be
transacted at, any special meeting

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of the Trust Managers need be specified in the notice or waiver of notice of
such meeting. Attendance of a Trust Manager at a meeting shall constitute a
waiver of notice of such meeting except where a Trust Manager attends a meeting
for the express purpose of objecting, at the beginning of the meeting, to the
transaction of any business on the grounds that the meeting is not lawfully
called or convened.

SECTION 4.5 QUORUM AND ACTION. At all meetings of the Trust
Managers, the presence of a majority of the Trust Managers shall be necessary
and sufficient to constitute a quorum for the transaction of business and the
act of a majority of the Trust Managers at any meeting at which a quorum is
present shall be the act of the Trust Managers unless the act of a greater
number is required by law, the Declaration of Trust or these Bylaws. If a
quorum shall not be present at any meeting of Trust Managers, the Trust
Managers present may adjourn the meeting from time to time without notice other
than announcement at the meeting until a quorum shall be present.

SECTION 4.6 PRESUMPTION OF ASSENT TO ACTION. A Trust Manager who
is present at a meeting of the Trust Managers at which action on any Trust
matter is taken shall be presumed to have assented to the action taken unless
his dissent shall be entered in the minutes of the meeting or unless he shall
file his written dissent to such action with the Secretary of the meeting
before the adjournment thereof or shall forward such dissent by registered mail
to the Secretary of the Trust immediately after the adjournment of the meeting.
Such right to dissent shall not apply to a Trust Manager who voted in favor of
such action.

SECTION 4.7 TELEPHONE MEETINGS. Trust Managers may participate
in and hold a meeting of the Trust Managers by means of conference telephone or
similar communications equipment by means of which all persons participating in
the meeting can hear each other. Participation in a meeting pursuant to this
Section 4.7 shall constitute presence in person at such meeting, except where a
person participates in the meeting for the express purpose of objecting to the
transaction of any business on the ground that the meeting is not lawfully
called or convened.

SECTION 4.8 ACTION WITHOUT MEETING. Any action required or
permitted to be taken at a meeting of the Trust Managers may be taken without a
meeting if a consent in writing, setting forth the action so taken, is signed
by all the Trust Managers, and such consent shall have the same force and
effect as a unanimous vote at a meeting.

SECTION 4.9 MINUTES. The Trust Managers shall keep regular
minutes of their proceedings. The minutes shall be placed in the minute book
of the Trust.

SECTION 4.10 INTEREST OF TRUST MANAGERS. With respect to the
actions of the Trust Managers, Trust Managers who have any direct or indirect
interest in connection with any matter being acted upon may be counted for all
quorum purposes under this Article IV.

SECTION 4.11 RIGHT OF TRUST MANAGERS AND OFFICERS TO OWN SHARES OR
OTHER PROPERTY AND TO ENGAGE IN OTHER BUSINESS. Any Trust Manager or officer
of the Trust may acquire, own, hold and dispose of shares of the Trust for his
individual account, and may exercise all rights of a shareholder to the same
extent and in the same manner as if he were not a Trust Manager or officer of
the Trust. Except as provided specifically to the contrary in a written
agreement with the Trust, any Trust Manager or officer of the Trust may, in a
capacity other than that of Trust Manager or officer of the Trust, have
business interests and engage in business activities similar to or in addition
to those relating to the Trust, which interests and activities may be similar
to and competitive with those of the Trust and may include the acquisition,
syndication, holding, management, development, operation or disposition, for
his own account or for the account of others, of

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<PAGE> 14
interests in mortgages, interests in real property, or interests in entities
engaged in the real estate business. Except as provided specifically to the
contrary in a written agreement with the Trust, each Trust Manager and officer
of the Trust shall be free of any obligation to present to the Trust any
investment opportunity which comes to him in any capacity other than solely as
Trust Manager or agent of the Trust, even if such opportunity is of a character
which, if presented to the Trust, could be exploited by the Trust. Subject to
the provisions of Article III hereof, any Trust Manager or officer of the Trust
may be a trustee, officer, director, shareholder, partner, member, advisor or
employee of, or otherwise have a direct or indirect interest in any person who
may be engaged to render advice or services to the Trust, and may receive
compensation from such person as well as compensation as Trust Manager or
officer or otherwise hereunder.

SECTION 4.12 TRANSACTIONS BETWEEN TRUST MANAGERS AND THE TRUST.
Except as otherwise provided by the Declaration of Trust or these Bylaws, and
in the absence of fraud, a contract, act or other transaction, between the
Trust and any other person, or in which the Trust is interested, shall be valid
and no Trust Manager or officer of the Trust shall have any liability as a
result of entering into any such contract, act or transaction, even though (a)
one or more of the Trust Managers, directly or indirectly is interested in or
connected with, or is a trustee, partner, director, shareholder, member,
employee, officer or agent of such other person, or (b) one or more of the
Trust Managers, individually or jointly with others, is a part to, or directly
or indirectly is interested in, or connected with, such contract, act or
transaction, provided that (i) such interest or connection is disclosed in
reasonable detail or known to the Trust Managers and thereafter the Trust
Managers authorize or ratify such contract, act or other transaction by
affirmative vote of a majority of the Trust Managers who are not interested in
the transaction or (ii) such interest or connection is disclosed in reasonable
detail or known to the shareholders, and thereafter such contract, act or
transaction is approved by shareholders holding a majority of the shares then
outstanding and entitled to vote thereon.

SECTION 4.13 PERSONS DEALING WITH TRUST MANAGERS OR OFFICERS.
Any act of the Trust Managers or officers of the Trust purporting to be done in
their capacity as such shall, as to any person dealing with such Trust Managers
or officers, conclusively be deemed to be within the purposes of the Trust and
within the powers of the Trust Managers or officers. No person dealing with
the Trust Managers or any of them or with the officers of the Trust or any of
them, shall be bound to see to the application of any funds or property passing
into their hands or control. The receipt of the Trust Managers or any of the
officers of the Trust of money or other consideration shall be binding upon the
Trust.

SECTION 4.14 RELIANCE. Trust Managers and officers of the Trust
shall not be liable for any claims or damages that may result from their acts
in the discharge of any duty imposed or power conferred upon them by the Trust,
if, in the exercise of ordinary care, they acted in good faith and in reliance
upon the written opinion of an attorney for the Trust. In discharging their
duties, Trust Managers and officers of the Trust, when acting in good faith and
exercising ordinary care, may rely upon financial statements of the Trust,
stated in a written report by an independent certified public accountant, to
fairly present the financial position of the Trust. The Trust Managers and
officers of the Trust may rely upon any instrument or other document reasonably
believed by them to be genuine.

SECTION 4.15 LIABILITY OF TRUST MANAGERS. No Trust Manager of the
Trust shall be liable to the Trust for any act, omission, loss, damage or
expense arising from the performance of his duty under the Trust, except to the
extent specifically required by statute, the Declaration of Trust or these
Bylaws.

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ARTICLE V

COMMITTEES OF THE TRUST MANAGERS

SECTION 5.1 MEMBERSHIP AND AUTHORITIES. The Trust Managers, by
resolution adopted by a majority of the Trust Managers, may designate one (1)
or more Trust Managers to constitute a Compensation Committee, Audit Committee
and such other committees as the Trust Managers may determine, each of which
committees to the extent provided in such resolution shall have and may
exercise all of the authority of the Trust Managers in the business and affairs
of the Trust, except in those cases where the authority of the Trust Managers
is specifically denied to the Audit Committee, Compensation Committee or such
other committee or committees by the Trust Managers, applicable law, the
Declaration of Trust or these Bylaws. Neither the Audit Committee,
Compensation Committee nor any other such committee shall have the power to
alter or to repeal any resolution adopted by the Trust Managers. The
designation of an Executive Committee or other committee and the delegation
thereto of authority shall not operate to relieve the Trust Managers, or any
member thereof, of any responsibility imposed upon him by law. The members of
each such committee shall serve at the pleasure of the Trust Managers.

SECTION 5.2 MINUTES AND RULES OF PROCEDURE. Each committee
designated by the Trust Managers shall keep regular minutes of its proceedings
and report the same to the Trust Managers when required. Subject to the
provisions of these Bylaws, the members of any committee may fix such
committee's own rules of procedure.

SECTION 5.3 VACANCIES. The Trust Managers shall have the power
at any time to fill vacancies in, to change the membership of, or to dissolve,
any committee.

SECTION 5.4 TELEPHONE MEETINGS. Members of any committee
designated by the Trust Managers may participate in or hold a meeting by use of
conference telephone or similar communications equipment by means of which all
persons participating in the meeting can hear each other. Participation in a
meeting pursuant to this Section 5.4 shall constitute presence in person at
such meeting, except where a person participates in the meeting for the express
purpose of objecting to the transaction of any business on the grounds that the
meeting is not lawfully called or convened.

SECTION 5.5 ACTION WITHOUT MEETING. Any action required or
permitted to be taken at a meeting of any committee designated by the Trust
Managers may be taken without a meeting if a consent in writing, setting forth
the action so taken, is signed by all the members of the committee, and such
consent shall have the same force and effect as a unanimous vote at a meeting.

ARTICLE VI

OFFICERS

SECTION 6.1 NUMBER. The officers of the Trust shall include a
President and a Secretary. The Trust Managers may also elect a Chairman of the
Board, one (1) or more Vice Presidents, a Treasurer, one (1) or more Assistant
Secretaries and one (1) or more Assistant Treasurers. One (1) person may hold
any two (2) or more of these offices.

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<PAGE> 16
SECTION 6.2 ELECTION, TERM OF OFFICE AND QUALIFICATION. The
Trust Managers shall elect officers, none of whom need be a Trust Manager,
except for the Chairman of the Board, if one shall be elected, at any time and
from time to time as they deem necessary. Each officer so elected shall hold
office until his successor shall have been duly elected and qualified or until
his death, resignation or removal in the manner hereinafter provided.

SECTION 6.3 SUBORDINATE OFFICERS. The Trust Managers may appoint
such other officers and agents as it shall deem necessary who shall hold their
offices for such terms, have such authority and perform such duties as the
Trust Managers may from time to time determine. The Trust Managers may
delegate to any committee or officer the power to appoint any such subordinate
officer or agent. No subordinate officer appointed by any committee or
superior officer as aforesaid shall be considered as an officer of the Trust,
the officers of the Trust being limited to the officers elected or appointed as
such by the Trust Managers.

SECTION 6.4 RESIGNATION. Any officer may resign at any time by
giving written notice thereof to the Trust Managers or to the President or
Secretary of the Trust. Any such resignation shall take effect at the time
specified therein and, unless otherwise specified therein, the acceptance of
such resignation shall not be necessary to make it effective.

SECTION 6.5 REMOVAL. Any officer elected or appointed by the
Trust Managers may be removed by the Trust Managers at any time with or without
cause by majority vote of the entire Board of Trust Managers. Any other
officer may be removed at any time with or without cause by the Trust Managers
or by any committee or superior officer upon whom such power of removal may be
conferred by the Trust Managers. The removal of any officer shall be without
prejudice to the contract rights, if any, of the person so removed. Election
or appointment of an officer or agent shall not of itself create any contract
rights.

SECTION 6.6 VACANCIES. A vacancy in any office shall be filled
for the unexpired portion of the term by the Trust Managers, but in case of a
vacancy occurring in an office filled by a committee or superior officer in
accordance with the provisions of Section 6.3, such vacancy may be filled by
such committee or superior officer.

SECTION 6.7 THE CHAIRMAN OF THE BOARD. The Chairman of the
Board, if one shall be elected, shall preside at all meetings of the
shareholders and Trust Managers and shall be an ex officio member of all
standing committees. The Chairman of the Board may sign, with any other proper
officer, certificates for shares of the Trust and any deeds, bonds, mortgages,
contracts and other documents which the Trust Managers have authorized to be
executed, except where required by law to be otherwise signed and executed and
except where the signing and execution thereof shall be expressly delegated by
the Trust Managers or these Bylaws, to some other officer or agent of the
Trust. In addition, the Chairman of the Board shall perform whatever duties
and shall exercise all powers that are given to him by the Trust Managers.

SECTION 6.8 THE PRESIDENT. The President shall be the chief
executive officer of the Trust and shall have general and active management of
the business and affairs of the Trust, shall have the general supervision and
direction of all other officers of the Trust with full power to see that their
duties are properly performed and shall see that all orders and resolutions of
the Trust Managers are carried into effect. If no Chairman of the Board is
elected, the President shall have the powers and duties of the Chairman of the
Board as set forth in Section 6.7. In the absence of the Chairman of the
Board, if one shall be elected, the President shall preside at all meetings of
the shareholders and Trust Managers. The President may sign, with any other
proper officer, certificates for shares of the Trust and any deeds, bonds,
mortgages, contracts and other documents which the Trust Managers have
authorized to be executed, except where required by law to be

15
<PAGE> 17
otherwise signed and executed and except where the signing and execution
thereof shall be expressly delegated by the Trust Managers or these Bylaws, to
some other officer or agent of the Trust. In addition, the President shall
perform whatever duties and shall exercise all powers that are given to him by
the Trust Managers.

SECTION 6.9 THE VICE PRESIDENTS. The Vice Presidents shall
perform such duties as are given to them by these Bylaws and as may from time
to time be assigned to them by the Trust Managers, by the Chairman of the
Board, if one shall be elected, or by the President, if a Chairman of the Board
is not elected, and may sign, with any other proper officer, certificates for
shares of the Trust. At the request of the President, or in his absence or
disability, the Vice President designated by the President (or in the absence
of such designation, the senior Vice President), shall perform the duties and
exercise the powers of the President.

SECTION 6.10 THE SECRETARY. The Secretary, when available, shall
attend all meetings of the Trust Managers and all meetings of the shareholders
and record all votes and the minutes of all proceedings in a book to be kept
for that purpose and shall perform like duties for the standing committees when
required. The Secretary shall give, or cause to be given, notice of all
meetings of the shareholders and of the Trust Managers as required by law or
these Bylaws, be custodian of the Trust records and have general charge of the
share books of the Trust and shall perform such other duties as may be
prescribed by the Trust Managers, by the Chairman of the Board, if one shall be
elected, or by the President, if a Chairman of the Board is not elected, under
whose supervision he shall be. The Secretary may sign, with any other proper
officer, certificates for shares of the Trust and shall keep in safe custody
the seal of the Corporation, and, when authorized by the Trust Managers, affix
the same to any instrument requiring it and, when so affixed, it shall be
attested by his signature or by the signature of the Treasurer or an Assistant
Secretary.

SECTION 6.11 ASSISTANT SECRETARIES. The Assistant Secretaries
shall perform such duties as are given to them by these Bylaws or as may from
time to time be assigned to them by the Trust Managers or by the Secretary. At
the request of the Secretary, or in his absence or disability, the Assistant
Secretary designated by the Secretary (or in the absence of such designation
the senior Assistant Secretary), shall perform the duties and exercise the
powers of the Secretary.

SECTION 6.12 THE TREASURER. The Treasurer shall have the custody
and be responsible for all Trust funds and securities and shall keep full and
accurate accounts of receipts and disbursements in books belonging to the Trust
and shall deposit all monies and other valuable effects in the name and to the
credit of the Trust in such depositories as may be designated by the Trust
Managers. The Treasurer shall disburse the funds of the Trust as may be ordered
by the Trust Managers, taking proper vouchers for such disbursements, and shall
render to the Chairman of the Board, if one shall be elected, the President and
the Trust Managers, at the regular meetings of the Trust Managers, or whenever
they may require it, an account of all his transactions as Treasurer and of the
financial condition of the Trust. The Treasurer may sign, with any other proper
officer, certificates for shares of the Trust.

SECTION 6.13 ASSISTANT TREASURERS. The Assistant Treasurers shall
perform such duties as are given to them by these Bylaws or as may from time to
time be assigned to them by the Trust Managers or by the Treasurer. At the
request of the Treasurer, or in his absence or disability, the Assistant
Treasurer designated by the Treasurer (or in the absence of such designation,
the senior Assistant Treasurer), shall perform the duties and exercise the
powers of the Treasurer.

SECTION 6.14 TREASURER'S BOND. If required by the Trust Managers,
the Treasurer and any Assistant Treasurer shall give the Trust a bond in such
sum and with such surety or sureties as shall be satisfactory to the Trust
Managers for the faithful performance of the duties of his office and for the
restoration

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<PAGE> 18
to the Trust, in case of his death, resignation, retirement or removal from
office, of all books, papers, vouchers, money and other property of whatever
kind in his possession or under his control belonging to the Trust.

SECTION 6.15 SALARIES. The salary or other compensation of
officers shall be fixed from time to time by the Trust Managers. The Trust
Managers may delegate to any committee or officer the power to fix from time to
time the salary or other compensation of subordinate officers and agents
appointed in accordance with the provisions of Section 6.3.

SECTION 6.16 EXECUTION OF DOCUMENTS. Each officer of the Trust
and any one of them is authorized to execute on behalf of the Trust any document
or instrument of any nature whatsoever, provided that the execution by the Trust
of any such document or instrument shall have been previously authorized by such
action of the Trust Managers as may be required by statute, the Declaration of
Trust or these Bylaws.

ARTICLE VII

TRUST SHARES

SECTION 7.1 SHARE CERTIFICATES.

(a) The certificates representing shares of beneficial interests of
the Trust shall be in such form, not inconsistent with statutory provisions and
the Declaration of Trust, as shall be approved by the Trust Managers. The
certificates shall be signed by the Chairman of the Board, if one shall be
elected, the President or a Vice President and a Secretary or Assistant
Secretary, or such other or additional officers as may be prescribed from time
to time by the Trust Managers. The signatures of such officer or officers upon
a certificate may be facsimiles if the certificate is countersigned by a
transfer agent or registered by a registrar, either of which is other than the
Trust itself or an employee of the Trust. In case any officer who has signed
or whose facsimile signature has been placed upon a certificate shall have
ceased to be such officer before such certificate is issued, it may be issued
with the same effect as if he were such officer at the date of its issuance.

(b) In the event the Trust has limited or denied the preemptive
right of shareholders, there shall be set forth on the face or back of the
certificates, which the Trust shall issue to represent beneficial interests,
such legends or statements, if any, as shall be required by applicable law or
the Declaration of Trust or as may be approved by the Trust Managers.

(c) All certificates shall be consecutively numbered and the name
of the person owning the shares represented thereby, with the number of such
shares and the date of issue, shall be entered on the Trust's books.

(d) All certificates surrendered to the Trust shall be canceled,
and, except as provided in Section 7.2 with respect to lost, destroyed or
mutilated certificates, no new certificate shall be issued until the former
certificate for the same number of shares has been surrendered and canceled.

SECTION 7.2 LOST CERTIFICATES, ETC. The Trust Managers may
direct a new certificate or certificates to be issued in place of any
certificate or certificates theretofore issued by the Trust alleged to have
been lost or destroyed, upon the making of an affidavit of that fact by the
person claiming the certificate of stock to be lost or destroyed. In
authorizing such issue of a new certificate or certificates, the Trust Managers
may, in their discretion and as a condition precedent to the issue thereof,
require the owner of such lost or

17
<PAGE> 19
destroyed certificate or certificates, or his legal representative, to
advertise the same in such manner as the Trust Managers shall require and/or
indemnify the Trust as the Trust Managers may prescribe.

SECTION 7.3 TRANSFER OF SHARES. Subject to any restrictions upon
transfer, upon surrender to the Trust or the transfer agent of the Trust of a
certificate for shares duly endorsed or accompanied by proper evidence of
succession, assignment or authority to transfer and satisfaction of the Trust
that the requested transfer complies with the provisions of applicable state
and federal laws and regulations, the Declaration of Trust and any agreements
to which the Trust is a party, the Trust shall issue a new certificate to the
person entitled thereto, cancel the old certificate and record the transaction
upon its books.

SECTION 7.4 OWNERSHIP OF SHARES. The Trust shall be entitled to
treat and recognize the holder of record of any share or shares as the holder
in fact thereof and, accordingly, shall not be bound to recognize any equitable
or other claim to or interest in such share or shares on the part of any other
person, whether or not it shall have express or other notice thereof, except as
otherwise provided by the laws of the State of Texas.

SECTION 7.5 CLOSING OF TRANSFER BOOKS. For the purpose of
determining shareholders entitled to notice of or to vote at any meeting of
shareholders or any adjournment thereof, or entitled to receive a distribution
by the Trust (other than a distribution involving a purchase or redemption by
the Trust of its own shares) or a share dividend, or in order to make a
determination of shareholders for any other proper purpose, the Trust Managers
may provide that the share transfer books shall be closed for a stated period
but not to exceed, in any case, sixty (60) days. If the share transfer books
shall be closed for the purpose of determining shareholders entitled to notice
of or to vote at a meeting of shareholders, such books shall be closed for at
least ten (10) days immediately preceding such meeting. In lieu of closing the
share transfer books, the Trust Managers may fix in advance a date as the
record date for any such determination of shareholders, such date in any case
to be not more than sixty (60) days and, in case of a meeting of shareholders,
not less than ten (10) days prior to the date on which the particular action
requiring such determination of shareholders is to be taken, and the
determination of shareholders on such record date shall apply with respect to
the particular action requiring the same notwithstanding any transfer of shares
on the books of the Trust after such record date.

SECTION 7.6 DIVIDENDS. The Trust Managers may, from time to
time, declare, and the Trust may pay, dividends on its outstanding shares in
the manner and upon the terms and conditions provided by the Declaration of
Trust and by law, such dividends to be paid in cash or in property or in shares
of beneficial interests of the Trust, except no dividends shall be paid when
the Trust is insolvent or when the payment thereof would render the Trust
insolvent.

SECTION 7.7 RESERVES. By resolution the Trust Managers may
create such reserve or reserves of the Trust as the Trust Managers from time to
time, in their absolute discretion, determine to be proper as a reserve or
reserves to meet contingencies, or for equalizing dividends, or for repairing
or maintaining any property of the Trust, or for such other purpose as the
Trust Managers shall determine to be beneficial to the interest of the Trust.
The Trust Managers may modify or abolish any such reserve in the manner in
which it was created.

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ARTICLE VIII

GENERAL PROVISIONS

SECTION 8.1 GENERAL POLICIES. The Trust intends to make
investments that are consistent with the applicable requirements of the
Internal Revenue Code of 1986, as amended, and the Texas REIT Act, as amended,
and related regulations with respect to the composition of the Trust's
investments and the derivation of its income.

SECTION 8.2 LIMITED LIABILITY OF SHAREHOLDERS. A shareholder
shall not be personally or individually liable in any manner whatsoever for any
debt, act, omission or obligation incurred by the Trust or the Trust Managers.
A shareholder shall be under no obligation to the Trust or to its creditors
with respect to such shares other than the obligation to pay to the Trust the
full amount of the consideration for which such shares were issued or to be
issued. Upon the payment of such consideration, such shares shall be fully
paid and non-assessable by the Trust.

SECTION 8.3 WAIVER OF NOTICE. (a) Whenever, under the provisions
of applicable law or of the Declaration of Trust or of these Bylaws, any notice
is required to be given to any shareholder or Trust Manager, a waiver thereof
in writing signed by the person or persons entitled to such notice, whether
before or after the time stated therein, shall be equivalent to the giving of
such notice.

(b) Attendance of a Trust Manager at a meeting shall constitute a
waiver of notice of such meeting except where a Trust Manager attends a meeting
for the express purpose of objecting, at the beginning of the meeting, to the
transaction of any business on the grounds that the meeting is not lawfully
called or convened.

SECTION 8.4 SEAL. If one be adopted, the Trust seal shall have
inscribed thereon the name of the Trust and shall be in such form as may be
approved by the Trust Managers. Said seal shall be kept in the custody of the
Secretary and may be used by causing it or a facsimile of it to be impressed or
affixed or in any manner reproduced.

SECTION 8.5 FISCAL YEAR. The fiscal year of the Trust shall be
fixed by resolution of the Trust Managers.

SECTION 8.6 CHECKS, NOTES, ETC. All checks or demands for money
and notes of the Trust shall be signed by such officer or officers or such
other person or persons as the Trust Managers may from time to time designate.
The Trust Managers may authorize any officer or officers or such other person
or persons to enter into any contract or execute and deliver any instrument in
the name of and on behalf of the Trust, and such authority may be general or
confined to specific instances.

SECTION 8.7 EXAMINATION OF BOOKS AND RECORDS. The Trust Managers
shall determine from time to time whether, and if allowed, when and under what
conditions and regulations the accounts and books of the Trust (except such as
may by statute be specifically opened to inspection) or any of them shall be
open to inspection by the shareholders, and the shareholders' rights in this
respect are and shall be restricted and limited accordingly.

SECTION 8.8 VOTING OF VOTING SECURITIES HELD BY THE TRUST.
Unless otherwise ordered by the Trust Managers, the President, acting on behalf
of the Trust, shall have full power and authority to attend and

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<PAGE> 21
to act and to vote at any meeting of holders of voting securities of any person
in which the Trust may hold voting securities and at any such meeting, shall
possess and may exercise any and all of the rights and powers incident to the
ownership of such voting securities which, as the owner thereof, the Trust
might have possessed and exercised, if present. The Trust Managers by
resolution from time to time may confer like powers upon any other person or
persons.

SECTION 8.9 NUMBER, GENDER, ETC. Whenever the singular number is
used in these Bylaws and when required by the context, the same shall include
the plural, and the masculine gender shall include the feminine and neuter
genders. The term "person," as used herein and as the context requires shall
mean and include individuals, corporations, limited partnerships, general
partnerships, joint stock companies or associations, joint ventures,
associations, limited liability companies, companies, trusts, banks, trust
companies, land trusts, business trusts, or other entities and governments and
agencies and political subdivisions thereof.

ARTICLE IX

AMENDMENTS

SECTION 9.1 AMENDMENT OF BYLAWS. Except as otherwise provided by
applicable law or the Declaration of Trust, the power to alter, amend or repeal
these Bylaws or to adopt new Bylaws shall be vested in the Trust Managers and
(to the extent not inconsistent with the Texas REIT Act and the Declaration of
Trust and specified in the notice of the meeting) the shareholders. Such
action to amend the Bylaws may be taken (i) with respect to all Bylaw
provisions, by the affirmative vote of a majority of the Trust Managers, or
(ii)(a) with respect to Section 2.5, Section 3.3, Section 3.4, Section 3.6,
Section 3.7 or Article IX of these Bylaws, by the affirmative vote of the
holders of two-thirds (2/3) of the Trust's outstanding shares, or (b) with
respect to all other Bylaws, by the affirmative vote of the holders of a
majority of the Trust's outstanding shares.

ARTICLE X

SUBJECT TO ALL LAWS

SECTION 10.1 SUBJECT TO ALL LAWS. The provisions of these Bylaws
shall be subject to all valid and applicable laws, including, without
limitation, the Texas REIT Act as now or hereafter amended, and in the event
that any of the provisions of these Bylaws are found to be inconsistent with or
contrary to any such valid laws, the latter shall be deemed to control and
these Bylaws shall be deemed modified accordingly, and, as so modified, shall
continue in full force and effect.

<PAGE> 1
EXHIBIT 23.1

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent public accountants, we hereby consent to the use in this
Registration Statement on Form S-11 of our report dated March 12, 1998 on the
balance sheet of Automotive Realty Trust of America and to all references to
our Firm included in this Registration Statement.

ARTHUR ANDERSEN LLP

Dallas, Texas,
April 17, 1998

<PAGE> 1
EXHIBIT 99.1

CONSENT TO BE NAMED AS TRUST MANAGER

I, Norman Braman, hereby consent to be nominated as a trust manager of
Automotive Realty Trust of America, and to be named as a nominated trust
manager in the Form S-11 Registration Statement filed with the Securities and
Exchange Commission by Automotive Realty Trust of America.

Dated: March 27, 1998

/s/ Norman Braman
-----------------------------------
Norman Braman

<PAGE> 1
EXHIBIT 99.2

CONSENT TO BE NAMED AS TRUST MANAGER

I, Douglas W. Schnitzer, hereby consent to be nominated as a trust
manager of Automotive Realty Trust of America, and to be named as a nominated
trust manager in the Form S-11 Registration Statement filed with the Securities
and Exchange Commission by Automotive Realty Trust of America.

Dated: March 27, 1998

/s/ Douglas W. Schnitzer
-----------------------------------
Douglas W. Schnitzer

<PAGE> 1
EXHIBIT 99.3

CONSENT TO BE NAMED AS TRUST MANAGER

I, Nelson E. Bowers, II, hereby consent to be nominated as a trust
manager of Automotive Realty Trust of America, and to be named as a nominated
trust manager in the Form S-11 Registration Statement filed with the Securities
and Exchange Commission by Automotive Realty Trust of America.

Dated: March 25, 1998

/s/ Nelson E. Bowers, II
-----------------------------------
Nelson E. Bowers, II

<PAGE> 1
EXHIBIT 99.4

CONSENT TO BE NAMED AS TRUST MANAGER

I, Gerald W. Haddock, hereby consent to be nominated as a trust
manager of Automotive Realty Trust of America, and to be named as a nominated
trust manager in the Form S-11 Registration Statement filed with the Securities
and Exchange Commission by Automotive Realty Trust of America.

Dated: April 16, 1998

/s/ Gerald W. Haddock
-----------------------------------
Gerald W. Haddock