U S RESTAURANT PROPERTIES MASTER L P, S-3, 1996-04-19

U S RESTAURANT PROPERTIES MASTER L P
S-3, 1996-04-19
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As filed with the Securities and Exchange Commission on April 19, 1996
Registration No. 33-________

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________

FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
____________________

U.S. RESTAURANT PROPERTIES MASTER L.P.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

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<S> <C> <C>
DELAWARE 6512 41-1541631
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
</TABLE>

5310 Harvest Hill Road, Suite 270
Dallas, Texas 75230
(214) 387-1487
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING
AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)

Robert J. Stetson
President and Chief Executive Officer
U.S. Restaurant Properties, Inc.
Managing General Partner
5310 Harvest Hill Road, Suite 270
Dallas, Texas 75230
(214) 387-1487
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
____________________

COPIES TO:
Richard S. Wilensky, Esq. Janice V. Sharry, Esq.
Middleberg, Riddle & Gianna Haynes and Boone, L.L.P.
2323 Bryan Street 901 Main Street
Suite 1600 Suite 3100
Dallas, Texas 75201 Dallas, Texas 75202
Phone (214) 220-6300 Phone (214) 651-5000
Fax (214) 220-0179 Fax (214) 651-5940

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon
as practicable after this Registration Statement becomes effective.

If the only securities being registered on this Form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box. / /

If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. / /

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. / /

COVER PAGE CONTINUED.....
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COVER PAGE CONTINUED.....

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

CALCULATION OF REGISTRATION FEE
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<S> <C> <C> <C> <C>
Proposed
Title of Each Class of Maximum Proposed Maximum
Securities To Be Amount to be Offering Price Aggregate Amount of
Registered Registered Per Unit(1) Offering Price(1) Registration Fee

Units of Beneficial Interest 2,070,000 Units (2) $22.625 $46,833,750 $16,150

</TABLE>

(1) Based upon the closing price for the Units on the New York Stock Exchange
on April 18, 1996. Estimated solely for the purpose of calculating the
registration fee pursuant to the provisions of Rule 457(a) under the
Securities Act of 1933.
(2) Includes 270,000 Units that the Underwriters may purchase from the
Registrant 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, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.

<PAGE>

U.S. RESTAURANT PROPERTIES MASTER L.P.

CROSS REFERENCE SHEET
SHOWING LOCATIONS IN PROSPECTUS OF REQUIRED INFORMATION

<TABLE>
<CAPTION>
FORM S-3 ITEM AND CAPTION LOCATION IN PROSPECTUS
- ------------------------- ----------------------
<S> <C> <C>

1. Forepart of Registration Statement and Outside Front
Cover Page of Prospectus................................ Outside Front Cover Page

2. Inside Front and Outside Back Cover Pages of
Prospectus.............................................. Inside Front and Outside
Back Cover Pages

3. Summary Information, Risk Factors and Ratio of
Earnings to Fixed Charges............................... Prospectus Summary;
Risk Factors

4. Use of Proceeds......................................... Use of Proceeds

5. Determination of Offering Price......................... Outside Front Cover Page;
Underwriting

6. Dilution................................................ *

7. Selling Security Holders................................ *

8. Plan of Distribution.................................... Outside Front Cover Page;
Underwriting

9. Description of Securities to be Registered.............. Description of Units

10. Interest of Named Experts and Counsel................... *

11. Material Changes........................................ Business and Properties;
Incorporation by
Reference

12. Incorporation of Certain Information by Reference....... Incorporation by
Reference

13. Disclosure of Commission Position on Indemnification
for Securities Act Liabilities.......................... *
</TABLE>
_____________________

* Not Applicable

<PAGE>

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.

<PAGE>

SUBJECT TO COMPLETION, DATED APRIL 19, 1996

PROSPECTUS

U.S. RESTAURANT PROPERTIES MASTER L.P.

1,800,000 UNITS OF BENEFICIAL INTEREST
____________________

U.S. Restaurant Properties Master L.P., a Delaware limited partnership
(the "Partnership"), acquires, owns and manages income-producing properties
that it leases on a triple net basis to operators of fast food and casual
dining restaurants, primarily Burger King-Registered Trademark-, and other
national and regional brands, including Dairy Queen-Registered Trademark-,
Hardee's-Registered Trademark- and Chili's-Registered Trademark-. The
Partnership is one of the largest publicly-owned entities in the United
States dedicated to acquiring, owning and managing restaurant properties. At
April 18, 1996, the Partnership's portfolio consisted of 166 restaurant
properties located in 37 states (the "Current Properties"), approximately 99%
of which were leased. As of the date hereof, the Partnership has an
additional 105 restaurant properties under binding agreements for acquisition
(the "Acquisition Properties").

This Prospectus relates to the sale of 1,800,000 Units of Beneficial
Interest (the "Units") of the Partnership by the Partnership. The Units are
listed on the New York Stock Exchange (the "NYSE") under the symbol "USV."
On April 18, 1996, the last reported sale price of the Units on the NYSE was
$22.625 per Unit. Since the Partnership's initial public offering in 1986,
the Partnership has made regular quarterly distributions to Unitholders. See
"Price Range of Units and Distribution Policy."

SEE "RISK FACTORS" WHICH BEGINS ON PAGE 10 OF THIS PROSPECTUS FOR CERTAIN
FACTORS THAT SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS.
____________________

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
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

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<CAPTION>
- ------------------------------------------------------------------------------
Price to Underwriting Proceeds to
Public Discount (1) Partnership (2)
- ------------------------------------------------------------------------------
<C> <S> <S> <S>
Per Unit . . . . . . . . $__________ $___________ $___________
- ------------------------------------------------------------------------------
Total (3). . . . . . . . $__________ $___________ $___________
- ------------------------------------------------------------------------------
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(1) The Partnership has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended. See "Underwriting."
(2) Before deducting estimated expenses of $______, payable by the Partnership.
(3) The Partnership has granted the Underwriters a 30-day option to purchase up
to an additional 270,000 Units at the Price to Public less Underwriting
Discount solely to cover over-allotments, if any. If all such __________
Units are purchased, the total Price to Public, Underwriting Discount and
Proceeds to Partnership will be $_________, $_________ and $________,
respectively. See "Underwriting."

____________________

The Units are offered by the several Underwriters, subject to prior sale,
when, as and if issued to and accepted by the Underwriters and subject to
approval of certain legal matters by counsel for the Underwriters and to
certain other conditions. The Underwriters reserve the right to withdraw,
cancel or modify such offer and to reject orders in whole or in part. It is
expected that delivery of the Units offered hereby will be made on or about
_____, 1996.

MORGAN KEEGAN & COMPANY, INC.

The date of this Prospectus is _______, 1996

<PAGE>

IN CONNECTION WITH THE OFFERING, THE UNDERWRITERS MAY OVER-ALLOT
OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET
PRICE OF THE UNITS AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE
PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME.

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PROSPECTUS SUMMARY

THE FOLLOWING SUMMARY IS QUALIFIED IN ALL RESPECTS BY THE MORE DETAILED
INFORMATION AND CONSOLIDATED FINANCIAL STATEMENTS AND THE NOTES THERETO
APPEARING ELSEWHERE IN THIS PROSPECTUS. UNLESS OTHERWISE INDICATED ALL
INFORMATION IN THIS PROSPECTUS ASSUMES THAT THE UNDERWRITERS' OVER-ALLOTMENT
OPTION IS NOT EXERCISED.

THE PARTNERSHIP

General

The Partnership acquires, owns and manages income-producing properties
that it leases on a triple net basis to operators of fast food and casual
dining restaurants, primarily Burger King (the second largest restaurant
chain in the world), and other national and regional brands including Dairy
Queen, Hardee's and Chili's. The Partnership acquires properties either from
third party lessors or from operators on a sale/leaseback basis. Under a
triple net lease, the tenant is obligated to pay all costs and expenses,
including all real property taxes and assessments, repairs and maintenance
and insurance. Triple net leases do not require substantial reinvestments by
the property owner and, as a result, more cash from operations may be used
for distributions to Unitholders or for acquisitions.

The Partnership is one of the largest publicly-owned entities in the
United States dedicated to acquiring, owning and managing restaurant
properties. At April 18, 1996, the Partnership's portfolio consisted of 166
restaurant properties in 37 states (the "Current Properties"), approximately
99% of which were leased. From the Partnership's initial public offering in
1986 until early 1995, the Partnership's portfolio was limited to
approximately 125 restaurant properties, all of which were leased on a triple
net basis to operators of Burger King restaurants. In May 1994, an investor
group led by Robert J. Stetson and Fred H. Margolin acquired the Managing
General Partner. In March 1995, certain amendments to the Partnership
Agreement were proposed by the new management and adopted by the Unitholders
which authorized the Partnership to incur debt and acquire additional
properties, including restaurant properties not affiliated with Burger King
Corporation ("BKC"). Since adoption of the amendments, the Partnership has
acquired 43 properties for an aggregate purchase price of approximately $28
million, including 27 properties acquired since January 1, 1996 and has
entered into binding agreements to acquire 105 additional restaurant
properties (the "Acquisition Properties") for an aggregate purchase price of
$55 million. Upon acquisition of the Acquisition Properties, the
Partnership's portfolio will consist of an aggregate of 271 properties in 40
states consisting of 171 Burger King restaurants, 40 Dairy Queen restaurants,
27 Hardee's restaurants, two Chili's restaurants and 31 restaurants operating
under other brand names.

The Partnership's management team consists of senior executives with
extensive experience in the acquisition, operation and financing of fast food
and casual dining restaurants. Mr. Stetson, the President - Chief Executive
Officer of the Managing General Partner is the former President of the Retail
Division and Chief Financial Officer of BKC, as well as the former Chief
Financial Officer of Pizza Hut, Inc. As a result, management has an
extensive network of contacts within the franchised fast food and casual
dining restaurant industry. Based on management's assessment of market
conditions, the Partnership believes that substantial opportunities exist for
it to acquire additional restaurant properties on advantageous terms.

The Partnership is a Delaware limited partnership. U.S. Restaurant
Properties, Inc. (formerly named QSV Properties Inc.), is the Managing
General Partner of the Partnership. The principal executive offices of the
Partnership and the Managing General Partner are located at 5310 Harvest Hill
Road, Suite 270, Dallas, Texas 75230. The telephone number is (214)
387-1487, FAX (214) 490-9119.

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Strategy

Since the adoption of the amendments to the Partnership Agreement in
March 1995, the Partnership's principal business objective has been to expand
and diversify the Partnership's portfolio through frequent acquisitions of
small to medium-sized portfolios of fast food and casual dining restaurant
properties. The Partnership intends to achieve growth and diversification
while maintaining low portfolio investment risk through adherence to proven
acquisition criteria with a conservative capital structure. The Partnership
intends to continue to expand its portfolio by acquiring triple net leased
properties and structuring sale/leaseback transactions consistent with the
following strategies:

- FOCUS ON RESTAURANT PROPERTIES. The Partnership takes advantage of
senior management's extensive experience in fast food and casual
dining restaurant operations to identify new investment opportunities
and acquire restaurant properties satisfying the Partnership's
investment criteria. Management believes that relative to other real
estate sectors, restaurant properties provide numerous acquisition
opportunities at attractive valuations.

- INVEST IN MAJOR RESTAURANT BRANDS. The Partnership intends to
continue to acquire properties operated as major national and regional
restaurant brands, such as Burger King, Dairy Queen, Hardee's and
Chili's by competent, financially-stable operators. Management
believes that successful restaurants operated under these brands offer
stable, consistent income to the Partnership with minimal risk of
default or non-renewal of the lease and franchise agreement. As a
result of its concentration on major national and regional brands, in
the last three fiscal years, of all rental revenues due, more than
99.5% has been collected.

- ACQUIRE EXISTING RESTAURANTS. The Partnership's strategy is to focus
primarily on the acquisition of existing fast food and casual dining
chain restaurant properties that have a history of profitable
operations with a remaining term on the current lease of at least five
years. Assuming acquisition of the Acquisition Properties, the
average remaining lease terms for the properties included within the
Partnership's portfolio would be 9.1 years. Management believes that
acquiring existing restaurant properties provides a higher
risk-adjusted rate of return to the Partnership than acquiring
newly-constructed restaurants.

- CONSOLIDATE SMALLER PORTFOLIOS. Management believes that pursuing
multiple transactions involving smaller portfolios of restaurant
properties results in a more attractive valuation because the size of
such transactions generally does not attract large institutional
property owners. Smaller buyers typically are not well capitalized
and may be unable to compete for such transactions. Larger
transactions involving multiple properties generally attract several
institutional bidders, often resulting in a higher purchase price and
lower investment returns to the purchaser. In certain circumstances,
however, the Partnership has identified, evaluated and pursued
portfolios valued at up to $50 million that present attractive risk
return ratios and has a transaction of approximately $21 million under
contract.

- MAINTAIN CONSERVATIVE CAPITAL STRUCTURE. The Partnership has a
policy of maintaining a ratio of total indebtedness of 50% or less to
the greater of (i) the market value of all issued and outstanding
Units plus total outstanding indebtedness ("Total Market
Capitalization") or (ii) the original cost of all of the Partnership's
properties as of the date of such calculation. The Partnership's
ratio of total indebtedness to Total Market Capitalization was
approximately 16 percent at March 31, 1996. See "Capitalization" and
"Pro Forma Consolidated Financial Statements" included elsewhere
herein. The Partnership, however, may from time to time reevaluate
its borrowing policies in light of then-current economic conditions,

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relative costs of debt and equity capital, market values of
properties, growth and acquisition opportunities and other factors.

INDUSTRY

Industry sources estimate that total food service industry sales during
1995 were approximately $277 billion and that there are more than 100,000
free standing fast food and casual dining chain restaurant locations with a
total current property value of more than $100 billion, with the number of
locations and value growing. Management believes that, in addition to the
Partnership, there is only one other publicly-owned entity dedicated to
acquiring, owning and managing chain restaurant properties. Collectively,
these two publicly-owned entities own less than 5% of the total number of
such restaurant properties, with a majority of such other restaurants owned
by private restaurant operators and real estate investors. Management
believes that this fragmented market provides the Partnership with
substantial acquisition opportunities.

Approximately 86% of the Partnership's portfolio (63% assuming
consummation of the Acquisition Properties) consists of properties leased to
operators of Burger King restaurants. Based on publicly-available
information, Burger King is the second largest fast food restaurant system in
the world in terms of gross revenues and number of restaurants. According to
publicly-available information, there are approximately 6,500 Burger King
restaurant units in the United States. With respect to the Burger King
restaurants in the Partnership's portfolio, for the year-ended December 31,
1995, same-store sales (consisting of the stores included in the portfolio at
January 1, 1994 and at December 31, 1995) increased 7% over the prior year.

RECENT DEVELOPMENTS

RECENT ACQUISITIONS: Since January 1, 1996, the Partnership has acquired
27 restaurant properties for an aggregate purchase price of $17.5 million.
The acquired properties are leased on a triple net basis to operators of
Burger King, Dairy Queen, Taco Bell-Registered Trademark-, KFC-Registered
Trademark-and other brand name restaurants.

PENDING ACQUISITIONS: At April 18, 1996, the Partnership had entered into
binding agreements to purchase interests in 105 Acquisition Properties for an
aggregate purchase price of approximately $55 million, including the purchase
of 29 Burger Kings, 24 Hardee's, 37 Dairy Queens and nine Pizza Huts. These
transactions include the (i) "Wiggins I" agreement regarding the purchase of
13 Hardee's properties, (ii) "Wiggins II" agreement regarding the purchase of
11 Hardee's properties, (iii) "BK II" agreement regarding 29 Burger King
properties and (iv) the "Dairy Queen" agreement regarding the purchase of 37
Dairy Queen properties. The Partnership intends to finance the Acquisition
Properties principally by utilizing existing borrowing capacity, on a
recourse or non-recourse basis utilizing the Partnership's $40 million
revolving credit agreement with a group of banks and proceeds of this
Offering. See "Use of Proceeds" and "Capitalization."

CREDIT FACILITIES: The Partnership's revolving credit agreement with a
syndicate of banks was recently increased to $40 million. At April 18, 1996,
approximately $18.7 million remained available under the credit agreement.
The Partnership has had discussions with the syndicate of banks regarding an
increase in the amount available under the credit agreement to $60 million.
The Partnership is also negotiating (i) a $35 million credit facility to be
secured by recently-acquired restaurant properties and (ii) a $20 million
mortgage warehouse facility to be secured by certain Current Properties and
Acquisition Properties. See "History and Structure of the Partnership" and
"Capitalization."

REIT CONVERSION: The Partnership and its advisers are analyzing all
aspects of a conversion to a Real Estate Investment Trust (REIT) including
feasibility and tax effects. Assuming that the Partnership and its advisers
determine that a conversion to a REIT is in the best interests of the
Partnership and its limited partners, the Partnership would attempt to
complete such a conversion by December 31, 1997, subject to the approval of
the limited partners. Even if the

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Partnership does not convert to a REIT, the Partnership intends to become
self-managed and self-advised by December 31, 1997, subject to the approval
of the limited partners.

DISTRIBUTION POLICY

The Partnership currently pays a quarterly distribution of $0.44 per
Unit, which on an annualized basis is equal to an annual distribution of
$1.76 per Unit. The Managing General Partner has declared a distribution of
$_____ per Unit payable June 15, 1996 to Unitholders of record on May 7,
1996. Purchasers of Units offered hereby will not be entitled to receive
such quarterly distribution.

RISK FACTORS

An investment in the Units involves various risks. Investors should
carefully consider the matters discussed under "Risk Factors" beginning on
page 10.

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THE OFFERING

Units outstanding before the Offering:. . . . . . 4,987,003 Units

Units to be outstanding after the Offering: . . . 6,787,003 Units (1)

Use of Proceeds:. . . . . . . . . . . . . . . . . For the acquisition of the
Acquisition Properties; to
reduce debt; and for other
general corporate purposes.
See "Use of Proceeds."

NYSE Symbol . . . . . . . . . . . . . . . . . . . USV

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

(1) Does not include options to purchase 400,000 Units held by the Managing
General Partner which are currently exercisable. See "Underwriting."

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SUMMARY HISTORICAL AND PRO FORMA FINANCIAL INFORMATION
AND OTHER DATA
(DOLLARS IN THOUSANDS, EXCEPT PER UNIT AMOUNTS)

<TABLE>
<CAPTION>
Years Ended December 31, (1)
- -------------------------------------------------------------------------------
Pro Forma(3)
Historical (Unaudited)
-------------------------------------------------
1993 1994 1995 1995
STATEMENT OF INCOME: ------ ------ ------ ------
<S> <C> <C> <C> <C>
Total revenues $ 8,332 $ 8,793 $ 9,780 $ 21,496

Expenses $ 3,804 $ 3,860 $ 4,557 $ 11,762

Net income allocable to
Unitholders $ 4,437 $ 4,834 $ 5,119 $ 9,541

Net income per Unit $ 0.96 $ 1.04 $ 1.10 $ 1.40

Weighted average
Units outstanding 4,635 4,635 4,638 6,808

CASH FLOW DATA:

Cash flows from operating
activities $ 7,475 $ 6,990 $ 9,287 $ 16,719

Cash flows from (used in)
investing activities $ 1,130 $ --- $(12,038) $(76,485)

Cash flows from (used in)
financing activities $ (8,302) $ (7,569) $2,077 $63,522

OTHER DATA:

Restaurant sales $112,880 $122,315 $135,297 N/A

Number of restaurant
properties 123 123 139 271

Funds generated from
operations (2) $ 7,281 $ 7,786 $8,418 $ 15,504

Regular cash distributions
declared per Unit applicable
to respective year $1.48* $1.61 $1.71

</TABLE>
____________________

* Does not include special capital transaction distributions of $.24 per
Unit.

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<TABLE>
<CAPTION>
DECEMBER 31, (1)
---------------------------------------------
PRO FORMA
AS ADJUSTED(3)
HISTORICAL (UNAUDITED)
------------------------------- -------------
BALANCE SHEET DATA: 1993 1994 1995 1995
------ ------ ------ ------
<S> <C> <C> <C> <C>
Net investment in
direct financing leases $22,910 $21,237 $19,371 $19,371

Land 23,414 23,414 27,493 55,953

Buildings and leasehold
improvements, net 1,734 1,548 6,257 41,020

Equipment -- -- 224 3,692

Intangibles, net 15,503 14,317 14,804 20,948

Total Assets 65,322 62,889 71,483 142,526

Line of credit -- -- 10,931 36,453

Capitalized lease obligations 966 775 563 563

General partners' capital 1,357 1,309 1,241 1,241

Limited partners' capital 62,757 60,361 58,072 103,593

____________________

</TABLE>

(1) The information for the years ended December 31, 1993, 1994 and 1995,
except for restaurant sales, was derived from the Partnership's audited
financial statements included elsewhere in this Prospectus.
(2) Funds generated from operations is calculated as the sum of taxable income
plus charges for depreciation and amortization. Funds generated from
operations does not represent cash generated from operating activities in
accordance with generally accepted accounting principles. Funds generated
from operations should not be considered as an alternative to net income
(determined in accordance with generally accepted accounting principles) as
an indication of the Partnership's performance or as an alternative to cash
flow (determined in accordance with generally accepted accounting
principles) as a measure of liquidity.
(3) The unaudited pro forma statement of income information for the year
ended December 31, 1995 is presented as if the following had occurred
as of January 1, 1995: (a) the purchase of 16 properties acquired on
various dates from March 1995 through December 1995; (b) the purchase of 27
properties completed since January 1, 1996 and the acquisition of 105
properties under contract with the assumption of related ground leases (all
of which are treated as operating leases); (c) the issuance and sale by the
Partnership in this Offering of 1,800,000 Units and the application of the
net proceeds therefrom; and (d) additional borrowings to purchase the
Acquisition Properties.

The December 31, 1995 unaudited Pro Forma Balance Sheet data represents
the Partnership's December 31, 1995 balance sheet adjusted on a pro forma
basis to reflect as of December 31, 1995: (a) the purchase of 27 properties
since January 1, 1996 and the acquisition of 105 properties under binding
contracts with the assumption of related ground leases (all of which are
treated as operating leases); (b) the issuance of 327,836 Units in connection
with the purchase of 27 properties since January 1, 1996; (c) the issuance
and sale by the Partnership in this Offering of 1,800,000 Units and the
application of the net proceeds therefrom; and (d) additional borrowings to
purchase the Acquisition Properties.

The unaudited pro forma income statement and balance sheet information is
not necessarily indicative of what the actual financial position or results
of operations of the Partnership would have been at December 31, 1995 or for
the year then ended had all of these transactions occurred and it does not
purport to represent the future financial position or results of operations
of the Partnership.

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<PAGE>
RISK FACTORS

IN ADDITION TO THE OTHER INFORMATION IN THIS PROSPECTUS AND INCORPORATED BY
REFERENCE HEREIN, THE FOLLOWING FACTORS SHOULD BE CAREFULLY CONSIDERED BY
PERSONS CONTEMPLATING AN INVESTMENT IN THE UNITS OFFERED HEREBY.

ACQUISITION AND EXPANSION RISKS

FAILURE TO ACQUIRE ACQUISITION PROPERTIES. As of the date of this
Prospectus, the Partnership had 105 properties under binding agreements of
acquisition. In connection with the execution of such agreements, the
Partnership made deposits of approximately $1.79 million which may be
non-refundable in whole or in part if the Partnership elects not to close
some or all of such acquisitions. If some or all of such acquisitions are
not closed, the Partnership may have proceeds from the Offering without a
designated use and there can be no assurance that the Partnership will be
able to locate additional properties that meet the Partnership's acquisition
criteria. If acquired, such investments entail risks that performance may
fail to meet expectations.

RISK OF LEVERAGE. In order to fund the Partnership's expanded business
strategy, the Partnership may borrow funds and grant liens on its restaurant
properties to secure such indebtedness. The Partnership Agreement does not
restrict the amount of such indebtedness, and the extent of the Partnership's
indebtedness from time to time may affect its interest costs, results of
operations, and its ability to respond to future business adversities and
changing economic conditions. The Partnership has implemented a non-binding
policy to maintain a ratio of total indebtedness of 50% or less to the greater
of Total Market Capitalization or the original cost of all of the Partnership's
properties as of the date of such calculation. Because it is anticipated that
the Partnership will not fix its interest costs for the long term, future
changes in interest rates may positively or negatively affect the Partnership.
In addition, because it is anticipated that the Partnership's borrowings may not
have long-term maturities, the Partnership could be required to refinance such
borrowings prior to the maturities of the lease terms of the additional
properties. Refinancing will depend upon the creditworthiness of the
Partnership and the availability of financing under market conditions at the
time such refinancing is required. The granting of liens on its restaurant
properties may preclude the Partnership from subsequently borrowing against such
restaurant properties and distributing such loan proceeds to the Unitholders.
Payment of the interest on, or amortization of, any such indebtedness could also
decrease the cash distributable to the Unitholders if the financing and other
costs of the expanded business strategy exceed any incremental revenue
generated. Moreover, if the Partnership were unable to repay or otherwise
default in respect of any indebtedness, the Partnership's properties could
become subject to foreclosure, with possible adverse income tax consequences to
the Unitholders, such as allocations of capital gain or discharge of
indebtedness income without any cash distributions from which to pay the related
income tax liability.

RISK OF MANAGING EXPANDED PORTFOLIO. Prior to March 1995, the
Partnership owned and managed less than 125 restaurant properties. Assuming
the consummation of the Acquisition Properties, the Partnership's portfolio
will consist of 271 restaurant properties. As a result of the rapid growth
of the Partnership's portfolio, there can be no assurance that management
will be able to adapt its management, administrative, accounting and
operational systems to respond to the growth represented by the Acquisition
Properties or any future growth. In addition, there can be no assurance that
the Partnership will be able to maintain its current rate of growth or
negotiate and acquire any acceptable restaurant properties in the future. A
larger portfolio of restaurant properties could entail additional operating
expenses that would be payable by the Partnership. Such acquisitions may
also require loans to prospective tenants. Making loans to existing or
prospective tenants involves credit risks and could subject the Partnership
to regulation under various federal and state laws. Any operation of
restaurants, even on an interim basis, would also subject the Partnership to
operating risks, which may be significant. See "Business and Properties."

-10-

<PAGE>

CONFLICTS OF INTEREST

The Partnership Agreement provides that the Partnership pays one-time and
continuing fees to the Managing General Partner with respect to additional
properties purchased regardless of whether the Partnership receives the
contemplated revenue from such additional properties or whether the Partnership
makes any cash distributions to the Unitholders after such properties are
purchased. This creates an incentive for the Managing General Partner to cause
the Partnership to purchase more properties, pay higher prices, and sell
existing properties or use more leverage to make such purchases. The Sale of
any of the 128 restaurant properties acquired from BKC in 1986 (currently 123)
would not reduce the management fee for existing properties, while the new fees
would benefit the Managing General Partner incrementally with each purchase.
The Managing General Partner, however, does not presently intend to cause the
Partnership to sell a significant number of its current restaurant properties.
In addition, the Amendments provide the Managing General Partner with a fee
providing a percentage participation above a threshold in the cash flow from
newly-purchased properties. Moreover, the Managing General Partner is not
restricted from acquiring for its own account properties of the type to be
purchased by the Partnership. See "Business and Properties -- Payments to the
Managing General Partner."

In addition, the Partnership Agreement does not restrict the ability of the
Managing General Partner or its principals from owning and/or operating
restaurants on Partnership properties or elsewhere. Presently, the Managing
General Partner owns 90% of Arkansas Restaurants #10 L.P., the operators of
three Burger King franchises on properties leased from the Partnership. The
Managing General Partner or its principals may acquire future operating
restaurants on Partnership properties, including in connection with the
Acquisition Properties. Financing may also be provided on an arm's length basis
by the Partnership to consummate the acquisition of operating restaurants by the
Managing General Partner, its principals or others.

INVESTMENT CONCENTRATION IN SINGLE INDUSTRY

The Partnership's current strategy is to acquire interests only in
restaurant properties, specifically fast food and casual dining restaurant
properties. As a result, a downturn in the fast food or casual dining segment
could have a material adverse effect on the Partnership's total rental revenues
and amounts available for distribution to its Unitholders. See "Business and
Properties -- The Properties."

EMPHASIS ON BURGER KING

Of the Partnership's Current Properties, 140 (169 if the Acquisition
Properties are acquired) are occupied by operators of Burger King restaurants.
In addition, the Partnership intends to acquire additional Burger King
properties. As a result, the Partnership is subject to the risks inherent in
investments concentrated in a single franchise brand, such as a reduction in
business following adverse publicity related to the brand or if the Burger King
restaurant chain (and its franchisees) were to suffer a system-wide decrease in
sales, the ability of franchisees to pay rents (including percentage rents) to
the Partnership may be adversely affected. See "Business and
Properties -- Strategy" and "Business and Properties -- The Properties."

RENT DEFAULTS AND FAILURE TO RENEW LEASES AND FRANCHISE AGREEMENTS

The Partnership's Current Properties are leased to restaurant franchise
operators pursuant to leases with remaining terms varying from one to 28 years
at April 18, 1996 and an average remaining term of 7.3 years (9.1 years if the
Acquisition Properties are included). No assurance can be given that such
leases will be renewed at the end of the lease terms or that the Partnership
will be able to renegotiate terms which are acceptable to the Partnership. The
Partnership has attempted to extend the terms of certain of its existing leases
pursuant to an "Early Renewal Program," but in connection therewith has had to
commit to paying for certain improvements on such properties. See "Business and
Properties -- The Properties."

-11-
<PAGE>

REAL ESTATE INVESTMENT RISKS

GENERAL RISKS. The Partnership's investments in real estate are subject to
varying degrees of risk inherent in the ownership of real property. The
underlying value of the Partnership's real estate and the income therefrom and
consequently, the ability of the Partnership to make distributions to
Unitholders are dependent upon the operators of the restaurant properties
generating income in excess of operating expenses in order to make rent
payments. Income from the properties may be adversely affected by changes in
national economic conditions, changes in local market conditions due to changes
in general or local economic conditions and neighborhood characteristics,
changes in interest rates and the availability, cost and terms of mortgage
funds, the impact of compliance with present or future environmental laws, the
ongoing need for capital improvements, particularly for older restaurants,
increases in operating expenses, adverse changes in governmental rules and
fiscal policies, civil unrest, acts of God (which may result in uninsured
losses), acts of war, adverse changes in zoning laws, and other factors beyond
the Partnership's control.

ILLIQUIDITY OF REAL ESTATE MAY LIMIT ITS VALUE. Real estate investments
are relatively illiquid. The ability of the Partnership to vary its portfolio
in response to changes in economic and other conditions is limited. No
assurances can be given that the market value of any of the Partnership's
properties will not decrease in the future. If the Partnership must sell an
investment, there can be no assurance that the Partnership will be able to
dispose of it in a desirable time period or that the sales price will recoup or
exceed the amount of the Partnership investment.

POSSIBLE LIABILITY THAT COULD RESULT FROM ENVIRONMENTAL MATTERS. The
Partnership's operating costs may be affected by the obligation to pay for the
cost of complying with existing environmental laws, ordinances and regulations,
as well as the cost of compliance with future legislation. Under current
federal, state and local environmental laws, ordinances and regulations, a
current or previous owner or operator of real property may be liable for the
costs of removal or remediation of hazardous or toxic substances on, under or in
such property. Such laws often impose liability whether or not the owner or
operator knew of, or was responsible for, the presence of such hazardous or
toxic substances. In addition, the presence of contamination from hazardous or
toxic substances, or the failure to remediate such contaminated property
properly, may adversely affect the ability of the owner of the property to use
such property as collateral for a loan or sell such property. Environmental
laws also may impose restrictions on the manner in which a property may be used
or transferred or in which businesses may be operated, and may impose remedial
or compliance costs. The costs of defending against claims of liability or
remediating contaminated property and the cost of complying with environmental
laws could materially adversely affect the Partnership's results of operations
and financial condition.

In connection with the Partnership's acquisition of a property, a Phase I
environmental assessment is obtained. If the results of such assessment reveal
potential liabilities, a Phase II assessment is ordered for further evaluation
and, depending upon the results of such assessment, the transaction is
consummated or the acquisition is terminated.

AMERICANS WITH DISABILITIES ACT. The Americans with Disabilities Act (the
"ADA") generally requires that all public accommodations, including restaurants,
comply with certain federal requirements relating to physical access and use by
persons with physical disabilities. A determination that the Partnership or a
property of the Partnership is not in compliance with the ADA could result in
the imposition of fines, injunctive relief, damages or attorney's fees. The
Partnership's leases specify that compliance with the ADA is the responsibility
of the operator. While the Partnership believes that compliance with the ADA
can be accomplished without undue costs, the costs of compliance may be
substantial and may adversely impact the ability of such lessees to pay rentals
to the Partnership. In addition, a determination that the Partnership is not in
compliance with the ADA could result in the imposition of fines or an award of
damages to private litigants.

-12-

<PAGE>

UNINSURED AND UNDERINSURED LOSSES COULD RESULT IN LOSS OF VALUE OF
FACILITIES. The Partnership requires its lessees to maintain comprehensive
insurance on each of the properties, including liability, fire and extended
coverage and the Partnership is an additional named insured under such
policies. Management believes such specified coverage is of the type and
amount customarily obtained for or by an owner on real property assets. The
Partnership intends to require lessees of subsequently acquired property,
including the Acquisition Properties, to obtain similar insurance coverage.
However, there are certain types of losses, generally of a catastrophic
nature, such as earthquakes and floods, that may be uninsurable or not
economically insurable, as to which the Partnership's properties are at risk
in their particular locales. In addition, because of coverage limits and
deductibles, insurance coverage in the event of a substantial loss may not be
sufficient to pay the full current market value or current replacement cost
of the Partnership's investment. Inflation, changes in building codes and
ordinances, environmental considerations, and other factors also might make
it infeasible to use insurance proceeds to replace a facility after it has
been damaged or destroyed. Under such circumstances, the insurance proceeds
received by the Partnership might not be adequate to restore its economic
position with respect to such property.

DEPENDENCE ON KEY PERSONNEL

The Partnership believes that its continued success is dependent upon the
efforts and abilities of its key executive officers. In particular, the loss of
the services of either Robert J. Stetson or Fred H. Margolin could have a
material adverse effect on the Partnership's operations and its ability to
effectuate its growth strategy. There can be no assurance that the Partnership
would be able to recruit or hire any additional personnel with equivalent
experience and contacts. The Partnership does not own key-man life insurance on
the lives of Mr. Stetson or Mr. Margolin. See "Management."

COMPETITION

ACQUISITIONS. Numerous entities and individuals compete with the
Partnership to acquire triple net leased restaurant properties, including
entities which have substantially greater financial resources than the
Partnership. These entities and individuals may be able to accept more risk
than the Partnership is willing to undertake. Competition generally may reduce
the number of suitable investment opportunities available to the Partnership and
may increase the bargaining power of property owners seeking to sell. There can
be no assurance that the Partnership will find attractive triple net leased
properties or sale/leaseback transactions in the future.

OPERATIONS. The restaurants operated on the properties are subject to
significant competition (including competition from other national and regional
fast food restaurant chains, including Burger King restaurants (including mobile
restaurants), local restaurants, restaurants owned by BKC or affiliated
entities, national and regional restaurant chains that do not specialize in fast
food but appeal to many of the same customers, and other competitors such as
convenience stores and supermarkets that sell prepared and ready-to-eat foods.
The success of the Partnership depends, in part, on the ability of the
restaurants operated on the properties to compete successfully with such
businesses. The Partnership does not intend to engage directly in the operation
of restaurants. Rather, the Partnership will be dependent upon the experience
and ability of the lessees operating the restaurants located on the properties.
See "Business and Properties -- Strategy" and "Business and Properties --
Industry."

DEVELOPMENT RISKS AND RISK OF NEWLY-CONSTRUCTED RESTAURANT PROPERTIES

The Partnership may pursue certain restaurant property developments. New
project developments are subject to numerous risks including construction delays
or costs that may exceed budgeted or contracted amounts, new project
commencement risks such as receipt of zoning, occupancy and other required
governmental approvals and permits and the incurrence of development costs in
connection with projects that are not pursued to completion. In addition,
development involves the risk that developed properties will not produce desired
revenue levels once leased, the risk of competition for suitable development
sites from competitors which may have

-13-

<PAGE>

greater financial resources than the Partnership, and the risk that debt or
equity financing are not available on acceptable terms. There can be no
assurance that development activities might not be curtailed or, if
consummated will perform in accordance with the Partnership's expectations
and distributions to Unitholders might be adversely affected. In addition,
the Partnership may pursue the acquisition of newly-constructed restaurant
properties that do not have operating histories. For example, the Partnership
recently entered into a binding agreement to acquire five newly-constructed
restaurant properties that are leased to operators of Schlotzsky's. See
"Business and Properties -- Strategy" and "Business and Properties --
Regulation."

RELIANCE ON MANAGING GENERAL PARTNER

Unitholders will have no right or power to take part in the management of
the Partnership except through the exercise of voting rights on certain
specified matters. The Partnership will rely on the services and expertise of
the Managing General Partner for strategic business direction. See "Business
and Properties -- General," "Business and Properties -- Strategy" and
"Management."

UNITS AVAILABLE FOR FUTURE SALE

In March 1995, the Unitholders authorized the grant to the Managing General
Partner of options to purchase 400,000 Units at $15.50 per Unit. Such options
are currently fully exercisable. The sale to the public of additional Units
owned or that may be acquired by the Managing General Partner could adversely
affect the trading price of the Units. Each of the Managing General Partner,
Robert J. Stetson, Fred H. Margolin, Darrell Rolph, David Rolph, Gerald H.
Graham and Eugene G. Taper has executed a lock-up agreement under which each has
agreed not to sell any of its or his Units for a period of 180 days after the
date of the Offering.

UNIT PRICE GUARANTEES

During 1995, the Partnership acquired three properties in part for 54,167
Units. As a term of the acquisition, the Partnership agreed that, if the market
price for the Units was less than $24 per Unit on October 10, 1998, and the
Units had not been sold prior to that date for a price at least equal to $24 per
Unit, the Partnership would pay such Unitholder the difference in cash between
$24 and the average closing price for the 20 trading days preceding such date.
In connection with the acquisition of ten properties in 1996, the Partnership
issued 327,836 Units and agreed that, as a term of those acquisitions, if the
market price for the Units was less than $23 per Unit (as to 28,261 Units) on
January 23, 1999 or $24 per Unit (as to 299,575 Units) on January 25, 1998, and
the Units had not been sold prior to that date for a price at least equal to $24
per Unit, the Partnership would pay the difference between $24 and the average
closing price for the 20 trading days preceding such date by the issuance of
additional Units.

EFFECT OF MARKET INTEREST RATES ON PRICE OF UNITS

One of the factors that may influence the market price of the Units is the
annual yield from distributions made by the Partnership on the Units as compared
to yields on certain financial instruments. Thus a general increase in market
interests rates could result in higher borrowing costs to the Partnership and
result in higher yields on certain financial instruments which could adversely
affect the market price for the Units.

TAX RISKS

There are numerous federal and state income tax considerations associated
with acquiring, owning and disposing of Units. See "Federal Income Tax
Considerations" and "State and Other Taxes."

PARTNERSHIP STATUS. The availability to a Unitholder of the federal income
tax benefits of an investment in the Partnership depends in large part on the
classification of the Partnerships as partnerships for federal income tax
purposes. Based upon certain representations of the Managing

-14-

<PAGE>

General Partner, Middleberg, Riddle & Gianna, counsel to the Partnership, has
rendered its opinion that under current law and regulations, the Partnerships
will be classified as partnerships for federal income tax purposes.
However, the opinion of counsel is not binding on the IRS. Neither
Partnership satisfies requirements to obtain an advance ruling from the IRS,
and as a result, no advance ruling from the IRS as to such status has been or
will be requested. If the IRS were to challenge the federal income tax
status of the Partnerships or the amount of a Unitholder's allocable share of
the Partnership's taxable income, such challenge could result in an audit of
the Unitholder's entire tax return and in adjustments to items on that return
that are unrelated to the ownership of Units. In addition, each Unitholder
would bear the cost of any expenses incurred in connection with an
examination of his personal tax return.

Middleberg, Riddle & Gianna's opinion is based on the assumption that at
least 90% of the Partnership's gross income for each taxable year will
constitute either (i) real property rents, (ii) gain from the sale or other
disposition of real property, or (iii) other qualifying income within the
meaning of Section 7704(d) of the Internal Revenue Code of 1986, as amended (the
"Code"), and the further assumption that the Managing General Partner will act
independently of and not as an agent for the Unitholders.

If either Partnership was taxable as a corporation or treated as an
association taxable as a corporation in any taxable year, its income, gains,
losses, deductions and credits would be reflected only on its tax return rather
than being passed through to its partners, and its taxable income would be taxed
at corporate rates. In addition, its distributions to each of its partners
would be treated as dividend income (to the extent of its current and
accumulated earnings and profits), and, in the absence of earnings and profits,
as a nontaxable return of capital (to the extent of such partner's tax basis in
his interest therein), or as taxable capital gain (after such partner's tax
basis in his interest therein is reduced to zero). Furthermore, losses realized
by such Partnership would not flow through to the Unitholders. Accordingly,
treatment of either Partnership as a corporation for federal income tax purposes
would probably result in a material reduction in a Unitholder's cash flow and
after-tax return. See "Federal Income Tax Considerations -- Partnership
Status."

LIMITED DEDUCTIBILITY OF LOSSES. Losses generated by the Partnership, if
any, will be available to Unitholders that are subject to the passive activity
loss limitations of Section 469 of the Code to offset only future income
generated by the Partnership and cannot be used to offset income to a Unitholder
from other passive activities or investments or any other source. Losses from
the Partnership that are not deductible because of the passive loss limitations
may be deducted when the Unitholder disposes of all of his Units in a fully
taxable transaction with an unrelated party. Net passive income from the
Partnership may be offset only by a Unitholder's investment interest expense and
by unused Partnership losses carried over from prior years. See "Federal Income
Tax Considerations -- Tax Consequences of Unit Ownership -- Limitations on the
Deductibility of Losses."

RISK OF CHALLENGE TO PARTNERSHIP ALLOCATIONS. Certain aspects of the
allocations contained in the Partnership Agreement may be challenged
successfully by the IRS. If an allocation contained in the Partnership
Agreement is not given effect for federal income tax purposes, items of income,
gain, loss, deduction or credit will be reallocated to the Unitholders and the
Managing General Partner in accordance with their respective interests in such
items, based upon all the relevant facts and circumstances. Such reallocation
among the Unitholders and the Managing General Partner of such items of income,
gain, loss, deduction or credit allocated under the Partnership Agreement could
result in additional taxable income to the Unitholders. Such reallocation of
Partnership items also could affect the uniformity of the intrinsic federal tax
characteristics of the Units. See "Federal Income Tax Considerations --
Allocation of Partnership Income, Gain, Loss and Deduction."

SECTION 754 ELECTION. The Partnership will make the election permitted by
Section 754 of the Code for its taxable year ending December 31, 1996, which
will be effective for taxable year 1996. Such election will generally permit a
purchaser of Units (including persons who purchase Units from the Underwriters)
to adjust his share of the tax basis in the Partnership's properties pursuant to
Section 743(b) of the Code. The aggregate amount of the adjustment computed
under
-15-

<PAGE>

Section 743(b) is then allocated among the various assets of the Partnership
pursuant to Section 755 of the Code. The Section 743(b) adjustment acts in
concert with the allocations pursuant to Section 704(c) of the Code
(including the curative allocations if respected) in providing the purchaser
of Units with the equivalent of a tax basis in his share of the Partnership's
properties equal to his purchase price for his Units. See "Federal Income
Tax Considerations -- Treatment of Operations -- Section 754 Election."

POSSIBLE UNSUITABILITY OF UNITS FOR TAX-EXEMPT ENTITIES, REGULATED
INVESTMENT COMPANIES AND FOREIGN INVESTORS. An investment in Units may not
be suitable for tax-exempt entities, regulated investment companies and
foreign investors. See "Federal Income Tax Considerations--Tax Treatment of
Operations--Tax-Exempt Entities, Regulated Investment Companies and Foreign
Investors."

RISK OF TAX LIABILITY EXCEEDING CASH DISTRIBUTIONS OR PROCEEDS FROM
DISPOSITIONS OF UNITS. Because the Partnership is not a taxable entity and
incurs no federal income tax liability, a Unitholder will be required to pay
federal income tax and, in certain cases, state and local income taxes on his
allocable share of the Partnership's income, whether or not he receives cash
distributions from the Partnership. There can be no assurance that Unitholders
will receive cash distributions equal to their allocable share of taxable income
from the Partnership. Further, upon the sale or other disposition of Units, a
Unitholder may incur tax liability in excess of the amount of cash received. To
the extent that a Unitholder's tax liability exceeds the amount distributed to
him or the amount he receives on the sale or other disposition of his Units, he
will incur an out-of-pocket expense. See "Federal Income Tax
Considerations -- Tax Consequences of Unit Ownership."

DILUTION

The Partnership Agreement permits the Partnership to issue an unlimited
number of additional Units at such prices or for such consideration, including
real property, as may be determined by the Managing General Partner in its
discretion, without the approval of the Unitholders. Depending upon the amount
of consideration that the Partnership receives for any additional Units or the
rents generated by the restaurant properties purchased, such issuance could
dilute the value of the outstanding Units. The Partnership's ability to issue
additional Units for property, moreover, may be restricted by applicable
securities laws.

Under certain circumstances, the Managing General Partner may require the
Partnership to register under applicable securities laws the Managing General
Partner's transfer of Units that it owns or may acquire. The availability to
the public of additional Units because of such a registration could adversely
affect the trading price of the Units. The issuance of additional Units would
also cause the Partnership to incur additional administrative and record-keeping
costs, which may be significant.

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<PAGE>

HISTORY AND STRUCTURE OF THE PARTNERSHIP

The Partnership, formerly Burger King Investors Master L.P., was formed in
1985 by BKC and QSV Properties Inc. ("QSV"), both of which were at that time
wholly-owned subsidiaries of The Pillsbury Company ("Pillsbury"). QSV acted as
the managing general partner of the Partnership. BKC was a Special General
Partner of the Partnership until its withdrawal on November 30, 1994.

The Partnership effected an initial public offering in 1986 and the
proceeds therefrom were used to buy the Partnership's initial portfolio of
128 properties from BKC. From 1986 through March 1995, the Partnership's
limited partnership agreement limited the activities of the Partnership to
managing the original portfolio of properties.

In May 1994, an investor group led by Robert J. Stetson and Fred H.
Margolin, acquired QSV and later changed its name to U.S. Restaurant Properties,
Inc. In March 1995, the Unitholders approved certain amendments to the
Partnership's limited partnership agreement that permit the Partnership to incur
debt, to acquire additional properties, including restaurant properties not
affiliated with BKC.

The Partnership operates through U.S. Restaurant Properties Operating L.P.
(the "Operating Partnership"), formerly Burger King Operating Limited
Partnership, which holds the interests in the properties. Through its ownership
of all of the limited partner interests in the Operating Partnership, the
Partnership owns a 99.01% partnership interest in the Operating Partnership.
The Partnerships (defined below) are Delaware limited partnerships and continue
in existence until December 31, 2035, unless sooner dissolved or terminated.

U.S. Restaurant Properties Business Trust #1, a Delaware Business Trust
("Business Trust"), was organized in 1996 to obtain permanent financing for the
Partnership which would be secured by certain of the Partnership's Current
Properties and Acquisition Properties. As of the date of this Prospectus, 13
properties have been acquired by the Business Trust. See "Capitalization."

The Partnership and the Operating Partnership are generally referred to
collectively herein as the "Partnership" or the "Partnerships," and all
references herein to the Partnership when used with respect to the acquisition,
ownership and operation of the properties refer to the combined operations of
the Partnership and Operating Partnership.

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<PAGE>

The following chart sets forth the organizational structure of the
Partnership and its related entities prior to the consummation of the
acquisition of the Acquisition Properties:

------------------
Public Unitholders
------------------

- --------------------------
U.S. Restaurant
Properties, Inc.
(Managing General Partner)
DELAWARE C CORPORATION 99%
- --------------------------
------------------------------
1.0% U.S. Restaurant
Properties Master L.P.
(Delaware Limited Partnership)
------------------------------

99.01%
------------------------------
.99% U.S. Restaurant
Properties Operating L.P.
(Delaware Limited Partnership) 50%
------------------------------

------------------------ ------------------------------
Most Current Properties* 50% U.S. Restaurant Properties
Business Trust #1
(Delaware Business Trust)
OWNS 13 BURGER KING RESTAURANTS
-------------------------------

* Following the consummation of the acquisition of the Acquisition Properties
and in connection with the proposed $20 million mortgage warehouse facility
from Morgan Keegan Mortgage Company, Inc., 29 of the Acquisition Properties
and certain additional Current Properties will be transferred to the
Business Trust to secure the Morgan Keegan mortgage warehouse facility.

-18-

<PAGE>
CAPITALIZATION

The following table sets forth the historical capitalization of the
Partnership at December 31, 1995, and as adjusted on a pro forma basis to give
effect to (i) the issuance and sale of the 1,800,000 Units offered hereby and
the application of the estimated net proceeds therefrom as described under "Use
of Proceeds", (ii) the issuance of 327,836 Units in connection with the
acquisition of certain properties since December 31, 1995 and (iii) the
acquisition of the Acquisition Properties. This information should be read in
conjunction with the Consolidated Financial Statements and Pro Forma
Consolidated Financial Statements and Notes thereto appearing elsewhere in this
Prospectus.

PRO FORMA
AS ADJUSTED(1)(2)
ACTUAL (UNAUDITED)
------ ----------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Line of credit (3).................. $10,931 $36,453

Capitalized lease obligations....... 562 562

Partners' capital:
General partners'.............. 1,241 1,241
Limited partners'
4,987,003 Units outstanding(2)
6,787,003 Units, as adjusted... $58,072 $103,593

</TABLE>
- -----------------

(1) Gives effect to the sale of 1,800,000 Units in the Offering and the
application of the net proceeds therefrom of $39 million (after
deducting estimated expenses of the Offering of $200,000) and to the
purchase of the Acquisition Properties as described in the Pro Forma
Consolidated Financial Statements and Notes thereto appearing
elsewhere in this Prospectus.
(2) Excludes 400,000 Units issuable upon exercise of options held by the
Managing General Partner.
(3) Consists of a revolving credit agreement from a syndicate of banks for
up to $40 million which is secured by certain of the Partnership's
real estate including its leasehold interests. The Partnership is
currently negotiating an increase in the aggregate borrowing base
under such credit agreement to $60 million. The Partnership is also
currently negotiating a $20 million mortgage warehouse facility to be
entered into by the Business Trust and Morgan Keegan Mortgage Company,
Inc. which will be secured by certain of the Partnership's Acquisition
Properties and certain additional Current Properties. If borrowings
are incurred under the mortgage warehouse facility prior to the
consummation of the Offering, a portion of the net proceeds of the
Offering will be used to reduce the borrowings. See "Use of
Proceeds."

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<PAGE>
USE OF PROCEEDS

The Partnership estimates that the net proceeds from the Offering, will be
approximately $39 million (approximately $44.8 million if the Underwriters'
over-allotment option is exercised in full). The Partnership intends to use
such net proceeds as follows:

APPROXIMATE AMOUNT
(IN MILLIONS)
------------------
<S> <C>
Purchase of additional Properties
including certain of the Acquisition Properties... $ 32.0
Repay indebtedness ................................. 7 (1)

TOTAL.......................................... $ 39
-------
</TABLE>

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

(1) To reduce by up to $7 million the outstanding balance owing under the $20
million Morgan Keegan mortgage warehouse facility. See "Capitalization"
and "Management's Discussion and Analysis of Results of Operations and
Financial Condition -- Liquidity and Capital Resources."

PRICE RANGE OF UNITS AND DISTRIBUTION POLICY

The Units are traded on the New York Stock Exchange under the symbol "USV."
Quarterly distributions are declared for payment early in the next calendar
quarter. The high and low sales prices of the Units and the distributions
declared during the first quarter of 1996 and to date in the second quarter of
1996 and for each calendar quarter of 1995 and 1994 are set forth below. The
Offering will be completed after the record date established for payment of the
dividend with respect to the quarter ended March 31, 1996 and, therefore, the
purchasers of the Units offered hereby will not be entitled to receive such
dividend.

<TABLE>
<CAPTION>
DISTRIBUTIONS
HIGH LOW DECLARED
---- --- -------------
<S> <C> <C> <C>
1994

First Quarter.......................... 16 3/4 15 7/8 $ .39
Second Quarter......................... 17 1/4 15 3/8 .39
Third Quarter.......................... 17 1/2 16 3/4 .41
Fourth Quarter......................... 17 3/8 13 .42
------
$ 1.61
------
1995

First Quarter.......................... 16 1/2 14 1/4 $ .42
Second Quarter......................... 17 1/8 15 3/4 .42
Third Quarter.......................... 18 7/8 16 3/4 .43
Fourth Quarter......................... 20 1/4 18 .44
------
$ 1.71
------
1996

First Quarter.......................... $23 3/8 $19 1/2
Second Quarter (through April 18)...... 24 22 3/8 $
------
</TABLE>

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<PAGE>

On April 18, 1996, the last reported sales price of the Units was $22.625
as reported in NYSE Composite Transactions. At March 31, 1996, there were 1,874
Unitholders of record in the Partnership.

In July 1995, the Partnership announced its intention to repurchase up to
300,000 Units. Through March 31, 1996, the Partnership purchased 30,000 Units.
No further repurchases have been made or are contemplated.

The Partnership intends to maximize the cash available for distributions
and enhance Unitholder value by acquiring or developing additional restaurant
properties that meet the investment criteria and by participating in increased
revenue from restaurant properties through participating leases. See "Business
and Properties -- Strategy." In connection therewith, the Partnership intends
to make regular quarterly distributions to its Unitholders. Currently, on an
annualized basis the distribution is $1.76 per Unit. The Managing General
Partner has declared a distribution of $__ per Unit for the first quarter of
fiscal 1996, payable on June 15, 1996, to Unitholders of record on May 7, 1996.
Purchasers of Units offered hereby will not be entitled to receive such
quarterly distribution.

Management intends to distribute from 75 to 95% of the estimated cash
available for distribution within the general objective of continued annual
growth in the distributions. The Partnership expects to maintain such
distribution rate for the foreseeable future based upon actual results of
operations, financial condition of the Partnership, capital expenditure
requirements, or other factors management deems relevant. However, such
distribution rate may vary depending on future market conditions, the
Partnership's financial condition and the Managing General Partner's perception
of operating cash needed by the Partnership to fund operations.

-21-

<PAGE>

SELECTED HISTORICAL AND PRO FORMA
FINANCIAL INFORMATION
AND OTHER DATA
(Dollars and Units in thousands, except per Unit amounts)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------------------------
(IN THOUSANDS)
PRO FORMA
(UNAUDITED) (2)
---------------
1991 1992 1993 1994 1995 1995
------- ------- ------- ------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF INCOME:
Total revenues...................... $ 8,750 $ 8,489 $ 8,332 $ 8,793 $ 9,780 $ 21,496
Expenses:
Ground rent......................... 1,177 1,187 1,295 1,348 1,405 2,173
Depreciation and amortization....... 1,499 1,473 1,383 1,361 1,541 4,654
Taxes, general and administrative... 1,062 1,097 1,008 1,144 1,419 2,249
Interest expense (income), net...... 36 60 44 (4) 192 2,686
Provision for write down or
disposition of properties......... 943 2,186 74 11 - -
------- ------- ------- ------- -------- --------
Total expenses...................... 4,717 6,003 3,804 3,860 4,557 11,762
------- ------- ------- ------- -------- --------
Net income.......................... 4,033 2,486 4,528 4,933 5,223 9,734
------- ------- ------- ------- -------- --------
------- ------- ------- ------- -------- --------
Net income allocable to unitholders. $ 3,952 $ 2,436 $ 4,437 $ 4,834 $ 5,119 $ 9,541
------- ------- ------- ------- -------- --------
------- ------- ------- ------- -------- --------
Weighted average number of Units
outstanding........................ 4,635 4,635 4,635 4,635 4,638 6,808
------- ------- ------- ------- -------- --------
------- ------- ------- ------- -------- --------
Net income per unit................. $ 0.85 $ 0.53 $ 0.96 $ 1.04 $ 1.10 $ 1.40
------- ------- ------- ------- -------- --------
------- ------- ------- ------- -------- --------
Cash distributions declared per
Unit applicable to respective
year............................... $ 1.58 $ 1.54 $ 1.48* $ 1.61 $ 1.71
------- ------- ------- ------- --------
------- ------- ------- ------- --------

CASH FLOW DATA:

Cash flows from operating
activities......................... $ 7,725 $ 7,366 $ 7,475 $ 6,990 $ 9,287 $ 16,719
Cash flows from (used in) investing
activities......................... $ - $ - $ 1,130 $ - $(12,038) $(76,485)
Cash flows from (used in) financing
activity........................... $(7,732) $(7,542) $(8,302) $(7,569) $ 2,077 $ 63,522

OTHER DATA:

Funds generated from
operations (1)..................... $ 7,541 $ 7,192 $ 7,281 $ 7,786 $ 8,418 $ 15,504
</TABLE>
____________________
* Does not include special capital transaction distributions of $.24 per Unit.

-22-

<PAGE>
<TABLE>
<CAPTION>
DECEMBER 31, 1995
-------------------------------------------------------------------
1995
1995 PRO FORMA
1991 1992 1993 1994 HISTORICAL AS ADJUSTED (2)
------- ------- ------- ------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Net investment in direct
financing leases $27,383 $24,760 $22,910 $21,237 $19,371 $19,371
Land 24,388 23,816 23,414 23,414 27,493 55,953
Buildings and leasehold
improvements, net 1,797 1,919 1,734 1,548 6,257 41,020
Equipment - - - - 224 3,692
Intangibles, net 18,920 17,123 15,503 14,317 14,804 20,948
Total assets 74,170 69,087 65,322 62,889 71,483 142,526
Line of credit - - - - 10,931 36,453
Capitalized lease obligations 1,302 1,138 966 775 563 563
General partners' capital 1,527 1,429 1,357 1,309 1,241 1,241
Limited partners' capital 71,082 66,287 62,757 60,361 58,072 103,593
</TABLE>
____________________
(1) Industry analysts generally consider funds generated from operations to be
an appropriate measure of performance. Funds generated from operations is
calculated as the sum of taxable income plus charges for depreciation and
amortization. Funds generated from operations does not represent cash
generated from operating activities in accordance with generally accepted
accounting principles. Funds from operations is not necessarily indicative
of cash available to fund cash needs and cash distributions. Funds
generated from operations should not be considered as an alternative to net
income (determined in accordance with generally accepted accounting
principles) as an indication of the Partnership's performance or as an
alternative to cash flow (determined in accordance with generally accepted
accounting principles) as a measure of liquidity.
(2) The unaudited pro forma statement of income information for the year
ended December 31, 1995 is presented as if the following had occurred
as of January 1, 1995: (a) the purchase of 16 properties acquired on
various dates from March 1995 through December 1995; (b) the purchase of 27
properties completed since January 1, 1996 and the acquisition of 105
properties under contract with the assumption of related ground leases (all
of which are treated as operating leases); (c) the issuance and sale by the
Partnership in this Offering of 1,800,000 Units and the application of the
net proceeds therefrom; and (d) additional borrowings to purchase the
Acquisition Properties.

The December 31, 1995 unaudited pro forma balance sheet data represents
the Partnership's December 31, 1995 balance sheet adjusted on a pro forma
basis to reflect as of December 31, 1995: (a) the purchase of 27 properties
since January 1, 1996 and the acquisition of 105 properties under binding
contracts with the assumption of related ground leases (all of which are
treated as operating leases); (b) the issuance of 327,836 Units in connection
with the purchase of 27 properties since January 1, 1996; (c) the issuance
and sale by the Partnership in this Offering of 1,800,000 Units and the
application of the net proceeds therefrom; and (d) additional borrowings to
purchase the Acquisition Properties.

-23-

<PAGE>

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

OVERVIEW

The Partnership derives its revenue from the leasing of the
Partnership's restaurant properties to operators on a "triple net" basis,
which is a lease that imposes on the tenant all obligations for real property
taxes and assessments, repairs and maintenance, insurance and the duty to
restore the property in case of casualty or condemnation. To the extent the
landlord retains any of these responsibilities, the lease becomes less than
"triple net."

The Partnership's leases provide for a base rent plus a percentage of
the restaurant's sales in excess of a threshold amount. Total restaurant
sales, the primary determinant of the Partnership's revenues, are a function
of the number of restaurants in operation and their performance. Sales at
individual restaurants are influenced by local market conditions, by the
efforts of specific restaurant operators, by marketing, by new product
program support by the franchisor, and by the general state of the economy.

Some of the leases of the Partnership's properties are treated as direct
financing leases for purposes of generally accepted accounting principles
("GAAP"); however, the leases do not grant the lessees thereunder the right
to acquire the properties at the expiration of such leases. As a result, the
lease is reflected as an asset on the Partnership's balance sheet as net
investment in direct financing leases, and the underlying depreciable real
property is not considered an asset of the Partnership for GAAP purposes.
Accordingly, the related depreciation is not reflected on the Partnership's
income statement; instead, there is a charge for amortization of the
investment in direct financing leases. For tax accounting purposes,
however, the depreciable real property is treated as being owned by the
Partnership (and not a direct financing lease) and the related charge for
depreciation is reflected on the Partnership's income statement. Primarily
due to this treatment, GAAP revenue and net income differ from gross rental
receipts and taxable income. The reconciliation between the GAAP and tax
treatment of these leases is described in Note 9 to the Partnership's audited
Consolidated Financial Statements. Management believes that most if not all
acquisitions made by the Partnership since March 1995, as well as all
acquisitions, future acquisitions and related leases will qualify as
operating leases according to GAAP and, therefore, not recorded as a net
investment in direct financing lease.

The Partnership believes that funds generated from operations is the
appropriate measure of the Partnership's funds available for distribution to
Unitholders. The Partnership calculates funds generated from operations by
taking its net income, as determined for tax purposes, and adding back
charges for depreciation and amortization as determined for tax purposes.
This calculation differs from "Funds From Operations" calculated in
accordance with the pronouncements of the National Association of Real Estate
Investment Trusts ("NAREIT"), which bases its calculation on net income
determined in accordance with GAAP. Funds generated from operations should
not be considered as a substitute for net income, as an indication of the
Partnership's performance, or as a substitute for cash flow as a measure of
its liquidity.

The following discussion should be read in conjunction with "Selected
Financial Information" and all of the financial statements and notes thereto
included elsewhere in this Prospectus.

COMPARISON OF YEAR ENDED DECEMBER 31, 1995 TO YEAR ENDED DECEMBER 31, 1994

The number of restaurants owned at December 31, 1995 was 139 compared to
123 at December 31, 1994, a 13% increase. Total sales in restaurants located
on Partnership real estate in 1995 was $135,297,000 compared to $122,315,000
reported in 1994, a 10.6% increase, which was attributable to the increase in
the number of restaurants in the portfolio and to an increase in the average
sales per store.

The Partnership's total revenues in 1995 increased $987,000 or 11.2% to
$9,780,000 compared to $8,793,000 recorded in 1994. Rental revenues from
properties owned throughout 1994 and 1995 increased 6.4% in 1995 over 1994.
The remaining increase in revenues in 1995 over 1994 was attributable to the
16 properties acquired on various dates during the last half of 1995.

-24-

<PAGE>

Expenses excluding the provision for write down on properties for 1995
increased $708,000 or 18.4% to $4,557,000 compared to $3,849,000 for 1994.
This increase in expenses was primarily due to the increase in the number of
restaurant sites owned by the Partnership and related financing costs.

There were no write downs of assets and intangible values related to
closed properties during 1995 compared to a write down of $11,000 in 1994
which was related to the one closed site.

Net income allocable to Unitholders in 1995 was $5,119,000 or $1.10 per
Unit, up 5.9% or $0.06 per Unit from $4,933,000 or $1.04 per Unit in 1994.
This was attributable to the increase in total revenues and management's
ability to limit expenses.

COMPARISON OF YEAR ENDED DECEMBER 31, 1994 TO YEAR ENDED DECEMBER 31, 1993

The number of restaurants owned at December 31, 1994 and 1993 was 123.
Total sales in restaurants located on Partnership real estate in 1994 was
$122,315,000 compared to $112,880,000 reported in 1993, an 8.4% increase,
which was attributable to an increase in the average sales per store.

The Partnership's total revenues in 1994 increased $461,000 or 5.5% to
$8,793,000 compared to $8,332,000 recorded in 1993. The Partnership owned
and leased 123 sites throughout 1993 and 1994.

Expenses excluding the provision for write down on properties for 1995
increased $119,000 or 3.2% to $3,849,000 compared to $3,730,000 for 1993.

Net income allocable to Unitholders in 1994 was $4,933,000 or $1.04 per
Unit, up 8.3% or $0.08 per Unit from $4,437,000 or $0.96 per Unit in 1993.
This was attributable to increased total revenues.

LIQUIDITY AND CAPITAL RESOURCES

The Partnership's principal source of cash to meet its cash
requirements, including distributions to Unitholders, is rental revenues
generated by the Partnership's properties. Cash generated by the portfolio
is held in temporary investment securities pending quarterly distributions to
the Unitholders in the form of quarterly dividends. As discussed below, this
cash also may be used on an interim basis to fund property acquisitions.
Currently, the Partnership's primary source of funding for acquisitions is
its existing revolving line of credit. The Partnership anticipates meeting
its future long-term capital needs through the incurrence of additional debt
or the issuance of additional Units, along with cash generated from internal
operations.

Upon consummation of the Offering and assuming application of the net
proceeds therefrom, the Partnership will have $36 million outstanding under
its $40 million line of credit with a syndicate of banks. This line of
credit is secured by certain of the Partnership's real estate including its
leasehold interests. The Partnership may request advances under this line of
credit to finance the acquisition of restaurant properties, to repair and
update restaurant properties and for working capital. The banks will also
issue standby letters of credit for the account of the Partnership under this
loan facility. This credit agreement expires on June 27, 1998 and provides
that borrowings thereunder bear interest at 180 basis points over the London
Interbank Offered Rate (LIBOR). Interest expense for 1995 was $199,000. The
Partnership is currently negotiating an increase in the aggregate borrowing
base under such credit agreement to $60 million. The Partnership is also
currently negotiating a $20 million mortgage warehouse facility from Morgan
Keegan Mortgage Company, Inc. which will be secured by certain of the
Partnership's Acquisition Properties and certain of the Current Properties.

The Managing General Partner has made available to the Partnership an
unsecured, interest-free, revolving line of credit in the principal amount of
$500,000 to provide the Partnership with necessary working capital to
minimize or avoid seasonal fluctuation in the amount of quarterly cash
distributions. The Managing General Partner is not required, however, to make
financing available under this line of credit before the Partnership obtains
other financing, whether for acquisitions, reinvestment, working capital or
otherwise. The Managing General Partner may make other loans to the
Partnership. Each loan must bear interest at a rate not to exceed the Morgan
Guaranty Trust Company of New York prime rate

-25-

<PAGE>

plus 1% or the highest lawful rate (whichever is less), and in no event may
any such loan be made on terms and conditions less favorable to the
Partnership that it could obtain from unaffiliated third parties or banks for
the same purpose. No loans were made or outstanding at any time during each
of the three years ended December 31, 1995 under either of the above
arrangements.

The Partnership paid distributions for 1995 of $1.69 per Unit.
Management intends to distribute from 75% to 95% of the estimated cash
available for distribution within the general objective of continued annual
growth in the distributions. The Partnership expects to maintain such
distribution rate for the foreseeable future based upon actual results of
operations, the financial condition of the Partnership, capital or other
factors Management deems relevant. During 1995, the Partnership distributed
an aggregate of $8,002,000 to its partners.

The Managing General Partner does not intend to cause the Partnership to
use otherwise distributable operating cash from its current restaurant
properties to finance the Partnership's expanded business strategy.
Moreover, the Managing General Partner believes that the best opportunity for
significant growth in cash distributions under current market conditions is
presented by the purchase of additional restaurant properties, although no
assurance exists that the Partnership would be able to purchase them as
contemplated by its expanded business strategy. Such policies assume and are
based on continuation of current market conditions and assumptions which, if
varied, could significantly affect actual results. The Partnership may also
retain otherwise distributable operating cash to the extent the Managing
General Partner deems appropriate.

INFLATION

The Partnership's leases are generally subject to adjustments for
increases in the Consumer Price Index, which reduces the risk to the
Partnership of the adverse effects of inflation. Because triple net leases
also require the restaurant operators to pay for some or all operating
expenses, property taxes, property repair and maintenance costs and
insurance, some or all of the inflationary impact of these expenses will be
borne by the restaurant operators and not by the Partnership.

Operators of restaurants, in general, possess the ability to adjust menu
prices quickly. However, competitive pressures may limit a restaurant
operator's ability to raise prices in the face of inflation.

SEASONALITY

Fast-foot restaurant operations historically have been seasonal in
nature, reflecting higher unit sales during the second and third quarters.
This seasonality can be expected to cause fluctuations in the Partnership's
quarterly unit revenue to the extent it receives percentage rent.

-26-

<PAGE>
BUSINESS AND PROPERTIES

GENERAL

The Partnership is one of the largest publicly-owned entities in the
United States dedicated to acquiring, owning and managing restaurant
properties. At April 18, 1996, the Partnership's portfolio consisted of 166
restaurant properties in 37 states (the "Current Properties"), approximately
99% of which were leased. From the Partnership's initial public offering in
1986 until early 1995, the Partnership's properties were limited to
approximately 125 restaurant properties, all of which were leased on a triple
net basis to operators of Burger King restaurants. In May, 1994, an investor
group led by Robert J. Stetson and Fred H. Margolin acquired the Managing
General Partner. In March 1995, certain amendments to the Partnership
Agreement were proposed by the new management and approved by the
Unitholders, which authorized the Partnership to incur debt and acquire
additional restaurant properties not affiliated with BKC. Since adoption of
the amendments, the Partnership has acquired 43 properties for an aggregate
purchase price of approximately $28 million including 27 properties acquired
since January 1, 1996, and has entered into binding agreements to acquire 105
additional properties (the "Acquisition Properties") for an aggregate
purchase price of $55 million. Upon acquisition of the Acquisition
Properties, the Partnership's portfolio will consist of an aggregate of 271
properties in 40 states consisting of 171 Burger King restaurants, 40 Dairy
Queen restaurants, 27 Hardee's restaurants, two Chili's restaurants and 31
restaurants operating under other brand names.

INDUSTRY

The restaurant industry has grown significantly over the past 20 years as
a result of population growth, the influence of the baby boom generation, the
growth of two-family incomes and the growth in consumers' disposable income.
The total food service industry sales during 1995 have been estimated at
approximately $277 billion. The fast food segment, which offers value
pricing and convenience, is the largest segment in the restaurant industry
with projected 1996 sales of $100 billion. In 1995, industry sources
estimate that fast food restaurants accounted for 71% of total restaurant
traffic, 52% of chain restaurant locations and 47% of consumers' restaurant
dollars spent.

The growth of the fast food segments has exceeded that of the entire
restaurant industry for over 20 years. According to industry sources, fast
food restaurant sales have grown at a 6.9% compound annual growth rate with
1995 sales up 7.1% over 1994 levels. Fast food restaurant sales are
anticipated to grow 6.7% in 1996 to over $100 billion. Additionally,
industry sources suggest that in the fast food industry, operators are
increasingly moving toward leasing rather than owning their restaurants.
Currently, approximately two-thirds of fast food restaurant operators lease
their restaurant properties. Leasing enables a restaurant operator to
reallocate funds to the improvement of current restaurants, the acquisition
of additional restaurants or other uses.

-27-

<PAGE>

Management believes that in addition to the Partnership, there is only
one other publicly-owned entity dedicated to acquiring, owning and managing
chain restaurant properties. Collectively, these two publicly-owned entities
own less than 5% of the total number of such restaurants, with a majority of
such other restaurants owned by private restaurant operators and real estate
investors and that this fragmented market provides the Partnership with
substantial acquisition opportunities. Management also believes that the
inability of most small restaurant owners to obtain funds with which to
compete for acquisitions as timely and inexpensively as the Partnership
provides the Partnership with a competitive advantage when seeking to acquire
a restaurant property.

In addition to the Partnership's large number of leases to operators of
Burger King restaurants, the Partnership also leases multiple restaurant
properties to operators of Pizza Hut, Taco Bell, Hardee's and Dairy Queen
brand names, all of which, according to industry sources, rank in the top 15
with respect to restaurant sales in 1995. Based on publicly-available
information, Burger King is the second largest fast food restaurant system in
the world in terms of gross revenues and number of restaurants. According to
publicly-available information, there are approximately 6,500 Burger King
restaurant units in the United States. With respect to the Burger King
restaurants in the Partnership's portfolio, for the year-ended December 31,
1995, same-store sales increased 7% over the prior year.

STRATEGY

Since the adoption of the amendments to the Partnership Agreement in
March 1995, the Partnership's principal business objective has been to expand
and diversify the Partnership's portfolio through frequent acquisitions of
small to medium-sized portfolios of fast food and casual dining restaurant
properties. The Partnership intends to achieve growth and diversification
while maintaining low portfolio investment risk through adherence to proven
acquisition criteria with a conservative capital structure. The Partnership
has and intends to continue to expand its portfolio by acquiring triple net
leased properties and structuring sale/leaseback transactions consistent with
the following strategies:

- INVEST IN MAJOR RESTAURANT BRANDS. The Partnership intends to
continue to acquire properties operated as major national and regional
restaurant brands, such as Burger King, Dairy Queen, Hardee's and
Chili's by competent, financially stable franchisees. Management
believes that successful restaurants operated under these brands offer
stable, consistent income to the Partnership with minimal risk of
default or non-renewal of the lease and franchise agreement. As a
result of its concentration on major national and regional brands, in
the last three fiscal years, of all rental revenues due, more than
99.5% has been collected.

- ACQUIRE EXISTING RESTAURANTS. The Partnership's strategy is to focus
primarily on the acquisition of existing fast food and casual dining
chain restaurants that have a history of profitable operations with a
remaining term on the current lease of at least five years. Assuming
acquisition of the Acquisition Properties, the average remaining lease
terms for the properties included within the Partnership's portfolio
would be 9.1 years. Management believes that acquiring existing
restaurants provides a higher risk-adjusted rate of return to the
Partnership than acquiring newly-constructed restaurants.

- CONSOLIDATE SMALLER PORTFOLIOS. Management believes that pursuing
multiple transactions involving smaller portfolios of restaurant
properties result in a more attractive valuation because the size of
such transactions generally does not attract large institutional
property owners and smaller buyers typically are not well capitalized
and may be unable to complete a transaction. Larger transactions
involving multiple properties generally attract several institutional
bidders, often resulting in a higher purchase price and lower
investment

-28-

<PAGE>

returns to the purchaser. In certain circumstances, however, the
Partnership has identified, evaluated and pursued portfolios valued at
up to $50 million that present attractive risk return ratios and has a
transaction of approximately $21 million under contract.

- MAINTAIN CONSERVATIVE CAPITAL STRUCTURE. The Partnership intends to
maintain a ratio of total indebtedness of 50% or less to the greater
of (i) the market value of all issued and outstanding Units plus total
outstanding indebtedness ("Total Market Capitalization") or (ii) the
original cost of all of the Partnership's properties as of the date of
such calculation. The Partnership's ratio of total indebtedness to
Total Market Capitalization was approximately 16% at March 31, 1996.
See "Capitalization" included elsewhere herein. The Partnership,
however, may from time to time reevaluate its borrowing policies in
light of then-current economic conditions, relative costs of debt and
equity capital, market values of properties, growth and acquisition
opportunities and other factors.

INVESTMENT CRITERIA

The Partnership has recently acquired 43 restaurant properties and intends
to acquire additional restaurant properties of national and regional fast food
or casual dining restaurant chains, which may include Burger King, that satisfy
some or all of the following criteria:

- The contractually fixed rent on such restaurant properties has
produced cash flow that, after deducting management fees and
interest and debt amortization or Unit issuance, would improve
the Partnership's existing cash flow per Unit.

- The respective restaurants' annual sales would be in the highest
70% of the restaurants in that chain.

- The respective restaurants would have historically generated at
least the normal profit for restaurants in that chain and be
projected to continue to generate a profit even if their sales
decreased by 20%.

- The restaurant properties would be located where the average per
capita income was stable or increasing.

- The respective restaurants' franchisees would possess significant
net worth and preferably operate multiple restaurants.

- The restaurant properties would be in good repair and operating
condition.

There can be no assurance that the Partnership will be able to identify
restaurant properties that satisfy all or a significant number of such
criteria, or that if identified, the Partnership will be able to purchase
such restaurant properties.

The Partnership believes that the Partnership can generate improved
operating results as a result of the acquisition of additional restaurant
properties and by making loans to tenants for renovation and improvement of
the Current Properties. The Partnership also believes that expansion and
diversification of the Partnership's restaurant property portfolio to include
more balance among restaurant brands decreases the Partnership's dependence
on one chain.

The Partnership intends to finance the acquisition of additional
properties principally by utilizing existing borrowing capacity, on a
recourse or non-recourse basis, through the issuance of additional Units, or
utilizing the Partnership's $40 million revolving credit agreement with a
syndicate of banks. The credit agreement expires June 27, 1998 and provides
that borrowings bear interest at 180 basis points over the London Interbank
Offered Rate (LIBOR). The borrowings are secured by certain of the
Partnership's interests in the real estate and leases owned by the
Partnership. At April 18, 1996, approximately $18.7 million remained
available under the credit agreement. The Partnership also intends to enter
into a $20 million mortgage warehouse facility with Morgan Keegan Mortgage
Company, Inc. and utilize the

-29-

<PAGE>

borrowings thereunder to pursue its acquisition strategy. The Partnership
believes that seller financing will not be available for the purchase of
additional restaurant properties.

THE PROPERTIES

At April 18, 1996, the Current Properties consisted of 166 properties,
99% of which were leased by operators of fast food and casual dining
restaurants. In addition, at such date the Acquisition Properties (totaling
105) were subject to binding agreements of acquisition. Set forth below are
summary descriptions of the Current Properties and Acquisition Properties.

BURGER KING PROPERTIES. At April 18, 1996, the Partnership owned 142
properties and has entered into agreements to acquire 29 additional
properties operated as Burger King restaurants. The Burger King restaurant
properties that are part of the Current Properties are operated by more than
80 operators, the largest of which operates five Burger King restaurants.

HARDEE'S PROPERTIES. At April 18, 1996, the Partnership owned two
properties in Georgia and has entered into agreements to acquire 25
additional properties in Georgia and South Carolina operated as Hardee's
restaurants. The Hardee's restaurant properties that are part of the Current
Properties are operated by two operators, the larger of which operates 23
Hardee's restaurants.

DAIRY QUEEN PROPERTIES. At April 18, 1996, the Partnership owned three
properties and has entered into an agreement to acquire 37 additional
properties operated as Dairy Queen restaurants, all in Texas. The Dairy
Queen restaurant properties that are part of the Current Properties are
operated by one operator.

CHILI'S PROPERTIES. At April 18, 1996, the Partnership owned two
properties in Texas which are operated by a single operator.

BURGER KING-Registered Trademark- IS A REGISTERED TRADEMARK OF BURGER
KING BRANDS, INC., SCHLOTZSKY'S-Registered Trademark- IS A REGISTERED
TRADEMARK OF SCHLOTZSKY'S, INC., DAIRY QUEEN-Registered Trademark- IS A
REGISTERED TRADEMARK OF AMERICAN DAIRY QUEEN CORPORATION, PIZZA
HUT-Registered Trademark- IS A REGISTERED TRADEMARK OF PIZZA HUT, INC.,
HARDEE'S-Registered Trademark- IS A REGISTERED TRADEMARK OF HARDEE'S FOOD
SYSTEMS, INC., AND CHILI'S-Registered Trademark- IS A REGISTERED TRADEMARK OF
BRINKER RESTAURANT CORPORATION, KFC-Registered Trademark- IS A REGISTERED
TRADEMARK OF KFC CORPORATION AND TACO BELL-Registered Trademark- IS A
REGISTERED TRADEMARK OF TACO BELL CORP. THE FOREGOING ENTITIES HAVE NOT
ENDORSED OR APPROVED THE PARTNERSHIP OR THE OFFERING MADE HEREBY.

-30-

<PAGE>

The Partnership's Current Properties consist of 166 properties. The table
below sets forth, as of March 31, 1996, the number of properties in each state
and the franchise affiliation of such properties assuming the consummation of
the Acquisition Properties.

<TABLE>
<CAPTION>
TOTAL BURGER DAIRY
STATE PROPERTIES KING QUEEN HARDEE'S PIZZA HUT CHILI'S OTHER
- ----- ---------- ------ ----- -------- --------- ------- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Alabama 1 1
Arizona 15 13 1 1
Arkansas 6 6
California 18 17 1
Colorado 3 3
Connecticut 3 3
Delaware 1 1
Florida 9 7 2
Georgia 34 8 25 1
Illinois 1 1
Indiana 3 2 1
Iowa 2 2
Kansas 2 2
Kentucky 3 3
Louisiana 4 4
Maine 4 4
Maryland 3 2 1
Massachusetts 3 3
Michigan 4 4
Minnesota 1 1
Mississippi 2 2
Missouri 3 3
Montana 1 1
Nebraska 1 1
Nevada 1 1
New Jersey 6 6
New Mexico 1 1
New York 4 4
North Carolina 7 6 1
Ohio 7 7
Oklahoma 5 3 1 1
Oregon 5 5
Pennsylvania 9 9
South Carolina 10 7 2 1
Tennessee 5 3 2
Texas 68 13 40 1 2 12
Vermont 1 1
Washington 8 8
West Virginia 2 2
Wisconsin 5 5
TOTAL 271(1) 171 40 27 11 2 20
% TOTAL 100 63% 15% 10% 4% 1% 7%
</TABLE>
____________________

(1) Includes one vacant restaurant property.

-31-

<PAGE>

LEASES WITH RESTAURANT OPERATORS

The Partnership's strategy is to acquire operating restaurant properties
rather than developing new properties. Typically, the Partnership acquires a
property that has been operated as a fast food or casual dining restaurant
and which is subject to a lease with a remaining term of five-20 years and a
co-terminous franchise agreement. Management believes that this strategy
reduces the Partnership's financial risk since the restaurant operated on
such property has a proven operating record which mitigates the risk of
default or non-renewal under the lease. At April 18, 1996, the Partnership's
Current Properties have remaining terms ranging from one to 28 years and an
average remaining term of 7.3 years (9.1 years if the Acquisition Properties
are included).

All of the Partnership's existing leases are "triple net," which means
that the tenant is obligated to pay all costs and expenses, including all
real property taxes and assessments, repairs and maintenance and insurance.
The Partnership's leases provide for a base rent plus a percentage of the
restaurant's sales in excess of a threshold amount. The triple net lease
structure is designed to provide the Partnership with a consistent stream of
income without the obligation to reinvest in the property. For the year
ended December 31, 1995, base rental revenues and percentage rental revenues
represented 66% and 34%, respectively of total gross rental revenues.
Management intends to renew and restructure leases to increase the percentage
of total rental revenues derived from base rental revenues and, consequently
decrease the percentage of total revenues from percentage rental revenues.
In addition, in order to encourage the early renewal of existing leases, the
Partnership has offered certain lessees remodeling grants of up to $30,000.
To date, the Partnership has renewed 14 leases early under this program.
Management considers the grants to be prudent given the increased sales
resulting at the remodeled restaurants and the lower costs incurred because
of the early lease renewals.

The Partnership generally acquires properties from third party lessors or
from operators in a sale/leaseback transaction in which the operator sells
the property to the Partnership and enters into a long-term lease (typically
20 years). A sale/leaseback transaction is attractive to the operator
because it allows the operator to realize the value of the real estate while
retaining occupancy for a long term. A sale/leaseback transaction may also
provide specific accounting, earnings and market value benefits to the
selling operator. For example, the lease on the property may be structured by
the tenant as an off-balance sheet operating lease, consistent with Financial
Accounting Standards Board rules, which may increase the operator's earnings,
net worth and borrowing capacity.

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<PAGE>

LEASE EXPIRATION SCHEDULE

<TABLE>
<CAPTION>
NUMBER OF % OF NET RENTAL % OF
YEAR LEASES EXPIRING TOTAL INCOME (1) TOTAL
- ---- --------------- ----- ---------- -----
<S> <C> <C> <C> <C>
1996 0 0 $ 0 0
1997 7 3 $ 321 2
1998 11 4 $ 823 4
1999 23 8 $ 1,794 8
2000 38 14 $ 2,363 12
2001-05 89 33 $ 7,135 35
2006-10 11 4 $ 919 5
2011-15 11 4 $ 1,128 6
2016-25 81 30 $ 5,863 28
--- ----- ------- ---
271(2) 100.0% $20,348 100%
</TABLE>
____________________
(1) Net Rental Income equals rental receipts less ground rents.

(2) Includes one vacant restaurant property.

OWNERSHIP OF REAL ESTATE INTERESTS

The Partnership's Current Properties and Acquisition Properties consist
of 190 properties where the Partnership owns both the land and the restaurant
building in fee simple (the "Fee Properties") and 81 Properties where the
Partnership leases the land, the building or both (the "Leasehold
Properties") under leases from third-party lessors.

Of the 81 Leasehold Properties, 13 are Primary Leases, whereby the
Partnership leases from a third party both the underlying land and the
restaurant building and the other improvements thereon. Under the terms of
the remaining 68 Leasehold Properties (the "Ground Leases"), the Partnership
leases the underlying land from a third party and owns the restaurant
building and the other improvements constructed thereon. In any event, upon
expiration or termination of a Primary Lease or Ground Lease, the owner of
the underlying land generally will become the owner of the building and all
improvements thereon. As of December 31, 1995, the remaining terms of the
Primary Leases and Ground Leases ranged from one to 28. With renewal options
exercised, the remaining terms of the Primary Leases and Ground Leases ranged
from approximately five to 35 years and the average remaining term was 21
years.

The terms and conditions of each Primary Lease and each Ground Lease vary
substantially. However, each Primary Lease and each Ground Lease have
certain provisions in common including that (i) the initial term is 20 years
or less, (ii) the rentals payable are stated amounts that may escalate over
the terms of the Primary Leases and Ground Leases (and/or during renewal
terms) but normally (although not always) are not based upon a percentage of
sales of the restaurants thereon, and (iii) the Partnership is required to
pay all taxes and operating, maintenance, and insurance expenses for the
Leasehold Properties. In addition, under substantially all of the Leases,
the Partnership may renew the term one or more times at its option (although
the provisions governing any such renewal vary significantly in that, for
example, some renewal options are at a fixed rental amount, while others are
at fair rental value at the time of renewal). Several Primary Leases and
Ground Leases also give the owner the right to require

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<PAGE>

the Partnership, upon the termination or expiration thereof, to remove all
improvements situated on the property.

Although the Partnership, as lessee under each Primary Lease and Ground
Lease, generally has the right to assign or sublet all of its rights and
interests thereunder without obtaining the landlord's consent, the
Partnership is not permitted to assign or sublet any of its rights or
interests under 22 Primary Leases and Ground Leases without obtaining the
landlord's consent or satisfying certain other conditions. In addition,
approximately 20% of the Primary Leases and Ground Leases require the
Partnership to use such Leasehold Properties only for the purpose of
operating a Burger King restaurant or another type of restaurant thereon. In
any event, no transfer will release the Partnership from any of its
obligations under the Primary Lease or Ground Lease, including the obligation
to pay rent.

Of the Current Properties 118 are leased or subleased to a BKC franchisee
under a Lease/Sublease, pursuant to which the franchisee is required to
operate a Burger King restaurant thereon in accordance with the lessee's
Franchise Agreement and to make no other use thereof. Upon its acquisition
of such properties, the Partnership assumed the rights and obligations of BKC
under the Leases/Subleases. Five Properties are leased to BKC on
substantially the same terms and conditions as those contained in the
Lease/Sublease with the prior lessees.

Although the provisions of BKC's standard form of lease to franchisees
have changed over time, the material provisions of the Lease/Subleases
generally are substantially similar to BKC's current standard form of lease
(except to the extent BKC has granted rent reductions or deferrals or made
other lease modifications in order to alleviate or lessen the impact of
business or other economic problems that a franchisee may have encountered).
The Leases/Subleases generally provide for a term of 20 years from the date
of opening of the Restaurant and do not grant the lessee any renewal options
or purchase options. The Partnership, however, is required under the
Partnership Agreement to renew a Lease/Sublease if BKC renews or extends the
lessee's Franchisee Agreement. The Partnership believes BKC's policy
generally is to renew a Franchise Agreement if BKC determines, in its sole
discretion, that economic and other factors justify renewal or extension and
if the franchisee has complied with all obligations under the Franchise
Agreement. As of December 31, 1995, the remaining terms of all the
Leases/Subleases ranged from approximately one to 28 years, and the average
remaining term was 7.3 years (9.1 years if the Acquisition Properties are
included).

USE AND OTHER RESTRICTIONS ON THE OPERATION AND TRANSFER OF BURGER KING
RESTAURANT PROPERTIES

The Partnership was originally formed for the purpose of acquiring all of
BKC's interests in the original portfolio and leasing or subleasing them to
BKC franchisees under the Leases/Subleases. Accordingly, the Partnership
Agreement contains provisions that state, except as expressly permitted by
BKC, that the Partnership may not use such properties for any purpose other
than to operate a Burger King restaurant. In furtherance thereof, the
Partnership Agreement (i) requires the Partnership, in certain specified
circumstances, to renew or extend a Lease/Sublease and enter into a new lease
with another franchisee of BKC, to approve an assignment of a Lease/Sublease,
to permit BKC to assume a Lease/Sublease at any time, and to renew a Primary
Lease, and (ii) imposes certain restrictions and limitations upon the
Partnership's ability to sell, lease, or otherwise transfer any interest in
such properties. The Partnership Agreement requires the Partnership to
provide BKC notice of default under a Lease/Sublease and an opportunity to
cure such defaults prior to taking any remedial action. The Partnership
Agreement also requires the Partnership under certain circumstances to
provide tenants with assistance with remodeling costs. Such terms with
respect to such properties imposed on the Partnership by the Partnership
Agreement may be less favorable than those imposed upon other lessors of
Burger King restaurants. BKC has advised the Partnership that it intends to
waive or not impose certain of the restrictive provisions contained in the
Partnership Agreement and the Partnership is discussing BKC's position with
BKC to clarify such provisions.

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<PAGE>

RESTAURANT ALTERATIONS AND RECONSTRUCTION

It is important that the Current Properties be improved, expanded,
rebuilt, or replaced from time to time. In addition to normal maintenance
and repair requirements, each franchisee is required under BKC's Franchise
Agreement and Lease/Sublease, at its own cost and expense, to make such
alterations to a Burger King restaurant as may be reasonably required by BKC
from time to time in order to modify the appearance of the restaurant to
reflect the then current image requirements for Burger King restaurants.
Most of the Current Properties that are operating as Burger Kings are 15 to
20 years old, and the Partnership believes that many of these properties
require substantial improvements to maximize sales and the conditions of many
of these properties is below BKC's current image requirements.

Recently, in order to encourage the early renewal of existing
Leases/Subleases, the Partnership has established an "Early Renewal Program"
whereby the Partnership has offered to certain tenants the right to renew
existing Leases/Subleases for up to an additional 20 years in consideration
for remodeling grants for the properties of up to $30,000. As a result of
this Program, to date, the Partnership has extended the lease term for 14
Leases/Subleases. The purpose of this Program is to extend the term of
existing Leases/Subleases prior to the end of the lease term and to enhance
the value of the underlying property to the Partnership.

COMPETITION

The restaurants operated on the properties are subject to significant
competition (including competition from other national and regional "fast
food" restaurant chains, other Burger King restaurants (including mobile
restaurants), local restaurants, restaurants owned by BKC or affiliated
entities, national and regional restaurant chains that do not specialize in
"fast food" but appeal to many of the same customers, and other competitors
such as convenience stores and supermarkets that sell prepared and
ready-to-eat foods. The success of the Partnership depends, in part, on the
ability of the restaurants operated on the properties to compete successfully
with such businesses. The Partnership does not anticipate that it will seek
to engage directly in or meet such competition. Instead, the Partnership will
be dependent upon the experience and ability of the lessees operating the
restaurants located on the properties and the particular franchise system
generally to compete with these other restaurants and similar operations.
The Partnership believes that the ability of its lessees to compete is
affected by their compliance with the image requirements at their restaurants.

REGULATION

The Partnership, through its ownership of interests in and management of
real estate, is subject to various of environmental, health, land-use and
other regulation by federal, state and local governments that affects the
development and regulation of restaurant properties. The Partnership's
leases impose the primary obligation for regulatory compliance on the
operators of the restaurant properties.

ENVIRONMENTAL REGULATION. Under various federal, state and local laws,
ordinances and regulations, an owner or operator of real property may become
liable for the costs of removal or remediation of certain hazardous
substances released on or within its property. Such liability may be imposed
without regard to whether the owner or operator knew of, or caused the
release of the hazardous substances. In addition to liability for cleanup
costs, the presence of hazardous substances on a property could result in the
owner or operator incurring liability as a result of a claim by an employee
or another person for personal injury or a claim by an adjacent property
owner for property damage.

In connection with the Partnership's acquisition of a new property, a
Phase I environmental assessment is obtained. If the results of such
assessment reveal potential liabilities, a Phase II assessment is ordered for
further evaluation and, depending upon the results of such assessment, the
transaction is consummated or the acquisition is terminated.

The Partnership is not currently a party to any litigation or
administrative proceeding with respect to any property's compliance with
environmental standards. Furthermore, the Partnership is not aware of nor
does it anticipate any such action, or the need to expend any of its funds,
in the foreseeable future

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<PAGE>

in connection with its operations or ownership of existing properties which
would have a material adverse effect upon the Company.

AMERICANS WITH DISABILITIES ACT ("ADA"). Under the ADA, all public
accommodations, including restaurants, are required to meet certain federal
requirements relating to physical access and use by disabled persons. A
determination that the Partnership or a property of the Partnership is not in
compliance with the ADA could result in the imposition of fines, injunctive
relief, damages or attorney's fees. The Partnership's leases contemplate
that compliance with the ADA is the responsibility of the operator. The
Partnership is not currently a party to any litigation or administrative
proceeding with respect to a claim of violation of the ADA and does not
anticipate any such action or proceeding that would have a material adverse
effect upon the Company.

LAND-USE; FIRE AND SAFETY REGULATIONS. In addition, the Partnership and
its restaurant operators are required to operate the properties in compliance
with various laws, land-use regulations, fire and safety regulations and
building codes as may be applicable or later adopted by the governmental body
or agency having jurisdiction over the location or the property or the matter
being regulated. The Partnership does not believe that the cost of
compliance with such regulations and laws will have a material adverse effect
upon the Partnership.

HEALTH REGULATIONS. The restaurant industry is regulated by a variety of
state and local departments and agencies, concerned with the health and
safety of restaurant customers. These regulations vary by restaurant
location and type (i.e., fast food or casual dining). The Partnership's
leases provide for compliance by the restaurant operator with all health
regulations and inspections and require that the restaurant operator obtain
insurance to cover liability for violation of such regulations or the
interruption of business due to closure caused by failure to comply with such
regulations. The Partnership is not currently a party to any litigation or
administrative proceeding with respect to the compliance with health
regulations of any property it finances, and does not anticipate any such
action or proceeding that would have a material adverse effect upon the
Partnership.

INSURANCE

The Partnership requires its lessees to maintain adequate comprehensive
liability, fire, flood and extended loss insurance provided by reputable
companies, with commercially reasonable and customary deductibles and limits.
Certain types and amounts of insurance are required to be carried by each
restaurant operator under the leases with the Partnership and the Partnership
actively monitors tenant compliance with this requirement. There are,
however, certain types of losses (such as from wars or earthquakes) that may
be either uninsurable or not economically insurable in some or all locations.
An uninsured loss could result in a loss to the Partnership of both its
capital investment and anticipated profits from the affected property.

PAYMENTS TO THE MANAGING GENERAL PARTNER

The Partnership pays the Managing General Partner a non-accountable
annual allowance designed to cover the costs that the Managing General
Partner incurs in connection with the management of the Partnership and the
Properties (other than reimbursements for out-of-pocket expenses paid to
third parties). The allowance is adjusted annually to reflect any cumulative
increases in the Consumer Price Index occurring after January 1, 1986, and
was $585,445 for the year ended December 31, 1995. The allowance is paid
quarterly, in arrears.

In addition, to compensate the Managing General Partner for its efforts
and increased internal expenses resulting from additional properties, the
Partnership will pay the Managing General Partner, with respect to each
additional property purchased: (i) a one-time acquisition fee equal to 1% of
the purchase price for such property and (ii) an annual fee equal to 1% of
the purchase price for such property, adjusted for increases in the Consumer
Price Index. For 1995, the one-time acquisition fee equaled $109,238 which
was capitalized and the increased annual fee equaled $29,375. In addition,
if the Rate of Return (as defined in the Partnership Agreement) on the
Partnership's equity in all additional properties exceeds 12% per annum for
any fiscal year, the Managing General Partner will be paid an additional fee

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<PAGE>

equal to 25% of the cash flow received with respect to such additional
properties in excess of the cash flow representing a 12% Rate of Return
thereon. However, to the extent the Managing General Partner receives
distributions in excess of those provided by its 1.98% Partnership interest,
such distributions will reduce the fee payable with respect to such excess
cash flow from any additional properties. See "Partnership Allocations"
below. Except as provided above, such payments are in addition to
distributions made by the Partnership to the Managing General Partner in its
capacity as a partner in the Partnership. The Partnership may pay or
reimburse the Managing General Partner for payments to affiliates for goods
or other services if the price and the terms for providing such goods or
services are fair to the Partnership and not less favorable to the
Partnership than would be the case if such goods or services were obtained
from or provided by an unrelated third party.

PARTNERSHIP ALLOCATIONS

Net cash flow from operations of the Partnership that is distributed is
allocated 98.02% to the Unitholders and 1.98% to the Managing General Partner
until the Unitholders have received a simple (non-cumulative) annual return
for such year equal to 12% of the Unrecovered Capital per Unit (such
Unrecovered Capital is currently $19.68 per Unit and will be adjusted to give
effect to the issuance of the Units hereunder in order to make the
Unrecovered Capital uniform for all outstanding Units) reduced by any prior
distributions of net proceeds of capital transactions); then any distributed
cash flow for such year is allocated 75.25% to the Unitholders and 24.75% to
the Managing General Partner until the Unitholders have received a total
simple (non-cumulative) annual return for such year equal to 17.5% of the
Unrecovered Capital Per Unit; and then any excess distributed cash flow for
such year is allocated 60.4% to the Unitholders and 39.6% to the Managing
General Partner. The Partnership may retain otherwise distributable cash
flow to the extent the Managing General Partner deems appropriate.

Net proceeds from financing and sales or other dispositions of the
Partnership's properties are allocated 98.02% to the Unitholders and 1.98% to
the Managing General Partner until the Unitholders have received an amount
equal to the Unrecovered Capital Per Unit plus a cumulative, simple return
equal to 12% of the balance of their Unrecovered Capital Per Unit outstanding
from time to time (to the extent not previously received from distributions
of prior capital transactions); then such proceeds are allocated 75.25% to
the Unitholders and 24.75% to the Managing General Partner until the
Unitholders have received a total cumulative, simple return equal to 17.5% of
the Unrecovered Capital per Unit; and then such proceeds are allocated 60.4%
to the Unitholders and 39.6% to the Managing General Partner. The
Partnership may retain otherwise distributable net proceeds from financing
and sales or other dispositions of the Partnership's properties to the extent
the Managing General Partner deems appropriate.

Operating income and loss of the Partnership for each year generally is
allocated between the Managing General Partner and the Unitholders in the
same aggregate ratio as cash flow is distributed for that year. Gain and
loss from a capital transaction generally is allocated among the Managing
General Partner and the Unitholders in the same aggregate ratio as net
proceeds of the capital transaction are distributed except to the extent
necessary to reflect capital account adjustments. In the case of both
operating income or loss and gain or loss from capital transactions, however,
the amount of such income, gain or loss allocated to the Managing General
Partner and the Unitholders for the year will not necessarily equal the total
cash distributed to the Managing General Partner and the Unitholders for such
year. Upon transfer of a Unit, tax items allocable thereto generally will be
allocated among the transferor and the transferee based on the period during
the year that each owned the Unit, with each Unitholder on the last day of
the month being treated as a Unitholder for the entire month.

EMPLOYEES

The Partnership has no employees. The Managing General Partner, which is
responsible for the management of the Partnership and the Current Properties,
retained five individuals during 1995 on either a full-time, part-time or
independent contractor basis. In addition, the Managing General Partner
retains, at the expense of the Partnership, other parties in connection with
the operations of the Partnership and the Current Properties, including
accounting, legal, property origination and other services.

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<PAGE>

LEGAL PROCEEDINGS

The Partnership is not presently involved in any material litigation nor,
to its knowledge, is any material litigation threatened against the
Partnership or its properties, other than routine litigation arising in the
ordinary course of business.

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<PAGE>

MANAGEMENT

The Partnership is a limited partnership (of which U.S. Restaurant
Properties, Inc. is the Managing General Partner) and has no directors or
officers. The executive officers of the Managing General Partner are Robert
J. Stetson, President and Chief Executive Officer, and Fred H. Margolin,
Chairman of the Board, Secretary and Treasurer. They have served in such
positions and as directors since the acquisition of the Managing General
Partner on May 27, 1994. Messrs. Stetson and Margolin are controlling
stockholders and serve as executive officers and directors of the Managing
General Partner (subject to election by its board of directors. The
following is a biographical summary of the experience of the directors and
executive officers of the Managing General Partner.

ROBERT J. STETSON. Mr. Stetson is the President, Chief Executive
Officer and a director of the Managing General Partner. Since 1978, Mr.
Stetson has been primarily engaged in restaurant chain management, including
the acquisition and management of restaurant properties. From 1987 until
1992, Mr. Stetson served as a senior executive in restaurant and retailing
subsidiaries of Grand Metropolitan PLC, the ultimate parent of Burger King.
During this period, Mr. Stetson served as the Chief Financial Officer and
later President - Retail Division of Burger King and Chief Financial Officer
and later Chief Executive Officer of Pearle Vision. As Chief Financial
Officer of Burger King, Mr. Stetson was responsible for managing more than
750 restaurants that Burger King leased to tenants. Prior to 1987, Mr.
Stetson served in several positions with PepsiCo Inc. and its subsidiaries,
including Chief Financial Officer of Pizza Hut. Mr. Stetson is also a
director of Bayport Restaurant Group and Bugaboo Creek Steakhouse Inc., both
publicly-traded restaurant companies. In 1972, Mr. Stetson received a
Bachelor of Arts degree from Harvard College. In 1975, Mr. Stetson received
an M.B.A. from Harvard Business School. Mr. Stetson is 45 years old.

FRED H. MARGOLIN. Mr. Margolin is the Chairman, Secretary, Treasurer
and a director of the Managing General Partner. In 1979, Mr. Margolin
founded and became the President of American Eagle Premium Finance Company,
one of the largest independent premium finance companies in Texas. From 1982
through 1988, Mr. Margolin developed and then leased or sold shopping centers
having an aggregate cost of $50,000,000. In 1977, Mr. Margolin founded
Intercon General Agency, a national insurance agency specializing in the
development and marketing of insurance products for financial institutions.
Mr. Margolin served as the Chief Executive Officer of Intercon General Agency
from its inception until its sale to a public company in 1982. In 1971, Mr.
Margolin received a Bachelor of Science degree from the Wharton School of the
University of Pennsylvania. In 1973, Mr. Margolin received an M.B.A. from
Harvard Business School. Mr. Margolin is 46 years old.

GERALD H. GRAHAM. Mr. Graham is a director of the Managing General
Partner. Mr. Graham is the Dean of the Barton School of Business at Wichita
State University. Mr. Graham is 58 years old.

DAVID ROLPH. Mr. Rolph is a director of the Managing General Partner.
Mr. Rolph co-owns and operates the Tex-Mex restaurant chain, "Carlos
O'Kellys," which has 25 units, and was formerly one of the largest Pizza Hut
franchisees. Mr. Rolph is 47 years old.

DARREL ROLPH. Mr. Rolph is a director of the Managing General Partner.
Mr. Rolph co-owns and operates "Carlos O'Kellys" and was formerly one of the
largest Pizza Hut franchisees. Mr. Rolph is 58 years old.

EUGENE G. TAPER. Mr. Taper is a director of the Managing General
Partner. Mr. Taper is a certified public accountant and a consultant and
retired partner, since 1993, of Deloitte & Touche LLP, an international
public accounting firm. Mr. Taper is 59 years old.

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<PAGE>

DESCRIPTION OF UNITS

The following paragraphs generally describe the Units and certain
provisions of the Deposit Agreement and the Depositary Receipt. The Deposit
Agreement and the Depositary Receipt are exhibits to this Prospectus. The
following discussion is qualified in its entirety by reference to the
Partnership Agreement, the Deposit Agreement and the Depositary Receipt.

GENERAL

The percentage interest in the Partnership represented by a Unit is
equal to the ratio it bears at the time of such determination to the total
number of Units in the Partnership (including any undeposited Units)
outstanding, multiplied by the aggregate percentage interest in the
Partnerships of all Unitholders. Each Unit evidences entitlement to a
portion of the Partnership's cash flow, proceeds from capital transactions
and allocations of net income and net loss, as determined in accordance with
certain provisions of the Partnership Agreement, including provisions for
increased distributions and allocations to the Managing General Partner (and
correspondingly decreased distributions and allocations to the Unitholders)
of cash flow and proceeds of capital transactions above certain levels. To
maintain the uniformity of the Units, the Managing General Partner is
authorized to make certain adjustments to the Capital Accounts, Unrecovered
Capital and Preferred Returns so that all of the Units will reflect the same
amounts on a per Unit basis. Such adjustments to the Unrecovered Capital
will generally dilute the interests of purchasers of the Units. In addition,
a Unitholder's percentage interest in the Partnership will be diluted if the
Partnership issues Units to a General Partner in connection with the
conversion of its interest as a General Partner into Units upon its
withdrawal or removal.

Upon the consummation of this Offering (and, if any, upon consummation
of the exercise of the Over-allotment Option), the Underwriters, will deposit
all of the Units offered and sold pursuant hereto with Morgan Guaranty Trust
Company of New York, as depositary (the "Depositary"). Purchasers of Units
in this offering will not be required to execute Transfer Applications, but
subsequent transferees of the Depositary Receipts (or their brokers, agents
or nominees on their behalf) will be required to execute a Transfer
Application in the form appearing on the back of the Depositary Receipt.
Although purchasers of Units in this Offering will not be required to execute
Transfer Applications, they will be deemed to have agreed to be bound by the
terms and conditions of the Partnership Agreement, the Deposit Agreement and
the Depositary Receipt.

Depositary Receipts may be held in a "street name" account or by any
other nominee holder. In such event, the nominee holder will be required to
provide the Partnership an undertaking to provide transferees with copies of
all reports issued by the Partnership to the Unitholders. The Partnership
will not recognize the transfer of Units held by a nominee holder from one
beneficial owner to another unless the nominee holder submits an executed
Transfer Application on behalf of the transferee. In the absence of written
notice to the Partnership or the Depositary to the effect that a holder of
Units is holding such Units in the capacity of nominee holder and identifying
the beneficial owner thereof, the Partnership will treat the nominee holder
of a Depositary Receipt as the absolute owner thereof for all purposes, and
the beneficial owner's rights shall be limited solely to those that it has
against the nominee holder as a result of or by reason of any understanding
or agreement between such beneficial owner and nominee holder.

TRANSFER OF THE DEPOSITARY RECEIPTS

The Depositary Receipts are transferable upon compliance with the
procedure described below. A transferee of a Depositary Receipt will be an
Assignee with respect to the Unit evidenced thereby unless and until the
Managing General Partner, in its sole and absolute discretion, consents to
the admission of such transferee as a Substituted Limited Partner (as defined
in the Partnership Agreement) with respect to such Unit and amends the
Partnership Agreement to reflect such admission. Although the Managing
General Partner reserves the right, in its sole and absolute discretion, to
refuse to consent to the admission of any transferee of a Depositary Receipt
for any reason or for no reason at all, the Managing General Partner
currently anticipates that it generally will consent to the admission of
transferees of Depositary Receipts who comply with the procedure described
below.

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A subsequent transferee of a Depositary Receipt (or his or her broker,
dealer or nominee holder on his or her behalf) will be required to deliver an
executed Transfer Application to the Depositary prior to registration of a
transfer by the Depositary. Transfer Applications appear on the back of each
Depositary Receipt and also will be furnished at no charge by the Depositary
or other transfer agent upon receipt of a request therefor. A subsequent
transferee of a Depositary Receipt, whether or not a Transfer Application has
been executed by or on his behalf, will be deemed to have agreed to be bound
by the terms and conditions of the Deposit Agreement and Depositary Receipt,
and requested admission as a Substituted Limited Partner in accordance with
the terms of the Partnership Agreement, agrees to be bound by the terms and
conditions of the Partnership Agreement and to execute any documents
reasonably required by the Partnership in connection with the transfer and
such admission, and grants the power of attorney described below. A request
by any broker, dealer or other nominee holder to register transfer of a
Depositary Receipt, however signed (including by any stamp, mark or symbol
executed or adopted with intent to authenticate the Depositary Receipt), will
be deemed to be execution of a Transfer Application by and on behalf of such
nominee and the beneficial owner of such Depositary Receipt. Until the
transfer of a Depositary Receipt has been registered on the books of the
Depositary or another transfer agent, the Depositary and the Partnership will
treat the record holder thereof as the absolute owner thereof for all
purposes.

Transferees who do not execute a Transfer Application (either themselves
or through their broker, agent or nominee on their behalf) will not be
treated either as an Assignee or as a record holder of Units and will not
receive cash distributions, federal income tax allocations or reports
furnished to record holders of Units. Nonetheless, any transferee of a Unit
conclusively will be deemed to have agreed to be bound by the terms of the
Partnership Agreement, the Deposit Agreement and the Depositary Receipt.

Pursuant to the terms of the Partnership Agreement, each purchaser of a
Unit in this offering and each subsequent transferee of a Depositary Receipt
appoints the Managing General Partner and each of the Managing General
Partner's authorized officers and attorneys-in-fact as such transferee's
attorney-in-fact (a) to enter into the Deposit Agreement and deposit the
Units of such transferee in the deposit account established by the
Depositary, and (b) to make, execute, file and/or record (i) documents with
respect to the qualification of the Partnership as a limited partnership in
Delaware and any other appropriate jurisdictions; (ii) other documents
requested by, or appropriate under the laws of, any appropriate jurisdiction;
(iii) instruments with respect to any amendment of the Partnership Agreement;
(iv) conveyances and other instruments or documents with respect to the
dissolution, termination, and liquidation of the Partnership pursuant to the
terms of the Partnership Agreement; (v) financing statements or other
documents necessary to grant or perfect a security interest, mortgage, pledge
or lien on all or any of the assets of the Partnership; (vi) instruments or
papers required to continue the business of the Partnership pursuant to the
Partnership Agreement; (vii) instruments relating to the admission of any
Partner to the Partnership; and (viii) all other instruments deemed necessary
or advisable to carry out the provisions of the Partnership Agreement. Such
power of attorney is irrevocable, will survive the subsequent death,
incompetency, dissolution, disability, incapacity, bankruptcy or termination
of granting transferee, and will extend to such transferee's heirs,
successors and assigns.

WITHDRAWAL OF UNITS

The Deposit Agreement generally provides that a record holder of a Unit
on deposit may withdraw such Unit from the Depositary upon written request
and surrender of the Depositary Receipt evidencing such Unit. A Unit
withdrawn from the Depositary will be evidenced by a certificate issued by
the Partnership. Withdrawn Units may not be transferred except upon death, by
operation of law or by transfer to the Partnership, but record holders of
withdrawn Units will continue to receive their respective share of
distributions and allocations pursuant to the terms of the Partnership
Agreement. In order to transfer a Unit withdrawn from the Depositary (other
than upon death, by operation of law or to the Partnership), a Unitholder
must redeposit the certificate representing such Unit with the Depositary and
request issuance of a Depositary Receipt, which then may be transferred. Any
redeposit of such Unit with the Depositary will require 60 days' advance
written notice and payment of a redeposit fee (currently $5.00 per 100 Units
(or portion thereof)) and will be subject to satisfaction of certain other
procedural requirements under the Deposit Agreement.

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RESIGNATION AND REMOVAL OF DEPOSITARY

The Depositary at any time may resign as Depositary and at any time may
be removed by the Partnership. The resignation or removal of the Depositary
becomes effective upon the appointment of a successor Depositary by the
Partnership and written acceptance by the successor Depositary of such
appointment. In the event a successor Depositary is not appointed within 30
days of notification of such resignation or removal, the Managing General
Partner will act as Depositary until a successor Depositary is appointed.
Any corporation into or with which the Depositary may be merged or
consolidated will be the successor Depositary without the execution or filing
of any document or any further act.

AMENDMENT

Subject to the restrictions described below, the Deposit Agreement
(including the form of Depositary Receipt) may be amended by the mutual
agreement of the Managing General Partner, the Partnership and the
Depositary. In the event any such amendment adversely affects any substantial
rights of holders of Units on deposit, such amendment will not be effective
without the affirmative vote or consent of record holders of a majority of
the Units on deposit, as described below. No amendment to the Deposit
Agreement may impair the right of a Unitholder to surrender the Depositary
Receipt and withdraw any or all of the Units evidenced thereby or to
redeposit Units pursuant to the Deposit Agreement and receive a Depositary
Receipt evidencing such redeposited Units.

Any amendment of the Deposit Agreement that imposes any fee, tax or
charge (other than the fees and charges set forth in the Deposit Agreement)
upon Depositary Receipts will not be effective until the expiration of 30
days after notice of the amendment has been given to the record holders of
Depositary Receipts or, if the amendment is presented for a vote of the
record holders of Units on deposit, until it has been approved by the
affirmative vote of the record holders of a majority of such Units.

For the purpose of considering any amendment of the Deposit Agreement
that adversely affects any substantial right of the record holders of Units
on deposit, the Partnership may call a meeting of the record holders of such
Units according to the procedures set forth in the Deposit Agreement. Such
an amendment of the Deposit Agreement also may be approved if record holders
of a majority of such Units, as of a record date selected by the Depositary,
consent thereto in a writing filed with the Depositary.

TERMINATION

The Partnership may not terminate the Deposit Agreement unless such
termination (a) is in connection with the Partnership entering into a similar
agreement with a new depositary selected by the Managing General Partner, (b)
is as a result of the Partnership's receipt of an opinion of counsel to the
effect that such termination is necessary for the Partnership to avoid being
treated as an association taxable as a corporation for federal income tax
purposes or to avoid being in violation of any applicable federal or state
securities laws, or (c) is in connection with the dissolution of the
Partnership. The Depositary will terminate the Deposit Agreement, when
directed to do so by the Partnership not less than 45 days prior to the date
fixed for termination, by mailing notice of termination to the record holders
of all Depositary Receipts then outstanding at least 30 days before the date
fixed for the termination in such notice. Termination will be effective on
the date fixed in the notice, which date must be at least 30 days after it is
mailed.

DUTIES AND STATUS OF DEPOSITARY

The Managing General Partner may request the Depositary to act as paying
agent with respect to any distributions by the Partnership. In addition to
its out-of-pocket expenses, the Depositary will charge the Partnership fees
for serving as Depositary, for transferring Depositary Receipts, for
withdrawal or redepositing of Units and for any preparation and mailing of
distribution checks. All such fees and expenses will be borne by the
Partnership, except that fees similar to those customarily paid by
stockholders for surety bond premiums to replace lost or stolen certificates,
tax or other governmental charges, special charges for services requested by
Unitholders (including

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redeposit of withdrawn Units) and other similar fees or charges will be borne
by the affected Unitholders. There will be no charge to Unitholders for any
disbursements by the Depositary of Partnership distributions.

First Chicago Trust Company of New York currently acts as the registrar
and transfer agent for the Depositary Receipts.

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FEDERAL INCOME TAX CONSIDERATIONS

This section was prepared by Middleberg, Riddle & Gianna, counsel to the
Partnership ("Counsel") and addresses all material income tax consequences to
individuals who are citizens or residents of the United States. Unless
otherwise noted, this section reflects Counsel's opinion with respect to the
matters set forth except for statements of fact and the representations and
estimates of the results of future operations of the Managing General Partner
included in such discussion as to which no opinion is expressed. Counsel
bases its opinions on its interpretation of the Internal Revenue Code of
1986, as amended (the "Code") and Treasury Regulations issued thereunder,
judicial decisions, the facts set forth in this Prospectus and certain
factual representations made by the Managing General Partner. Counsel's
opinions are subject to both the accuracy of such facts and the continued
applicability of such legislative, administrative and judicial authorities,
all of which authorities are subject to changes and interpretations that may
or may not be retroactively applied.

No ruling has been requested from the IRS with respect to the
classification of the Partnerships as partnerships for federal income tax
purposes or any other matter affecting the Partnerships. Accordingly, the
IRS may adopt positions that differ from Counsel's conclusions expressed
herein. It may be necessary to resort to administrative or court proceedings
in an effort to sustain some or all of Counsel's conclusions, and some or all
of these conclusions ultimately may not be sustained. The costs of any
contest with the IRS will be borne directly or indirectly by some or all of
the Unitholders and the Managing General Partner. Furthermore, no assurance
can be given that the tax consequences of investing in the Partnership will
not be significantly modified by future legislation or administrative changes
or court decisions. Any such modifications may or may not be retroactively
applied.

It is impractical to comment on all aspects of federal, state, local and
foreign laws that may affect the tax consequences of the transactions
contemplated by the sale of Units made by this Prospectus and of an
investment in such Units. Moreover, certain types of taxpayers such as
tax-exempt entities, regulated investment companies and insurance companies
may be subject to rules and regulations unique to their status or form of
organization in addition to those rules and regulations described herein.
Each prospective Unitholder should consult his own tax advisor in deciding to
acquire Units.

PARTNERSHIP STATUS

A partnership is not a taxable entity and incurs no federal income tax
liability. Each partner is required to take into account in computing his
federal income tax liability his allocable share of income, gains, losses,
deductions and credits of the partnership, regardless of whether cash
distributions are made. Distributions by a partnership to a partner are
generally not taxable unless the distribution is in excess of the partner's
tax basis in his partnership interest.

Counsel is of the opinion that under present law, and subject to the
conditions and qualifications set forth below, for federal income tax
purposes, the Partnerships will be treated as partnerships. Counsel's
opinion as to the partnership status of the Partnerships is based principally
upon its interpretation of the factors set forth in Treasury Regulations
under Section 7701 of the Code, its interpretation of Section 7704 of the
Code, and upon certain representations made by the Managing General Partner.
However, it should be noted that neither Partnership satisfies the
requirements to obtain an advance ruling from the IRS with respect to its
classification as a partnership for federal income tax purposes.

The Treasury Regulations under Section 7701 of the Code provide that the
determination of whether a limited partnership will be classified as a
partnership or as an association taxable as a corporation for federal income
tax purposes depends upon the extent to which the partnership has the
corporate characteristics of continuity of life, free transferability of
interests, centralization of management and limited liability. A limited
partnership having no more than two of these four characteristics will
ordinarily be classified as a partnership for federal income tax purposes.
In Counsel's opinion, neither Partnership has the corporate characteristics
of continuity of life or limited liability, and the Operating Partnership
does not have the corporate characteristic of free transferability of
interests. Based on this

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analysis, Counsel has concluded that neither Partnership will be classified
as an association taxable as a corporation under Section 7701 of the Code.

Section 7704 of the Code provides that publicly traded partnerships
shall, as a general rule, be taxed as corporations despite the fact that they
are not classified as associations taxable as corporations under Section
7701. Section 7704 of the Code provides an exception to this general rule
(the "Real Property Rent Exception") for a publicly traded partnership if 90%
or more of its gross income for every taxable year consists of "qualifying
income". "Qualifying income" includes real property rental income and gain
from the sale or other disposition of real property and gains from the sale
or other disposition of capital assets held for the production of income that
otherwise constitutes "qualifying income."

Real property rent is defined, under Section 7704 of the Code, as
amounts which would qualify as rent from real property under Section 856(d)
of the Code (the provisions of the Code dealing with Real Estate Investment
Trusts). Although substantially all of the income of the Partnership consists
of qualifying rental income, the Partnership currently engages in activities
that give rise to non-qualifying rental income and may enter into other such
transactions in the future. Rental income of the Partnership may not qualify
as real property rent pursuant to Section 856 of the Code because the
Partnership, directly or indirectly through the constructive ownership rules
contained in Section 318 of the Code, owns more than 10% of the capital or
profits interest in any tenant leasing real property from the Partnership.
The Partnership, through such attribution rules, owns greater than a 10%
interest in one tenant which leases three (3) Burger King restaurant
properties from the Partnership. However, such non-qualifying income is less
than 3.5% of total Partnership gross income. With respect to other
transactions in which the Managing General Partner has or may acquire an
ownership interest in any tenant, the Managing General Partner has
represented that it and its affiliates will not acquire, or allow any
Unitholder owning more than 5% of total Units outstanding, to acquire greater
than a 10% ownership interest in such tenant.

Additionally, the Partnership has purchased items of personalty and
equipment and leased such items to tenants in conjunction with real property
leases. To the extent that the rental income attributable to such equipment
exceeds 15% of total rental income for the real property and equipment, such
rental income would not qualify as real property rent. The Partnership
generally separately allocates rental income between equipment and real
property, and the equipment component of such rental income is generally less
than 15% of the total rental income. Assuming that such allocation is valid,
no portion of the rental income attributable to equipment and personal
property should constitute non-qualifying income.

The Partnership estimates that a total of 3.5% of its gross income for
taxable year 1996 will not constitute qualifying income, and estimates that
less than 3.5% of its gross income for each subsequent taxable year will not
constitute qualifying income.

If the Partnership fails to meet the Real Property Rent Exception to the
general rule of Section 7704 of the Code (other than a failure determined by
the IRS to be inadvertent which is cured within a reasonable time after
discovery), the Partnership will be treated as if it had transferred all of
its assets (subject to liabilities) to a newly-formed corporation (on the
first day of the year in which it fails to meet the Real Property Rent
Exception) in return for stock in such corporation, and then distributed such
stock to the Unitholders in liquidation of their interest in the Partnership.

In rendering its opinion that neither Partnership will be treated as a
partnership for federal income tax purposes, Counsel has relied on the
following factual representations by the Managing General Partner as to the
Partnerships:

1. Each Partnership will be operated in accordance with applicable
state partnership statutes, its partnership agreement and the statements and
representations made in this Prospectus.

2. Except as otherwise required by Section 704(c) of the Code, the
general partner of each Partnership will have at least a 0.99% interest in
each material item of income, gain, loss, deduction and credit of its
respective Partnership.

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3. For each taxable year, less than 10% of each Partnership's
gross income will be derived from sources other than (i) real property rental
income and gain from the sale or other disposition of real property, or (ii)
other items of "qualifying income" within the meaning of Section 7704(d) of
the Code.

4. The Managing General Partner of each Partnership will act
independently of such Partnership's limited partners.

If either Partnership was taxable as a corporation or treated as an
association taxable as a corporation in any taxable year, its income, gains,
losses, deductions and credits would be reflected only on its tax return
rather than being passed through to its partners and its taxable income would
be taxed at corporate rates. In addition, its distributions to each of its
partners would be treated as either dividend income (to the extent of its
current or accumulated earnings and profits), and, in the absence of earnings
and profits, as a nontaxable return of capital (to the extent of such
partner's tax basis in his interest therein) or taxable capital gain (after
such partner's tax basis in his interest therein is reduced to zero).
Furthermore, losses realized by such Partnership would not flow through to
the Unitholders. Accordingly, treatment of either Partnership as a
corporation for federal income tax purposes would probably result in a
material reduction in a Unitholder's cash flow and after-tax return.

The discussion below is based on the assumption that each Partnership
will be classified as a partnership for federal income tax purposes. If that
assumption proves to be erroneous, most, if not all, of the tax consequences
described below would not be applicable to Unitholders.

PARTNER STATUS

Unitholders who have become limited partners of the Partnership pursuant
to the provisions of the Partnership Agreement will be treated as partners of
the Partnership for federal income tax purposes.

The IRS has ruled that assignees of partnership interests who have not
been admitted to a partnership as partners, but who have the capacity to
exercise substantial dominion and control over the assigned partnership
interests, will be treated as partners for federal income tax purposes. On
the basis of such ruling, except as otherwise described herein, (i) assignees
who have executed and delivered transfer applications, and are awaiting
admission as limited partners of the Partnership, and (ii) Unitholders whose
Units are held in street name or by another nominee will be treated as
partners for federal income tax purposes. As such ruling does not extend, on
its facts, to assignees of Units who are entitled to execute and deliver
transfer applications and thereby become entitled to direct the exercise of
attendant rights, but who fail to execute and deliver transfer applications,
the tax status of such Unitholders is unclear, and Counsel expresses no
opinion with respect to the status of such assignees. Such Unitholders should
consult their own tax advisors with respect to their status as partners in
the Partnership for federal income tax purposes. A purchaser or other
transferee of Units who does not execute and deliver a transfer application
may not receive certain federal income tax information or reports furnished
to record holders of Units unless the Units are held in a nominee or street
name account and the nominee or broker has executed and delivered a transfer
application with respect to such Units.

A beneficial owner of Units whose Units have been transferred to a short
seller to complete a short sale would appear to lose his status as a partner
with respect to such Units for federal income tax purposes. See "--Tax
Treatment of Operations--Treatment of Short Sales."

TAX CONSEQUENCES OF UNIT OWNERSHIP

FLOW-THROUGH OF TAXABLE INCOME

The Partnership's income, gains, losses, deductions and credits will
consist of its allocable share of the income, gains, losses, deductions and
credits of the Operating Partnership and dividends from its corporate
subsidiaries. Because the Partnership is not a taxable entity and incurs no
federal income tax liability, each Unitholder will be required to take into
account his allocable share of income, gain, loss and deductions of the
Operating Partnership (through the Partnership) without regard to whether

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corresponding cash distributions are received by Unitholders. Consequently,
a Unitholder may be allocated income from the Partnership although he has not
received a cash distribution in respect of such income.

TREATMENT OF PARTNERSHIP DISTRIBUTIONS

Under Section 731 of the Code, distributions by the Partnership to a
Unitholder generally will not be taxable to such Unitholder for federal
income tax purposes to the extent of his tax basis in his Units immediately
before the distribution. Cash distributions (and, in certain circumstances,
distributions of marketable securities) in excess of such basis generally
will be considered to be gain from the sale or exchange of the Units, taxable
in accordance with the rules described under "--Disposition of Units." Any
reduction in a Unitholder's share of the Partnership's liabilities included
in his tax basis in his Units will be treated as a distribution of cash to
such Unitholder. See "--Tax Basis of Units." A decrease in a Unitholder's
percentage interest in the Partnership because of a Partnership offering of
additional Units will decrease such Unitholder's share of nonrecourse
liabilities, and thus will result in a corresponding deemed distribution of
cash.

A non-pro rata distribution of money or property may result in ordinary
income to a Unitholder, regardless of his tax basis in his Units, if such
distribution reduces the Unitholder's share of the Partnership's "unrealized
receivables" (including depreciation recapture) and/or substantially
appreciated "inventory items" (both as defined in Section 751 of the Code)
(collectively, "Section 751 Assets"). To that extent, the Unitholder will be
treated as having received his proportionate share of the Section 751 Assets
and having exchanged such assets with the Partnership in return for the
non-pro rata portion of the actual distribution made to him. This latter
deemed exchange will generally result in the Unitholder's realization of
ordinary income under Section 751(b) of the Code. Such income will equal the
excess of (i) the non-pro rata portion of such distribution over (ii) the
Unitholder's tax basis for the share of such Section 751 Assets deemed
relinquished in the exchange.

TAX BASIS OF UNITS

In general, a Unitholder's tax basis for his Units initially will be
equal to the price of such Units to him. A Unitholder's tax basis will
generally be increased by (i) his share of Partnership taxable income and
(ii) his share of Partnership liabilities that are without recourse to any
Partner ("nonrecourse liabilities"), if any. Generally, a Unitholder's tax
basis in his interest will be decreased (but not below zero) by (i) his share
of Partnership distributions, (ii) his share of decreases in nonrecourse
liabilities of the Partnership, (iii) his share of losses of the Partnership
and (iv) his share of nondeductible expenditures of the Partnership that are
not chargeable to capital. A Unitholder's share of nonrecourse liabilities
will generally be based on his share of the Partnership's profits. The
Partnership's present debt financing in the maximum principal amount of $40
million is fully recourse to the Managing General Partner and would therefore
not be includable in the Unitholder's tax basis for their Units.
Accordingly, at the time that a Unitholder makes the adjustment to his share
of Partnership properties pursuant to Section 743(b) of the Code, the
Unitholder will not be permitted to include the debt financing of the
Partnership (unless the Partnership obtains nonrecourse financing prior to
such date) in such adjustment. See "--Tax Treatment of Operations--Section
754 Election."

LIMITATIONS ON DEDUCTIBILITY OF LOSSES

The passive loss limitations contained in Section 469 of the Code
generally provide that individuals, estates, trusts and certain closely held
corporations and personal service corporations can deduct losses from passive
activities (generally, activities in which the taxpayer does not materially
participate) only to the extent of the taxpayer's income from such passive
activities or investments. The passive loss limitations are to be applied
separately with respect to publicly traded partnerships. Consequently,
losses generated by the Partnership, if any, will be available to offset only
future income generated by the Partnership and will not be available to
offset income from other passive activities or investments (including other
publicly traded partnerships) or salary or active business income. Passive
losses that are not deductible because they exceed the Unitholder's income
generated by the Partnership may be deducted in full when the Unitholder
disposes of his entire investment in the Partnership to an unrelated party in
a fully taxable transaction.

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A Unitholder's share of net income from the Partnership may be offset by
any suspended passive losses from the Partnership, but may not be offset by
any other current or carryover losses from other passive activities,
including those attributable to other publicly traded partnerships.
According to an IRS announcement, Treasury regulations will be issued which
characterize net passive income from a publicly traded partnership as
investment income for purposes of deducting investment interest.

In addition to the foregoing limitations, a Unitholder may not deduct
from taxable income his share of Partnership losses, if any, to the extent
that such losses exceed the lesser of (i) the tax basis of his Units at the
end of the Partnership's taxable year in which the loss occurs and (ii) the
amount for which the Unitholder is considered "at risk" under Section 465 of
the Code at the end of that year. In general, a Unitholder will initially be
"at risk" to the extent of the purchase price of his Units. A Unitholder's
"at risk" amount increases or decreases as his tax basis in his Units
increases or decreases, except that nonrecourse liabilities (or increases or
decreases in such liabilities) of the Partnership generally do not affect his
"at risk" amount. Losses disallowed to a Unitholder as a result of these
rules can be carried forward and will be allowable to the Unitholder to the
extent that his tax basis or "at risk" amount (whichever was the limiting
factor) is increased in a subsequent year. The "at risk" rules apply to an
individual Unitholder, a shareholder of a corporate Unitholder that is an S
corporation and a corporate Unitholder if 50% or more of the value of such
stock is owned directly or indirectly by five or fewer individuals.

ALLOCATION OF PARTNERSHIP INCOME, GAIN, LOSS AND DEDUCTION

The Partnership Agreement requires that a capital account be maintained
for each partner in accordance with the tax accounting principles set forth
in applicable Treasury Regulations under Section 704 of the Code.
Distributions upon liquidation of the Partnership are to be made in
accordance with positive capital account balances.

In general, if the Partnership has a net profit, items of income, gain,
loss and deduction will be allocated among the Managing General Partner and
the Unitholders in accordance with their respective interests in the
Partnership. Notwithstanding the above, as required by Section 704(c) of the
Code, certain items of Partnership income, gain, loss and deduction will be
allocated to account for the difference between the tax basis and fair market
value of certain property held by the Partnership ("Contributed Property").
Transactions which result in a required Section 704(c) allocation with
respect to Contributed Property may arise if (i) a Unitholder contributes
appreciated or depreciated property, rather than cash, to the Partnership, or
(ii) additional Partnership Units are issued for cash, and at the time of
such issuance, the capital account of the existing partners are restated to
account for the difference between the tax basis and fair market value of
Partnership property. The Partnership has previously participated in several
transactions described in clause (i) above. Upon the issuance of the Units,
the capital accounts of the existing partners will be restated as described
in clause (ii) above. Accordingly, with respect to each such transaction,
the Partnership will be required to make Section 704(c) allocations.

In addition, certain items of recapture income will be allocated to the
extent possible to the partner allocated the deduction giving rise to the
treatment of such gain as recapture income in order to minimize the
recognition of ordinary income by some Unitholders, but these allocations may
not be respected. If these allocations of recapture income are not
respected, the amount of the income or gain allocated to a Unitholder will
not change, but a change in the character of the income allocated to a
Unitholder would result. Finally, although the Partnership does not expect
that its operations will result in the creation of negative capital accounts,
if negative capital accounts nevertheless result, items of Partnership income
and gain will be allocated in an amount and manner sufficient to eliminate
the negative balances as quickly as possible.

Under Section 704(c) of the Code, the partners in a partnership cannot be
allocated more depreciation, gain or loss than the total amount of any such
item recognized by that partnership in a particular taxable period (the
"ceiling limitation"). To the extent the ceiling limitation is or becomes
applicable, the Partnership Agreement will require that certain items of
income and deduction be allocated in a way designed to effectively "cure"
this problem and eliminate the impact of the ceiling limitation. Such
allocations will not have substantial economic effect because they will not
be reflected in the capital

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accounts of the Unitholders. Treasury Regulations under Section 704(c) of
the Code permit a partnership to make reasonable curative allocations to
reduce or eliminate disparities between the tax basis and value attributable
to Contributed Properties.

Counsel is of the opinion that, with the exception of the allocation of
recapture income discussed above, allocations under the Partnership Agreement
will be given effect for federal income tax purposes in determining a
partner's distributive share of an item of income, gain, loss or deduction.
There are, however, uncertainties in the Treasury Regulations relating to
allocations of partnership income, and investors should be aware that the
allocations of recapture income in the Partnership Agreement may be
successfully challenged by the IRS.

TAX TREATMENT OF OPERATIONS

INCOME AND DEDUCTIONS IN GENERAL

No federal income tax will be paid by the Partnership. Instead, each
Unitholder will be required to report on his income tax return his allocable
share of income, gains, losses and deductions of the Partnership. Such items
must be included on the Unitholder's federal income tax return without regard
to whether the Partnership makes a distribution of cash to the Unitholder. A
Unitholder is generally entitled to offset his allocable share of the
Partnership's passive income with his allocable share of losses generated by
the Partnership, if any. See "--Tax Consequences of Unit
Ownership--Limitations on Deductibility of Losses."

The Partnership has adopted a convention with respect to transferring
Unitholders which generally allocates the Net Income or Net Loss of the
Partnership proportionately to each day of the year, and treats any
Unitholder owning a Unit as of the last day of the month as owning the Unit
for the entire month.

ACCOUNTING METHOD AND TAXABLE YEAR

The Partnership utilizes the calendar year as its taxable year and
adopted the accrual method of accounting for federal income tax purposes.

DEPRECIATION METHOD

The Partnership elected to use the straight-line depreciation method with
respect to its real property assets. Property subsequently acquired or
constructed by the Partnership may be depreciated using accelerated
depreciation methods permitted by Section 168 of the Code.

SECTION 754 ELECTION

Each Partnership will make the election permitted by Section 754 of the
Code effective for Partnership taxable year 1996. Such election will
generally permit a purchaser of Units to adjust his share of the tax basis in
the Partnership's properties pursuant to Section 743(b) of the Code. Such
elections are irrevocable without the consent of the IRS. The Section 743(b)
adjustment is attributed solely to a purchaser of Units and is not added to
the tax basis of the Partnership's assets associated with all of the
Unitholders described above under the heading "--Initial Tax Basis of
Partnership Assets" (the "Common Bases"). The amount of the adjustment under
Section 743(b) is the difference between the Unitholder's tax basis in his
Units and the Unitholder's proportionate share of the Common Bases
attributable to the Units pursuant to Section 743. The aggregate amount of
the adjustment computed under Section 743(b) is then allocated among the
various assets of the Partnership pursuant to the rules of Section 755. The
Section 743(b) adjustment acts in concert with the Section 704(c) allocations
(including the curative allocations, if respected) in providing the purchaser
of Units with the equivalent of a tax basis in his share of the Partnership's
properties equal to the fair market value of such share. See "--Allocation
of Partnership Income, Gain, Loss and Deduction--The Partnership Agreement"
and "--Uniformity of Units."

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Proposed Treasury Regulation Section 1.168-2(n) generally requires the
Section 743(b) adjustment attributable to recovery property to be depreciated
as if the total amount of such adjustment were attributable to newly-acquired
recovery property placed in service when the transfer occurs. The
legislative history of Section 197 of the Code indicates that the Section
743(b) adjustment attributable to an amortizable Section 197 intangible
should be similarly treated. Under Treasury Regulation Section
1.167(c)-1(a)(6), a Section 743(b) adjustment attributable to property
subject to depreciation under Section 167 of the Code rather than cost
recovery deductions under Section 168 is generally required to be depreciated
using either the straight-line method or the 150% declining balance method.
The Partnership utilizes the straight line method on such property. The
depreciation and amortization methods and useful lives associated with the
Section 743(b) adjustment, therefore, may differ from the methods and useful
lives generally used to depreciate the Common Bases in such properties. The
Managing General Partner is authorized to adopt a convention to preserve the
uniformity of Units despite its inconsistency with Proposed Treasury
Regulation Section 1.168-2(n) and Treasury Regulation Section
1.167(c)-1(a)(6). See "Uniformity of Units."

Although Counsel is unable to opine as to the validity of such an
approach, the Partnership intends to depreciate the portion of a Section
743(b) adjustment attributable to unrealized appreciation in the value of
Contributed Property (to the extent of any unamortized disparity between the
tax basis and value attributable to Contributed Property) using a rate of
depreciation or amortization derived from the depreciation or amortization
method and useful life applied to the Common Bases of such property, despite
its inconsistency with Proposed Treasury Regulation Section 1.168-2(n),
Treasury Regulation Section l.167(c)-1(a)(6) or the legislative history of
Section 197 of the Code. If the Partnership determines that such position
cannot reasonably be taken, the Partnership may adopt a depreciation or
amortization convention under which all purchasers acquiring Units in the
same month would receive depreciation or amortization, whether attributable
to Common Bases or Section 743(b) basis, based upon the same applicable rate
as if they had purchased a direct interest in the Partnership's property.
Such an aggregate approach may result in lower annual depreciation or
amortization deductions than would otherwise be allowable to certain
Unitholders. See "---Uniformity of Units."

The allocation of the Section 743(b) adjustment must be made in
accordance with the principles of Section 1060 of the Code. Based on these
principles, the IRS may seek to reallocate some or all of any Section 743(b)
adjustment not so allocated by the Partnership to goodwill which, as an
intangible asset, would be amortizable over a longer period of time than
certain of the Partnership's tangible assets. Alternatively, it is possible
that the IRS might seek to treat the portion of such Section 743(b)
adjustment attributable to the underwriters' discount as if it were allocable
to a non-deductible syndication cost.

A Section 754 election is advantageous when the transferee's tax basis
in such Units is higher than such Units' share of the aggregate tax basis in
the Partnership's assets immediately prior to the transfer. In such case,
pursuant to the election, the transferee will take a new and higher tax basis
in his share of the Partnership's assets for purposes of calculating, among
other items, his depreciation deductions and his share of any gain or loss on
a sale of the Partnership's assets. Conversely, a Section 754 election would
be disadvantageous if the transferee's tax basis in such Units is lower than
such Units' share of the aggregate tax basis in the Partnership's assets
immediately prior to the transfer. Thus, the amounts that a Unitholder would
be able to obtain on a sale or other disposition of his Units may be affected
favorably or adversely by the elections under Section 754.

The calculations and adjustments in connection with the Section 754
election depend, among other things, on the date on which a transfer occurs
and the price at which the transfer occurs. To help reduce the complexity of
those calculations and the resulting administrative cost to the Partnership,
the Managing General Partner will apply the following method in making the
necessary adjustments pursuant to the Section 754 election on transfers
subsequent to the transfers pursuant to this offering: the price paid by a
transferee for his Units will be deemed to be the lowest quoted trading price
for the Units during the calendar month in which the transfer was deemed to
occur, without regard to the actual price paid. The application of such
convention yields a less favorable tax result, as compared to adjustments
based on actual price, to a transferee who paid more than the "convention
price" for his Units. The calculations under Section 754 elections are
highly complex, and there is little legal authority concerning the mechanics
of the calculations, particularly in the context of publicly traded
partnerships. It is possible that the IRS

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will successfully assert that the adjustments made by the Managing General
Partner do not meet the requirements of the Code or the applicable
regulations and require a different tax basis adjustment to be made.

Should the IRS require a different tax basis adjustment to be made, and
should, in the Managing General Partner's opinion, the expense of compliance
exceed the benefit of the election, the Managing General Partner may seek
permission from the IRS to revoke the Section 754 election previously made
for the Partnership. Such a revocation may increase the ratio of a
Unitholder's distributive share of taxable income to cash distributions and
adversely affect the amount that a Unitholder will receive from the sale of
his Units.

ESTIMATES OF RELATIVE FAIR MARKET VALUES AND BASIS OF PROPERTIES

The consequences of the acquisition, ownership and disposition of Units
will depend in part on estimates by the Managing General Partner of the
relative fair market values and determinations of the tax basis of the assets
of the Partnership. The federal income tax consequences of such estimates
and determinations of tax basis may be subject to challenge and will not be
binding on the IRS or the courts. If the estimates of fair market value or
determinations of tax basis were found to be incorrect, the character and
amount of items of income, gain, loss, deduction or credit previously
reported by Unitholders might change, and Unitholders might be required to
amend their previously filed tax returns or to file claims for refund. See
"--Administrative Matters--Valuation Overstatements."

TREATMENT OF SHORT SALES

A Unitholder whose Units are loaned to a "short seller" to cover a short
sale of Units would appear to be considered as having transferred beneficial
ownership of such Units and would, thus, no longer be a partner with respect
to such Units during the period of such loan. As a result, during such
period, any Partnership income, gains, deductions, losses or credits with
respect to such Units would appear not to be reportable by such Unitholder,
any cash distributions received by the Unitholder with respect to such Units
would be fully taxable and all of such distributions would appear to be
treated as ordinary income. The IRS also may contend that a loan of Units to
a "short seller" constitutes a taxable exchange. If such a contention were
successfully made, the lending Unitholder may be required to recognize gain
or loss. Unitholders desiring to assure their status as partners should
modify their brokerage account agreements, if any, to prohibit their brokers
from borrowing their Units. The IRS has announced that it is actively
studying issues relating to the tax treatment of short sales of partnership
interests.

ALTERNATIVE MINIMUM TAX

Each Unitholder will be required to take into account his share of any
items of Partnership income, gain or loss for purposes of the alternative
minimum tax. A portion of the Partnership's depreciation deductions may be
treated as an item of tax preference for this purpose. A Unitholder's
alternative minimum taxable income derived from the Partnership may be higher
than his share of Partnership net income because the Partnership may use more
accelerated methods of depreciation for purposes of computing federal taxable
income or loss. Prospective Unitholders should consult with their tax
advisors as to the impact of an investment in Units on their liability for
the alternative minimum tax.

TAX-EXEMPT ENTITIES, REGULATED INVESTMENT COMPANIES AND FOREIGN INVESTORS

Employee benefit plans and most other organizations exempt from federal
income tax (including individual retirement accounts ("IRAs") and other
retirement plans) are subject to federal income tax on unrelated business
taxable income ("UBIT"). Substantially all of the income of the Partnership
is rental income from real property which is excluded from the definition of
UBIT. However, to the extent that any rental income is attributable to
debt-financed property, as defined in Section 514 of the Code, such income
will not satisfy the rental income exclusion and will be taxable to a
tax-exempt Unitholder as an item of UBIT. Although the Partnership currently
has only a small amount of debt-financed property (as defined under Section
514 of the Code), the Managing General Partner expects such proportion of
debt-financed

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properties to increase as the Partnership continues its acquisition program.
Accordingly, a larger percentage of the Partnership's total income may become
UBIT.

Regulated investment companies are required to derive 90% or more of
their gross income from interest, dividends, gains from the sale of stocks or
securities or foreign currency or certain related sources. It is not
anticipated that any significant amount of the Partnership's gross income
will be qualifying income.

Nonresident aliens and foreign corporations, trusts or estates that
acquire Units will be considered to be engaged in business in the United
States on account of ownership of such Units and as a consequence will be
required to file federal tax returns in respect of their distributive shares
of Partnership income, gain, loss, deduction or credit and pay federal income
tax at regular rates (net of credits, including withholding) on such income.
Generally, a partnership is required by Section 1446 of the Code to pay a
withholding tax on the portion of the partnership's income that is
effectively connected with the conduct of a United States trade or business
and that is allocable to the foreign partners, regardless of whether any
actual distributions have been made to such partners. However, under rules
applicable to publicly-traded partnerships, the Partnership will withhold
(currently at the rate of 39.6%) on actual cash distributions made quarterly
to foreign Unitholders. Each foreign Unitholder must obtain a taxpayer
identification number from the IRS and submit that number to the transfer
agent of the Partnership on a Form W-8 in order to obtain credit for the
taxes withheld. Subsequent adoption of the Treasury Regulations or the
issuance of other administrative pronouncements may require the Partnership
to change these procedures.

Because a foreign corporation that owns Units will be treated as engaged
in a United States trade or business, such a Unitholder will be subject to
United States branch profits tax at a rate of 30%, in addition to regular
federal income tax, on its allocable share of the Partnership's earnings and
profits (as adjusted for changes in the foreign corporation's "U.S. net
equity") that are effectively connected with the conduct of a United States
trade or business. Such a tax may be reduced or eliminated by an income tax
treaty between the United States and the country with respect to which the
foreign corporate Unitholder is a "qualified resident." In addition, such a
Unitholder is subject to special information reporting requirements under
Section 6038C of the Code.

A foreign Unitholder who sells or otherwise disposes of a Unit will be
subject to federal income tax on gain realized on the disposition of such
Unit to the extent that such gain is effectively connected with a United
States trade or business of the foreign Unitholder. The IRS has issued a
ruling under which all or a portion of any gain that is recognized on a sale
of a Unit by a foreign Unitholder will be subject to tax under the rule of
the preceding sentence. The Partnership does not expect that any material
portion of any such gain will avoid United States taxation. If less than all
of any such gain is so taxable, then Section 897 of the Code may increase the
portion of any gain that is recognized by a foreign Unitholder that is
subject to United States income tax and withholding of 10% of the amount
realized on the disposition of a Unit may apply if that foreign Unitholder
has held more than 5% in value of the Units during the five-year period
ending on the date of the disposition or if the Units are not regularly
traded on an established securities market at the time of the disposition.

UNIFORMITY OF UNITS

There can arise a lack of uniformity in the intrinsic tax
characteristics of Units sold pursuant to this offering and Units outstanding
prior to this offering. Without such uniformity, compliance with several
federal income tax requirements, both statutory and regulatory, could be
substantially diminished. In addition, such non-uniformity could have a
negative impact on the ability of a Unitholder to dispose of his interest in
the Partnership. Such lack of uniformity can result from the application of
Proposed Treasury Regulation Section 1.168-2(n) and Treasury Regulation
Section l.167(c)-1(a)(6) or the application of certain "ceiling" limitations
on the Partnership's ability to make allocations to eliminate disparities
between the tax basis and value attributable to Contributed Properties.

Depreciation conventions may be adopted or items of income and deduction
may be specially allocated in a manner that is intended to preserve the
uniformity of intrinsic tax characteristics among all Units, despite the
application of either Proposed Treasury Regulation Section 1.168-2(n) and
Treasury

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Regulation Section l.167(c)-l(a)(6) or the "ceiling" limitations to
Contributed Properties. Any such special allocation will be made solely for
federal income tax purposes. In the event the IRS disallows the use of such
conventions, some or all of the adverse consequences described in the
preceding paragraph could result. See "--Allocation of Partnership Income,
Gain, Loss and Deduction" and "--Tax Treatment of Operations--Section 754
Election."

DISPOSITION OF UNITS

GAIN OR LOSS IN GENERAL

If a Unit is sold or otherwise disposed of, the determination of gain or
loss from the sale or other disposition will be based on the difference
between the amount realized and the tax basis for such Unit. See "--Tax
Consequences of Unit Ownership--Basis of Units". Upon the sale of his Units,
a Unitholder's "amount realized" will be measured by the sum of the cash or
other property received plus the portion of the Partnership's nonrecourse
liabilities allocated to the Units sold. Similarly, upon a gift of his
Units, a Unitholder will be deemed to have realized gain with respect to the
portion of the Partnership's nonrecourse liabilities allocable to such Units.
To the extent that the amount of cash or property received plus the
allocable share of the Partnership's nonrecourse liabilities exceeds the
Unitholder's tax basis for the Units disposed of (in the case of a charitable
gift, only a portion of such tax basis may be offset against the nonrecourse
debt), the Unitholder will recognize gain. The tax liability resulting from
such gain could exceed the amount of cash received upon the disposition of
such Units.

The IRS has ruled that a partner must maintain an aggregate tax basis
for his interests in a single partnership (consisting of all interests
acquired in separate transactions). On a sale of a portion of such aggregate
interest, such partner would be required to allocate his aggregate tax basis
between the interest sold and the interest retained by some equitable
apportionment method. If applicable, the aggregation of tax basis of a
Unitholder effectively prohibits a Unitholder from choosing among Units with
varying amounts of inherent gain or loss to control the timing of the
recognition of such inherent gain or loss as would be possible in a stock
transaction. Thus, the IRS ruling may result in an acceleration of gain or
deferral of loss on a sale of a portion of a Unitholder's Units. It is not
clear whether such ruling applies to publicly traded partnerships, such as
the Partnership, the interests in which are evidenced by separate registered
certificates, providing a verifiable means of identifying each separate
interest and tracing the purchase price of such interest. A Unitholder
considering the purchase of additional Units or a sale of Units purchased at
differing prices should consult his tax advisor as to the possible
consequences of that IRS ruling.

To the extent that a portion of the gain upon the sale of a Unit is
attributable to a Unitholder's share of "substantially appreciated inventory
items" and "unrealized receivables" of the Partnership, as those terms are
defined in Section 751 of the Code, such portion will be treated as ordinary
income. Unrealized receivables include (i) to the extent not previously
includable in Partnership income, any rights to pay for services rendered or
to be rendered and (ii) amounts that would be subject to recapture as
ordinary income if the Partnership had sold its assets at their fair market
value at the time of the transfer of a Unit.

Gain from the sale or other disposition of a Unit may constitute
investment income under Section 163(d) of the Code. A Unitholder must report
to the transfer agent of the Partnership (on behalf of the Partnership) any
transfer of Units. See "--Information Return Filing Requirements."

The treatment of distributions received after a Unitholder has disposed
of his Units is unclear. Such a distribution may be fully taxable as
ordinary income or may reduce a Unitholder's tax basis for the Units disposed
of, resulting in a larger gain or smaller loss from such disposition.

TRANSFEROR/TRANSFEREE ALLOCATIONS

In general, the Partnership's taxable income and losses are determined
annually and are prorated on a monthly basis and subsequently apportioned
among the Unitholders in proportion to the number of Units owned by them as
of the opening of the New York Stock Exchange on the last business day of the

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month. However, extraordinary gain or loss realized on a Terminating Capital
Transaction is allocated among the Unitholders of record as of the opening of
the NYSE on the date such Terminating Capital Transaction occurs. As a
result of this monthly allocation, a Unitholder transferring Units in the
open market may be allocated income, gain, loss, deduction and credit accrued
after the transfer.

The use of the monthly conventions discussed above may not be permitted
by existing Treasury Regulations and, accordingly, Counsel is unable to opine
on the validity of the method of allocating income and deductions between the
transferors and transferees of Units. If the IRS treats transfers of Units
as occurring throughout each month and a monthly convention is not allowed by
the regulations (or only applies to transfers of less than all of a partner's
interest), the IRS may contend that taxable income or losses of the
Partnership must be reallocated among the Partners. If any such contention
were sustained, certain Unitholders' respective tax liabilities would be
adjusted to the possible detriment of other Unitholders. The Managing
General Partner is authorized to revise the Partnership's method of
allocation between transferors and transferees (as well as among Partners
whose interests otherwise vary during a taxable period) to comply with any
future regulations.

CONSTRUCTIVE TERMINATION OR DISSOLUTION OF PARTNERSHIP

Under Section 708(b)(l)(B) of the Code, a partnership will be considered
to have been terminated if within a twelve-month period there is a sale or
exchange of 50% or more of the interests in partnership capital and profits.
A termination results in a closing of the partnership's taxable year for all
partners, and the partnership's assets are treated as having been distributed
to the partners and reconveyed to the partnership, which is then treated as a
new partnership. A constructive termination of the Partnership will cause a
termination of the Operating Partnership. In the case of a Unitholder
reporting on a fiscal year other than a calendar year, the closing of a tax
year of the Partnership may result in more than twelve months' taxable income
or loss of the Partnership being includable in his taxable income for the
year of termination. In addition, each Unitholder will realize taxable gain
to the extent that any money distributed or deemed distributed to him
(including any net reduction in his share of the Partnership's nonrecourse
liabilities) exceeds the tax basis of his Units.

A termination of either Partnership under Section 708(b)(l)(B) could
result in adverse tax consequences to Unitholders because it could result in
a change in the tax basis for the Partnership's properties and would require
that new tax elections be made by the reconstituted partnerships. In
addition, such a termination could result in a deferral of Partnership
depreciation deductions. Further, such a termination may either accelerate
the application of (or subject the reconstituted partnerships to the
application of) any change in law effective as of a date after the
termination.

The Partnership may not have the ability to determine when a
constructive termination occurs as a result of transfers of Units because the
Units will be freely transferable under "street name" ownership. Thus, the
Partnership may be subject to penalty for failure to file a tax return and
may fail to make certain Partnership elections in a timely manner, including
the Section 754 Election.

PARTNERSHIP INCOME TAX INFORMATION RETURNS AND PARTNERSHIP AUDIT
PROCEDURES

The Partnership will use all reasonable efforts to furnish Unitholders
with tax information within 75 days after the close of each Partnership
taxable year. Specifically, the Partnership intends to furnish to each
Unitholder a Schedule K-1 which sets forth his allocable share of the
Partnership's income, gains, losses, deductions and credits, if any. In
preparing such information, the Managing General Partner will necessarily use
various accounting and reporting conventions to determine each Unitholder's
allocable share of income, gains, losses, deductions and credits. There is
no assurance that any such conventions will yield a result that conforms to
the requirements of the Code, regulations thereunder or administrative
pronouncements of the IRS. The Managing General Partner cannot assure
prospective Unitholders that the IRS will not contend that such accounting
and reporting conventions are impermissible. Contesting any such allegations
could result in substantial expense to the Partnership. In addition, if the
IRS were to prevail, Unitholders may incur substantial liabilities for taxes
and interest.

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The federal income tax information returns filed by the Partnership may
be audited by the IRS. The Code contains partnership audit procedures that
significantly simplify the manner in which IRS audit adjustments of
partnership items are resolved. Adjustments (if any) resulting from such an
audit may require each Unitholder to file an amended tax return, and possibly
may result in an audit of the Unitholder's return. Any audit of a
Unitholder's return could result in adjustments of non-partnership as well as
partnership items.

Under Sections 6221 through 6233 of the Code, partnerships generally are
treated as separate entities for purposes of federal tax audits, judicial
review of administrative adjustments by the IRS and tax settlement
proceedings. The tax treatment of partnership items of income, gain, loss,
deduction and credit is determined at the partnership level in a unified
partnership proceeding rather than in separate proceedings with the partners.
The Code provides for one partner to be designated as the "Tax Matters
Partner" for these purposes. The Partnership Agreement appoints the Managing
General Partner as the Tax Matters Partner for the Partnership.

The Tax Matters Partner is entitled to make certain elections on behalf
of the Partnership and Unitholders and can extend the statute of limitations
for assessment of tax deficiencies against Unitholders with respect to
Partnership items. In connection with adjustments to partnership tax returns
proposed by the IRS, the Tax Matters Partner may bind any Unitholder with
less than a 1% profits interest in the Partnership to a settlement with the
IRS unless the Unitholder elects, by filing a statement with the IRS, not to
give such authority to the Tax Matters Partner. The Tax Matters Partner may
seek judicial review (to which all the Unitholders are bound) of a final
Partnership administrative adjustment and, if the Tax Matters Partner fails
to seek judicial review, such review may be sought by any Unitholder having
at least a 1% profit interest in the Partnership and by Unitholders having,
in the aggregate, at least a 5% profits interest. Only one judicial
proceeding will go forward, however, and each Unitholder with an interest in
the outcome may participate.

The Unitholders will generally be required to treat Partnership items on
their federal income tax returns in a manner consistent with the treatment of
the items on the Partnership information return. In general, that
consistency requirement is waived if the Unitholder files a statement with
the IRS identifying the inconsistency. Failure to satisfy the consistency
requirement, if not waived, will result in an adjustment to conform the
treatment of the item by the Unitholder to the treatment on the Partnership
return. Even if the consistency requirement is waived, adjustments to the
Unitholder's tax liability with respect to Partnership items may result from
an audit of the Partnership's or the Unitholder's tax return. Intentional or
negligent disregard of the consistency requirement may subject a Unitholder
to substantial penalties.

INFORMATION RETURN FILING REQUIREMENTS

A Unitholder who sells or exchanges Units is required by Section 6050K
of the Code to notify the Partnership in writing of such sale or exchange,
and the Partnership is required to notify the IRS of such transaction and to
furnish certain information to the transferor and transferee. However, these
reporting requirements do not apply with respect to a sale by an individual
who is a citizen of the United States and who effects such sale through a
broker. In addition, a transferor and a transferee of a Unit will be
required to furnish to the IRS the amount of the consideration received for
such Unit that is allocated to goodwill or going concern value of the
Partnership. Failure to satisfy such reporting obligations may lead to the
imposition of substantial penalties.

NOMINEE REPORTING

Under Section 6031 (c) of the Code, persons who hold an interest in the
Partnership as a nominee for another person must report certain information
to the Partnership. Temporary Treasury Regulations provide that such
information should include (i) the name, address and taxpayer identification
number of the beneficial owners and the nominee; (ii) whether the beneficial
owner is (a) a person that is not a United States person, (b) a foreign
government, an international organization or any wholly owned agency or
instrumentality of either of the foregoing, or (c) a tax-exempt entity; (iii)
the amount and description of Units held, acquired or transferred for the
beneficial owners; and (iv) certain information including the

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dates of acquisitions and transfers, means of acquisitions and transfers, and
acquisition cost for purchases, as well as the amount of net proceeds from
sales. Brokers and financial institutions are required to furnish additional
information, including whether they are a United States person and certain
information on Units they acquire, hold or transfer for their own account. A
penalty of $50 per failure (up to a maximum of $100,000 per calendar year) is
imposed for failure to report such information to the Partnership. The
nominee is required to supply the beneficial owner of the Units with the
information furnished to the Partnership.

STATE AND OTHER TAXES

In addition to federal income taxes, Unitholders may be subject to other
taxes, such as state and local income taxes, unincorporated business taxes,
and estate, inheritance or intangible taxes that may be imposed by the
various jurisdictions in which the Partners reside or in which either
Partnership does business or owns property. Although an analysis of those
various taxes cannot be presented here, each prospective Unitholder should
consider the potential impact of such taxes on his investment in the
Partnership. The Operating Partnership owns property and does business in 37
states. A Unitholder will likely be required to file state income tax
returns in such states (other than states such as Texas and Florida not
having a state income tax or states in which the Partnership is required or
has elected to withhold and pay taxes on behalf of the Unitholders) and may
be subject to penalties for failure to comply with such requirements. In
addition, an obligation to file tax returns or to pay taxes may arise in
other states. Moreover, in certain states, tax losses may not produce a tax
benefit in the year incurred (if, for example, the Partner has no income from
sources within that state) and also may not be available to offset income in
subsequent taxable years.

It is the responsibility of each prospective Unitholder to investigate
the legal and tax consequences, under the laws of pertinent states or
localities, of his investment in the Partnership. Accordingly, each
prospective Unitholder should consult, and must depend upon his own tax
counsel or other advisor with regard to those matters. Further, it is the
responsibility of each Unitholder to file all state and local, as well as
federal, tax returns that may be required of such Unitholder.

INVESTMENT IN THE PARTNERSHIP BY EMPLOYEE BENEFIT PLANS

An investment in the Partnership by an employee benefit plan is subject
to certain additional considerations because the investments of such plans
are subject to the fiduciary responsibility and prohibited transaction
provisions of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), and restrictions imposed by Section 4975 of the Code. As used
herein, the term "employee benefit plan" includes, but is not limited to,
qualified pension, profit-sharing and stock bonus plans, Keogh plans,
Simplified Employee Pension Plans, and tax deferred annuities or Individual
Retirement Accounts established or maintained by an employer or employee
organization. Among other things, consideration should be given to (a)
whether such investment is prudent under Section 404(a)(1)(B) of ERISA; (b)
whether in making such investment such plan will satisfy the diversification
requirement of Section 404(a)(1)(C) of ERISA; and (c)(i) the fact that such
investment could result in recognition of UBIT by such plan even if there is
no net income, (ii) the effect of an imposition of income taxes on the
potential investment return for an otherwise tax-exempt investor, and (iii)
whether, as a result of the investment, the plan will be required to file an
exempt organization business income tax return with the IRS. See "Federal
Income Tax Considerations--Tax Treatment of Operations--Tax-Exempt Entities,
Regulated Investment Companies and Foreign Investors". The person with
investment discretion with respect to the assets of an employee benefit plan
(a "fiduciary") should determine whether an investment in the Partnership is
authorized by the appropriate governing instrument and is a proper investment
for such plan.

In addition, a fiduciary of an employee benefit plan should consider
whether such plan will, by investing in the Partnership, be deemed to own an
undivided interest in the assets of the Partnership, with the result that the
Managing General Partner also would be a fiduciary of such plan and the
Partnership would be subject to the regulatory restrictions of ERISA,
including its prohibited transaction rules, as well as the prohibited
transaction rules of the Code.

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Section 406 of ERISA and Section 4975 of the Code (which also applies to
Individual Retirement Accounts which are not considered part of an employee
benefit plan) prohibit an employee benefit plan from engaging in certain
transactions involving "plan assets" with parties that are "parties in
interest" under ERISA or "disqualified persons" under the Code with respect
to the plan. The Department of Labor issued final regulations on November 13,
1986, providing guidance with respect to whether the assets of an entity in
which employee benefit plans acquire equity interests would be deemed "plan
assets" under certain circumstances. Pursuant to these regulations, an
entity's assets would not be considered to be "plan assets" if, among other
things, (i) the equity interests acquired by employee benefit plans are
publicly offered securities, i.e., the equity interests are widely held by
100 or more investors independent of the issuer and each other, freely
transferable and registered pursuant to certain provisions of the federal
securities laws, (ii) the entity is an "operating company", i.e., it is
primarily engaged in the production or sale of a product or service other
than the investment of capital either directly or through a majority-owned
subsidiary or subsidiaries, or (iii) there is no significant investment by
benefit plan investors, which is defined to mean that less than 25% of the
value of each class of equity interest (disregarding certain interests held
by the Managing General Partner, its affiliates and certain other persons) is
held by employee benefit plans (as defined in Section 3(3) of ERISA), whether
or not they are subject to the provisions of Title I of ERISA, plans
described in Section 4975(e)(1) of the Code, and any entities whose
underlying assets include plan assets by reason of a plan's investments in
the entity. The Partnership's assets would not be considered "plan assets"
under these regulations because it is expected that the investment will
satisfy the requirements in (i) above, and also may satisfy requirements (ii)
and (iii) above.

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UNDERWRITING

The Underwriters named below, acting through their Representative,
Morgan Keegan & Company, Inc., have agreed, subject to the terms and
conditions contained in the Underwriting Agreement, to purchase from the
Partnership the number of Units set forth opposite their respective names
below:

<TABLE>
<CAPTION>
NUMBER OF UNITS
UNDERWRITER TO BE PURCHASED
----------- ---------------
<S> <C>
Morgan Keegan & Company, Inc. ................

Total................................... 1,800,000
---------
---------
</TABLE>

The Underwriting Agreement provides that the Underwriters are obligated
to purchase all of the Units offered hereby (other than those covered by the
over-allotment option described below) if any such Units are purchased. The
Partnership has been advised by the Representatives that the Underwriters
propose to offer the Units to the public at the offering price set forth on
the cover page of this Prospectus and to certain dealers at such price less a
concession not in excess of $._____ per Unit. The Underwriters may allow,
and such dealers may reallow, a discount not in excess of $._____ per Unit to
other dealers. The public offering price and the concessions and discount to
dealers may be changed by the Underwriters after the Offering.

The Partnership has granted to the Underwriters an option, expiring on
the close of business on the 30th day subsequent to the date of this
Prospectus, to purchase up to an additional 270,000 Units at the public
offering price, less underwriting discount, as shown on the cover page of
this Prospectus. The Underwriters may exercise such option solely for the
purpose of covering over-allotments incurred in the sale of the Units. To
the extent that the Underwriters exercise such option, each Underwriter will
become obligated, subject to certain conditions, to purchase approximately
the same percentage of such additional Units as the number of Units set forth
next to such Underwriter's name in the preceding table bears to the total
offered initially.

The Partnership has agreed to indemnify the several Underwriters and
certain related persons or to contribute to losses arising out of certain
liabilities, including liabilities under the Securities Act of 1933, as
amended.

With certain limited exceptions, the Partnership and certain Unitholders
have agreed not to offer, sell, contract to sell, grant any option to
purchase or otherwise dispose (or announce any offer, sale, grant of any
option to purchase or other disposition) of any Units, or any securities
convertible into, or exercisable or exchangeable for, Units for a period of
180 days from the date of this Prospectus, without the prior written consent
of the Representatives.

Morgan Keegan Mortgage Company, Inc. is an affiliate of Morgan Keegan &
Company, Inc. In connection with the closing of the Mortgage Warehouse
Facility, the Partnership will pay Morgan Keegan Mortgage Company, Inc. a fee
of $100,000. In addition, Morgan Keegan Mortgage Company, Inc. is entitled
to receive a 1% fee on the first $10,000,000 advanced to the Partnership.

Certain of the Underwriters make a market in the Partnership's Units.
During the two days immediately prior to the offer and sale of the Units,
regulations under the Exchange Act impose restrictions on the market making
activities of such Underwriters, including price and volume limitations.
Certain of the Underwriters may engage in permitted passive market making
activities during the two business days immediately prior to the offer and
sale of the Units.

The Underwriters do not intend to sell Units to any account over which
they exercise discretionary authority.

-58-

<PAGE>

The foregoing does not purport to be a complete statement of the terms
and conditions of the Underwriting Agreement and related documents, a copy of
which has been filed as an exhibit to the Registration Statement of which
this Prospectus is a part.

LEGAL MATTERS

The validity of the Units to be issued by the Partnership in connection
with the Offering will be passed on by Middleberg, Riddle & Gianna, Dallas,
Texas. Certain matters will be passed upon for the Underwriters by Haynes
and Boone, L.L.P., Dallas, Texas.

EXPERTS

The financial statements of the Partnership as of December 31, 1995 and
1994, and for each of the three years in the period ended December 31, 1995
included in this Prospectus and the related financial statement schedule
incorporated by reference therein have been audited by Deloitte & Touche
LLP, independent auditors, as stated in their reports which are included and
incorporated by reference herein, and have been so included and incorporated
in reliance upon the reports of such firm given upon their authority as
experts in accounting and auditing.

The financial statements of Burger King Limited Partnership II as of
December 31, 1995 and 1994 and for each of the years in the three-year period
ended December 31, 1995, and the related financial statement schedule as of
December 31, 1995, have been incorporated herein by reference, in reliance
upon the report of KMPG Peat Marwick LLP, independent certified public
accountants, incorporated hereby by reference and upon the authority of said
firm as experts in accounting and auditing.

The financial statements of WW Services, Inc. as of September 30, 1995
and 1994, and for each of the two years then ended incorporated by reference
herein have been audited by Tanner and Long, P.C., independent auditors, as
stated in their report incorporated by reference herein and has been so
included in reliance on the report of such firm given upon their authority as
experts in accounting and auditing.

The financial statements of Wiggins Enterprises, Inc. as of September
30, 1995, and for the nine months then ended incorporated by reference herein
have been audited by Thigpen & Lanier, independent auditors, as stated in their
report incorporated by reference herein and has been so included in reliance on
the report of such firm given upon their authority as experts in accounting and
auditing.

AVAILABLE INFORMATION

The Partnership is subject to the informational reporting requirements
of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and
the regulations promulgated thereunder, and in connection therewith files
reports and other information with the Securities and Exchange Commission
(the "Commission"). Reports, proxy statements and other information filed by
the Partnership can be inspected and copied at the public reference
facilities maintained by the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the Commission's Regional Offices at 26
Federal Plaza, New York, New York 10278 and 219 South Dearborn, Room 1204,
Chicago, Illinois 60604. In addition, copies of such material can be
obtained from the public reference section of the Commission, 450 Fifth
Street, N.W., Washington, D.C. 20549, at the Commission's prescribed rates.
The Partnership's Units are listed for

-59-

<PAGE>

trading on the New York Stock Exchange under the symbol "USV". Reports and
other information concerning the Partnership can be inspected at the offices
of such Exchange, 20 Broad Street, New York, New York 10005.

The Partnership has filed with the Commission, 450 Fifth Street, N.W.,
Washington, D.C. 20549, a Registration Statement on Form S-3 (herein,
together with all amendments thereto, the "Registration Statement") under the
Securities Act of 1933, as amended (the "Act"), with respect to the Units.
This Prospectus does not contain all information set forth in the
Registration Statement and in the exhibits thereto. Statements herein
concerning the contents of any contract or other document are not necessarily
complete, and in each instance, reference is made to such contract or other
document filed with the Commission as an exhibit to the Registration
Statement, or otherwise, each such statement being qualified and amplified in
all respects by such reference. Items of information omitted from the
Prospectus but contained in the Registration Statement may be obtained from
the public reference room of the Commission in Washington, D.C. upon payment
of the fee prescribed by the Rules and Regulations of the Commission or may
be examined there without charge.

INCORPORATION BY REFERENCE

The following documents previously filed by the Partnership with the
Commission are incorporated herein by reference:

(a) The Partnership's Annual Report on Form 10-K for the fiscal year
ended December 31, 1995;

(b) The Partnership's Current Report on Form 8-K dated April 19, 1996;
and

(c) All documents subsequently filed by the Partnership pursuant to
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act prior to the
termination of the Offering. Such documents shall be deemed to be
incorporated by reference in this Prospectus and to be a part hereof from the
date of filing of such documents. Any statement contained herein or in a
document incorporated or deemed to be incorporated herein by reference herein
shall be deemed to be modified or superseded for purposes of this Prospectus
to the extent that a statement contained herein or in any subsequently filed
document which is incorporated or deemed to be incorporated by reference
herein, modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or
superseded, to constitute a part of this Prospectus.

The Managing General Partner of the Partnership will provide without
charge to each person, including any beneficial owner, to whom a copy of this
Prospectus is delivered, upon the written or oral request of such person, a
copy of any or all of the documents incorporated herein by reference, other
than exhibits to such documents unless such exhibits are specifically
incorporated by reference into such documents. Requests should be addressed
to President, U.S. Restaurant Properties, Inc., 5310 Harvest Hill Road, Suite
270, Dallas, Texas 75230. The telephone number is (214) 387-1487, FAX (214)
490-9119.

-60-

<PAGE>

INDEX TO FINANCIAL STATEMENTS

U.S. RESTAURANT PROPERTIES MASTER L.P.

PRO FORMA FINANCIAL STATEMENTS

Pro Forma Financial Information. . . . . . . . . . . . . . . . . . . . . . . . . F-2

Pro Forma Consolidated Balance Sheet as of
December 31, 1995 (unaudited) and Notes thereto . . . . . . . . . . . . . . F-3

Pro Forma Condensed Consolidated Statement of Income
for the year ended December 31, 1995
(unaudited) and Notes thereto . . . . . . . . . . . . . . . . . . . . . . . F-4

FINANCIAL STATEMENTS
U.S. RESTAURANT PROPERTIES MASTER L.P.

Independent Auditors' Report . . . . . . . . . . . . . . . . . . . . . . . . . . F-5

Consolidated Balance Sheets at
December 31, 1995 and 1994. . . . . . . . . . . . . . . . . . . . . . . . . F-6

Consolidated Statements of Income for the years
ended December 31, 1995, 1994 and 1993. . . . . . . . . . . . . . . . . . . F-7

Consolidated Statements of Cash Flows for the
years ended December 31, 1995, 1994 and 1993. . . . . . . . . . . . . . . . F-8

Consolidated Statements of Partners' Capital for
the years ended December 31, 1995, 1994 and 1993. . . . . . . . . . . . . . F-9

Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . F-10

</TABLE>

F-1

<PAGE>

PRO FORMA FINANCIAL INFORMATION

The following December 31, 1995 unaudited Pro Forma Consolidated Balance
Sheet of U.S. Restaurant Properties, Master L.P. (the "Partnership") consists
of the Partnership's December 31, 1995 balance sheet adjusted on a pro forma
basis to reflect as of December 31, 1995: (a) the purchase of 27 properties
since January 1, 1996 and the acquisition of 105 properties under binding
contracts with the assumption of related ground leases (all of which are
treated as operating leases); (b) the issuance of 327,836 Units in connection
with the purchase of 27 properties since January 1, 1996; (c) the issuance
and sale by the Partnership in this Offering of 1,800,000 Units and the
application of the net proceeds therefrom; and (d) additional borrowings to
purchase the Acquisition Properties. The unaudited Pro Forma Consolidated
Balance Sheet is not necessarily indicative of what the actual financial
position of the Partnership would have been at December 31, 1995 had all of
these transactions occurred and it does not purport to represent the future
financial position of the Partnership.

The unaudited Pro Forma Condensed Consolidated Statement of Income for
the year ended December 31, 1995 is presented as if the following had
occurred as of January 1, 1995: (a) the purchase of 16 properties acquired on
various dates from March 1995 through December 1995; (b) the purchase of 27
properties completed since January 1, 1996 and the acquisition of 105
properties under contract with the assumption of related ground leases (all
of which are treated as operating leases); (c) the issuance and sale by the
Partnership in this Offering of 1,800,000 Units and the application of the
net proceeds therefrom; and (d) additional borrowings to purchase the
Acquisition Properties. The purchase and operations of the Acquisition
Properties are being included in the pro forma financial statements because
(a) 27 of such properties have already been acquired and (b) the proceeds of
the Offering are being used to acquire the 105 properties under contract and
the Partnership presently intends to consummate such acquisitions. The
unaudited Pro Forma Condensed Consolidated Statement of Income is not
necessarily indicative of what the actual results of operations of the
Partnership would have been assuming the transactions described above had
been completed as of January 1, 1995 nor do they purport to represent the
results of operations for future periods.

These pro forma consolidated financial statements should be read in
conjunction with all of the financial statements and the notes thereto
contained elsewhere in this Prospectus. In management's opinion, all
adjustments necessary to properly reflect the above indicated transactions
have been made.

F-2

<PAGE>

U.S. RESTAURANT PROPERTIES, MASTER LP

PRO FORMA CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1995
(Unaudited)

(In thousands)
<TABLE>
<CAPTION>
ACQUISITIONS/
OFFERING PRO
HISTORICAL ADJUSTMENTS (a) FORMA
---------- --------------- --------
<S> <C> <C> <C>
Assets

Cash $ 7 $ $ 7
Receivables, net 951 951
Purchase deposits 1,792 (1,792)(b) 0
Prepaid expenses 315 315
Notes receivable 269 269
Net investment in direct financing leases 19,371 19,371
Land 27,493 28,460 (c) 55,953
Buildings and leasehold improvements, net 6,257 34,763 (c) 41,020
Machinery and equipment, net 224 3,468 (c) 3,692
Intangibles, net 14,804 6,144 (c) 20,948
------- ------- --------
$71,483 $71,043 $142,526
------- ------- --------
------- ------- --------

Liabilities and Partners' Capital

Accounts payable $ 677 $ $ 677
Line of credit 10,931 25,522 (d) 36,453
Capitalized lease obligations 562 0 562

General Partners' capital 1,241 1,241
Limited Partners' capital 58,072 45,521 (e) 103,593
------- ------- --------
$71,483 $71,043 $142,526
------- ------- --------
------- ------- --------
</TABLE>
____________________

(a) Reflects pro forma adjustments for acquisitions and related tenant and
ground leases on the preliminary assessment that all such leases represent
operating leases. Final determination of the proper classification of
leases is subject to the completion of the acquisition transactions.

(b) Application of $1,792 of purchase deposits to the purchase price of
27 properties purchased since January 1, 1996 and 105 properties under
binding contracts.

(d) Increase in borrowings to finance the acquisition of 27 properties
completed since January 1, 1996 and for 105 properties under binding
contracts.

(e) Recording the issuance of 327,836 Units in connection with the acquisition
of certain properties since January 1, 1996 valued at approximately $20 per
Unit (the market price of the Units issued at the respective dates of
acquisition which approximates the guaranteed value of the Units discounted
to reflect the present value on the dates the Units were issued) and the
net proceeds relating to the issuance of 1,800,000 Units to be issued in
this Offering at an assumed market price of $23 per Unit, less
underwriters' discounts and commissions and offering costs.

F-3

<PAGE>

U.S. RESTAURANT PROPERTIES, MLP

PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1995
(Unaudited)

(In thousands except for per unit data)
<TABLE>
<CAPTION>
ACQUISITIONS/
1995 OFFERING PRO
HISTORICAL ACQUISITIONS ADJUSTED ADJUSTMENTS(c) FORMA
---------- ------------ -------- -------------- -------
<S> <C> <C> <C> <C> <C>
Total Revenues $9,780 $1,280 (a) $11,060 $10,436 (d) $21,496

Rent 1,405 123 (a) 1,528 645 (d) 2,173
Depreciation and amortization 1,541 291 (a) 1,832 2,822 (d) 4,654
Taxes, general and administrative 1,419 114 (a) 1,533 716 (d) 2,249
Interest expense (income), net 192 687 (a) 879 1,807 (e) 2,686
------ ------ ------- ------- -------
Total expenses 4,557 1,215 5,772 5,990 11,762

Net income $5,223 $ 65 $ 5,288 $ 4,446 $ 9,734
------ ------ ------- ------- -------
------ ------ ------- ------- -------
Net income allocable to unitholders $5,119 $ 5,183 $ 9,541
------ ------- -------
------ ------- -------
Average number of units outstanding 4,638 54 (b) 4,680 2,128 (f) 6,808
------ ------ ------- ------- -------
------ ------ ------- ------- -------
Net income per unit $ 1.10 $ 1.11 $ 1.40
------ ------- -------
------ ------- -------
</TABLE>
____________________

(a) Revenues relating to 16 properties acquired on various dates from March
1995 through December 1995.

(b) In connection with the acquisition of three properties, 54,167 Units were
issued.

(c) Reflects pro forma adjustments for acquisitions and related tenant and
ground leases on the preliminary assessment that all such leases represent
operating leases. Final determination of the proper classification of
leases is subject to the completion of the acquisition transactions.

(d) Results of operations for the acquisition of 27 properties completed since
January 1, 1996, and for 105 properties under binding contracts.

(e) Adjustment for interest expense as a result of the proceeds of the Offering
and purchase of the Acquisition Properties. The $40 million line of credit
bears interest at 1.8 percentage points above LIBOR. For pro forma
purposes, the Partnership's average interest rate of 7.7% on the line of
credit for 1995 is used. The LIBOR rate as of April 16, 1996 approximates
5.5%.

(f) Reflects the 1,800,000 Units to be issued in the Offering and 327,836 Units
issued in conjunction with acquisitions completed since January 1, 1996.

F-4
<PAGE>
INDEPENDENT AUDITORS' REPORT

The Partners
U.S. Restaurant Properties Master L.P.

We have audited the accompanying consolidated balance sheets of U.S.
Restaurant Properties Master L.P. (the Partnership) as of December 31, 1995 and
1994, and the related consolidated statements of income, partners' capital, and
cash flows for each of the three years in the period ended December 31, 1995.
These financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. 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 audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in
all material respects, the financial position of U.S. Restaurant Properties
Master L.P. as of December 31, 1995 and 1994, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1995, in conformity with generally accepted accounting principles.

DELOITTE & TOUCHE LLP

Dallas, Texas
February 17, 1996
(April 19, 1996 as to Note 14)

F-5
<PAGE>
U.S. RESTAURANT PROPERTIES MASTER L.P.

CONSOLIDATED BALANCE SHEETS

ASSETS

<TABLE>
<CAPTION>
DECEMBER 31,
------------------------------
1995 1994
-------------- --------------
<S> <C> <C>
Cash and equivalents............................................................. $ 7,127 $ 680,646
Marketable securities............................................................ -- 853,791
Receivables, net................................................................. 951,095 715,202
Purchase deposits (Note 3)....................................................... 1,791,682 --
Prepaid expenses................................................................. 315,189 122,962
Notes receivable (Note 10)....................................................... 268,654 --
Net investment in direct financing leases........................................ 19,371,015 21,237,432
Land............................................................................. 27,492,895 23,414,280
Buildings and leasehold improvements, net........................................ 6,257,188 1,548,375
Machinery and equipment, net..................................................... 223,739 --
Intangibles, net................................................................. 14,804,155 14,316,583
-------------- --------------
$ 71,482,739 $ 62,889,271
-------------- --------------
-------------- --------------

LIABILITIES AND PARTNERS' CAPITAL
Accounts payable................................................................. $ 677,398 $ 445,518
Line of credit................................................................... 10,930,647 --
Capitalized lease obligations.................................................... 562,544 774,602
Commitments (Notes 7 and 8)
General Partners' capital........................................................ 1,240,604 1,308,543
Limited Partners' capital........................................................ 58,071,546 60,360,608
-------------- --------------
$ 71,482,739 $ 62,889,271
-------------- --------------
-------------- --------------
</TABLE>

See Notes to Consolidated Financial Statements.

F-6
<PAGE>
U.S. RESTAURANT PROPERTIES MASTER L.P.

CONSOLIDATED STATEMENTS OF INCOME

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------------------
1995 1994 1993
-------------- -------------- -------------
<S> <C> <C> <C>
GROSS RENTAL RECEIPTS (NOTE 9).................................... $ 11,646,706 $ 10,465,533 $ 9,848,394
-------------- -------------- -------------
-------------- -------------- -------------
REVENUES FROM LEASED PROPERTIES
Rental income................................................... $ 7,539,634 $ 6,339,993 $ 5,665,976
Amortization of unearned income on direct financing leases...... 2,240,655 2,453,063 2,665,667
-------------- -------------- -------------
Total Revenues.................................................. 9,780,289 8,793,056 8,331,643
EXPENSES
Rent............................................................ 1,405,380 1,347,748 1,294,669
Depreciation and amortization................................... 1,540,900 1,361,136 1,383,489
Taxes, general and administrative............................... 1,419,279 1,143,956 1,007,914
Interest expense (income), net.................................. 192,142 (3,515) 44,234
-------------- -------------- -------------
4,557,701 3,849,325 3,730,306
Provision for write down or disposition of properties........... -- 11,061 73,739
-------------- -------------- -------------
Total Expenses.................................................. 4,557,701 3,860,386 3,804,045
-------------- -------------- -------------
Net income........................................................ $ 5,222,588 $ 4,932,670 $ 4,527,598
-------------- -------------- -------------
-------------- -------------- -------------
Net income allocable to unitholders............................... $ 5,119,175 $ 4,834,017 $ 4,437,051
-------------- -------------- -------------
-------------- -------------- -------------
Average number of outstanding units............................... 4,637,865 4,635,000 4,635,000
-------------- -------------- -------------
-------------- -------------- -------------
Net income per unit............................................... $ 1.10 $ 1.04 $ 0.96
-------------- -------------- -------------
-------------- -------------- -------------
</TABLE>

See Notes to Consolidated Financial Statements.

F-7
<PAGE>
U.S. RESTAURANT PROPERTIES MASTER L.P.

CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------
1995 1994 1993
---------------- ------------- -------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income...................................................... $ 5,222,588 $ 4,932,670 $ 4,527,598
---------------- ------------- -------------
Adjustments to reconcile net income to net cash from operating
activities:
Depreciation and amortization................................... 1,540,900 1,361,136 1,383,489
Provision for write down or disposition of properties........... -- 11,061 73,739
Marketable securities........................................... 853,791 (853,791) --
Decrease (increase) in receivables, net......................... (235,893) (301,505) 10,873
Decrease (increase) in prepaid expenses......................... (192,227) (35,673) 1,262
Reduction in net investment in direct financing
leases......................................................... 1,866,417 1,672,477 1,468,790
Increase in accounts payable.................................... 231,880 203,333 9,506
---------------- ------------- -------------
4,064,868 2,057,038 2,947,659
---------------- ------------- -------------
9,287,456 6,989,708 7,475,257
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of properties................................ -- -- 1,130,000
Purchase of property............................................ (8,083,302) -- --
Purchase of intangibles......................................... (1,662,729) -- --
Purchase of machines and equipment.............................. (231,609) -- --
Purchase deposits paid.......................................... (1,791,682) -- --
Increase in notes receivable.................................... (268,654) -- --
---------------- ------------- -------------
(12,037,976) -- 1,130,000
CASH FLOWS USED IN FINANCING ACTIVITIES:
Increase in loan origination costs.............................. (76,843) -- --
Reduction in capitalized lease obligations...................... (212,058) (191,008) (172,047)
Increase in line of credit...................................... 10,930,647 -- --
Cash distributions.............................................. (8,001,995) (7,378,157) (8,129,829)
Purchase of partnership units................................... (546,750) -- --
Purchase of special general partner interest.................... (16,000) -- --
---------------- ------------- -------------
2,077,001 (7,569,165) (8,301,876)
---------------- ------------- -------------
Increase (decrease) in cash and equivalents..................... (673,519) (579,457) 303,381
Cash and equivalents at beginning of year....................... 680,646 1,260,103 956,722
---------------- ------------- -------------
Cash and equivalents at end of year............................. $ 7,127 $ 680,646 $ 1,260,103
---------------- ------------- -------------
---------------- ------------- -------------
SUPPLEMENTAL DISCLOSURE:
Interest paid during the year................................... $ 256,325 $ 89,912 $ 108,874
---------------- ------------- -------------
---------------- ------------- -------------
NON-CASH INVESTING ACTIVITIES
Units issued for property....................................... $ 985,156 $ -- $ --
---------------- ------------- -------------
---------------- ------------- -------------
</TABLE>

See Notes to Consolidated Financial Statements.

F-8
<PAGE>
U.S. RESTAURANT PROPERTIES MASTER L.P.

CONSOLIDATED STATEMENTS OF PARTNERS' CAPITAL

<TABLE>
<CAPTION>
GENERAL LIMITED
PARTNERS PARTNERS TOTAL
------------- -------------- --------------
<S> <C> <C> <C>
Balance at January 1, 1993........................................ $ 1,429,488 $ 66,287,381 $ 67,716,869
Net income........................................................ 90,547 4,437,051 4,527,598
Cash distributions................................................ (162,588) (7,967,241) (8,129,829)
------------- -------------- --------------
Balance at December 31, 1993...................................... 1,357,447 62,757,191 64,114,638
------------- -------------- --------------
Net income........................................................ 98,653 4,834,017 4,932,670
Cash distributions................................................ (147,557) (7,230,600) (7,378,157)
------------- -------------- --------------
Balance at December 31, 1994...................................... 1,308,543 60,360,608 61,669,151
------------- -------------- --------------
Special general partner interest transfer......................... (12,899) (3,101) (16,000)
Net income........................................................ 103,413 5,119,175 5,222,588
Purchase of partnership units..................................... -- (546,750) (546,750)
Units issued for property......................................... -- 985,156 985,156
Cash distributions................................................ (158,453) (7,843,542) (8,001,995)
------------- -------------- --------------
Balance at December 31, 1995...................................... $ 1,240,604 $ 58,071,546 $ 59,312,150
------------- -------------- --------------
------------- -------------- --------------
</TABLE>

See Notes to Consolidated Financial Statements.

F-9
<PAGE>
U.S. RESTAURANTS PROPERTIES MASTER L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. ORGANIZATION
U.S. Restaurant Properties Master L.P. (Partnership), formerly Burger King
Investors Master L.P., a Delaware limited partnership, was formed on December
10, 1985. The Partnership, through its 99% limited partnership interest in U.S.
Restaurant Properties Operating Limited Partnership (Operating Partnership),
also a Delaware Limited Partnership, acquired from Burger King Corporation (BKC)
in February 1986 for $94,592,000 an interest in 128 restaurant properties
(Properties) owned or leased by BKC and leased or subleased on a net lease basis
to BKC franchisees. The Partnership is the sole limited partner of the Operating
Partnership, and they are referred to collectively as the "Partnerships". U.S.
Restaurant Properties, Inc., formerly QSV Properties, Inc., (QSV), the managing
general partner and BKC, the special general partner, were both indirect
wholly-owned subsidiaries of Grand Metropolitan PLC prior to May 17, 1994, at
which time QSV was sold to the current owners. On January 20, 1995, the
Partnership paid Burger King Corporation $16,000 for its 0.02% interest in the
Operating and Master Limited Partnership.

The Partnership may issue an unlimited number of units. The units
outstanding as of December 31, 1995 and 1994 totaled 4,659,167 and 4,635,000,
respectively.

2. ACCOUNTING POLICIES
The financial statements have been prepared in accordance with generally
accepted accounting principles; however, this will not be the basis for
reporting taxable income to unitholders (see Note 9 for a reconciliation of
financial reporting income to taxable income). The financial statements reflect
the consolidated accounts of the Partnerships after elimination of significant
inter-partnership transactions.

Cash and equivalents include short-term, highly liquid investments with
original maturities of three months or less.

Marketable securities consist of U.S. treasury securities which have been
treated as trading securities as of December 31, 1994. As a result, they are
stated at market value.

An intangible asset was recorded for the excess of cost over the net
investment in direct financing leases in 1986. This intangible asset represents
the acquired value of future contingent rent receipts (based on a percentage of
each restaurant's sales) and is being amortized on a straight-line basis over 40
years.

Also included in intangible assets is the amount paid to acquire certain
leases with favorable rents payable to third party lessors. This amount is being
amortized over the remaining lease terms.

DEPRECIATION

Depreciation is computed using the straight-line method over estimated
useful lives of 10 to 20 years for financial statement purposes. Accelerated and
straight-line methods are used for tax purposes.

USE OF ESTIMATES

The preparation of financial statements, in conformity with generally
accepted accounting principles, requires management to make estimates and
assumptions that affect reported amounts of certain assets, liabilities, and
revenues and expenses as of and for the reporting periods. Actual results may
differ from such estimates.

LONG-LIVED ASSETS

In March 1995, Statement of Financial Accounting Standard ("SFAS") No. 121,
"Accounting for the Impairment of Long-Lived Assets and Long-Lived Assets to be
Disposed of" was issued. The Partnerships adopted SFAS No. 121 in 1995.
Long-lived assets include real estate, direct financing

F-10
<PAGE>
U.S. RESTAURANTS PROPERTIES MASTER L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

2. ACCOUNTING POLICIES (CONTINUED)
leases, and intangibles which are evaluated on an individual property basis.
Based on the Partnership's policy for reviewing impairment of long-lived assets,
there was no adjustment necessary to the accompanying consolidated financial
statements.

INCOME TAXES

No federal or, in most cases, state income taxes are reflected in the
consolidated financial statements because the Partnerships are not taxable
entities. The partners must report their allocable shares of taxable income or
loss in their individual income tax returns.

FAIR VALUE DISCLOSURE OF FINANCIAL INSTRUMENTS

The notes receivable and the line of credit are carried at amounts that
approximate their fair value.

STOCK-BASED COMPENSATION

In October 1995, Statement of Financial Accounting Standards No. 123,
"Accounting for Stock-Based Compensation," was issued, effective for calendar
year 1996. This statement applies to transactions in which an entity issues its
equity instruments to acquire goods or services from non-employees. Those
transactions must be accounted for based on the fair value of the consideration
received or the fair value of the equity instruments issued, whichever is more
reliably measurable. The Partnership has not completed the process of evaluating
the impact that will result from adopting such statement and therefore is unable
to disclose the impact the adoption will have on its financial position and
results of operations. Additionally, the effect of adopting the statement will
depend on the calculated value of the units issued and the extent to which units
are used in acquiring real estate properties in the future.

3. OTHER BALANCE SHEET INFORMATION

<TABLE>
<CAPTION>
DECEMBER 31,
------------------------------
1995 1994
-------------- --------------
<S> <C> <C>
RECEIVABLES, NET
Receivables.......................................................... $ 1,067,986 $ 832,093
Less allowance for doubtful accounts................................. 116,891 116,891
-------------- --------------
$ 951,095 $ 715,202
-------------- --------------
-------------- --------------
BUILDINGS AND LEASEHOLD IMPROVEMENTS, NET
Buildings and leasehold improvements................................. $ 8,882,138 $ 3,892,294
Less accumulated depreciation........................................ 2,624,950 2,343,919
-------------- --------------
$ 6,257,188 $ 1,548,375
-------------- --------------
-------------- --------------
INTANGIBLES, NET
Intangibles.......................................................... $ 28,178,508 $ 26,392,197
Less accumulated amortization........................................ 13,374,353 12,075,614
-------------- --------------
$ 14,804,155 $ 14,316,583
-------------- --------------
-------------- --------------
</TABLE>

Total purchase deposits of $1,791,682 included $1,075,000 of non-refundable
deposits.

On December 31, 1995, the Partnerships owned the land at 79 Properties and
leased the land at 60 Properties from third party lessors under operating
leases. The Partnerships in turn leased or subleased the land primarily to BKC
franchisees under operating leases.

F-11
<PAGE>
U.S. RESTAURANTS PROPERTIES MASTER L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

3. OTHER BALANCE SHEET INFORMATION (CONTINUED)
On December 31, 1995, the Partnerships owned the buildings on 124 Properties
and leased the buildings on 14 Properties from third party lessors under leases
accounted for as capital leases. The Partnerships own one property in which only
the land is owned and leased. The Partnerships leased 28 owned buildings to
franchisees under operating leases. These 28 buildings are stated at cost, net
of accumulated depreciation, on the balance sheet. A total of 109 buildings are
leased primarily to franchisees under direct financing leases. The net
investment in the direct financing leases represents the present value of the
future minimum lease receipts for these 109 buildings. One property is not
currently leased.

On December 31, 1995, there were 138 Partnership restaurant sites in
operation, and there was one closed site. The Partnerships continue to seek a
suitable tenant for the remaining site. The write-down of the closed site was
$11,061 and $73,739 in 1994 and 1993, respectively.

5. GUARANTEED STOCK PRICE
Three properties were acquired on October 10, 1995, with a combination of
cash and 54,167 partnership units. The partnership units are guaranteed to have
a value of $24 per unit three years from the transaction date. The unit price on
the date issued was $18 3/8. Any difference between the guaranteed value and the
actual value of the units at the end of the three year period is to be paid in
cash. These properties were recorded at the guaranteed value of the units
discounted to reflect the present value on the date the units were issued.

6. LINE OF CREDIT
On December 31, 1995, $10,930,647 had been drawn on the $20 million line of
credit. All properties are included as collateral on this line of credit. The
interest rate floats at 1.8 percentage points above LIBOR. The LIBOR rate at
December 31, 1995, was 5.375%. The line of credit also requires the Partnerships
to maintain a tangible net worth in excess of $40,500,000, a debt to tangible
net worth ratio of not more than 0.5 to 1, and a cash flow coverage ratio of not
less than 2 to 1 based upon a Proforma Five Year Bank Debt Amortization. The $20
million line of credit matures on June 27, 1998.

7. INVESTMENTS AND COMMITMENTS AS LESSOR
The Partnerships lease land and buildings primarily to BKC franchisees. The
building portions of most of the leases are direct financing leases while the
land portions are operating leases. The leases generally provide for a term of
20 years from the opening of the related restaurant, and do not contain renewal
options. The Partnerships, however, have agreed to renew a franchise lease if
BKC renews or

F-12
<PAGE>
U.S. RESTAURANTS PROPERTIES MASTER L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

7. INVESTMENTS AND COMMITMENTS AS LESSOR (CONTINUED)
extends the lessee's franchise agreement. As of December 31, 1995, the remaining
lease terms ranged from 1 to 28 years. The leases provide for minimum rents and
contingent rents based on a percentage of each restaurant's sales, and require
the franchisee to pay executory costs.

<TABLE>
<CAPTION>
DIRECT
FINANCING OPERATING
LEASES LEASES
-------------- --------------
<S> <C> <C>
MINIMUM FUTURE LEASE RECEIPTS FOR YEARS ENDING DECEMBER 31:
1996................................................................. $ 4,172,825 $ 4,957,086
1997................................................................. 4,115,977 4,943,011
1998................................................................. 3,810,947 4,886,906
1999................................................................. 3,018,938 4,599,365
2000................................................................. 2,056,720 3,798,127
Later.................................................................. 2,602,150 19,086,897
-------------- --------------
$ 19,777,557 $ 42,271,392
-------------- --------------
-------------- --------------
</TABLE>

<TABLE>
<CAPTION>
1995 1994
-------------- --------------
<S> <C> <C>
NET INVESTMENT IN DIRECT FINANCING LEASES AT DECEMBER 31:
Minimum future lease receipts........................................ $ 19,777,557 $ 23,950,382
Estimated unguaranteed residual values............................... 7,561,965 7,561,965
Unearned amount representing interest................................ (7,968,507) (10,274,915)
-------------- --------------
$ 19,371,015 $ 21,237,432
-------------- --------------
-------------- --------------
</TABLE>

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------------
1995 1994 1993
------------- ------------- -------------
<S> <C> <C> <C>
RENTAL INCOME:
Minimum rental income.................................... $ 3,583,609 $ 3,061,951 $ 3,029,998
Contingent rental income................................. 3,956,025 3,278,042 2,635,978
------------- ------------- -------------
$ 7,539,634 $ 6,339,993 $ 5,665,976
------------- ------------- -------------
------------- ------------- -------------
</TABLE>

If the restaurant properties are not adequately maintained during the term
of the tenant leases, such properties may have to be rebuilt before the leases
can be renewed, either by the Partnership as it considers necessary or pursuant
to Burger King's successor policy. The successor policy, which is subject to
change from time to time in Burger King's discretion, is intended to encourage
the reconstruction, expansion, or other improvement of older Burger King
restaurants and generally affects properties that are more than ten years old or
are the subject of a franchise agreement that will expire within five years.

Under the current partnership agreement, Burger King can require that a
restaurant property be rebuilt. If the tenant does not elect to undertake the
rebuilding, the Partnership would be required to make the required improvement
itself. However, as a condition to requiring the Partnership to rebuild, Burger
King would be required to pay the Partnership its percentage share ("Burger
King's Percentage Share") of the rebuilding costs. Such percentage share would
be equal to (i) the average franchise royalty fee percentage rate payable to
Burger King with respect to such restaurant, divided by (ii) the aggregate of
such average franchise royalty fee percentage rate and the average percentage
rate payable to the Partnership with respect to such restaurant property. The
managing general partner believes that Burger King's Percentage Share would
typically be 29% for a restaurant property.

F-13
<PAGE>
U.S. RESTAURANTS PROPERTIES MASTER L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

7. INVESTMENTS AND COMMITMENTS AS LESSOR (CONTINUED)
The managing general partner believes it is unlikely that any material
amount of rebuilding of Burger King restaurant properties will be required in
the next several years, if ever.

8. COMMITMENTS
The land at 46 Properties and the land and buildings at 14 Properties are
leased by the Partnerships from third party lessors. The building portions of
the leases are generally capital leases while the land portions are operating
leases. Commitment leases provide for an original term of 20 years and most are
renewable at the Partnership's option. As of December 31, 1995, the remaining
lease terms (excluding renewal option terms) ranged from 1 to 11 years. If all
renewal options are taken into account, the terms ranged from 8 to 33 years.
Rents payable may escalate during the original lease and renewal terms. For six
properties, the leases provide for contingent rent based on each restaurant's
sales.

<TABLE>
<CAPTION>
CAPITAL OPERATING
LEASES LEASES
----------- -------------
<S> <C> <C>
MINIMUM FUTURE LEASE OBLIGATIONS FOR YEARS ENDING DECEMBER 31:
1996...................................................................... $ 247,603 $ 1,357,289
1997...................................................................... 198,819 1,387,445
1998...................................................................... 139,610 1,349,357
1999...................................................................... 60,250 1,173,489
2000...................................................................... 4,328 938,647
Later..................................................................... 1,082 3,290,229
----------- -------------
Total minimum obligations (a)............................................... 651,692 $ 9,496,456
-------------
-------------
Amount representing interest................................................ (89,148)
-----------
Present value of minimum obligations........................................ $ 562,544
-----------
-----------
</TABLE>

- ------------------------
(a) Minimum Lease Obligations have not been reduced by minimum sublease rentals.

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------------------
1995 1994 1993
------------- ------------- -------------
<S> <C> <C> <C>
RENTAL EXPENSE
Minimum rental expense............................................. $ 1,303,666 $ 1,245,986 $ 1,213,564
Contingent rental expense.......................................... 101,714 101,762 81,105
------------- ------------- -------------
$ 1,405,380 $ 1,347,748 $ 1,294,669
------------- ------------- -------------
------------- ------------- -------------
</TABLE>

On July 21, 1995, the managing general partner authorized the Partnership to
repurchase up to 300,000 of its units in the open market. During 1995, 30,000
units were repurchased by the Partnership.

F-14
<PAGE>
U.S. RESTAURANTS PROPERTIES MASTER L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

9. RECONCILIATION OF FINANCIAL REPORTING INCOME TO TAXABLE INCOME
Financial reporting income differs from taxable income primarily because
generally accepted accounting principles reflect the building portion of leases
from Partnerships to franchisees as a net investment in direct financing leases.
For tax purposes, these leases are treated as operating leases. In addition,
differences exist in depreciation methods and asset lives.

<TABLE>
<CAPTION>
FINANCIAL
REPORTING RECONCILING TAXABLE
INCOME DIFFERENCES INCOME
------------- -------------- --------------
<S> <C> <C> <C>
REVENUES FROM LEASED PROPERTIES:
Rental income................................................... $ 7,539,634 $ 4,107,072 $ 11,646,706
Amortization of unearned income on direct financing leases...... 2,240,655 (2,240,655) --
------------- -------------- --------------
$ 9,780,289 $ 1,866,417 $ 11,646,706
------------- -------------- --------------
------------- -------------- --------------
EXPENSES:
Rent............................................................ $ 1,405,380 $ 280,872 $ 1,686,252
Depreciation and amortization................................... 1,540,900 1,396,966 2,937,866
General and administrative...................................... 1,419,279 -- 1,419,279
Interest expense (income), net.................................. 192,142 (68,814) 123,328
------------- -------------- --------------
4,557,701 1,609,024 6,166,725
------------- -------------- --------------
Net income...................................................... $ 5,222,588 $ 257,393 $ 5,479,981
------------- -------------- --------------
------------- -------------- --------------
</TABLE>

10. RELATED PARTY TRANSACTIONS
The managing general partner is responsible for managing the business and
affairs of the Partnerships. The Partnerships pay the managing general partner a
non-accountable annual allowance (adjusted annually to reflect increases in the
Consumer Price Index), plus reimbursement of out-of-pocket costs incurred to
other parties for services rendered to the Partnerships. The allowance for the
years ended December 31, 1995, 1994, and 1993, was $585,445, $542,508, and
$528,000, respectively. The Partnerships' accounts payable balance includes
$187,204 and $135,627 for this allowance as of December 31, 1995 and 1994,
respectively. The managing general partner paid no out-of-pocket costs to other
parties on behalf of the Partnerships during 1995, 1994, and 1993.

To compensate the Managing General Partner for its efforts and increased
internal expenses with respect to additional properties, the Partnership will
pay the Managing General Partner, with respect to each additional property
purchased: (i) a one-time acquisition fee equal to one percent of the purchase
price for such property and (ii) an annual fee equal to one percent of the
purchase price for such property, adjusted for increases in the Consumer Price
Index. For 1995, the one-time acquisition fee equaled $109,238 which was
capitalized, and the increase in the non-accountable annual fee equaled $29,375.
In addition, if the Rate of Return (as defined) on the Partnership's equity in
all additional properties exceeds 12 percent per annum for any fiscal year, the
Managing General Partner will be paid an additional fee equal to 25 percent of
the cash flow received with respect to such additional properties in excess of
the cash flow representing a 12 percent Rate of Return thereon. However, to the
extent such distributions are ultimately received by the Managing General
Partner in excess of those provided by its 1.98 percent Partnership interest,
they will reduce the fee payable with respect to such excess flow from any
additional properties.

In 1994, the Partnerships with the consent and financial participation of
BKC, continued rent relief for three properties.

F-15
<PAGE>
U.S. RESTAURANTS PROPERTIES MASTER L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

10. RELATED PARTY TRANSACTIONS (CONTINUED)
In 1993, the Partnerships sold two non-operating properties at slightly less
than their book values to BKC. At that time, BKC was the special general partner
and had an ownership interest of 0.02% in the Partnerships.

The managing general partner has agreed to make available to the Partnership
an unsecured, interest-free, revolving line of credit in the principal amount of
$500,000 to provide the Partnerships with the necessary working capital to
minimize or avoid seasonal fluctuation in the amount of quarterly cash
distributions. No loans were made or were outstanding at any time during the
years ended December 31, 1995, 1994, and 1993.

A note receivable of $255,000 is due from Arkansas Restaurants #10 L.P. at
December 31, 1995. The note receivable is due on September 1, 1996, and has an
interest rate of 9.0% per annum.

As of December 31, 1995, the managing general partner owned 90% of Arkansas
Restaurants #10 L.P.

On March 17, 1995 the limited partners granted the managing general partner
options to acquire up to 400,000 units, subject to certain adjustments under
anti-dilution provisions. The initial exercise price of each option is $15.50
which is the average closing price of the depository receipts for the units on
the New York Stock Exchange for the five trading days immediately after the date
of grant. The options are non-transferable except by operation of law and vest
and become exercisable on the first anniversary of the date as of which the
exercise price is determined, subject to earlier vesting and exercisability if
the managing general partner is removed as general partner. The term of the
options expires on the tenth anniversary of the date as of which the exercise
price is determined.

11. DISTRIBUTIONS AND ALLOCATIONS
Under the amended partnership agreement, cash flow from operations of the
Partnerships each year will be distributed 98.02% to the unitholders and 1.98%
to the general partners until the unitholders have received a 12% simple
(noncumulative) annual return for such year on the unrecovered capital per unit
($20.00, reduced by any prior distributions of net proceeds of capital
transactions); then any cash flow for such year will be distributed 75.25% to
the unitholders and 24.75% to the general partners until the unitholders have
received a total simple (noncumulative) annual return for such year of 17.5% on
the unrecovered capital per unit; and then any excess cash flow for such year
will be distributed 60.40% to the unitholders and 39.60% to the general
partners. The unitholders received 98.02% of all cash flow distributions for
1995 and 98% for 1994 and 1993.

Under the amended partnership agreement, net proceeds from capital
transactions (for example, disposition of the Properties) will be distributed
98.02% to the unitholders and 1.98% to the general partners until the
unitholders have received an amount equal to the unrecovered capital per unit
plus 12.0% cumulative, simple return on the unrecovered capital per unit
outstanding from time to time (to the extent not previously received from
distribution of cash flow or proceeds of prior capital transactions); then such
proceeds will be distributed 75.25% to the unitholders and 24.75% to the general
partners until the unitholders have received the total cumulative, simple return
of 17.5% on the unrecovered capital per unit; and then such proceeds will be
distributed 60.40% to the unitholders and 39.60% to the general partners. There
were no capital transactions in 1995 or 1994.

During 1993 two non-operating properties were sold at slightly less than
their book values. Both dispositions were capital transactions and resulted in
the special distributions to unitholders of 11 cents and 13 cents per unit on
September 13, and December 13, 1993, respectively.

All operating income and loss of the Partnership for each year generally
will be allocated among the partners in the same aggregate ratio as cash flow is
distributed for that year. Gain and loss from a

F-16
<PAGE>
U.S. RESTAURANTS PROPERTIES MASTER L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

11. DISTRIBUTIONS AND ALLOCATIONS (CONTINUED)
capital transaction generally will be allocated among the partners in the same
aggregate ratio as proceeds of the capital transactions are distributed except
to the extent necessary to reflect capital account adjustments.

12. SUMMARY BY QUARTER (UNAUDITED)

<TABLE>
<CAPTION>
PER UNIT
------------------------------------------------------------
MARKET PRICE
ALLOCABLE RELATED CASH -----------------------------
REVENUES NET INCOME NET INCOME DISTRIBUTIONS * HIGH LOW CLOSE
------------- ------------- ----------- --------------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
1993
First quarter............... $ 1,871,146 $ 925,817 $ 0.20 $ 0.37 $14 7/8 $13 3/4 $14 1/2
Second quarter.............. 2,116,827 1,146,078 0.24 0.48** 15 14 14 3/8
Third quarter............... 2,248,966 1,304,560 0.28 0.50** 16 7/8 14 3/8 16
Fourth quarter.............. 2,094,704 1,151,143 0.24 0.37 17 3/8 15 1/2 16 1/8
------------- ------------- ----- ----- ------- ------- -------
Annual...................... $ 8,331,643 $ 4,527,598 $ 0.96 $ 1.72**
------------- ------------- ----- -----
------------- ------------- ----- -----
1994
First quarter............... $ 1,983,987 $ 1,099,981 $ 0.23 $ 0.39 $16 3/4 $15 7/8 $15 7/8
Second quarter.............. 2,297,313 1,340,560 0.28 0.39 17 1/4 15 3/8 17 1/8
Third quarter............... 2,329,969 1,392,292 0.29 0.41 17 1/2 16 3/4 16 3/4
Fourth quarter.............. 2,181,787 1,099,837 0.24 0.42 17 3/8 13 14 7/8
------------- ------------- ----- ----- ------- ------- -------
Annual...................... $ 8,793,056 $ 4,932,670 $ 1.04 $ 1.61
------------- ------------- ----- -----
------------- ------------- ----- -----
1995
First quarter............... $ 2,122,620 $ 1,090,130 $ 0.23 $ 0.42 $16 1/2 $14 1/4 $16 1/8
Second quarter.............. 2,494,818 1,406,993 0.30 0.42 17 1/8 15 3/4 17 1/8
Third quarter............... 2,592,283 1,495,433 0.32 0.43 18 7/8 16 3/4 18 3/8
Fourth quarter.............. 2,570,568 1,230,032 0.25 0.44 20 1/4 18 19 3/4
------------- ------------- ----- ----- ------- ------- -------
Annual...................... $ 9,780,289 $ 5,222,588 $ 1.10 $ 1.71
------------- ------------- ----- -----
------------- ------------- ----- -----
</TABLE>

- ------------------------
* Represents amounts declared and paid in the following quarter.

** Includes special cash distributions of $0.11 for the second quarter and $0.13
for the third quarter.

13. PROFORMA (UNAUDITED)
The 1995 acquisitions consisted of 16 properties that were valued at
$10,731,187 based upon the purchase method of accounting. These properties were
acquired on various dates from March 1995 through December 1995. Three of the
properties were acquired with a combination of cash and 54,167 partnership
units. The 54,167 partnership units are guaranteed to have a market value of $24
three years from the transaction date and have certain registration rights.

The following proforma information was prepared by adjusting the actual
consolidated results of the Partnership for the years ended December 31, 1995
and 1994 for the effects of the 1995 acquisitions as if all such acquisitions
and related financing transactions including the issuance of 54,167 units had
occurred on January 1, 1994. Interest expense for proforma purposes was
calculated assuming a 7.7% interest rate for both years presented, which
approximates the rate the Partnership paid during 1995.

F-17
<PAGE>
U.S. RESTAURANTS PROPERTIES MASTER L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

13. PROFORMA (UNAUDITED) (CONTINUED)
These proforma operating results are not necessarily indicative of what the
actual results of operations of the Partnership would have been assuming all of
the properties were acquired as of January 1, 1994, and they do not purport to
represent the results of operations for future periods.

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------
1995 1994
-------------- --------------
<S> <C> <C>
REVENUES FROM LEASED PROPERTIES:
Rental income........................................................ $ 8,819,204 $ 8,049,916
Amortization of unearned income on direct financing leases........... 2,240,655 2,453,063
-------------- --------------
Total revenues..................................................... 11,059,859 10,502,979
EXPENSES
Rent................................................................. 1,527,758 1,501,887
Depreciation and amortization........................................ 1,831,641 1,771,740
Taxes, general and administrative.................................... 1,533,251 1,292,359
Interest expense (income), net....................................... 879,172 877,104
Provision for write down or disposition of properties................ -- 11,061
-------------- --------------
Total expenses..................................................... $ 5,771,822 $ 5,454,151
-------------- --------------
-------------- --------------
Net income........................................................... $ 5,288,037 $ 5,048,828
-------------- --------------
-------------- --------------
Net income allocable to unitholders.................................. $ 5,183,334 $ 4,947,851
-------------- --------------
-------------- --------------
Average number of outstanding units.................................. 4,679,715 4,689,167
-------------- --------------
-------------- --------------
Net income per unit.................................................. $ 1.11 $ 1.06
-------------- --------------
-------------- --------------
</TABLE>

14. SUBSEQUENT EVENTS
Since January 1, 1996, 27 restaurant properties were purchased in six
separate transactions. The total purchase price was $17.5 million which
consisted of cash and 327,836 Partnership units. The restaurant properties
operate as Burger King, Dairy Queen, Taco Bell, KFC and other brand names. Of
the 327,836 units issued, 299,575 units have a guaranteed market price of $24
per unit within two years of the date issued, any difference being payable
through issuance of additional partnership units. The units must be registered
by the Partnership by January 1997, which will result in related registration
costs. The remaining 28,261 units have a guaranteed market price of $23 per unit
within three years of the date issued, any difference being payable through
issuance of additional Partnership units. There is no registration requirement
in respect to the latter units.

On February 15, 1996, the $20 million line of credit was increased to $40
million. The terms are disclosed in Note 6.

At April 19, 1996 the Partnership had entered into binding agreements to
purchase the land and buildings of 105 properties for an aggregate purchase
price of approximately $55 million including restaurant properties operating as
Burger King, Dairy Queen, Hardees and Pizza Hut.

F-18
<PAGE>

NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS IN CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE PARTNERSHIP OR ANY OF THE UNDERWRITERS. THIS PROSPECTUS DOES
NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF ANY OFFER TO BUY ANY
SECURITY OTHER THAN THE UNITS OFFERED BY THIS PROSPECTUS, NOR DOES IT CONSTITUTE
AN OFFER TO SELL AS A SOLICITATION OF ANY OFFER TO BUY THE UNITS BY ANYONE IN
ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED, OR IN
WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO, OR
TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION IN ANY
CIRCUMSTANCES. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS
BEEN NO CHANGE IN THE AFFAIRS OF THE PARTNERSHIP SINCE THE DATE HEREOF OR THAT
THE INFORMATION HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF.

_________________

TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
PAGE
Summary 3
Risk Factors 10
History and Structure of The Partnership 17
Capitalization 19
Use of Proceeds 20
Price Range of Units and Distribution Policy 20
Management Discussion and Analysis 24
Business and Properties 27
Management 39
Description of Units 40
Federal Income Tax Considerations 44
Underwriting 58
Legal Matters 59
Experts 59
Available Information 59
Incorporation by Reference 60
Index to Financial Statements F-1
</TABLE>

______________

UNTIL ___________, 1996 (25 DAYS FROM THE DATE OF THIS PROSPECTUS), ALL
DEALERS EFFECTING TRANSACTIONS IN THE REGISTERED SECURITIES, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS IS IN ADDITION TO THE OBLIGATIONS OF DEALERS TO DELIVER A PROSPECTUS WHEN
ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.

1,800,000 UNITS OF
BENEFICIAL INTEREST

U.S. RESTAURANT

PROPERTIES MASTER L.P.

-------------------------------
PROSPECTUS
-------------------------------

MORGAN KEEGAN & COMPANY, INC.

________________, 1996
<PAGE>

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

Item 14. Other Expenses of Issuance and Distribution.

Set forth below is an estimate of the approximate amount of the fees and
expenses payable by the Registrant in connection with the issuance and
distribution of the Units:

<TABLE>
<S> <C>
Securities and Exchange Commission registration fee $16,150
NYSE listing fee *
Printing and mailing expenses 60,000
Accountant's fees and expenses 80,000
Engraving expenses 10,000
Blue Sky fees and expenses *
Legal fees 70,000
Transfer Agent's fees *
Miscellaneous expenses *
-------
Total *
</TABLE>

* To be supplied by amendment.

ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

The Partnership Agreement provides that the General Partner and its
affiliates, officers, directors, agents, and employees will not be personally
liable to the Partnership or to any of its Unitholders for any actions that do
not constitute actual fraud, gross negligence, or willful or wanton misconduct
if the General Partner or such other person acted (or failed to act) in good
faith and in a manner they believe to be in, or not opposed to, the interests of
the Partnership. Therefore, the Unitholders have a more limited right against
the General Partner than they would have absent the limitations in the
Partnership Agreement. The Partnership also indemnifies the General Partner and
such persons and entities against all liabilities, costs, and expenses
(including legal fees and expenses) incurred by a General Partner or any such
person or entity arising out of or incidental to the business of the
Partnership, including without limitation, liabilities under the federa and
state securities laws if (i) the General Partner or such person or entity acted
(or failed to act) in good faith and in a manner it believed to be in, or not
opposed to, the interests of the Partnership and, with respect to any criminal
proceedings, had no reasonable cause to believe such conduct was unlawful; and
(ii) the conduct of the General Partner or of such person or entity did not
constitute actual fraud, gross negligence, or willful or wanton misconduct. A
successful indemnification of a General Partner could deplete the assets of the
Partnership unless the Partnership's indemnification obligation is covered by
insurance. The Partnership's indemnification obligation is currently not
covered by insurance. No determination has been made whether to attempt to
secure such insurance, which may not be available at a reasonable price or at
all. Any Unitholder who recovers from any indemnified party an amount for which
the indemnified party is entitled to indemnification will be personally liable
to the Partnership and the indemnified party (in aggregate) for and to the
extent of such amount.

II-1

<PAGE>

ITEM 16. EXHIBITS

*1.1 Underwriting Agreement.

2.1 Amended and Restated Purchase and Sale Agreement dated as of February
3, 1986, filed as Exhibit 10(a) to Amendment No. 2 to the Registrant's
Registration Statement on Form S-11 (Registration No. 33-2382) and
incorporated herein by reference.

*4.1 Second Amended and Restated Partnership Agreement.

*4.2 Certificate of Limited Partnership of the Partnership.

4.3 Deposit Agreement and Form of Depositary Receipt and Application for
Transfer of Depositary Units to Morgan Guaranty Trust Company of
New York dated February 3, 1986, filed as Exhibit 4.5 to Amendment
No. 3 to the Registrant's Registration Statement on Form S-11
(Registration No. 33-2382) and incorporated herein by reference.

4.4 First Amendment to Deposit Agreement, dated as of May 5, 1987, filed
as Exhibit (4)A to Registrant's Current Report on Form 8-K dated as of
September 30, 1987 and incorporated herein by reference.

*5.1 Opinion of Middleberg, Riddle & Gianna.

*8.1 Opinion of Middleberg, Riddle & Gianna relating to tax matters.

10.2 Amendment No. 91 to Limited Partnership Agreement effective as of
November 30, 1994, regarding Burger King Corporation Withdrawal
as Special General Partner and Name Change, filed as Exhibit 10.1 to
the Registrant's Quarterly Report on Form 10-Q for the period ended
September 30, 1994 and incorporated herein by reference.

10.3 Consulting Agreement dated as of April 30, 1987, filed as Exhibit 10.2
to Registrant's Annual Report on Form 10-K for the year ended December
31, 1987 and incorporated herein by reference.

10.4 Option Agreement dated as of March 24, 1995, between U.S. Restaurant
Properties Master L.P. and QSV Properties Inc., filed as Exhibit 10.3
to Registrant's Annual Report on Form 10-K for the year ended December
31, 1987 and incorporated herein by reference.

10.5 Stock Purchase Agreement dated as of May 27, 1994 between Pillsbury
Company and Robert J. Stetson et al. regarding sale of QSV Properties
Inc., filed as Exhibit 10.1 to Registrant's Quarterly Report on
Form 10-Q for the period ended June 30, 1984 and incorporated herein
by reference.

10.6 Amended and Restated Secured Loan Agreement dated as of February 15,
1996 between the Registrant and various banks, filed as Exhibit 10.6
to Registrant's Annual Report on Form 10-K for the year ended December
31, 1995 and incorporated herein by reference.

II-2

<PAGE>

*10.7 Demand Promissory Note dated as of August 15, 1995, executed by
Arkansas Restaurants #10, L.P. for the benefit of U.S. Restaurant
Properties Operating, L.P.

**23.1 Consent of Deloitte & Touche LLP.

**23.2 Consent of KPMG Peat Marwick LLP.

**23.3 Consent of Tanner and Long, P.C.

**23.4 Consent of Thigpen & Lanier.

*23.4 Consent of Middleberg, Riddle & Gianna.

**24.1 Power of Attorney (set forth on Signature page hereof).

</TABLE>

*To be filed by amendment.
**Filed herein.

ITEM 17. UNDERTAKINGS.

The undersigned registrant hereby undertakes that, for purposes of determining
any liability under the Securities Act of 1933, each filing of the registrant's
annual report pursuant to section 13(a) or section 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the registration statement 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.

Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, 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 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 director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, 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 controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act, and will be governed by the final adjudication
of such issue.

II-3

<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 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 19, 1996.

U.S. RESTAURANT PROPERTIES MASTER L.P.
By: U.S. RESTAURANT PROPERTIES,
INC.
Managing General Partner

By: /s Robert J. Stetson
-----------------------------
Robert J. Stetson
President and Chief Executive
Officer

POWER OF ATTORNEY

Each individual whose signature appears below hereby constitutes and
appoints Fred H. Margolin and Robert J. Stetson and each of them (with full
power to each of them to act alone), 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 any and all documents relating to this Registration Statement,
including any and all amendments (including post-effective amendments), exhibits
and supplements thereto, and requests to accelerate the effectiveness of this
Registration Statement, with any regulatory authority, granting unto said
attorneys 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 said attorneys-in-fact and agents, or any of them, or
their or his substitute or substitutes, may lawfully do or cause to be done by
virtue hereof.

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.

SIGNATURE TITLE DATE
- --------- ----- ----
<S> <C> <C>

s/ Robert J. Stetson Director of U.S. Restaurant Properties, Inc. April 19, 1996
- -------------------- (Principal Accounting Officer)
Robert J. Stetson

s/ Fred H. Margolin Director of U.S. Restaurant Properties, Inc. April 19, 1996
- --------------------
Fred H. Margolin

s/ Eugene G. Taper Director of U.S. Restaurant Properties, Inc. April 19, 1996
- --------------------
Eugene G. Taper

s/ Gerald H. Graham Director of U.S. Restaurant Properties, Inc. April 19, 1996
- --------------------
Gerald H. Graham

s/ Darrel Rolph Director of U.S. Restaurant Properties, Inc. April 19, 1996
- --------------------
Darrel Rolph

s/ David Rolph Director of U.S. Restaurant Properties, Inc. April 19, 1996
- --------------------
David Rolph

</TABLE>

II-4

<PAGE>

INDEX TO EXHIBITS

Page
----
*1.1 Underwriting Agreement.

*4.1 Second Amended and Restated Partnership Agreement.

*4.2 Certificate of Limited Partnership of the Partnership.

*5.1 Opinion of Middleberg, Riddle & Gianna.

*8.1 Opinion of Middleberg, Riddle & Gianna relating to tax matters.

10.3 Consulting Agreement dated as of April 30, 1987, filed as Exhibit 10.2
to Registrant's Annual Report on Form 10-K for the year ended December
31, 1987 and incorporated herein by reference.

*10.7 Demand Promissory Note dated as of August 15, 1995, executed by
Arkansas Restaurants #10, L.P. for the benefit of U.S. Restaurant
Properties Operating, L.P.

**23.1 Consent of Deloitte & Touche LLP.

II-5

<PAGE>

**23.2 Consent of KPMG Peat Marwick LLP.

**23.3 Consent of Tanner and Long, P.C.

**23.4 Consent of Thigpen & Lanier.

*23.4 Consent of Middleberg, Riddle & Gianna.

**24.1 Power of Attorney (set forth on Signature page hereof).

*To be filed by amendment.
**Filed herein.

II-6

<PAGE>

INDEPENDENT AUDITORS' CONSENT

We consent to the use in this Registration Statement relating to 1,800,000
limited partner units of U.S. Restaurant Properties Master L.P. on Form S-3 of
our report dated February 17, 1996 (April 19, 1996 as to Note 14) appearing in
the Prospectus, which is a part of such Registration Statement, and our report
dated February 17, 1996 included in the Annual Report on Form 10-K of U.S.
Restaurant Properties Master L.P. for the year ended December 31, 1995
incorporated by reference in the Registration Statement, and to the reference to
us under the heading "Experts" in such Prospectus.

DELOITTE & TOUCHE LLP

Dallas, Texas
April 19, 1996

<PAGE>

CONSENT OF INDEPENDENT AUDITORS

The Partners
Burger King Limited Partnership II:

We consent to the incorporation by reference in the registration statement on
Form S-3 of U.S. Restaurant Properties Master L.P. of our report dated
February 2, 1996, except as to Note 5, which is as of March 25, 1996, with
respect to the balance sheets of Burger King Limited Partnership II as of
December 31, 1995 and 1994, and the related statements of operations, changes
in partners' capital (deficit) and cash flows for each of the years in the
three-year period ended December 31, 1995, and the related financial
statement schedule, which report appears in the Form 8-K of U.S. Restaurant
Properties Master L.P dated April 19, 1996 and to the reference to our firm
under the heading "Experts" in the prospectus.

KPMG Peat Marwick LLP

Boston, Massachusetts
April 18, 1996

<PAGE>

INDEPENDENT AUDITORS' CONSENT

We consent to the incorporation by reference in the Registration Statement
of U.S. Restaurant Properties Master L.P. on Form S-3 of our report dated
February 26, 1996, on WW Services, Inc. included in the Form 8-K of U.S.
Restaurant Properties Master L.P. We also consent to the reference to us under
the heading "Experts" in the Prospectus included in such Registration Statement.

Tanner and Long, P.C.
Baxley, Georgia
April 18, 1996

<PAGE>

INDEPENDENT AUDITORS' CONSENT

We consent to the incorporation by reference in the Registration Statement
of U.S. Restaurant Properties Master L.P. on Form S-3 of our report dated
January 12, 1995, on Wiggins Enterprises, Inc. included in the Form 8-K of U.S.
Restaurant Properties Master L.P. We also consent to the reference to us under
the heading "Experts" in the Prospectus included in such Registration Statement.

Thigpen & Lanier
Statesboro, Georgia
April 18, 1996