COLE CREDIT PROPERTY TRUST II, INC.
Filed Pursuant to Rule 424(b)(3)
Registration No. 333-138444
COLE CREDIT PROPERTY TRUST II, INC.
SUPPLEMENT NO. 8 DATED OCTOBER 27, 2008
TO THE PROSPECTUS DATED APRIL 30, 2008
     This document supplements, and should be read in conjunction with, the prospectus of Cole Credit Property Trust II, Inc. dated April 30, 2008. This Supplement No. 8 supersedes and replaces all previous supplements to the prospectus. Unless otherwise defined in this supplement, capitalized terms used in this supplement shall have the same meanings as set forth in the prospectus.
     The purpose of this supplement is to describe the following:
  (1)   the status of the offering of shares in Cole Credit Property Trust II, Inc.;
 
  (2)   new suitability standards for residents of North Dakota;
 
  (3)   notification of change of transfer agent;
 
  (4)   clarification and addition of risk factors;
 
  (5)   terms of a new credit facility entered into by Cole Operating Partnership II, LP;
 
  (6)   the reallocation of shares of common stock being offered between the primary offering and the distribution reinvestment plan;
 
  (7)   recent real property investments;
 
  (8)   potential real property investments;
 
  (9)   selected financial data, portfolio information, distributions and fees paid to affiliates as of June 30, 2008;
 
  (10)   the incorporation of certain historical information by reference into our prospectus;
 
  (11)   a modified form of Subscription Agreement; and
 
  (12)   updated financial information regarding Cole Credit Property Trust II, Inc. and certain acquired properties.
   Status of Our Public Offerings
     As of October 24, 2008, we had approximately 19.9 million shares available for sale (excluding shares offered pursuant to our distribution reinvestment plan) in our follow-on offering, or approximately $199.4 million. Based on the shares currently available, we anticipate the offering will close to new investments on or about November 30, 2008.
     If all of the shares we are offering pursuant to the follow-on offering have not been sold by May 11, 2009, we may extend the offering as permitted under applicable law. In addition, at the discretion of our board of directors, we may elect to extend the termination date of our offering of shares reserved for issuance pursuant to our distribution reinvestment plan until we have sold all shares allocated to such plan through the reinvestment of distributions, in which case participants in the plan will be notified. The follow-on offering must be registered in every state in which we offer or sell shares. Generally, such registrations are for a period of one year. Thus, we may have to stop selling shares in any state in which our registration is not renewed or otherwise extended annually. We reserve the right to terminate this offering at any time prior to the stated termination date.
     We commenced our initial public offering on June 27, 2005. We terminated our initial public offering on May 22, 2007. We issued a total of 54,838,315 shares in our initial public offering, including 53,909,877 shares sold in the primary offering and 928,438 shares sold pursuant to our distribution reinvestment plan, resulting in gross offering proceeds to us of approximately $547.4 million.
     We commenced our follow-on offering of shares of our common stock on May 23, 2007. Pursuant to the follow-on offering, we are offering up to 143,050,000 shares in a primary offering and up to 6,000,000 shares pursuant to our distribution reinvestment plan. As of October 24, 2008, we had accepted investors’ subscriptions for, and issued, approximately 129,044,732 shares of our common stock in the follow-on offering, including approximately 123,112,319 shares sold in the primary offering and approximately 5,932,413 shares sold pursuant to our distribution reinvestment plan, resulting in gross proceeds to us of approximately $1.3 billion. Combined with our initial public offering, we had received a total of approximately $1.8 billion in gross offering proceeds as of October 24, 2008.
     On September 18, 2008, we registered 30,000,000 additional shares to be offered pursuant to our distribution reinvestment plan in a Registration Statement on Form S-3. We will stop offering shares under the distribution reinvestment plan portion of our follow-on offering before we begin offering shares under the Registration Statement on Form S-3.

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   Suitability Standards
     The following information supplements, and should be read in conjunction with, the section of our prospectus captioned “Suitability Standards” beginning on page i of the prospectus and other similar disclosures elsewhere in the prospectus:
     Residents of North Dakota who intend to invest in our shares must have either (a) a minimum net worth of at least $250,000 or (b) a net minimum annual gross income of $70,000 and a minimum net worth of at least $70,000. Net worth excludes home, home furnishings and automobiles.
   Change of Transfer Agent
     The following information supersedes and replaces in its entirety the second question and answer on page 4 of the prospectus under “Questions and Answers About this Offering” and other similar disclosures elsewhere in the prospectus including the Subscription Agreement beginning on page B-1 and Additional Investment Subscription Agreement beginning on page C-1.
     
Q:
  Who is the transfer agent?
 
   
A:
  Effective as of June 23, 2008, the name, address and telephone number of our transfer agent is as follows:
 
   
 
  Cole Credit Property Trust II, Inc.
c/o DST Systems, Inc.
P.O. Box 219312
Kansas City, MO 64121-9312
1-866-907-2653
     To ensure that any account changes are made promptly and accurately, all changes including your address, ownership type, and distribution mailing address should be directed to the transfer agent.
Risk Factors
     The following information supersedes and replaces in its entirety the first paragraph of the risk factor under the caption “If we are required to register as an investment company under the Investment Company Act, we could not continue our business, which may significantly reduce the value of your investment” on page 30 of the prospectus:
     We are not registered as an investment company under the Investment Company Act of 1940, as amended (Investment Company Act), pursuant to an exemption in Section 3(c)(5)(C) of the Investment Company Act and certain No-Action Letters from the Securities and Exchange Commission. Pursuant to this exemption, (1) at least 55% of our assets must consist of real estate fee interests or loans secured exclusively by real estate or both, (2) at least 25% of our assets must consist of loans secured primarily by real estate (this percentage will be reduced by the amount by which the percentage in (1) above is increased); and (3) up to 20% of our assets may consist of miscellaneous investments. We intend to monitor compliance with these requirements on an ongoing basis. If we were obligated to register as an investment company, we would have to comply with a variety of substantive requirements under the Investment Company Act imposing, among other things:

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   The following information supersedes and replaces in its entirety the first paragraph of the risk factor under the caption “Adverse economic conditions will negatively affect our returns and profitability” on page 36 of the prospectus:
Adverse economic and geopolitical conditions will negatively affect our returns and profitability.
     Our operating results may be affected by market and economic challenges, including the current global economic credit environment, which may result from a continued or exacerbated general economic slow down experienced by the nation as a whole or by the local economics where our properties may be located, or by the real estate industry, including the following:
    poor economic conditions may result in tenant defaults under leases;
 
    re-leasing may require concessions or reduced rental rates under the new leases;
 
    poor economic conditions may result in lower revenue to us from retailers who pay us a percentage of their revenues under percentage rent leases;
 
    constricted access to credit may result in tenant defaults or non-renewals under leases; and
 
    increased insurance premiums may reduce funds available for distribution or, to the extent such increases are passed through to tenants, may lead to tenant defaults. Increased insurance premiums may make it difficult to increase rents to tenants on turnover, which may adversely affect our ability to increase our returns.
     The length and severity of any economic slow down or downturn cannot be predicted. Our operations could be negatively affected to the extent that an economic slow down or downturn is prolonged or becomes more severe.
   The following information supplements the risk factors section under the caption “General Risks Related to Investments in Real Estate” on page 33 of the prospectus:
     Disruptions in the credit markets and real estate markets could have a material adverse effect on our results of operations, financial condition and ability to pay distributions to you.
     Domestic and international financial markets currently are experiencing significant disruptions which have been brought about in large part by failures in the U.S. banking system. These disruptions have severely impacted the availability of credit and have contributed to rising costs associated with obtaining credit. If debt financing is not available on terms and conditions we find acceptable, we may not be able to obtain financing for investments. If this disruption in the credit markets persists, our ability to borrow monies to finance the purchase of, or other activities related to, real estate assets will be negatively impacted. If we are unable to borrow monies on terms and conditions that we find acceptable, we likely will have to reduce the number of properties we can purchase, and the return on the properties we do purchase may be lower. In addition, we may find it difficult, costly or impossible to refinance indebtedness which is maturing. If interest rates are higher when the properties are refinanced, we may not be able to finance the properties and our income could be reduced. In addition, if we pay fees to lock-in a favorable interest rate, falling interest rates or other factors could require us to forfeit these fees. All of these events would have a material adverse effect on our results of operations, financial condition and ability to pay distributions.
     In addition to volatility in the credit markets, the real estate market is subject to fluctuation and can be impacted by factors such as general economic conditions, supply and demand, availability of financing and interest rates. To the extent we purchase real estate in an unstable market, we are subject to the risk that if the real estate market ceases to attract the same level of capital investment in the future that it attracts at the time of our purchases, or the number of companies seeking to acquire properties decreases, the value of our investments may not appreciate or may decrease significantly below the amount we pay for these investments.
     The failure of any bank in which we deposit our funds could reduce the amount of cash we have available to pay distributions and make additional investments.
     We intend to diversify our cash and cash equivalents among several banking institutions in an attempt to minimize exposure to any one of these entities. However, the Federal Deposit Insurance Corporation, or “FDIC,” only insures amounts up to $250,000 per depositor per insured bank. We expect that we will have cash and cash equivalents and restricted cash deposited in certain financial institutions in excess of federally insured levels. If any of the banking institutions in which we have deposited funds ultimately fails, we may lose our deposits over $250,000. The loss of our deposits could reduce the amount of cash we have available to distribute or invest and could result in a decline in the value of your investment.

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   The following information supersedes and replaces in its entirety the second paragraph of the risk factor under the caption “Increases in interest rates could increase the amount of our debt payments and adversely affect our ability to pay distributions to our stockholders” on page 41 of the prospectus:
     As of June 30, 2008, we had approximately $1.0 billion of indebtedness, approximately $77.3 million of which was variable rate debt. We incurred variable rate indebtedness in the past and expect that we will incur variable rate indebtedness in the future. To the extent that we incur variable rate debt, increases in interest rates would increase our interest costs, which could reduce our cash flows and our ability to pay distributions to you. In addition, if we need to repay existing debt during periods of rising interest rates, we could be required to liquidate one or more of our investments in properties at times that may not permit realization of the maximum return on such investments.
Borrowing Policies
     The following information supplements the section of our prospectus captioned “Investment Objectives and Policies — Borrowing Policies” beginning on page 81 of the prospectus:
     On May 23, 2008, Cole Operating Partnership II, LP, the operating partnership of CCPT II, (“Cole OP II”) which we sometimes refer to as the borrower, entered into a revolving credit facility providing for up to $135.0 million of secured borrowings pursuant to a credit agreement with Bank of America, N.A., as administrative agent, among other things, (“Bank of America”), Banc of America Securities, LLC, as sole lead arranger and sole book manager, JP Morgan Chase Bank, N.A. as syndication agent, and other lending institutions that may become parties to the credit agreement. The credit facility allows Cole OP II to borrow up to $135.0 million in revolving loans. Subject to meeting certain conditions, the approval of Bank of America and the payment of certain fees, the amount of the credit facility may be increased up to a maximum of $235.0 million, with each increase being no less than $25.0 million. Up to 15.0% of the total amount available may be used for issuing letters of credit and up to $20.0 million may be used for “swingline” loans, which generally are loans of a minimum of $100,000 for which the Borrower receives funding on the same day as its loan request, and which are repaid within five business days. The proceeds of the credit facility may be used for acquiring real estate and real estate related assets, working capital and general corporate purposes.
     The credit facility matures on May 23, 2011. The borrower has the option to extend the credit facility for an additional twelve month period through May 23, 2012 provided that (i) a written notice of intent to extend the term of the credit agreement is provided at least 30 days, but not more than 90 days prior to May 23, 2011; (ii) no defaults or events of default exist; (iii) the borrower pays to Bank of America a fee equal to fifteen hundredths of one percent (0.15%) of the then existing aggregate commitments; and (iv) certain requirements with respect to the representations and warranties contained in the credit agreement are satisfied.
     Loans under the credit facility will bear interest at rates depending upon the type of loan used. For a eurodollar rate loan, the interest rate will be equal to the greater of (a) two and one half percent (2.50%) per annum or (b) the one month, two month, three month or six month London Interbank Offered Rate for the interest period, as selected by borrower, plus the applicable rate. The applicable rate is based upon the overall leverage ratio, generally defined as our total consolidated outstanding indebtedness divided by our total consolidated asset value and ranges from 1.80% at a leverage ratio of less than 50.0% to 2.10% at a leverage ratio of 60.0% to 65.0%.
     For each base rate committed loan and each swing line loan, the interest rate will be a per annum amount equal to the base rate plus the applicable rate. The base rate generally is a fluctuating rate per annum equal to (a) 0.25% plus (b) the higher of (i) the federal funds rate plus 0.50% or (ii) Bank of America’s prime rate. The applicable rate for base rate committed loans is zero at all leverage ratios.
     The borrower has the right to prepay the outstanding amounts in the credit facility, in whole or in part, without premium or penalty provided that (i) prior written notice is received by the administrative agent and (ii) any prepayment of eurodollar rate loans shall be in a principal amount of $5,000,000 or a whole multiple of $1,000,000 in excess thereof; and (iii) any prepayment of base rate committed loans shall be in a principal amount of $500,000 or a whole multiple of $100,000 in excess thereof or, in each case, if less the entire principal amount thereof then outstanding.
     Cole OP II has pledged all of its equity interests in certain of its subsidiary limited liability companies which have been identified by Cole OP II as collateral for its obligations under the credit facility. Subject to certain conditions, Cole OP II may pledge its equity interests in additional subsidiary entities and may remove its pledge of previously identified subsidiary entities. In addition, we, and each identified subsidiary entity, guarantees the obligations of Cole OP II under the credit facility.
     The credit agreement contains customary affirmative, negative and financial covenants, representations, warranties and borrowing conditions. The credit agreement also includes usual and customary events of default and remedies for facilities of this nature. Upon the occurrence of any event of default, the eurodollar rate loans and base rate committed loans will bear interest payable on demand at

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an interest rate equal to 2.0% per annum above the interest rate that would otherwise be applicable at that time, until the default is cured. Similarly, the letter of credit fees described below will be increased to a rate of 2.0% above the letter of credit fee that would otherwise be applicable at that time. In addition to Cole OP II failing to pay amounts when due and breaching any of the terms of the credit agreement or related loan documents, events of default include, but are not limited to: (1) failure to pay any principal when due; (2) failure to pay interest and fees within five (5) business days after due; (3) the occurrence of a change of control; (4) a change in management; (5) material inaccuracy of any representation or warranty; (6) the bankruptcy or insolvency of Cole OP II or any consolidated subsidiary; (7) violation of any financial, negative or other covenant; (8) violation of ERISA regulations; and (9) judgments against Cole OP II or any consolidated subsidiary in excess of $10.0 million or $25.0 million in aggregate that remain unsatisfied or unstayed for sixty days. If an event of default occurs and is not cured timely, the lenders under the credit facility shall have no obligation to make further disbursements under the credit facility and all outstanding loans shall be immediately due and payable.
     Cole OP II was required to pay certain fees under the credit agreement, including an arrangement fee of $250,000 to Banc of America Securities, LLC along with an upfront fee equal to 0.45% of the total credit facility. In addition, Cole OP II will pay to Bank of America an annual administrative agency fee of $50,000. Cole OP II will also pay an annualized fee for any unused portion of the credit facility. The unused portion fee is based on the average daily balance of the total aggregate commitment less any borrowing outstanding and is equal to 0.20% on the daily unused portion of the credit facility if daily usage is less than 50.0% of the aggregate commitments and 0.15% on the daily unused portion of the credit facility if daily usage is greater than or equal to 50.0% of the aggregate commitments. Cole OP II must also pay certain fees upon the issuance of each letter of credit under the credit agreement and a quarterly fee based on the outstanding face amounts of any letters of credit.
Outside Front Cover Page of the Prospectus
   The second paragraph appearing on the outside front cover page of the prospectus and all similar discussions appearing throughout the prospectus are superseded in their entirety as follows:
     We are offering up to 143,050,000 shares of our common stock in our primary offering for $10.00 per share, with discounts available for certain categories of purchasers. We also are offering up to 6,000,000 shares pursuant to our distribution reinvestment plan at a purchase price equal to the higher of $9.50 per share or 95% of the estimated value of a share of our common stock. We will offer these shares until May 11, 2009, which is two years after the effective date of this offering, unless the offering is extended. We reserve the right to reallocate the shares of our common stock we are offering between the primary offering and the distribution reinvestment plan.
     The table appearing on the outside front cover page of our prospectus and all similar discussions appearing throughout the prospectus are superseded in their entirety as follows:
                                 
    Price   Selling   Dealer   Net Proceeds
    to Public   Commissions   Manager Fee   (Before Expenses)
Primary Offering
                               
Per Share
  $ 10.00     $ 0.70     $ 0.20     $ 9.10  
Total Maximum
  $ 1,430,500,000     $ 100,135,000     $ 28,610,000     $ 1,301,755,000  
Distribution Reinvestment Plan
                               
Per Share
  $ 9.50     $     $     $ 9.50  
Total Maximum
  $ 57,000,000     $     $     $ 57,000,000  
Cole Credit Property Trust II, Inc.
     The third paragraph of the “Prospectus Summary — Cole Credit Property Trust II, Inc.” section beginning on page 5 of the prospectus and all similar discussions appearing throughout the prospectus are superseded in their entirety as follows:
     Following the termination of our initial public offering, we commenced this “best efforts” public offering of up to $1,487,500,000 in shares of our common stock. We are offering 143,050,000 shares of our common stock in our primary offering at $10.00 per share, with discounts available for certain categories of purchasers, and 6,000,000 additional shares at $9.50 per share under our distribution reinvestment plan. We reserve the right to reallocate the shares of common stock we are offering between the primary offering and our distribution reinvestment plan. We are offering our shares pursuant to a registration statement on Form S-11, which was declared effective by the Securities and Exchange Commission on May 11, 2007. This public offering commenced on May 11, 2007 and will be terminated on or before May 11, 2009, unless extended with respect to shares offered under our distribution reinvestment plan or as otherwise permitted under applicable law. The proceeds raised during this offering will be used to make real estate investments, pay fees and expenses and for general corporate purposes.

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Estimated Use of Proceeds
     The “Prospectus Summary — Estimated Use of Proceeds of This Offering” section beginning on page 14 of the prospectus and all similar discussions appearing throughout the prospectus are superseded in their entirety as follows:
     Depending primarily on the number of shares we sell in this offering and assuming all shares sold under our distribution reinvestment plan are sold at $9.50 per share, we estimate for each share sold in this offering that between approximately $8.72 (assuming no shares available under our distribution reinvestment plan are sold) and approximately $8.76 (assuming all shares available under our distribution reinvestment plan are sold) will be available for the purchase of real estate. We will use the remainder of the offering proceeds to pay the costs of the offering, including selling commissions and the dealer manager fee, and to pay a fee to our advisor for its services in connection with the selection and acquisition of properties. We will not pay selling commissions or a dealer manager fee on shares sold under our distribution reinvestment plan. The table below sets forth our estimated use of proceeds from this offering:
                                 
                    Maximum Offering (Not  
    Maximum Offering (Including     Including Distribution  
    Distribution Reinvestment Plan)     Reinvestment Plan)  
    Amount     Percent     Amount     Percent  
Gross Offering Proceeds
  $ 1,487,500,000       100 %   $ 1,430,500,000       100 %
Less Public Offering Expenses:
                               
Selling Commissions and Dealer Manager Fee
    128,745,000       8.7 %     128,745,000       9.0 %
Organization and Offering Expenses
    22,312,500       1.5 %     21,457,500       1.5 %
 
                       
Amount Available for Investment
    1,336,442,500       89.8 %     1,280,297,500       89.5 %
Acquisition and Development:
                               
Acquisition and Advisory Fees
    26,051,510       1.7 %     24,957,066       1.8 %
Acquisition Expenses
    6,512,878       0.4 %     6,239,267       0.4 %
Initial Working Capital Reserve
    1,302,576       0.1 %     1,247,853       0.1 %
 
                       
Amount Invested in Properties
  $ 1,302,575,536       87.6 %   $ 1,247,853,314       87.2 %
 
                       
     The “Estimated Use of Proceeds” section beginning on page 46 of the prospectus and all similar discussions appearing throughout the prospectus are superseded in their entirety as follows:
     The following table sets forth information about how we intend to use the proceeds raised in this offering, assuming that we sell the maximum offering of 149,050,000 shares of common stock pursuant to this offering. Many of the figures set forth below represent management’s best estimate since they cannot be precisely calculated at this time. Assuming a maximum offering, we expect that approximately 87.6% of the money that stockholders invest will be used to buy real estate or make other investments, while the remaining approximately 12.4% will be used for working capital, and to pay expenses and fees including the payment of fees to Cole Advisors II, our advisor, and Cole Capital Corporation, our dealer manager.
                 
    Offering        
    Amount (1)     Percent  
Gross Offering Proceeds
  $ 1,487,500,000       100 %
Less Public Offering Expenses:
               
Selling Commissions and Dealer Manager Fee(2)
    128,745,000       8.7 %
Organization and Offering Expenses(3)
    22,312,500       1.5 %
 
           
Amount Available for Investment(4)
    1,336,442,500       89.8 %
Acquisition and Development:
               
Acquisition and Advisory Fees(5)
    26,051,510       1.7 %
Acquisition Expenses(6)
    6,512,878       0.4 %
Initial Working Capital Reserve(7)
    1,302,576       0.1 %
 
           
Amount Invested in Properties(8)
  $ 1,302,575,536       87.6 %
 
           
 
(1)   Assumes the maximum offering is sold, which includes 143,050,000 shares offered to the public at $10.00 per share and 6,000,000 shares offered pursuant to our distribution reinvestment plan at $9.50 per share.
 
(2)   Includes selling commissions equal to 7% of aggregate gross offering proceeds, which commissions may be reduced under certain circumstances, and a dealer manager fee equal to 2% of aggregate gross offering proceeds, both of which are payable to the dealer manager, an affiliate of our advisor. The dealer manager, in its sole discretion, may reallow selling commissions of up to 7% of gross offering proceeds to other broker-dealers participating in this offering attributable to the shares sold by them and may reallow its dealer manager fee up to 2% of gross offering proceeds in marketing fees and due diligence expenses to broker-dealers

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    participating in this offering based on such factors including the participating broker-dealer’s level of marketing support, level of due diligence review and success of its sales efforts, each as compared to those of the other participating broker-dealers. Additionally, we will not pay a selling commission or a dealer manager fee on shares purchased pursuant to our distribution reinvestment plan. The amount of selling commissions may be reduced under certain circumstances for volume discounts. See the “Plan of Distribution” section of this prospectus for a description of such provisions.
 
(3)   Organization and offering expenses consist of reimbursement of actual legal, accounting, printing and other accountable offering expenses, including amounts to reimburse Cole Advisors II, our advisor, for marketing, salaries and direct expenses of its employees while engaged in registering and marketing the shares and other marketing and organization costs, other than selling commissions and the dealer manager fee. Cole Advisors II and its affiliates are responsible for the payment of organization and offering expenses, other than selling commissions and the dealer manager fee, to the extent they exceed 1.5% of gross offering proceeds, without recourse against or reimbursement by us; provided, however, that in no event will we pay or reimburse organization and offering expenses in excess of 10% of the gross offering proceeds. We currently estimate that approximately $22,312,500 of organization and offering costs will be incurred if the maximum offering of 149,050,000 shares (approximately $1,487,500,000) is sold.
 
(4)   Until required in connection with the acquisition and/or development of properties, substantially all of the net proceeds of the offering and, thereafter, any working capital reserves we may have, may be invested in short-term, highly-liquid investments including government obligations, bank certificates of deposit, short-term debt obligations and interest-bearing accounts.
 
(5)   Acquisition and advisory fees are defined generally as fees and commissions paid by any party to any person in connection with identifying, reviewing, evaluating, investing in and the purchase, development or construction of properties. We pay to our advisor acquisition and advisory fees up to a maximum amount of 2% of the contract purchase price of each property acquired, which for purposes of this table we have assumed is an aggregate amount equal to our estimated amount invested in properties. Acquisition and advisory fees do not include acquisition expenses. For purposes of this table, we have assumed that no financing is used to acquire properties or other real estate assets.
 
(6)   Acquisition expenses include legal fees and expenses, travel expenses, costs of appraisals, nonrefundable option payments on property not acquired, accounting fees and expenses, title insurance premiums and other closing costs and miscellaneous expenses relating to the selection, acquisition and development of real estate properties. For purposes of this table, we have assumed expenses of 0.5% of average invested assets, which for purposes of this table we have assumed is our estimated amount invested in properties; however, expenses on a particular acquisition may be higher. Notwithstanding the foregoing, the total of all acquisition expenses and acquisition fees payable with respect to a particular property or investment shall be reasonable, and shall not exceed an amount equal to 4% of the contract purchase price of the property, or in the case of a mortgage loan 4% of the funds advanced, unless a majority of our directors (including a majority of our independent directors) not otherwise interested in the transaction approve fees and expenses in excess of this limit and determine the transaction to be commercially competitive, fair and reasonable to us.
 
(7)   Working capital reserves typically are utilized for extraordinary expenses that are not covered by revenue generation of the property, such as tenant improvements, leasing commissions and major capital expenditures. Alternatively, a lender may require its own formula for escrow of working capital reserves. Because we expect most of our leases will be “net” leases, as described elsewhere herein, we do not expect to maintain significant working capital reserves.
 
(8)   Includes amounts anticipated to be invested in properties net of fees, expenses and initial working capital reserves.
The Offering
     The “Prospectus Summary — The Offering” section on page 17 of the prospectus and all similar discussions appearing throughout the prospectus are superseded in their entirety as follows:
     We are offering an aggregate of 143,050,000 shares of common stock in our primary offering on a best-efforts basis at $10.00 per share. Discounts are available for certain categories of purchasers as described in the “Plan of Distribution” section of this prospectus. We also are offering 6,000,000 shares of common stock under our distribution reinvestment plan at $9.50 per share, subject to certain limitations, as described in the “Summary of Amended and Restated Distribution Reinvestment Plan” section of this prospectus. We will offer shares of common stock in our primary offering until the earlier of May 11, 2009, which is two years from the effective date of this offering, unless the offering is extended, or the date we sell 143,050,000 shares. We may sell shares under the distribution reinvestment plan beyond the termination of our primary offering until we have sold 6,000,000 shares through the reinvestment of distributions, but only if there is an effective registration statement with respect to the shares. Under the Securities Act of 1933, as amended (Securities Act), and in some states, we may not be able to continue the offering for these periods without filing a new registration statement, or in the case of shares sold under the distribution reinvestment plan, renew or extend the registration statement in such state. We may terminate this offering at any time prior to the stated termination date. We reserve the right to reallocate the shares of our common stock we are offering between the primary offering and the distribution reinvestment plan.

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Management Compensation
     The table in the “Management Compensation” section beginning on page 62 of the prospectus and all similar discussions appearing throughout the prospectus, including without limitation the table in the “Prospectus Summary — Compensation to Cole Advisors II and its Affiliates” section beginning on page 17 of the prospectus, are superseded in their entirety as follows:
         
        Estimated Amount for
Type of Compensation(1)   Determination of Amount   Maximum Offering(2)
 
    Offering Stage    
 
Selling Commissions — Cole
Capital Corporation(3)
  We will pay to Cole Capital Corporation 7% of the gross offering proceeds before reallowance of commissions earned by participating broker-dealers, except that no selling commission is payable on shares sold under our distribution reinvestment plan. Cole Capital Corporation, our dealer manager, will reallow 100% of commissions earned to participating broker-dealers.    $100,135,000 
Dealer Manager Fee — Cole Capital Corporation(3)
  We will pay to Cole Capital Corporation 2% of the gross offering proceeds before reallowance to participating broker-dealers, except that no dealer manager fee is payable on shares sold under our distribution reinvestment plan. Cole Capital Corporation may reallow all or a portion of its dealer manager fee to participating broker-dealers. See “Plan of Distribution.”   $  28,610,000 
Reimbursement of Other
Organization and Offering
Expenses — Cole
Advisors II(4)
  We will reimburse Cole Advisors II up to 1.5% of our gross offering proceeds. Cole Advisors II will incur or pay our organization and offering expenses (excluding selling commissions and the dealer manager fee). We will then reimburse Cole Advisors II for these amounts up to 1.5% of aggregate gross offering proceeds.   $  22,312,500
 
    Acquisition and Operations Stage    
 
Acquisition and Advisory Fees —
Cole Advisors II(5)(6)
  We will pay to Cole Advisors II 2% of the contract purchase price of each property or asset.   $  26,051,510
Acquisition Expenses — Cole Advisors II
  We will reimburse our advisor for acquisition expenses incurred in the process of acquiring property. We expect these expenses to be approximately 0.5% of the purchase price of each property. In no event will the total of all fees and acquisition expenses payable with respect to a particular property or investment exceed 4% of the contract purchase price.   $    6,512,878
Asset Management Fee — Cole Advisors II(7)
  We will pay to Cole Advisors II a monthly fee equal to 0.02083%, which is one-twelfth of 0.25% of the aggregate asset value.   Actual amounts are dependent upon the aggregate asset value of our properties and, therefore, cannot be determined at the present time. Because the fee is based on a fixed percentage of aggregate asset value, there is no limit on the aggregate amount of these fees.

8


 

         
        Estimated Amount for
Type of Compensation(1)   Determination of Amount   Maximum Offering(2)
Property Management Fees —
Cole Realty Advisors(8)
  We will pay to Cole Realty Advisors up to (i) 2% of the gross revenues from our single-tenant properties and (ii) 4% of the gross revenues from our multi-tenant properties, plus reimbursement of Cole Realty Advisors’ costs of managing the properties.   Actual amounts are dependent upon the gross revenues from properties and, therefore, cannot be determined at the present time. Because the fee is based on a fixed percentage of the gross revenue and/or market rates, there is no limit on the aggregate amount of these fees.
Leasing Commissions — Cole
Realty Advisors(8)
  We will pay to Cole Realty Advisors prevailing market rates. Cole Realty Advisors may also receive a fee for the initial listing of newly constructed properties, which generally would equal one month’s rent.   Actual amounts are dependent upon prevailing market rates in the geographic regions in which we acquire property and, therefore, cannot be determined at the present time. There is no limit on the aggregate amount of these commissions.
Financing Coordination Fee —
Cole Advisors II(6)
  For services in connection with the origination or refinancing of any debt financing we obtain and use to acquire properties or to make other permitted investments, or that is assumed, directly or indirectly, in connection with the acquisition of properties, we will pay our advisor a financing coordination fee equal to 1% of the amount available and/or outstanding under such financing; provided, however, that our advisor will not be entitled to a financing coordination fee in connection with the refinancing of any loan secured by any particular property that was previously subject to a refinancing in which our advisor received such a fee. Financing coordination fees payable from loan proceeds from permanent financing will be paid to our advisor as we acquire and/or assume such permanent financing. However, no acquisition fees will be paid on the investments of loan proceeds from any line of credit until such time as we have invested all net offering proceeds.   Actual amounts are dependent on the amount of any debt financing or refinancing and, therefore, cannot be determined at the present time. Because the fee is based on a fixed percentage of any debt financing, there is no limit on the aggregate amount of these fees.
Operating Expenses — Cole Advisors II(9)
  We will reimburse the expenses incurred by Cole Advisors II in connection with its provision of administrative services, including related personnel costs, subject to the limitation that we will not reimburse our advisor for any amount by which the operating expenses (including the asset management fee) at the end of the four preceding fiscal quarters exceeds the greater of (i) 2% of average invested assets, or (ii) 25% of net income other than any additions to reserves for depreciation, bad debt or other similar non-cash reserves and excluding any gain from the sale of assets for that period.   Actual amounts are dependent upon the expenses incurred and, therefore, cannot be determined at the present time.

9


 

         
        Estimated Amount for
Type of Compensation(1)   Determination of Amount   Maximum Offering(2)
    Liquidation/Listing Stage    
Real Estate Commissions — Cole
Advisors II or its
Affiliates(10)
  For substantial assistance in connection with the sale of properties, we will pay our advisor or its affiliates an amount equal to up to one-half of the brokerage commission paid on the sale of property, not to exceed 2% of the contract price of each property sold; provided, however, in no event may the real estate commissions paid to our advisor, its affiliates and unaffiliated third parties exceed 6% of the contract sales price.   Actual amounts are dependent upon the contract price of properties sold and, therefore, cannot be determined at the present time. Because the commission is based on a fixed percentage of the contract price for a sold property, there is no limit on the aggregate amount of these commissions.
Subordinated Participation in
Net Sale Proceeds — Cole
Advisors II(11)
  After investors have received a return of their net capital invested and an 8% annual cumulative, non-compounded return, then Cole Advisors II is entitled to receive 10% of remaining net sale proceeds. We cannot assure you that we will provide this 8% return, which we have disclosed solely as a measure for our advisor’s incentive compensation.   Actual amounts are dependent upon results of operations and, therefore, cannot be determined at the present time. There is no limit on the aggregate amount of these payments.
Subordinated Incentive Listing
Fee — Cole Advisors II(11)(12)
  Upon listing our common stock on a national securities exchange, our advisor is entitled to a fee equal to 10% of the amount, if any, by which (1) the market value of our outstanding stock plus distributions paid by us prior to listing, exceeds (2) the sum of the total amount of capital raised from investors and the amount of cash flow necessary to generate an 8% annual cumulative, non-compounded return to investors. We have no intent to list our shares at this time. We cannot assure you that we will provide this 8% return, which we have disclosed solely as a measure for our advisor’s incentive compensation.   Actual amounts are dependent upon total equity and debt capital we raise and results of operations and, therefore, cannot be determined at the present time. There is no limit on the aggregate amount of this fee.
 
(1)   We will pay all fees, commissions and expenses in cash, other than the subordinated participation in net sales proceeds and incentive listing fees with respect to which we may pay to Cole Advisors II in cash, common stock, a promissory note or any combination of the foregoing, as we may determine in our discretion.
 
(2)   The estimated maximum dollar amounts are based on the sale of a maximum of 143,050,000 shares to the public at $10.00 per share and the sale of 6,000,000 shares at $9.50 per share pursuant to our distribution reinvestment plan.
 
(3)   Selling commissions and, in some cases, the dealer manager fee, will not be charged with regard to shares sold to or for the account of certain categories of purchasers. See “Plan of Distribution.” Selling commissions and the dealer manager fee will not be charged with regard to shares purchased pursuant to our distribution reinvestment plan.
 
(4)   These organization and offering expenses include all expenses (other than selling commissions and the dealer manager fee) to be paid by us in connection with the offering, including our legal, accounting, printing, mailing and filing fees, charges of our escrow holder, due diligence expense reimbursements to participating broker-dealers and amounts to reimburse Cole Advisors II for its portion of the salaries of the employees of its affiliates who provide services to our advisor and other costs in connection with preparing supplemental sales materials, holding educational conferences and attending retail seminars conducted by broker-dealers. Our advisor will be responsible for the payment of all such organization and offering expenses to the extent such expenses exceed 1.5% of the aggregate gross proceeds of this offering.
 
(5)   This estimate assumes the amount of proceeds available for investment is equal to the gross offering proceeds less the public offering expenses, and we have assumed that no financing is used to acquire properties or other real estate assets. Our board’s investment policies limit our ability to purchase property if the total of all acquisition fees and expenses relating to the purchase exceeds 4% of the contract purchase price unless a majority of our directors (including a majority of our independent directors)

10


 

    not otherwise interested in the transaction approve fees and expenses in excess of this limit and determine the transaction to be commercially competitive, fair and reasonable to us.
 
(6)   Included in the computation of such fees will be any real estate commission, acquisition and advisory fee, development fee, construction fee, non-recurring management fee, loan fees, financing coordination fees or points or any fee of a similar nature.
 
(7)   Aggregate asset value will be equal to the aggregate value of our assets (other than investments in bank accounts, money markets funds or other current assets) at cost before deducting depreciation, bad debts or other similar non-cash reserves and without reduction for any debt relating to such assets at the date of measurement, except that during such periods in which our board of directors is determining on a regular basis the current value of our net assets for purposes of enabling fiduciaries of employee benefit plans stockholders to comply with applicable Department of Labor reporting requirements, aggregate asset value is the greater of (i) the amount determined pursuant to the foregoing or (ii) our assets’ aggregate valuation most recently established by our board without reduction for depreciation, bad debts or other similar non-cash reserves and without reduction for any debt secured by or relating to such assets.
 
(8)   The property management and leasing fees payable to Cole Realty Advisors are subject to the limitation that the aggregate of all property management and leasing fees paid to Cole Realty Advisors and its affiliates plus all payments to third parties for property management and leasing services may not exceed the amount that other non-affiliated property management and leasing companies generally charge for similar services in the same geographic location. Additionally, all property management and leasing fees, including both those paid to Cole Realty Advisors and third parties, are subject to the limit on total operating expenses as described in footnote (4). Cole Realty Advisors may subcontract its duties for a fee that may be less than the fee provided for in our property management agreement with Cole Realty Advisors.
 
(9)   We may reimburse our advisor in excess of that limit in the event that a majority of our independent directors determine, based on unusual and non-recurring factors, that a higher level of expense is justified. In such an event, we will send notice to each of our stockholders within 60 days after the end of the fiscal quarter for which such determination was made, along with an explanation of the factors our independent directors considered in making such determination. We will not reimburse our advisor for personnel costs in connection with services for which the advisor receives acquisition fees or real estate commissions.
 
    We lease our office space from an affiliate of our advisor and share the space with other Cole-related entities. The amount we will pay under the lease will be determined on a monthly basis based upon on the allocation of the overall lease cost to the approximate percentage of time, size of the area that we utilize and other resources allocated to us.
 
(10)   Although we are most likely to pay real estate commissions to Cole Advisors II or an affiliate in the event of our liquidation, these fees may also be earned during our operational stage.
 
(11)   Upon termination of the advisory agreement, Cole Advisors II may be entitled to a similar performance fee if Cole Advisors II would have been entitled to a subordinated participation in net sale proceeds had the portfolio been liquidated (based on an independent appraised value of the portfolio) on the date of termination. Under our charter, we could not increase these success-based fees without the approval of a majority of our independent directors, and any increase in the subordinated participation in net sale proceeds would have to be reasonable. Our charter provides that such incentive fee is “presumptively reasonable” if it does not exceed 10% of the balance of such net proceeds remaining after investors have received a return of their net capital contributions and an 8% per year cumulative, non-compounded return.
 
    Cole Advisors II cannot earn both the subordinated participation in net sale proceeds and the subordinated incentive listing fee. The subordinated participation in net sale proceeds or the subordinated listing fee, as the case may be, will be paid in the form of an interest bearing promissory note that will be repaid from the net sale proceeds of each sale after the date of the termination or listing. At the time of such sale, we may, however, at our discretion, pay all or a portion of such promissory note with shares of our common stock. If shares are used for payment, we do not anticipate that they will be registered under the Securities Act and, therefore, will be subject to restrictions on transferability. Any portion of the subordinated participation in net sale proceeds that Cole Advisors II receives prior to our listing will offset the amount otherwise due pursuant to the subordinated incentive listing fee. In no event will the amount paid to Cole Advisors II under the promissory note, if any, including interest thereon, exceed the amount considered presumptively reasonable by the NASAA REIT Guidelines.
 
(12)   If at any time the shares become listed on a national securities exchange, we will negotiate in good faith with Cole Advisors II a fee structure appropriate for an entity with a perpetual life. Our independent directors must approve the new fee structure negotiated with Cole Advisors II. The market value of our outstanding stock will be calculated based on the average market value of the shares issued and outstanding at listing over the 30 trading days beginning 180 days after the shares are first listed or included for quotation. We have the option to pay the subordinated incentive listing fee in the form of stock, cash, a promissory note or any combination thereof. In the event the subordinated incentive listing fee is earned by Cole Advisors II as a result of the listing of the shares, any previous payments of the subordinated participation in net sale proceeds will offset the amounts due pursuant to the subordinated incentive listing fee, and we will not be required to pay Cole Advisors II any further subordinated participation in net sale proceeds.

11


 

Summary of Amended and Restated Distribution Reinvestment Plan
     The first paragraph of the “Summary of Amended and Restated Distribution Reinvestment Plan” section on page 177 of the prospectus and all similar discussions appearing throughout the prospectus are superseded in their entirety as follows:
     We have adopted an amended and restated distribution reinvestment plan. The amended and restated reinvestment plan allows you to have distributions otherwise payable to you in cash reinvested in additional shares of our common stock. We are offering up to 6,000,000 shares for sale pursuant to our distribution reinvestment plan at a purchase price equal to the higher of $9.50 per share or 95% of the estimated value of a share of our common stock. Following is a summary of our distribution reinvestment plan. A complete copy of our amended and restated distribution reinvestment plan is included in this prospectus as Appendix D.
Plan of Distribution
     The “Plan of Distribution — The Offering” section on page 184 of the prospectus and all similar discussions appearing throughout the prospectus are superseded in their entirety as follows:
     We are offering a maximum of 149,050,000 shares of our common stock to the public through Cole Capital Corporation, our dealer manager, a registered broker-dealer affiliated with our advisor. Of this amount, we are offering 143,050,000 shares in our primary offering at a price of $10.00 per share, except as provided below. The shares are being offered on a “best efforts” basis, which means generally that the dealer manager is required to use only its best efforts to sell the shares and it has no firm commitment or obligation to purchase any of the shares. We also are offering up to 6,000,000 shares for sale pursuant to our distribution reinvestment plan. The purchase price for shares sold under our distribution reinvestment plan will be equal to the higher of 95% of the estimated value of a share of common stock, as estimated by our board of directors, and $9.50 per share. The reduced purchase price for shares purchased pursuant to our distribution reinvestment plan reflects that there will be no fees, commissions or expenses paid with respect to these shares. We reserve the right to reallocate the shares of our common stock we are offering between the primary offering and the distribution reinvestment plan. The offering of shares of our common stock will terminate on or before May 11, 2009, which is two years after the effective date of this offering, unless the offering is extended. In addition, at the discretion of our board of directors, we may elect to extend the termination date of our offering of shares reserved for issuance pursuant to our distribution reinvestment plan until we have sold all shares allocated to such plan through the reinvestment of distributions, in which case participants in the plan will be notified. This offering must be registered in every state in which we offer or sell shares. Generally, such registrations are for a period of one year. Thus, we may have to stop selling shares in any state in which our registration is not renewed or otherwise extended annually. We reserve the right to terminate this offering at any time prior to the stated termination date.
     The seventh paragraph of the “Plan of Distribution — Compensation We Will Pay for the Sale of Our Shares” section beginning on page 184 of the prospectus and all similar discussions appearing throughout the prospectus are superseded in their entirety as follows:
     In addition to the compensation described above, our sponsor may pay certain costs associated with the sale and distribution of our shares. Such payments will be deemed to be “underwriting compensation” by FINRA. In accordance with the rules of FINRA, the table below sets forth the nature and estimated amount of all items that will be viewed as “underwriting compensation” by FINRA that are anticipated to be paid by us and our sponsor in connection with the offering. The amounts shown assume we sell all of the shares offered hereby and that all shares are sold in our primary offering through participating broker-dealers, which is the distribution channel with the highest possible selling commissions and dealer manager fees.
         
    Total Maximum  
Selling commissions
  $ 100,135,000  
Dealer manager fee reallowance to participating broker-dealers
    10,013,500  
Dealer manager wholesaling compensation
    22,687,500  
Expense reimbursements for wholesaling travel and expenses
    4,412,000  
Broker-dealer conference fees and training and education meetings
    2,800,000  
Due diligence allowance
    160,000  
Legal fees of the dealer manager
    120,000  
 
     
Total(1)
  $ 140,328,000  
 
     
 
(1)   Of this amount, $100,135,000 and $28,610,000 will be paid by us from the proceeds of this offering in the form of selling commissions and dealer manager fees, respectively. Subject to the cap on underwriting compensation described below, and in accordance with our limits on reimbursement and payment of organization and offering expenses as disclosed elsewhere in this prospectus, we will reimburse our sponsor or its affiliates for certain expenses that constitute underwriting compensation. In some cases, these payments will serve to reimburse our sponsor or its affiliates for amounts it has paid to participating broker-dealers. Any remaining amounts will be paid by our sponsor without reimbursement from us.

12


 

     The total amount of underwriting compensation, including selling commissions, dealer manager fees and other expenses paid or reimbursed by us, our sponsor or any other source in connection with the offering, will not exceed 10% of the gross proceeds of this offering, plus up to an additional 0.5% of gross proceeds ($500,000 if the maximum offering amount is sold) for reimbursement of bona fide due diligence expenses.
Real Property Investments
     The following information supplements, and should be read in conjunction with, the table in the section captioned “Prospectus Summary — Description of Real Estate Investments” beginning on page 7 of the prospectus:
Description of Real Estate Investments
     As of October 27, 2008, we owned 471 properties, comprising approximately 17.8 million gross rentable square feet of commercial space located in 45 states and the U.S. Virgin Islands. Properties acquired between April 30, 2008, the date of our prospectus, and October 27, 2008 are listed below.
                         
            Rentable        
Property Description   Type   Tenant   Square Feet     Purchase Price  
Walgreens — Elmira, NY
  Drugstore   Walgreen Eastern Co., Inc.     14,820     $ 6,076,000  
CVS — Onley, VA
  Drugstore   CVS of Virginia, Inc.     13,225       5,486,000  
Tractor Supply — Carroll, OH
  Specialty Retail   Tractor Supply Company     40,700       2,000,000  
Walgreens — Hibbing, MN
  Drugstore   Walgreen Co.     14,820       4,200,000  
Allstate Customer Contact Center — Yuma, AZ
  Call Center   Allstate Insurance Company     28,800       7,686,409  
Walgreens — Essex, MD
  Drugstore   Walgreen Co.     14,820       6,488,000  
Convergy’s — Las Cruces, NM
  Call Center  
Convergy’s Customer Management Group Inc.
    45,761       8,111,260  
Walgreens — Bath, NY
  Drugstore   Walgreen Eastern Co., Inc.     12,222       4,236,005  
Walgreens — Chino Valley, AZ
  Drugstore   Walgreen Arizona Drug Co.     14,820       5,435,000  
III Forks — Dallas, TX
  Restaurant   III Forks Dallas, L.P.     21,145       11,000,000  
Walgreens — Albany, GA
  Drugstore   Walgreen Co.     14,820       4,600,000  
Kohl’s — Grand Forks, ND
  Specialty Retail   Kohl’s Illinois, Inc.     68,725       8,525,000  
Coral Walk — Cape Coral, FL
  Shopping Center   Various     94,817       27,000,000  
LA Fitness — Brooklyn Park, MN
  Fitness and Health   L.A. Fitness International, LLC     45,000       10,450,000  
Market Pointe — Papillion, NE
  Shopping Center   Various     254,125       25,500,000  
PetSmart Distribution Center — McCarran, NV
  Distribution Center   Petsmart, Inc.     872,710       51,525,000  
Cumming Town Center — Cumming, GA
  Shopping Center   Various     310,192       58,381,303  
Walgreens — Rome, NY
  Drugstore   Walgreen Co.     13,770       4,477,727  
LA Fitness — Matteson, IL
  Fitness and Health   L.A. Fitness International, LLC     45,000       10,089,000  
Walgreens — Columbus, MS
  Drugstore   Walgreen Co.     14,450       4,420,000  
Weston Shops — Weston, FL
  Shopping Center   Various     30,420       16,400,000  
Jo-Ann Fabrics — Alpharetta, GA
  Specialty Retail   FCA of Ohio, Inc.     38,418       6,441,000  
LA Fitness — Greenwood, IN
  Fitness and Health   LA Fitness International, LLC     45,000       10,605,000  
PetSmart — Chattanooga, TN
  Specialty Retail   Petsmart, Inc.     26,040       4,815,000  
PetSmart — Daytona Beach, FL
  Specialty Retail   Petsmart, Inc.     26,194       5,333,000  
PetSmart — Fredericksburg, VA
  Specialty Retail   Petsmart, Inc.     26,051       5,199,000  
Ferguson Portfolio — Various (1)
  Specialty Retail   Ferguson Enterprises, Inc.     1,111,843       86,793,249  
Home Depot — Lakewood, CO
  Home Improvement   Home Depot U.S.A, Inc.     102,000 (6)     11,300,000  
Walgreens — Mobile, AL
  Drugstore   Walgreen Co.     13,650       5,415,000  
Aaron Rents Portfolio — Various (2)
  Specialty Retail   Aaron Rents, Inc.     259,185       32,675,202  
Lowe’s — Chester, NY
  Home Improvement   Lowe’s Home Centers, Inc.     131,798 (6)     7,037,037  
HH Gregg — Grove City, OH
  Specialty Retail   Gregg Appliances, Inc.     30,167       5,902,000  
BJ’s Wholesale Club — Ft. Lauderdale, FL
  Warehouse Club   BJ’s Wholesale Club, Inc.     119,598       28,272,857  
HH Gregg — Mt. Juliet, TN
  Specialty Retail   Gregg Appliances, Inc.     30,000       6,346,000  
Winter Garden Village — Winter Garden, FL
  Shopping Center   Various     758,988 (5)     180,351,286  

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            Rentable        
Property Description   Type   Tenant   Square Feet     Purchase Price  
Payless ShoeSource — Columbia, SC (3)
  Specialty Retail   Payless ShoeSource Inc.     5,534     $ 1,400,000  
Walgreens — Jacksonville, FL (3)
  Drugstore   Walgreen Co.     15,120       5,050,000  
CVS — Hamilton, OH (3)
  Drugstore   CVS Corporation     11,180       3,600,000  
Walgreens — Akron, OH (3)
  Drugstore   Walgreen Co.     13,500       2,820,000  
Walgreens — Seattle, WA (3)
  Drugstore   Walgreen Co.     14,410       6,770,000  
Walgreens — LaMarque, TX (3)
  Drugstore   Walgreen Co.     15,120       4,510,000  
CVS — Mechanicville, NY (3)
  Drugstore   CVS Albany, L.L.C.     10,125       2,600,000  
Office Depot — Laurel, MS (3)
  Office Supply   Office Depot, Inc.     20,515       2,650,000  
Home Depot — Colma, CA (3)(4)
  Home Improvement   Home Depot U.S.A., Inc.     99,970       39,310,000  
Walgreens — Saginaw, MI (3)
  Drugstore   Walgreen Co.     15,120       4,200,000  
Walgreens — Tulsa, OK (3)
  Drugstore   Walgreen Co.     13,000       2,190,000  
Walgreens — Broken Arrow, OK (3)
  Drugstore   Walgreen Co.     13,000       2,100,000  
Office Depot — London, KY (3)
  Office Supply   Office Depot, Inc.     20,468       3,500,000  
Best Buy — Las Cruces, NM (4)
  Electronics Retail   Best Buy Stores, L.P.     30,000       6,100,000  
Staples — Angola, IN (4)
  Office Supply   Staples, Inc.     24,049       3,200,000  
TJ Maxx — Staunton, VA (4)
  Specialty Retail   The TJX Companies, Inc.     78,823       4,300,000  
AT&T Wireless — Santa Clara, CA (4)
  Communications   AT&T Wireless Services, Inc.     33,257       10,200,000  
Walgreens — Tulsa, OK (4)
  Drugstore   Walgreen Co.     13,500       2,950,000  
Walgreens — Crossville, TN (4)
  Drugstore   Walgreen Co.     15,070       4,450,000  
CVS — Columbia, TN (Nashville) (4)
  Drugstore   Revco Discount Drug Centers, Inc.     10,715       2,400,000  
CVS — Columbia, TN (James Campbell) (4)
  Drugstore   Revco Discount Drug Centers, Inc.     10,759       2,600,000  
Walgreens — Newton, IA (4)
  Drugstore   Walgreen Co.     15,047       4,330,000  
FedEx — Huntsville, AL
  Distribution   FedEx Freight East, Inc.     56,360       10,947,787  
FedEx — Baton Rouge, LA
  Distribution   FedEx Freight East, Inc.     29,400       8,998,880  
CVS — Atlanta, GA
  Drugstore   Big B Drugs, Inc.     12,013       3,841,000  
Tractor Supply — Baldwinsville, NY
  Specialty Retail   Tractor Supply Company     24,727       3,402,120  
 
                   
 
            5,324,876     $ 826,992,122  
 
                   
 
(1)   The Ferguson Portfolio consists of seven single-tenant retail properties and one single-tenant commercial property located in various states, which were purchased under a sale-lease back agreement and the properties are subject to eight separate lease agreements.
 
(2)   The Aaron Rents Portfolio consists of 25 single-tenant retail properties located in various states, which were purchased under a sale-lease back agreement and the properties are subject to a master lease agreement.
 
(3)   Property was acquired from Cole Credit Property Fund LP, an affiliate of our advisor. The Company’s board of directors, including all of the independent directors, not otherwise interested in the transaction, approved the transaction as being fair and reasonable to the Company, at a price in excess of the cost to Cole Credit Property Fund LP. Substantial justification exists for such excess as such excess is reasonable and the costs of the interest did not exceed its current fair market value as determined by an independent appraiser approved by the Company’s independent directors.
 
(4)   Property was acquired from Cole Credit Property Fund II LP, an affiliate of our advisor. The Company’s board of directors, including all of the independent directors, not otherwise interested in the transaction, approved the transaction as being fair and reasonable to the Company, at a price in excess of the cost to Cole Credit Property Fund II LP. Substantial justification exists for such excess as such excess is reasonable and the costs of the interest did not exceed its current fair market value as determined by an independent appraiser approved by the Company’s independent directors.
 
(5)   Rentable square feet includes approximately 145,000 square feet accounted for under 13 ground leases.
 
(6)   Square feet accounted for under a ground lease.

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     The following information supplements the section of our prospectus captioned “Investment Objectives and Policies — Real Property Investments” beginning on page 87 of the prospectus:
Real Property Investments
     We engage in the acquisition and ownership of commercial properties throughout the United States. We invest primarily in income-generating retail, office and distribution properties, net leased to investment grade and other creditworthy tenants.
     As of October 27, 2008, we, through separate wholly-owned limited liability companies, have acquired a 100% fee simple interest in 471 properties consisting of approximately 17.8 million gross rentable square feet of commercial space located in 45 states and the U.S. Virgin Islands. The properties were generally acquired through the use of mortgage notes payable and proceeds from our ongoing public offering of our common stock.
     The following table summarizes properties acquired between April 30, 2008, the date of our prospectus, and October 27, 2008 in order of acquisition date:
                                         
        Year           Fees Paid to     Initial     Physical  
Property   Date Acquired   Built   Purchase Price     Sponsor (1)     Yield (2)     Occupancy  
Walgreens — Elmira, NY
  May 1, 2008   2007   $ 6,076,000     $ 121,520       6.50 %     100 %
CVS — Onley, VA
  May 8, 2008   2007     5,486,000       109,720       6.75 %     100 %
Tractor Supply — Carroll, OH
  May 8, 2008   1976     2,000,000       40,000       8.24 %     100 %
Walgreens — Hibbing, MN
  May 14, 2008   2007     4,200,000       84,000       6.60 %     100 %
Allstate Customer Contact Center — Yuma, AZ
  May 22, 2008   2008     7,686,409       153,728       7.49 %     100 %
Walgreens — Essex, MD
  May 30, 2008   2007     6,488,000       129,760       6.55 %     100 %
Convergy’s — Las Cruces, NM
  June 2, 2008   1983     8,111,260       162,225       8.95 %     100 %
Walgreens — Bath, NY
  June 2, 2008   2008     4,236,005       84,721       6.61 %     100 %
Walgreens — Chino Valley, AZ
  June 2, 2008   2006     5,435,000       108,700       6.53 %     100 %
III Forks — Dallas, TX
  June 5, 2008   1998     11,000,000       220,000       8.50 %     100 %
Walgreens — Albany, GA
  June 11, 2008   2008     4,600,000       92,000       6.65 %     100 %
Kohl’s — Grand Forks, ND
  June 11, 2008   2006     8,525,000       170,500       6.71 %     100 %
Coral Walk — Cape Coral, FL
  June 12, 2008   2007     27,000,000       540,000       7.20 %     100 %
LA Fitness — Brooklyn Park, MN
  June 17, 2008   2008     10,450,000       209,000       7.75 %     100 %
Market Pointe — Papillion, NE
  June 20, 2008   2006     25,500,000       510,000       6.66 %     98 %
PetSmart Distribution Center — McCarran, NV
  July 2, 2008   2008     51,525,000       1,030,500       6.72 %     100 %
Cumming Town Center — Cumming, GA
  July 11, 2008   2007     58,381,303       1,167,626       7.21 %     95 %
Walgreens — Rome, NY
  July 15, 2008   2007     4,477,727       89,555       6.70 %     100 %
LA Fitness — Matteson, IL
  July 16, 2008   2007     10,089,000       201,780       7.85 %     100 %
Walgreens — Columbus, MS
  July 24, 2008   2004     4,420,000       88,400       6.78 %     100 %
Weston Shops — Weston, FL
  July 30, 2008   2007     16,400,000       328,000       7.28 %     100 %
Jo-Ann Fabrics — Alpharetta, GA
  August 5, 2008   2000     6,441,000       128,820       7.96 %     100 %
LA Fitness — Greenwood, IN
  August 5, 2008   2008     10,605,000       212,100       7.85 %     100 %
PetSmart — Chattanooga, TN
  August 5, 2008   1996     4,815,000       96,300       7.16 %     100 %
PetSmart — Daytona Beach, FL
  August 5, 2008   1996     5,333,000       106,660       6.74 %     100 %
PetSmart — Fredericksburg, VA
  August 5, 2008   1997     5,199,000       103,980       7.29 %     100 %
Ferguson Portfolio — Various
  August 21, 2008   Various     86,793,249       1,735,865       7.43 %     100 %
Home Depot — Lakewood, CO
  August 27, 2008   2006     11,300,000       226,000       6.86 %     100 %
Walgreens — Mobile, AL
  August 28, 2008   2007     5,415,000       108,300       6.60 %     100 %
Aaron’s Rents Portfolio — Various
  September 15, 2008   Various     32,675,202       653,504       7.50 %     100 %
Lowe’s — Chester, NY
  September 19, 2008   2008     7,037,037       140,741       6.75 %     100 %
HH Gregg — Grove City, OH
  September 17, 2008   2008     5,902,000       118,040       7.82 %     100 %

15


 

                                             
        Year           Fees Paid to   Initial   Physical
Property   Date Acquired   Built   Purchase Price   Sponsor (1)   Yield (2)   Occupancy
BJ’s Wholesale Club — Ft. Lauderdale, FL
  September 23, 2008     2007       $    28,272,857     $ 565,457       7.00 %     100 %
HH Gregg — Mt. Juliet, TN
  September 23, 2008     2008       6,346,000       126,920       7.80 %     100 %
Winter Garden Village — Winter Garden, FL
  September 26, 2008     2007       180,351,286       4,664,026       7.39 %     99.1 %
Payless Shoe Source — Columbia, SC
  September 30, 2008     1998       1,400,000       28,000       9.88 %     100 %
Walgreens — Jacksonville, FL
  September 30, 2008     2000       5,050,000       101,000       7.05 %     100 %
CVS — Hamilton, OH
  September 30, 2008     1999       3,600,000       72,000       7.28 %     100 %
Walgreens — Akron, OH
  September 30, 2008     1994       2,820,000       56,400       7.99 %     100 %
Walgreens — Seattle, WA
  September 30, 2008     2002       6,770,000       135,400       6.75 %     100 %
Walgreens — LaMarque, TX
  September 30, 2008     2000       4,510,000       90,200       7.07 %     100 %
CVS — Mechanicville, NY
  September 30, 2008     1998       2,600,000       52,000       7.27 %     100 %
Office Depot — Laurel, MS
  September 30, 2008     2002       2,650,000       53,000       7.55 %     100 %
Home Depot — Colma, CA
  September 30, 2008     1995       39,310,000       786,200       6.39 %     100 %
Walgreens — Saginaw, MI
  September 30, 2008     2001       4,200,000       84,000       7.57 %     100 %
Walgreens — Tulsa, OK
  September 30, 2008     1993       2,190,000       43,800       8.01 %     100 %
Walgreens — Broken Arrow, OK
  September 30, 2008     1993       2,100,000       42,000       7.74 %     100 %
Office Depot — London, KY
  September 30, 2008     2001       3,500,000       70,000       7.57 %     100 %
Best Buy — Las Cruces, NM
  September 30, 2008     2002       6,100,000       160,090       7.94 %     100 %
Staples — Angola, IN
  September 30, 2008     1999       3,200,000       83,990       7.74 %     100 %
TJ Maxx — Staunton, VA
  September 30, 2008     1988       4,300,000       117,160       9.62 %     100 %
AT&T Wireless — Santa Clara, CA
  September 30, 2008     2002       10,200,000       264,320       6.56 %     100 %
Walgreens — Tulsa, OK
  September 30, 2008     1994       2,950,000       78,260       7.73 %     100 %
Walgreens — Crossville, TN
  September 30, 2008     2001       4,450,000       116,530       7.28 %     100 %
CVS — Columbia, TN (Nashville)
  September 30, 2008     1998       2,400,000       65,150       8.15 %     100 %
CVS — Columbia, TN (James Campbell)
  September 30, 2008     1998       2,600,000       69,350       7.01 %     100 %
Walgreens — Newton, IA
  September 30, 2008     2000       4,330,000       86,600       7.51 %     100 %
FedEx — Huntsville, AL
  September 30, 2008     2008       10,947,787       218,955       7.50 %     100 %
FedEx — Baton Rouge, LA
  October 3, 2008     2008       8,998,880       179,978       7.52 %     100 %
CVS — Atlanta, GA
  October 7, 2008     2006       3,841,000       76,820       7.25 %     100 %
Tractor Supply — Baldwinsville, NY
  October 15, 2008     2005       3,402,120       68,042       7.45 %     100 %
 
                                           
 
                $  826,992,122     $ 17,827,693                  
 
                                           
 
(1)   Fees paid to sponsor include payments made to an affiliate of our advisor for acquisition fees in connection with the property acquisition and payments to our advisor for finance coordination fees for services in connection with the origination or assumption of debt financing obtained to acquire the respective property, where applicable. For more detailed information on fees paid to affiliates of our sponsor, see the section captioned “Management Compensation” beginning on page 62 of the prospectus.
 
(2)   Initial yield is calculated as the annual rental income for the in place leases at the respective property divided by the property purchase price, exclusive of closing costs and fees paid to sponsor.

16


 

     The following table sets forth the principal provisions of the lease term for the major tenants at the properties listed above:
                                                             
                    % of                                      
            Total     Total                 Base              
    Number       Square     Square         Current     Rent per              
    of       Feet     Feet     Renewal   Annual Base     Square     Lease Term ***  
Property   Tenants   Major Tenants*   Leased     Leased     Options**   Rent     Foot     Beginning     To  
Walgreens — Elmira, NY
  1   Walgreen Eastern Co., Inc.     14,820       100 %   10/5 yr.   $ 395,000     $ 26.65       5/1/2008       1/31/2033 (2)
CVS — Onley, VA
  1   CVS of Virginia, Inc.     13,225       100 %   4/5 yr.     370,300       28.00       5/8/2008       1/31/2033  
Tractor Supply — Carroll, OH
  1   Tractor Supply Company     40,700       100 %   1/5 yr.     164,835       4.05       5/8/2008       12/31/2011  
 
                                175,010       4.30       1/1/2012       12/31/2016  
Walgreens — Hibbing, MN
  1   Walgreen Co.     14,820       100 %   10/5 yr. 2/3 yr.     277,250       18.71       5/14/2008       4/30/2032 (2)
Allstate Customer Contact Center — Yuma, AZ
  1   Allstate Insurance Company     28,800       100 %   1/5 yr.     575,712 (1)     19.99       5/22/2008       4/30/2018  
Walgreens — Essex, MD
  1   Walgreen Co.     14,820       100 %   10/5 yr.     425,000       28.68       5/30/2008       4/30/2032 (2)
Convergy’s — Las Cruces, NM
  1   Convergy’s Customer Management Group Inc.     45,761       100 %   2/5 yr.     726,227 (1)     15.87       6/2/2008       3/31/2018  
Walgreens — Bath, NY
  1   Walgreen Eastern Co., Inc.     12,222       100 %   10/5 yr.     280,000       22.91       6/2/2008       4/30/2033 (2)
Walgreens — Chino Valley, AZ
  1   Walgreen Arizona Drug Co.     14,820       100 %   10/5 yr.     355,000       23.95       6/2/2008       7/31/2032 (2)
III Forks — Dallas, TX
  1   III Forks Dallas, L.P.     21,145       100 %   5/5 yr.     935,000 (3)     44.22       6/5/2008       6/30/2025  
Walgreens — Albany, GA
  1   Walgreen Co.     14,820       100 %   10/5 yr.     306,000       20.65       6/11/2008       2/28/2033 (2)
Kohl’s — Grand Forks, ND
  1   Kohl’s Illinois, Inc.     68,725       100 %   8/5 yr.     572,450       8.33       6/11/2008       9/30/2016  
 
                                601,073       8.75       10/1/2016       9/30/2026  
Coral Walk — Cape Coral, FL
  16   TSA Stores, Inc.     40,228       42 %   4/5 yr.     623,534       15.50       6/12/2008       1/31/2013  
 
                                663,762       16.50       2/1/2013       1/31/2018  
 
      Staples the Office Superstore East, Inc.     20,388       22 %   4/5 yr.     305,820       15.00       6/12/2008       12/31/2017  
LA Fitness — Brooklyn Park, MN
  1   L.A. Fitness International, LLC     45,000       100 %   3/5 yr.     810,000 (4)     18.00       6/17/2008       6/30/2023  
Market Pointe — Papillion, NE
  11   Lowe’s Home Centers, Inc.     138,134       54 %   5/5 yr.     600,000       4.34       6/20/2008       10/9/2016  
 
                                660,000       4.78       10/10/2016       10/9/2026  
 
      Kohl’s Department Stores, Inc.     88,248       35 %   5/5 yr.     595,674       6.75       6/20/2008       1/31/2027  
PetSmart Distribution Center — McCarran, NV
  1   PetSmart Inc.     872,710       100 %   3/5 yr.     3,462,157 (5)     3.97       7/2/2008       3/31/2023  
Cumming Town Center — Cumming, GA
  26   Kingswere Furniture LLC     53,667       17 %   4/5 yr.     751,338       14.00       7/11/2008       3/14/2018  
 
      The TJX Companies, Inc.     52,000       17 %   4/5 yr.     465,400       8.95       7/11/2008       10/31/2012  
 
                                491,400       9.45       11/1/2012       10/31/2017  
 
      Dick’s Sporting Goods, Inc.     45,000       15 %   4/5 yr.     585,000       13.00       7/11/2008       1/31/2013  
 
                                607,500       13.50       2/1/2013       1/31/2018  
 
      Best Buy Stores, L.P.     30,000       10 %   4/5 yr.     435,000       14.50       7/11/2008       1/31/2018  

17


 

                                                             
                                                             
                    % of                                
            Total     Total                 Base              
    Number       Square     Square         Current     Rent per              
    of     Feet     Feet     Renewal   Annual Base     Square     Lease Term***  
Property   Tenants   Major Tenants*   Leased     Leased     Options**   Rent     Foot     Beginning     To  
Walgreens — Rome, NY
  1   Walgreen Co.     13,770       100 %   10/5 yr.   $ 300,000     $ 21.79       7/15/2008       1/31/2033 (2)
LA Fitness — Matteson, IL
  1   L.A. Fitness International, LLC     45,000       100 %   3/5 yr.     792,000       17.60       7/16/2008       5/31/2023  
Walgreens — Columbus, MS
  1   Walgreen Co.     14,450       100 %   10/5 yr.     299,850       20.75       7/24/2008       7/31/2029 (2)
Weston Shops — Weston, FL
  8   Walgreen Co.     14,820       49 %   10/5 yr.     533,000       35.96       7/30/2008       6/30/2031  
 
      Mayor’s Jewelers of Florida, Inc.     4,000       13 %   2/5 yr.     232,000       58.00       7/30/2008       7/31/2012  
 
                                256,000       64.00       8/1/2012       7/31/2017  
 
      Mattress Giant Corporation     3,600       12 %   2/5 yr.     126,000       35.00       7/30/2008       4/30/2013  
 
                                141,120       39.20       5/1/2013       4/30/2015  
Jo-Ann Fabrics — Alpharetta, GA
  1   FCA of Ohio, Inc.     38,418       100 %   3/5 yr.     512,880       13.35       8/5/2008       1/31/2011  
 
                                532,089       13.85       2/1/2011       1/31/2016  
LA Fitness — Greenwood, IN
  1   LA Fitness International, LLC     45,000       100 %   3/5 yr.     832,500 (4)     18.50       8/5/2008       5/31/2023  
PetSmart — Chattanooga, TN
  1   Petsmart, Inc.     26,040       100 %   3/5 yr.     344,665 (6)     13.24       8/5/2008       12/31/2021  
PetSmart — Daytona Beach, FL
  1   Petsmart, Inc.     26,194       100 %   3/5 yr.     359,664 (6)     13.73       8/5/2008       12/31/2021  
PetSmart — Fredericksburg, VA
  1   Petsmart, Inc.     26,051       100 %   3/5 yr.     378,797 (6)     14.54       8/5/2008       12/31/2021  
Ferguson Portfolio — Various
  1   Ferguson Enterprises, Inc.     1,111,843       100 %   4/5 yr.     6,446,258 (7)     5.80       8/21/2008       8/30/2023  
Home Depot — Lakewood, CO
  1   Home Depot U.S.A, Inc.     102,000       100 %   11/5 yr.     775,000       7.60       8/27/2008       1/31/2032  
Walgreens — Mobile, AL
  1   Walgreens     13,650       100 %   10/5 yr.     357,596       26.20       8/28/2008       10/31/2032 (2)
Aaron’s Rents Portfolio — Various
  1   Aaron’s Rents, Inc.     259,382       100 %   3/5yr     2,450,640 (8)     9.45       9/15/2008       9/30/2023  
Lowe’s — Chester, NY
  1   Lowe’s Home Centers, Inc.     131,798       100 %   8/5 yr.     475,000       3.60       9/19/2008       8/31/2033  
HH Gregg — Grove City, OH
  1   Gregg Appliances, Inc.     30,167       100 %   4/5 yr.     461,555       15.30       9/17/2008       2/28/2023  
BJ’s Wholesale Club- Ft. Lauderdale, FL
  1   BJ’s Wholesale Club, Inc.     119,598       100 %   4/5 yr.     1,979,100 (9)     16.55       9/23/2008       11/17/2027  
HH Gregg — Mt. Juliet, TN
  1   Gregg Appliances, Inc.     30,000       100 %   4/5 yr.     495,000       16.50       9/23/2008       8/31/2018  
 
                                525,000       17.50       9/1/2018       8/31/2023  
Winter Garden Village — Winter Garden, FL
  82   Beall’s Department Stores, Inc.     80,000 (13)     10.5 %   5/5 yr.     320,000       4.00       9/26/2008       4/30/2023  
Payless Shoe Source — Columbia, SC
  1   Payless ShoeSource Inc.     5,534       100 %   3/5 yr.     138,367       25.00       9/30/2008       11/30/2008  
 
                                152,204       27.50       12/1/2008       11/30/2013  
Walgreens — Jacksonville, FL
  1   Walgreen Co.     15,120       100 %   4/10 yr.     356,000       23.54       9/30/2008       9/30/2020 (2)
CVS — Hamilton, OH
  1   CVS Corporation     11,180       100 %   6/5 yr.     262,145       23.45       9/30/2008       2/24/2019  
Walgreens — Akron, OH
  1   Walgreen Co.     13,500       100 %   3/10 yr.     225,453       16.70       9/30/2008       7/31/2014 (2)
Walgreens — Seattle, WA
  1   Walgreen Co.     14,410       100 %   4/10 yr.     457,000       31.71       9/30/2008       11/30/2022 (2)
Walgreens — LaMarque, TX
  1   Walgreen Co.     15,120       100 %   4/10 yr.     319,000       21.10       9/30/2008       6/30/2020 (2)
CVS — Mechanicville, NY
  1   CVS Albany, L.L.C.     10,125       100 %   4/5 yr.     188,933 (10)     18.66       9/30/2008       1/31/2018  

18


 

                                                             
                                                             
                    % of                              
            Total     Total             Base              
    Number       Square     Square         Current     Rent per              
    of     Feet     Feet     Renewal   Annual Base     Square     Lease Term***  
Property   Tenants   Major Tenants*   Leased     Leased     Options**   Rent     Foot     Beginning     To  
Office Depot — Laurel, MS
  1   Office Depot, Inc.     20,515       100 %   4/5 yr.   $ 200,021     $ 9.75       9/30/2008       10/31/2017  
Home Depot — Colma, CA
  1   Home Depot U.S.A., Inc.     99,970       100 %   4/5 yr.     2,512,750 (11)     25.14       9/30/2008       1/31/2016  
Walgreens — Saginaw, MI
  1   Walgreen Co.     15,120       100 %   4/10 yr.     318,000       21.03       9/30/2008       4/30/2021 (2)
Walgreens — Tulsa, OK
  1   Walgreen Co.     13,000       100 %   3/10 yr.     175,500       13.50       9/30/2008       12/31/2013 (2)
Walgreens — Broken Arrow, OK
  1   Walgreen Co.     13,000       100 %   3/10 yr.     162,500       12.50       9/30/2008       10/31/2013 (2)
Office Depot — London, KY
  1   Office Depot, Inc.     20,468       100 %   4/5 yr.     265,061       12.95       9/30/2008       9/30/2016  
Best Buy — Las Cruces, NM
  1   Best Buy Stores, L.P.     30,000       100 %   3/5 yr.     484,500       16.15       9/30/2008       1/31/2013  
Staples — Angola, IN
  1   Staples, Inc.     24,049       100 %   4/5 yr.     247,705       10.30       9/30/2008       2/28/2015  
TJ Maxx — Staunton, VA
  1   The TJX Companies, Inc.     78,823       100 %   4/5 yr.     413,821       5.25       9/30/2008       10/31/2012  
AT&T Wireless — Santa Clara, CA
  1   AT&T Wireless Services, Inc.     33,257       100 %   3/5 yr.     668,928       20.11       9/30/2008       6/8/2013  
 
                                691,152       20.78       6/9/2013       6/8/2018  
Walgreens — Tulsa, OK
  1   Walgreen Co.     13,500       100 %   3/10 yr.     228,150       16.90       9/30/2008       8/31/2014 (2)
Walgreens — Crossville, TN
  1   Walgreen Co.     15,070       100 %   4/10 yr.     324,000       21.50       9/30/2008       3/31/2021 (2)
CVS — Columbia, TN
  1   Revco Discount Drug Centers, Inc.     10,715       100 %   4/5 yr.     195,677       18.26       9/30/2008       11/30/2017  
CVS — Columbia, TN
  1   Revco Discount Drug Centers, Inc.     10,759       100 %   4/5 yr.     182,274       16.94       9/30/2008       11/30/2017  
Walgreens — Newton, IA
  1   Walgreen Co.     15,047       100 %   4/10 yr.     325,000       21.60       9/30/2008       2/28/2021 (2)
FedEx — Huntsville, AL
  1   FedEx Freight East, Inc.     56,360       100 %   2/5 yr.     821,084       14.57       9/30/2008       7/10/2018  
 
                                903,192       16.03       7/11/2018       7/31/2023  
FedEx — Baton Rouge, LA
  1   FedEx Freight East, Inc.     29,400       100 %   2/5 yr.     676,848       23.02       10/3/2008       7/22/2018  
 
                                744,468       25.32       7/23/2018       7/31/2023  
CVS — Atlanta, GA
  1   Big B Drugs, Inc.     12,013       100 %   6/5 yr     278,479       23.18       10/7/2008       1/31/2033  
Tractor Supply — Baldwinsville, NY
  1   Tractor Supply Company     24,727       100 %   3/5 yr.     253,452 (12)     10.25       10/15/2008       9/30/2020  
 
*   Major tenants include those tenants that occupy greater than 10.0% of the rentable square feet of their respective property.
 
**   Represents option renewal period / term of each option.
 
***   Represents lease term beginning with purchase date.
 
(1)   The initial annual base rent under the lease increases each year by 2.0% of the then current annual base rent. For the purposes of this presentation, the individual rental escalations are not displayed in the table.
 
(2)   Walgreens has the right, at its election, to terminate the lease effective as of the last day of the initial lease term, or effective as of the last day of any month thereafter.
 
(3)   The initial annual base rent under the lease increases each year by 1.5% of the then current annual base rent. For the purposes of this presentation, the individual rental escalations are not displayed in the table.
 
(4)   The initial annual base rent under the lease, as displayed in the table above, increases every five years by the lessor of the cumulative percentage increase in the Consumer Price Index over the preceding five year period or 10.0% of the then current annual base rent. For the purposes of this presentation, the individual rental escalations are not displayed in the table.
 
(5)   The initial annual base rent under the lease increases every five years by 10.0% of the then current annual base rent. For the purposes of this presentation, the individual rental escalations are not displayed in the table.
 
(6)   The initial annual base rent under the lease increases every five years by 3.0% of the then current annual base rent. For the purposes of this presentation, the individual rental escalations are not displayed in the table.
 
(7)   The lease consists of seven single tenant retail properties and one single tenant commercial property, which are subject to a

19


 

    master lease. The initial annual base rent under the lease increases every five years by 7.5% of the then current annual base rent. For purposes of this presentation, the individual rental escalations are not displayed in the table.
 
(8)   The lease consists of 25 single tenant retail properties, which are subject to a master lease. The initial annual base rent under the lease increases every five years by 2.5% of the then current annual base rent. For purposes of this presentation, the individual rental escalations are not displayed in the table.
 
(9)   The initial annual base rent under the lease increases November 17, 2017 and November 17, 2022 by the lesser of three times the Consumer Price Index or 5%.
 
(10)   The initial annual base rent under the lease increases each year by 8.0% of the then current annual base rent. For the purposes of this presentation, the individual rental escalations are not displayed in the table.
 
(11)   The initial annual base rent under the lease increases every five years by the percentage of the increase, if any, in the United States Bureau of Labor statistics Consumer Price Index for All Items All Urban Consumers for San Francisco-Alameda, California.
 
(12)   The initial annual base rent under the lease increases every five years by 10.0% of the then current annual base rent. For the purposes of this presentation, the individual rental escalations are not displayed in the table.
 
(13)   Total square feet leased is accounted for as a ground lease.
     Cole Realty Advisors has the sole and exclusive right to manage, operate, lease and supervise the overall maintenance of the properties listed above and currently receives a property management fee of 2.0% of the monthly gross revenues from our properties. In accordance with the property management agreement, we may pay Cole Realty Advisors (i) up to 2.0% of gross revenues from our single tenant properties and (ii) up to 4.0% of gross revenues from our multi tenant properties. We currently have no plan for any renovations, improvements or development of the properties listed above and we believe the properties are adequately insured.

20


 

     These acquisitions were funded by net proceeds from our follow-on offering, borrowings from our Credit Facility, available cash and the following mortgage notes. In connection with the property acquisitions noted above we incurred or assumed the following mortgage notes:
                                                         
            Fixed                                
    Fixed Rate Loan     Interest     Maturity     Variable Rate     Variable     Maturity     Total Loan  
Property   Amount     Rate     Date     Loan Amount     Interest Rate     Date     Outstanding  
Walgreens — Elmira, NY
  $       N/A       N/A     $ 3,835,614 (1)   LIBOR + 2.0%     9/5/2010     $ 3,835,614  
CVS — Onley, VA
    3,328,988 (1)     5.87 %     9/30/2010           NA       N/A       3,328,988  
Tractor Supply — Carroll, OH
    1,213,630 (1)     5.87 %     9/30/2010           NA       N/A       1,213,630  
Walgreens — Hibbing, MN
    2,548,624 (1)     5.87 %     9/30/2010           NA       N/A       2,548,624  
Allstate Customer Contact Center — Yuma, AZ
          N/A       N/A       4,687,201 (1)   LIBOR + 2.0%     9/5/2010       4,687,201  
Walgreens — Essex, MD
    3,937,017 (1)     5.87 %     9/30/2010           NA       N/A       3,937,017  
Convergy’s — Las Cruces, NM
    4,569,318 (1)     5.87 %     9/30/2010           NA       N/A       4,569,318  
Walgreens — Bath, NY
    2,590,065 (1)     5.87 %     9/30/2010           NA       N/A       2,590,065  
Walgreens — Chino Valley, AZ
    3,298,040 (1)     5.87 %     9/30/2010           NA       N/A       3,298,040  
Three Forks — Dallas, TX
          N/A       N/A       6,675,228 (1)   LIBOR + 2.5%     9/2/2011       6,675,228  
Walgreens — Albany, GA
          N/A       N/A       2,791,459 (1)   LIBOR + 2.5%     9/2/2011       2,791,459  
Kohl’s — Grand Forks, ND
    5,173,099 (1)     5.87 %     9/30/2010           NA       N/A       5,173,099  
LA Fitness — Brooklyn Park, MN
    6,341,219 (1)     5.87 %     9/30/2010           NA       N/A       6,341,219  
Cumming Town Center — Cumming, GA
    33,700,000 (1)     6.10 %     10/1/2015             N/A       N/A       33,700,000  
Walgreens — Rome, NY
          N/A       N/A       2,758,358 (1)   LIBOR + 2.5%     9/2/2011       2,758,358  
LA Fitness — Matteson, IL
          N/A       N/A       6,122,398 (1)   LIBOR + 2.5%     9/2/2011       6,122,398  
Walgreens — Columbus, MS
          N/A       N/A       2,730,775 (1)   LIBOR + 2.5%     9/2/2011       2,730,775  
Home Depot — Lakewood, CO
    8,350,000       5.80 %     8/10/2031           NA       N/A       8,350,000  
Payless Shoe Source — Columbia, SC
    860,000       4.29 %     12/11/2008             N/A       N/A       860,000  
Walgreens — Jacksonville, FL
    2,510,750       4.29 %     12/11/2008             N/A       N/A       2,510,750  
CVS — Hamilton, OH
    1,787,500       4.29 %     12/11/2008             N/A       N/A       1,787,500  
Walgreens — Akron, OH
          N/A       N/A       1,900,000     LIBOR + 2.0%     6/6/2009       1,900,000  
Walgreens — Seattle, WA
    3,349,500       4.29 %     12/11/2008             N/A       N/A       3,349,500  
Walgreens — LaMarque, TX
    2,277,000       4.29 %     12/11/2008             N/A       N/A       2,277,000  
CVS — Mechanicville, NY
    1,290,000       4.29 %     12/11/2008             N/A       N/A       1,290,000  
Office Depot — Laurel, MS
    1,270,000       4.29 %     12/11/2008             N/A       N/A       1,270,000  
Home Depot — Colma, CA
    21,613,000       4.80 %     4/11/2009             N/A       N/A       21,613,000  
Walgreens — Saginaw, MI
    2,282,500       4.29 %     12/11/2008             N/A       N/A       2,282,500  
Walgreens — Tulsa, OK
    1,215,500       4.29 %     12/11/2008             N/A       N/A       1,215,500  
Walgreens — Broken Arrow, OK
    1,127,500       4.29 %     12/11/2008             N/A       N/A       1,127,500  
Office Depot — London, KY
    1,680,000       4.29 %     12/11/2008             N/A       N/A       1,680,000  
Best Buy — Las Cruces, NM
    3,809,000       4.46 %     5/11/2011             N/A       N/A       3,809,000  
Staples — Angola, IN
    1,999,000       4.46 %     5/11/2011             N/A       N/A       1,999,000  
TJ Maxx — Staunton, VA
    3,116,000       4.46 %     5/11/2011             N/A       N/A       3,116,000  
AT&T Wireless — Santa Clara, CA
    6,032,000       4.46 %     5/11/2011             N/A       N/A       6,032,000  
Walgreens — Tulsa, OK
    1,926,000       4.46 %     5/11/2011             N/A       N/A       1,926,000  
Walgreens — Crossville, TN
    2,753,000       4.46 %     5/11/2011             N/A       N/A       2,753,000  
CVS — Columbia, TN (Nashville)
    1,715,000       6.44 %     6/11/2011             N/A       N/A       1,715,000  
CVS — Columbia, TN (James Campbell)
    1,735,000       6.44 %     6/11/2011             N/A       N/A       1,735,000  
Walgreens — Newton, IA
    2,393,000       5.06 %     10/11/2009             N/A       N/A       2,393,000  
Winter Garden — Winter Garden, FL
    105,700,000       6.10 %     10/1/2015             N/A       N/A       105,700,000  
Tractor Supply — Baldwinsville, NY
    2,200,000       6.00 %     12/1/2025             N/A       N/A       2,200,000  
 
                                                 
 
  $ 249,691,250                     $ 31,501,033                     $ 281,192,283  
 
                                                 
 
(1)   Mortgage note incurred subsequent to purchase date.

21


 

     In addition, we incurred mortgage notes payable, secured by properties purchased prior to April 30, 2008, the date of our prospectus, totaling approximately $67.4 million, of which approximately $27.0 million is fixed rate debt (the “Fixed Rate Debt”) which bears interest at 6.80% per annum and matures August 2018, and of which approximately $40.4 million is variable rate debt (the “Variable Rate Debt”). Approximately $27.5 million of the Variable Rate Debt bears interest at the one-month LIBOR rate plus 200 basis points, not to exceed 7.0% pursuant to a rate cap agreement, and matures in September 2010. Approximately $12.9 million of the Variable Rate Debt bears interest at the one-month LIBOR rate plus 250 basis points and matures in September 2011. The Fixed Rate Debt is secured by the PB Albuquerque property, the PB Arlington Heights property, the PB Colorado Springs property, the PB Fort Meyers property, the PB Nashua property, the PB New Hartford property, the PB Redlands property, the PB San Antonio property, and the PB Tampa property. The Variable Rate Debt is secured by the BJ Haverhill property, the TS Clovis property, the WG Batesville property, the WG Oneida property, the WG Brentwood property, the WG Harriman property, the WG Olivette Property, the WG Columbia property, the WG Beverly Hills Property and the WG Waco Property.

22


 

     For federal income tax purposes, the depreciable basis in the properties noted above is approximately $661.6 million in total. When we calculate depreciation expense for tax purposes, we will use the straight-line method. We depreciate buildings and improvements based upon estimated useful lives of 40 years and the lesser of the useful life or lease term, respectively. The preliminary depreciable basis in the properties noted above is estimated as follows:
                 
Property           Depreciable Tax Basis  
Walgreens — Elmira, NY
          $ 4,860,800  
CVS — Onley, VA
            4,388,800  
Tractor Supply — Carroll, OH
            1,600,000  
Walgreens — Hibbing, MN
            3,360,000  
Allstate Customer Contact Center — Yuma, AZ
            6,149,127  
Walgreens — Essex, MD
            5,190,400  
Convergy’s — Las Cruces, NM
            6,489,008  
Walgreens — Bath, NY
            3,388,804  
Walgreens — Chino Valley, AZ
            4,348,000  
III Forks — Dallas, TX
            8,800,000  
Walgreens — Albany, GA
            3,680,000  
Kohl’s — Grand Forks, ND
            6,820,000  
Coral Walk — Cape Coral, FL
            21,600,000  
LA Fitness — Brooklyn Park, MN
            8,360,000  
Market Pointe — Papillion, NE
            20,400,000  
PetSmart Distribution Center — McCarran, NV
            41,220,000  
Cumming Town Center — Cumming, GA
            46,705,042  
Walgreens — Rome, NY
            3,582,182  
LA Fitness — Matteson, IL
            8,071,200  
Walgreens — Columbus, MS
            3,536,000  
Weston Shops — Weston, FL
            13,120,000  
Jo-Ann Fabrics — Alpharetta, GA
            5,152,800  
LA Fitness — Greenwood, IN
            8,484,000  
PetSmart — Chattanooga, TN
            3,852,000  
PetSmart — Daytona Beach, FL
            4,266,400  
PetSmart — Fredericksburg, VA
            4,159,200  
Ferguson Portfolio — Various
            69,434,599  
Home Depot — Lakewood, CO
            9,040,000  
Walgreens — Mobile, AL
            4,332,000  
Aaron’s Rents Portfolio — Various
            26,140,161  
Lowe’s — Chester, NY
            5,629,630  
HH Gregg — Grove City, OH
            4,721,600  
BJ’s Wholesale Club — Ft. Lauderdale, FL
            22,618,285  
HH Gregg — Mt. Juliet, TN
            5,076,800  
Winter Garden Village — Winter Garden, FL
            144,281,029  
Payless Shoe Source — Columbia, SC
            1,120,000  
Walgreens — Jacksonville, FL
            4,040,000  
CVS — Hamilton, OH
            2,880,000  
Walgreens — Akron, OH
            2,256,000  
Walgreens — Seattle, WA
            5,416,000  
Walgreens — LaMarque, TX
            3,608,000  
CVS — Mechanicville, NY
            2,080,000  

23


 

                 
Property           Depreciable Tax Basis  
Office Depot — Laurel, MS
          $ 2,120,000  
Home Depot — Colma, CA
            31,448,000  
Walgreens — Saginaw, MI
            3,360,000  
Walgreens — Tulsa, OK
            1,752,000  
Walgreens — Broken Arrow, OK
            1,680,000  
Office Depot — London, KY
            2,800,000  
Best Buy — Las Cruces, NM
            4,880,000  
Staples — Angola, IN
            2,560,000  
TJ Maxx — Staunton, VA
            3,440,000  
AT&T Wireless — Santa Clara, CA
            8,160,000  
Walgreens — Tulsa, OK
            2,360,000  
Walgreens — Crossville, TN
            3,560,000  
CVS — Columbia, TN
            1,920,000  
CVS — Columbia, TN
            2,080,000  
Walgreens — Newton, IA
            3,464,000  
FedEx — Huntsville, AL
            8,758,230  
FedEx — Baton Rouge, LA
            7,199,104  
CVS — Atlanta, GA
            3,072,800  
Tractor Supply — Baldwinsville, NY
            2,721,696  
 
             
 
          $ 661,593,697  
 
             

24


 

Tenant Lease Expirations
     The following table sets forth, as of October 27, 2008, lease expirations of our properties, including the properties described above, for each of the next ten years assuming no renewal options are exercised. For purposes of the table, the “total annual base rent” column represents annualized base rent, based on rent in effect on January 1 of the respective year, for each lease that expires during the respective year.
                                 
                            % of Total  
    Number of     Approx. Square     Total Annual     Annual Base  
Year Ending December 31,   Leases Expiring     Feet Expiring     Base Rent     Rent  
2008
    3       15,431     $ 169,911       <1 %
2009
    15       94,263       1,149,627       1 %
2010
    21       119,467       1,702,743       1 %
2011
    16       60,216       1,013,272       1 %
2012
    41       292,666       2,683,436       1 %
2013
    61       547,307       5,093,760       3 %
2014
    16       302,736       3,461,001       2 %
2015
    19       1,216,192       8,748,656       5 %
2016
    36       1,784,836       14,989,415       9 %
2017
    56       1,742,755       15,432,561       9 %
2018
    73       1,319,782       11,920,949       7 %
 
                       
 
    357       7,495,651     $ 66,365,331       39 %
 
                       
Other Investments
     On September 17, 2008, we purchased commercial mortgage backed securities, class A-J certificates of the LB-UBS Commercial Mortgage Trust 2007 — C2 (the “UBS Certificates”) with a face amount of $35.2 million at a discounted price of approximately $26.3 million. The UBS Certificates are rated AAA by Standard & Poor’s Ratings Services and AAA by Fitch Ratings with a coupon rate of 5.562% per year and are secured by a diversified pool of commercial mortgage loans secured by commercial real estate. JP Morgan Chase Bank, N.A. provided 30-day repurchase financing at settlement in the amount of approximately $17.4 million, with an interest rate of 3.50%. We paid Cole Realty Advisors, an affiliate of our advisor, an acquisition fee of approximately $525,000, or 2% of the net settlement price.
     On October 20, 2008, we purchased commercial mortgage backed securities, class A3 certificates of the JPMCC 08-C2 (the “JPM Certificates”) with a face amount of $18.5 million at a discounted price of approximately $15.1 million. The Certificates are rated Aaa by Moody’s Ratings Services and AAA by Fitch Ratings with a coupon rate of 6.288% per year and are secured by a diversified pool of commercial mortgage loans secured by commercial real estate. JP Morgan Chase Bank, N.A. provided 60-day repurchase financing at settlement in the amount of approximately $10.6 million, with an interest rate of 5.16%. We paid Cole Realty Advisors, an affiliate of our advisor, an acquisition fee of approximately $302,000, or 2% of the net settlement price.

25


 

Potential Property Investments
     Our advisor has identified certain properties as potential suitable investments for us. The acquisition of each such property is subject to a number of conditions. A significant condition to acquiring any one of these potential acquisitions is our ability to raise sufficient proceeds in this offering to pay all or a portion of the purchase price. An additional condition to acquiring these properties may be our securing debt financing to pay the balance of the purchase price. Such financing may not be available on acceptable terms or at all.
     Our evaluation of a property as a potential acquisition, including the appropriate purchase price, will include our consideration of a property condition report; unit-level store performance; property location, visibility and access; age of the property, physical condition and curb appeal; neighboring property uses; local market conditions, including vacancy rates; area demographics, including trade area population and average household income; neighborhood growth patterns and economic conditions; and the presence of demand generators.
     We will decide whether to acquire each property generally based upon:
    satisfaction of the conditions to the acquisition contained in the respective contract;
 
    no material adverse change occurring relating to the properties, the tenant or in the local economic conditions;
 
    our receipt of sufficient net proceeds from the offering of our common stock to the public and financing proceeds to make this acquisition; and
 
    our receipt of satisfactory due diligence information including the appraisal, environmental reports and tenant and lease information.
     Other properties may be identified in the future that we may acquire prior to or instead of these properties. Due to the considerable conditions to the consummation of the acquisition of these properties, we cannot make any assurances that the closing of these acquisitions are probable. The properties currently identified are as follows:
                         
                    Approximate  
    Expected       Approximate     Compensation to  
Property   Acquisition Date   Seller (1)   Purchase Price (2)     Sponsor (3)  
LA Fitness — McDonough, GA
  October 2008   Shoppes At Henry Crossing, LLC   $ 9,563,750     $ 191,275  
 
                       
BE Aerospace — Winston Salem, NC
  October 2008   Bellevue Acquisitions, LLC     5,527,000       110,540  
 
                       
Walgreens — Evansville, IN
  October 2008   Hogan Holdings 22, LLC     5,032,000       100,640  
Church’s Chicken Portfolio - Various
  October 2008   Fri Chkn Holding, LLC     132,000,000       3,345,160  
 
                   
 
          $ 152,122,750     $ 3,747,615  
 
                   
 
(1)   Seller is an unaffiliated third party.
 
(2)   Approximate purchase price does not include acquisition costs, which we expect to be approximately 3.0% of the contract purchase price, which include acquisition fees described in note 3 below.
 
(3)   Amounts include acquisition fees payable to an affiliate of our advisor for acquisition fees in connection with the property acquisition.

26


 

     Each potential property acquisition is subject to net lease(s), pursuant to which the tenant(s) are required to pay substantially all operating expenses and capital expenditures in addition to base rent.
                         
                    % of Total
            Total Square   Square Feet
Property   Major Tenants*   Guarantor   Feet Leased   Leased
LA Fitness — McDonough, GA
  L.A. Fitness International, LLC   N/A     45,000       100 %
BE Aerospace — Winston Salem, NC
  BE Aerospace, Inc.   N/A     89,600       100 %
Walgreens — Evansville, IN
  Walgreen Co.   N/A     14,820       100 %
Church’s Chicken Portfolio — Various
  Cajun Operating Company   N/A     244,075       100 %
 
*   Major tenants are those tenants that occupy greater than 10.0% of the rentable square of their respective property.
     The table below provides leasing information for the major tenants at each respective property:
                                                 
                    Current   Base Rent    
    Number of       Renewal   Annual Base   per Square   Lease Term
Property   Tenants   Major Tenants*   Options**   Rent   foot   Beginning   To
LA Fitness — McDonough, GA
  1   L.A. Fitness International, LLC   3/5 yr.     765,000 (1)     17.00       7/21/2008       7/31/2023  
BE Aerospace — Winston Salem, NC
  1   BE Aerospace, Inc.   2/5 yr.     425,600 (2)     4.75       8/22/2008       8/31/2018  
Walgreens — Evansville, IN
  1   Walgreen Co.   10/5 yr.     352,300       23.77       6/25/2007       6/30/2032  
Church’s Chicken Portfolio — Various
  1   Cajun Operating Company   2/ 10 yr.     11,596,080       47.51       4/12/2005       12/27/2024  
 
*   Major tenants include those tenants that occupy greater than 10.0% of the rentable square feet of their respective property.
 
**   Represents option renewal period / term of each option.
 
(1)   The initial annual base rent under the lease, as displayed in the table above, increases every five years by the lessor of the cumulative percentage increase in the Consumer Price Index over the preceding five year period or 10.0% of the then current annual base rent. For the purposes of this presentation, the individual rental escalations are not displayed in the table.
 
(2)   On January 1, 2010 and on each January 1 thereafter during the lease term, base rent increases 2.75% of the then current annual base rent.
     We expect to purchase each property with proceeds from our ongoing public offering of common stock, potential borrowings from our line of credit and available cash.
     We believe that each of our properties is adequately covered by insurance and we intend to obtain adequate insurance coverage for all future properties that we acquire.

27


 

Selected Financial Data
     The following data supplements, and should be read in conjunction, with the section of our prospectus captioned “Selected Financial Data” beginning on page 127 of the prospectus.
     The selected financial data presented below has been derived from our consolidated financial statements for the three and six months ended June 30, 2008 and year ended December 31, 2007:
                 
Balance Sheet Data:   June 30, 2008   December 31, 2007
Total real estate assets, net
  $ 2,236,692,426     $ 1,794,352,512  
Investment in mortgages receivable, net
  $ 86,117,652     $ 87,099,624  
Cash and cash equivalents
  $ 43,801,769     $ 43,517,178  
Restricted cash
  $ 8,347,978     $ 14,032,616  
Total assets
  $ 2,408,702,420     $ 1,967,697,834  
Mortgage notes payable
  $ 1,038,583,645     $ 1,055,681,538  
Escrowed investor proceeds
  $ 2,796,522     $ 12,737,969  
Stockholders’ equity
  $ 1,192,256,063     $ 781,086,865  
                         
    Three Months Ended   Six Months Ended   Year Ended
Operating Data:   June 30, 2008   June 30, 2008   December 31, 2007
Total revenue
  $ 44,108,126     $ 84,788,387     $ 89,842,150  
General and administrative
  $ 1,110,673     $ 2,079,890     $ 2,011,322  
Property operating expenses
  $ 3,439,305     $ 6,140,183     $ 6,466,677  
Property and asset management fees
  $ 2,046,127     $ 3,954,929     $ 4,184,271  
Depreciation and amortization
  $ 14,119,950     $ 27,487,653     $ 30,482,273  
Impairment of real estate assets
  $     $ 3,550,000     $ 5,400,000  
Operating income
  $ 23,392,071     $ 41,575,732     $ 41,297,607  
Interest expense
  $ 16,608,453     $ 34,569,901     $ 39,075,748  
Net income
  $ 7,047,454     $ 7,634,107     $ 4,480,017  
Funds from operations (1)
  $ 21,167,404     $ 38,671,760     $ 40,362,290  
Net operating income (1)
  $ 37,561,822     $ 72,559,669     $ 79,616,322  
Per share data:
                       
Net income — basic and diluted
  $ 0.05     $ 0.06     $ 0.07  
Weighted average dividends declared
  $ 0.17     $ 0.35     $ 0.68  
Weighted average shares outstanding (basic)
    130,357,008       117,448,582       60,929,996  
Weighted average shares outstanding (diluted)
    130,360,091       117,451,552       60,931,316  
                 
    Six Months Ended   Year Ended December
Cash Flow Data:   June 30, 2008   31, 2007
Cash flows provided by operations
  $ 38,783,625     $ 43,366,041  
Cash flows used in investing activities
  $ (405,737,744 )   $ (1,364,777,444 )
Cash flows provided by financing activities
  $ 367,238,710     $ 1,327,362,091  
 
(1)   See tables below for a reconciliation of this non-GAAP financial measure to net income.

28


 

Reconciliations of Non-GAAP Financial Measures
     We believe that funds from operations (“FFO”) is a beneficial indicator of the performance of a REIT. Because FFO calculations exclude such factors as depreciation and amortization of real estate assets and gains or losses from sales or impairment of operating real estate assets (which can vary among owners of identical assets in similar conditions based on historical cost accounting and useful-life estimates), they facilitate comparisons of operating performance between periods and between other REITs. Our management believes that accounting for real estate assets in accordance with GAAP implicitly assumes that the value of real estate assets diminishes predictability over time. Since real estate values have historically risen or fallen with market conditions, many industry investors and analysts have considered the presentation of operating results for real estate companies that use historical cost accounting to be insufficient by themselves. As a result, we believe that the use of FFO, together with the required GAAP presentations, provide a more complete understanding of our performance relative to our competitors and a more informed and appropriate basis on which to make decisions involving operating, financing, and investing activities. Other REITs may not define FFO in accordance with the current National Association of Real Estate Investment Trust’s (“NAREIT”) definition or may interpret the current NAREIT definition differently than we do.
     FFO is a non-GAAP financial measure and does not represent net income as defined by GAAP. Net income as defined by GAAP is the most relevant measure in determining our operating performance because FFO includes adjustments that investors may deem subjective, such as adding back expenses such as depreciation and amortization. Accordingly, FFO should not be considered as an alternative to net income as an indicator of our operating performance.
     Our calculation of FFO is presented in the following table for the periods ended as indicated:
                         
    Three Months Ended     Six Months Ended     Year Ended  
    June 30, 2008     June 30, 2008     December 31, 2007  
Net income
  $ 7,047,454     $ 7,634,107     $ 4,480,017  
Add:
                       
Depreciation of real estate assets
    9,259,374       17,992,484       20,460,219  
Amortization of lease related costs
    4,860,576       9,495,169       10,022,054  
Impairment on real estate assets
          3,550,000       5,400,000  
 
                 
FFO
  $ 21,167,404     $ 38,671,760     $ 40,362,290  
 
                 
     Set forth below is additional information (often considered in conjunction with FFO) that may be helpful in assessing our operating results:
  In order to recognize revenues on a straight-line basis over the terms of the respective leases, we recognized additional revenue by straight-lining rental revenue of approximately $2.1 million and approximately $4.2 million during the three and six months ended June 30, 2008, respectively, and approximately $4.4 million during the year ended December 31, 2007.
  Amortization of deferred financing costs totaled approximately $1.0 million and approximately $2.8 million during the three and six months ended June 30, 2008, respectively and approximately $1.9 million during the year ended December 31, 2007.
  Net income includes a net gain on disposal of rate lock of approximately $478,000 for the year ended December 31, 2007.
     The following table presents the historic net operating income derived from our investments in real estate assets for the three and six months ended June 30, 2008 and the year ended December 31, 2007.
                         
    Three Months Ended     Six Months Ended     Year Ended  
    June 30, 2008     June 30, 2008     December 31, 2007  
Rental revenue (1)
  $ 41,724,904     $ 80,116,370     $ 87,652,801  
Property operating expenses (2)
    4,163,082       7,556,701       8,036,479  
 
                 
Net operating income
  $ 37,561,822     $ 87,673,071     $ 79,616,322  
 
                 
 
(1)   Rental revenue includes adjustments as defined by GAAP such as straight-line rental revenue, tenant reimbursements and adjustments for the value of above and below market lease amortization.
 
(2)   The primary property operating expense items are property management fees, repairs and maintenance, property taxes, and insurance. Property operating expenses exclude depreciation, amortization, general and administrative expenses, interest expense and asset management fees.
     We consider net operating income (“NOI”), to be an appropriate supplemental performance measure, because NOI reflects the operating performance of our real estate assets and excludes certain items that are not considered to be controllable in connection with management of each property such as depreciation and amortization, general and administrative expenses and interest expense.
     NOI is a non-GAAP financial measure and does not represent net income as defined by GAAP. Net income as defined by GAAP is the most relevant measure in determining our operating performance because NOI includes adjustments that investors may deem subjective, such as adding back expenses such as interest expense, depreciation and amortization. Accordingly, NOI should not be considered as an alternative to net income as an indicator of our operating performance.
     Our reconciliation of NOI to reported net income is presented in the following table for the periods ended as indicated:
                         
    Three Months Ended     Six Months Ended     Year Ended  
    June 30, 2008     June 30, 2008     December 31, 2007  
Net operating income
  $ 37,561,822     $ 72,559,669     $ 79,616,322  
Earned income from direct financing leases
    611,456       1,117,755       1,075,412  
Interest income on mortgage notes receivable
    1,771,766       3,554,262       1,113,937  
General and administrative
    (1,110,673 )     (2,079,890 )     (2,011,322 )
Asset management fees
    (1,322,350 )     (2,538,411 )     (2,614,469 )
Depreciation
    (9,259,374 )     (17,992,484 )     (20,460,219 )
Amortization
    (4,860,576 )     (9,495,169 )     (10,022,054 )
Impairment or real estate assets
          (3,550,000 )     (5,400,000 )
Interest income
    263,836       628,276       2,258,158  
Interest expense
    (16,608,453 )     (34,569,901 )     (39,075,748 )
 
                 
Net income
  $ 7,047,454     $ 7,634,107     $ 4,480,017  
 
                 

29


 

Portfolio Information
     The following data supplements, and should be read in conjunction with the section of our prospectus captioned “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Portfolio Information” beginning on page 136 of the prospectus.
Real Estate Portfolio
     As of June 30, 2008, we owned 394 properties located in 45 states and the U.S. Virgin Islands, the gross rentable space of which was approximately 99% leased with an average lease term remaining of approximately 12.8 years. Of the leases related to these properties, 13 were classified as direct financing leases. As of June 30, 2008, the average base rent per square foot of our total real estate portfolio was $12.08 per square foot.
     As of June 30, 2008, our five highest geographic concentrations were as follows:
                                 
                            Percentage of 2008  
    Total Number     Rentable Square     2008 Annualized     Annualized Gross  
Location   of Properties     Feet     Gross Base Rents     Base Rent  
Texas
    43       3,177,031     $ 24,687,240       16 %
Illinois
    17       1,602,529       18,366,036       12 %
Ohio
    56       525,545       10,416,118       7 %
Georgia
    30       493,376       8,250,617       5 %
Missouri
    17       504,663       8,012,079       5 %
 
                       
 
    163       6,303,144     $ 69,732,090       45 %
 
                       
     As of June 30, 2008, our five highest tenant industry concentrations were as follows:
                                 
                            Percentage of 2008  
    Total Number     Rentable     2008 Annualized     Annualized Gross  
Industry   of Leases     Square Feet     Gross Base Rent     Base Rent  
Drugstore
    77       1,028,282     $ 22,422,057       14 %
Specialty retail
    115       1,670,448       17,936,443       11 %
Sporting goods
    17       2,238,954       15,352,758       10 %
Convenience stores
    84       277,478       12,563,148       8 %
Restaurant
    57       334,488       12,030,976       8 %
 
                       
 
    350       5,549,650     $ 80,305,382       51 %
 
                       
     As of June 30, 2008, our five highest tenant concentrations were as follows:
                         
                    Percentage of 2008  
    Total Number     2008 Annualized     Annualized Gross  
Tenant   of Leases     Gross Base Rent     Base Rent  
Walgreens — drug store
    40     $ 12,293,934       8 %
Academy Sports — sporting goods
    9       11,578,577       7 %
Circle K — convenience store
    83       11,550,030       7 %
Station Casinos — gaming
    1       5,921,959       4 %
Applebee’s — restaurant
    3       5,397,224       3 %
 
                 
 
    136     $ 46,741,724       29 %
 
                 
Mortgage Notes Receivable Portfolio
     As of June 30, 2008, the Company owned 69 mortgage notes receivable aggregating approximately $86.1 million, secured by 23 restaurant properties leased to Cracker Barrel Old Country Store, 20 restaurant properties leased to KFC, and 26 retail properties leased to O’Reilly Auto Parts. The mortgage notes receivable mature on various dates from August 2020 to January 2021. Interest and principal is due each month at interest rates ranging from 8.60% to 10.47% per annum, with a weighted average interest rate of 9.87%.

30


 

Mortgage Notes Payable
     As of June 30, 2008, we had 173 mortgage notes payable totaling approximately $1.0 billion. Of the total mortgage notes payable, we had approximately $961.3 million of fixed rate debt (the “Fixed Rate Debt”), with a weighted average interest rate of 5.85%. We also had approximately $77.3 million of variable rate debt (the “Variable Rate Debt”), which bears interest at variable rates equal to the one-month LIBOR rate plus 150 to 195 basis points. We had no outstanding amounts under our credit facility at June 30, 2008. See “Borrowing Policies” above for a description of our credit facility terms.
Distribution Policy and Distributions
     The following data supplements, and should be read in conjunction, with the section of our prospectus captions “Description of Shares — Distribution Policy and Distributions” beginning on page 168 of the prospectus.
                                                         
                                                    Cash flow
                                    Funds   Cash flow   from
                    Distributions           from   from   operating
    Distributions   Distributions   declared, per   Funds from   operations   operating   activities
Quarter Ended   Declared   Paid (a)   common share   operations   per share   activities   per share
September 30, 2007
    12,050,997       10,842,997       0.18       11,767,682       0.17       11,877,218       0.17  
December 31, 2007
    15,109,245       13,947,563       0.18       13,995,806       0.16       15,344,009       0.18  
March 31, 2008
    18,196,163       16,967,965       0.17       17,504,356       0.17       18,890,398       0.18  
June 30, 2008
    22,680,941       21,331,114       0.17       21,167,404       0.16       19,893,227       0.15  
 
(a)   Distributions paid includes cash distributions paid to investors and common stock issued under our distribution reinvestment plan (the “DRIP”).
     We intend to continue paying regular monthly cash distributions to our stockholders. For the period from January 1, 2006 through June 30, 2008, we paid cash distributions to our stockholders aggregating approximately $38.2 million and issued approximately $44.9 million of common stock under the DRIP. All of these distributions were funded with cash provided by our operating activities. For the period beginning January 1, 2008 and ending June 30, 2008, we paid cash distributions of approximately $17.2 million and issued approximately $21.1 million of common stock under the DRIP, all of which was funded with cash provided by our operating activities. For the period beginning January 1, 2007 and ending December 31, 2007, we paid cash distributions of approximately $17.4 million and issued approximately $20.3 million of common stock under the DRIP, all of which was funded with cash provided by our operating activities. For the period beginning January 1, 2006 and ending December 31, 2006, we paid cash distributions of approximately $3.6 million and issued approximately $3.5 million of common stock under the DRIP, all of which was funded with cash provided by our operating activities. During the period from April 1, 2008 through September 30, 2008, our board of directors declared daily distributions of $0.00191257 per share for stockholders of record as of the close of business on each day during the period. Distributions at this rate are equivalent to a 7.0% annualized yield on a share purchased for $10.00.

31


 

Compensation Paid to Cole Advisors II and its Affiliates
     The following data supplements, and should be read in conjunction with the section of our prospectus captioned “Management Compensation” beginning on page 62 of the prospectus.
     The following table summarizes the cumulative compensation, fees and reimbursements we have paid to Cole Advisors II and its affiliates related to the offering stage.
                 
    As of   As of
    June 30, 2008   December 31, 2007
Offering Stage:
               
 
               
Selling commissions
  $ 96,951,729     $ 62,908,152  
Selling commissions reallowed
  $ 96,513,332     $ 62,908,152  
Dealer manager fee
  $ 25,406,786     $ 15,568,311  
Dealer manager fee reallowed
  $ 7,302,609     $ 4,510,647  
Other organization and offering expenses
  $ 10,884,596     $ 8,362,087  
     The following table summarizes the compensation, fees and reimbursements we have paid to Cole Advisors II and its affiliates related to the operational and liquidation/listing stages during the respective periods.
                 
    For the six months    
    ended June 30,   For the year ended
    2008   December 31, 2007
Operational Stage:
               
 
               
Acquisition and advisory fee
  $ 8,410,126     $ 26,875,563  
Acquisition expenses
  $     $  
Asset management fees
  $ 2,538,411     $ 2,614,469  
Property management and leasing fees
  $ 1,416,518     $ 1,569,802  
Operating expenses
  $     $  
Financing coordination fee
  $ 982,361     $ 7,992,466  
 
               
Liquidation/ Listing Stage:
               
 
               
Real estate commissions
  $     $  
Subordinated participation in net sale proceeds
  $     $  
Subordinated incentive listing fee
  $     $  
     As of June 30, 2008, the Company had approximately $640,000 payable to Cole Advisors II, which generally consisted of reimbursement of organization and offering costs. As of December 31, 2007, the Company had approximately $1.5 million payable to Cole Advisors II, which generally consisted of acquisition and finance coordination fees and reimbursement of organization and offering costs.

32


 

   Incorporation by Reference
     We have elected to “incorporate by reference” certain information into this prospectus. By incorporating by reference, we are disclosing important information to you by referring you to documents we have filed separately with the Securities and Exchange Commission, or “SEC.” The information incorporated by reference is deemed to be part of this prospectus, except for information incorporated by reference that is superseded by information contained in this prospectus. The following documents filed with the SEC are incorporated by reference in this prospectus (Commission File No. 333-138444) except for any document or portion thereof deemed to be “furnished” and not filed in accordance with SEC rules:
  (1)   Annual Report on Form 10-K for the fiscal year ended December 31, 2007 filed with the SEC on March 31, 2008;
 
  (2)   Current Report on Form 8-K filed with the SEC on April 2, 2008;
 
  (3)   Definitive Proxy Statement filed with the SEC on April 9, 2008 in connection with our Annual Meeting of Stockholders held on May 29, 2008;
 
  (4)   Quarterly Report on Form 10-Q for the quarter ended March 31, 2008 filed with the SEC on May 15, 2008;
 
  (5)   Current Report on Form 8-K filed with the SEC on May 30, 2008;
 
  (6)   Current Report on Form 8-K filed with the SEC on June 19, 2008;
 
  (7)   Quarterly Report on Form 10-Q for the quarter ended June 30, 2008 filed with the SEC on August 14, 2008; and
 
  (8)   Current Report on Form 8-K filed with the SEC on September 29, 2008.
     All of the documents that we have incorporated by reference into this prospectus are available on the SEC’s website, www.sec.gov. In addition, these documents can be inspected and copied at the Public Reference Room maintained by the SEC at 100 F Street, NE, Washington, D.C. 20549. Copies also can be obtained by mail from the Public Reference Room at prescribed rates. Please call the SEC at (800) SEC-0330 for further information on the operation of the Public Reference Room.
     In addition, we will provide to each person, including any beneficial owner of our common stock, to whom this prospectus is delivered, a copy of any or all of the information that we have incorporated by reference into this prospectus, as supplemented, but not delivered with this prospectus. To receive a free copy of any of the documents incorporated by reference in this prospectus, other than exhibits, unless they are specifically incorporated by reference in those documents, write us at 2555 E. Camelback Rd. Ste. 400, Phoenix, Arizona, 85016, Attention: Investor Relations, or contact our offices at (866) 341-2653. The documents also may be accessed on our website at www.colecapital.com. The information relating to us contained in this prospectus does not purport to be comprehensive and should be read together with the information contained in the documents incorporated or deemed to be incorporated by reference in this prospectus.

33


 

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
     
    Page
Summary Financial Information of Properties Acquired and Probable Properties to be Acquired(a)
   
 
   
Sembler Portfolio Properties — Various Cities (Sembler Portfolio Properties)
   
Overview
  F-3
Independent Auditors’ Report
  F-4
Audited Financial Statements of Portfolio Acquired
  F-5
 
   
Statement of Revenues and Certain Operating Expenses for the Year Ended December 31, 2007 and the Six Months Ended June 30, 2008
  F-6
Notes to the Statement of Revenues and Certain Operating Expenses
  F-8
 
   
Church’s Chicken Portfolio — Various Properties
Summary Financial Data Regarding Church’s Chicken
   
 
   
Tractor Supply — Various Properties
Summary Financial Data Regarding Tractor Supply
  F-9
 
   
Walgreens — Various Properties
Summary Financial Data Regarding Walgreens
  F-10
 
   
Kohl’s — Grand Forks, ND (KO Grand Forks Property)
Summary Financial Data Regarding Kohl’s
  F-12
 
   
CVS — Various Properties
Summary Financial Data Regarding CVS
  F-13
 
   
Petsmart — Various Properties
Summary Financial Data Regarding Petsmart
  F-15
 
   
Home Depot — Various Properties
Summary Financial Data Regarding Home Depot
  F-16
 
   
Lowe’s — Chester, NY (LO Chester Property)
Summary Financial Data Regarding Lowe’s
  F-18
 
   
Office Depot — Various Properties
Summary Financial Data Regarding Office Depot
  F-19
 
   
Staples — Angola, IN (ST Angola Property)
Summary Financial Data Regarding Staples
  F-21
 
   
Best Buy — Las Cruces, NM (BB Las Cruces Property)
Summary Financial Data Regarding Best Buy
  F-22
 
   
AT&T — Santa Clara, CA (ATT Santa Clara Property)
Summary Financial Data Regarding AT&T
  F-24
 
   
Payless — Columbia, SC (PL Columbia Property)
Summary Financial Data Regarding Payless
  F-25

F-1


 

     
    Page
TJ Maxx — Staunton, VA (TJ Staunton Property)
Summary Financial Data Regarding TJX Companies
  F-26
 
   
BJ’s Wholesale — Ft. Lauderdale, FL (BJ Ft. Lauderdale Property)
Summary Financial Data Regarding BJ’s
  F-27
 
   
Unaudited Pro Forma Financial Statements Cole Credit Property Trust II, Inc.
   
Pro Forma Consolidated Balance Sheet as of June 30, 2008 (Unaudited)
  F-28
Pro Forma Consolidated Statement of Operations for the Six Months Ended June 30, 2008 (Unaudited)
  F-30
Notes to Pro Forma Consolidated Financial Statements (Unaudited)
  F-31
Pro Forma Consolidated Statement of Operations for the Year Ended December 31, 2007 (Unaudited)
  F-35
Notes to Pro Forma Consolidated Financial Statements (Unaudited)
  F-36
 
(a)   This section includes summary financial information of properties acquired and probable properties to be acquired pursuant to SEC Rule 3-14 of Regulation S-X.

F-2


 

Sembler Portfolio Properties
Overview
     On July 11, 2008 and September 26, 2008, we acquired two multi-tenant retail shopping centers (the “Sembler Portfolio Properties”) from an affiliate of the Sembler Company. The Sembler Portfolio Properties consist of a multi-tenant shopping center located in Cumming, Georgia, (the “MT Cumming Property”) and a multi-tenant shopping center located in Winter Garden, Florida (the “MT Winter Garden Property”). The Sembler Portfolio Properties contain approximately 1.07 million square feet of rentable space. The Sembler Portfolio Properties were constructed in 2007 and 2008, and are approximately 99% leased to 108 tenants. Pursuant to 108 net leases, the tenants are required to pay substantially all operating expenses and capital expenditures in addition to base rent.
     The purchase price of the MT Cumming Property and the MT Winter Garden Property was approximately $58.4 million and $180.4 million, respectively, exclusive of closing costs. The MT Cumming Property and MT Winter Garden Property were purchased with proceeds from our ongoing public offering and an approximately $139.4 million loan cross collateralized by both properties.
     After reasonable inquiry, we are not aware of any material factors relating to the Sembler Portfolio Properties, other than those discussed above, that would cause the reported financial information not to be necessarily indicative of future operating results.
     In evaluating the Sembler Portfolio Properties as potential acquisitions and determining the appropriate amount of consideration to be paid for our interests therein, a variety of factors were considered, including our consideration of property condition reports; unit-level store performance; property location, visibility and access; age of the property, physical condition and curb appeal; neighboring property uses; local market conditions, including vacancy rates; area demographics, including trade area population and average household income; neighborhood growth patterns and economic conditions; and the presence of demand generators.
     In accordance with the provisions of Rule 3-14 of Regulation S-X promulgated by the Securities and Exchange Commission, we have included the audited Historical Summary of revenue and certain operating expenses (the “Historical Summary”) of the Sembler Portfolio Properties.

F-3


 

INDEPENDENT AUDITORS’ REPORT
To the Board of Directors and Stockholders of
Cole Credit Property Trust II, Inc.
Phoenix, AZ
     We have audited the accompanying Historical Summary of revenues and certain operating expenses (the “Historical Summary”) of the Sembler Portfolio (the “Portfolio”) for the year ended December 31, 2007. The Historical Summary is the responsibility of Cole Credit Property Trust II, Inc. management. Our responsibility is to express an opinion on the Historical Summary based on our audit.
     We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the Historical Summary is free of material misstatement. An audit includes consideration of internal control over financial reporting as it relates to the Historical Summary as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Portfolio’s internal control over financial reporting as it relates to the Historical Summary. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the Historical Summary, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the Historical Summary. We believe that our audit provides a reasonable basis for our opinion.
     The accompanying Historical Summary was prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission (for inclusion in the Registration Statement on Form S-11 of Cole Credit Property Trust II, Inc.) as discussed in Note 1 to the Historical Summary and is not intended to be a complete presentation of the Portfolio’s revenues and expenses.
     In our opinion, such Historical Summary presents fairly, in all material respects, the revenues and certain operating expenses discussed in Note 1 to the Historical Summary of the Portfolio for the year ended December 31, 2007, in conformity with accounting principles generally accepted in the United States of America.
/S/ DELOITTE & TOUCHE LLP
Phoenix, Arizona
October 27, 2008

F-4


 

Sembler Portfolio Properties
Statements of Revenues and Certain Operating Expenses
For the Year Ended December 31, 2007 and
the Six Months Ended June 30, 2008 (Unaudited)
                 
    Year Ended     Six Months Ended  
    December 31, 2007     June 30, 2008  
            (Unaudited)  
Revenues:
               
Rental revenue
  $ 4,816,224     $ 9,485,754  
Tenant reimbursement income
    861,886       2,189,125  
 
           
Total revenues
    5,678,110       11,674,879  
 
               
Certain Operating Expenses:
               
Real estate taxes
    407,512       835,606  
Insurance
    8,628       323,812  
Other reimbursable expenses
    519,969       1,018,966  
 
             
Total certain operating expenses
    936,109       2,178,384  
 
               
 
           
Revenues in excess of certain operating expenses
  $ 4,742,001     $ 9,496,495  
 
           
See accompanying notes to statements of revenues and certain operating expenses.

F-5


 

Sembler Portfolio Properties
Notes to the Statements of Revenues and Certain Operating Expenses
For the Year Ended December 31, 2007 and
the Six Months Ended June 30, 2008 (Unaudited)
1. Basis of Presentation
     On July 11, 2008 and September 26, 2008, Cole Credit Property Trust II, Inc. (the “Company”) acquired two multi-tenant retail shopping centers containing approximately 1.07 million rentable square feet located in Georgia and Texas.
     The statements of revenues and certain operating expenses (the “Historical Summary”) has been prepared for the purpose of complying with the provisions of Article 3-14 of Regulation S-X promulgated by the Securities and Exchange Commission (the “SEC”), which requires certain information with respect to real estate operations to be included with certain filings with the SEC. The Historical Summary includes the historical revenues and certain operating expenses of the Sembler Portfolio Properties, exclusive of items which may not be comparable to the proposed future operations of the Sembler Portfolio Properties. The results of the Sembler Portfolio Properties have been aggregated for purposes of the Historical Summary as the acquisitions are considered related by common commercial factors. Material amounts that would not be directly attributable to future operating results of the Sembler Portfolio Properties are excluded, and the financial statements are not intended to be a complete presentation of the Sembler Portfolio Properties’ revenues and expenses. Items excluded consist of management fees, legal fees, depreciation, amortization, certain non reimbursable real estate taxes, insurance and advertising, other non-operating expenses, and interest expense.
2. Significant Accounting Policies
Revenue Recognition
     The leases are accounted for as operating leases and minimum rental income is recognized on a straight-line basis over the remaining term of each lease. Contingent rental income, such as percentage rents, is recognized when the specific target which triggers the contingent rental income is achieved. Tenant reimbursement revenue is recognized in the same periods in which the related expenses are incurred. Tenant reimbursement revenue includes payments from tenants as reimbursements for property taxes and other property operating expenses.
Repairs and Maintenance
     Expenditures for repairs and maintenance are the responsibility of the tenant under the respective lease agreements and therefore are not included in the statements of revenues and certain expenses.
Use of Estimates
     The preparation of historical summaries in conformity with generally accepted accounting principles requires the Company’s management to make estimates and assumptions that affect the reported amounts of revenues and certain operating expenses during the reporting period. Actual results could differ from those estimates.

F-6


 

Sembler Portfolio Properties
Notes to the Statements of Revenues and Certain Operating Expenses
For the Year Ended December 31, 2007 and
the Six Months Ended June 30, 2008 (Unaudited)
3. Leases
     The leases have remaining terms of approximately four to 19 years (expiring between 2013 and 2028) and provide for minimum rentals. The tenant leases generally provide for limited increases in rent as a result of fixed increases, which are recognized on a straight-line basis over the terms of the leases. In addition, some of the tenant leases provide for the receipt of percentage rents which are recorded when earned.
     The aggregate annual minimum future rental payments on the non-cancelable operating leases in effect as of December 31, 2007 are as follows:
         
Year ending December 31:
       
2008
  $ 16,510,616  
2009
    18,137,197  
2010
    18,133,486  
2011
    18,068,591  
2012
    17,923,775  
Thereafter
    96,084,903  
 
     
Total
  $ 184,858,568  
 
     
     The above tables do not include future minimum lease payments for renewal periods or rent increases that are based on the Consumer Price Index (“CPI”) or future contingent rents. Payments are also exclusive of potential charges related to real estate taxes and operating cost escalations.
4. Tenant Concentration
     For the year ended December 31, 2007, no single tenant accounted for more than 10% of the annual rental income for the Sembler Portfolio Properties.
5. Commitments and Contingencies
Litigation
     The Sembler Portfolio Properties may be subject to legal claims in the ordinary course of business as a property owner. The Company believes that the ultimate settlement of any potential claims will not have a material impact on the Sembler Portfolio Properties’ results of operations.
Environmental Matters
     In connection with the ownership and operation of real estate, the Sembler Portfolio Properties may be potentially liable for costs and damages related to environmental matters. The Sembler Portfolio Properties have not been notified by any governmental authority of any non-compliance, liability or other claim, and the Company is not aware of any other environmental condition that it believes will have a material adverse effect on the Sembler Portfolio Properties’ results of operations.

F-7


 

SUMMARY FINANCIAL INFORMATION OF BUSINESSES ACQUIRED AND
PROBABLE BUSINESSES TO BE ACQUIRED
SUMMARY FINANCIAL DATA
CAJUN OPERATING COMPANY, INC.
     Series C has entered into a purchase agreement to purchase 191 properties (the “Church’s Chicken properties”) leased to Cajun Operating Company, Inc. (“Cajun Operating Company”) for approximately $132.0 million. The Church’s Chicken properties consist of approximately 244,075 square feet located throughout the United States. Subject to the satisfactory completion of certain conditions to closing, we expect that Series C will assign all of its rights and obligations under the purchase agreement for the Church’s Chicken properties to Cole Credit Property Trust II, Inc., prior to the closing of the transaction.
     Cajun Operating Company develops, operates and franchises quick-service restaurants (“QSRs”), under the trade names Church’s Chicken and Texas Chicken in 30 states, two United States territories and 15 foreign countries.
     In evaluating the Church’s Chicken properties as potential acquisitions and determining the appropriate amount of consideration to be paid for our interests therein, a variety of factors were considered, including: our consideration of property condition reports; unit-level store performance; property location, visibility and access; age of the property, physical condition and curb appeal; neighboring property uses; local market conditions, including vacancy rates; area demographics, including trade area population and average household income; neighborhood growth patterns and economic conditions; and the presence of demand generators. After reasonable inquiry, we are not aware of any material factors relating to these properties, other than those discussed above, that would cause the reported financial information not to be necessarily indicative of future operating results.
     Because the Church’s Chicken properties are each 100% leased to a single tenant on a long-term basis under a net lease that transfers substantially all of the operating costs to the tenant, we believe that the financial condition and results of operations of the tenant, Cajun Operating Company, are more relevant to investors than the financial statements of the properties acquired in order to enable investors to evaluate the credit-worthiness of the lessee. Additionally, because the properties are subject to a net lease, the historical property financial statements provide limited information other than rental income, which is disclosed in the section captioned “Investment Objectives and Policies — Real Property Investments” beginning on page 87 of the prospectus, as supplemented from time to time. As a result, pursuant to the guidance provided by the Securities and Exchange Commission, we have not provided audited statements of the properties acquired.
     The following summary financial data regarding Cajun Operating Company is taken from its previously audited financial statements:
                                 
    For the Six    
    Months Ended   For the Fiscal Year Ended
    7/13/2008   12/31/2007   12/31/2006   12/31/2005
    (unaudited)           (in thousands)        
Consolidated Statements of Operations
                               
Revenues
  $ 156,747     $ 273,559     $ 280,987     $ 271,456  
Operating Income
    24,682       35,426       41,603       36,151  
Net Income (Loss)
    2,851       (3,677 )     1,833       (4,225 )
                                 
    As of   As of the Fiscal Year Ended
    7/13/2008   12/31/2007   12/31/2006   12/31/2005
    (unaudited)           (in thousands)        
Consolidated Balance Sheets
                               
Total Assets
  $ 453,025     $ 456,346     $ 451,849     $ 444,015  
Long-term Debt
    155,637       330,393       327,538       322,222  
Stockholders’ Equity
    80,657       77,702       81,134       79,052  

F-8


 

TRACTOR SUPPLY COMPANY
     We acquired the following properties (the “Tractor Supply properties”) leased to Tractor Supply Company (“Tractor Supply”) between April 30, 2008, the date of our prospectus, and October 27, 2008:
                                 
Property Location   Date Acquired     Purchase Price     Square Feet     Year Built  
Carroll, Ohio
    5/8/2008     $ 2,000,000       40,700       1976  
Baldwinsville, NY
    10/15/2008       3,402,120       24,727       2005  
 
                           
 
          $ 5,402,120       65,427          
 
                           
     Tractor Supply currently operates more than 800 retail stores in 43 states, employs more than 11,600 and is headquartered in Brentwood, Tennessee. Tractor Supply’s common stock is traded on The Nasdaq Global Select Market under the symbol “TSCO.”
     In evaluating the Tractor Supply properties as potential acquisitions and determining the appropriate amount of consideration to be paid for our interests therein, a variety of factors were considered, including: our consideration of property condition reports; unit-level store performance; property location, visibility and access; age of the property, physical condition and curb appeal; neighboring property uses; local market conditions, including vacancy rates; area demographics, including trade area population and average household income; neighborhood growth patterns and economic conditions; and the presence of demand generators. After reasonable inquiry, we are not aware of any material factors relating to the Tractor Supply properties, other than those discussed above, that would cause the reported financial information not to be necessarily indicative of future operating results.
     Because the Tractor Supply properties are each 100% leased to a single tenant on a long-term basis under a net lease that transfers substantially all of the operating costs to the tenant, we believe that the financial condition and results of operations of the tenant, Tractor Supply, are more relevant to investors than the financial statements of the individual property acquired in order to enable investors to evaluate the credit-worthiness of the lessee. Additionally, because the properties are subject to a net lease, the historical property financial statements provide limited information other than rental income, which is disclosed in the section captioned “Investment Objectives and Policies — Real Property Investments” beginning on page 87 of the prospectus. As a result, pursuant to the guidance provided by the Securities and Exchange Commission, we have not provided audited statements of the property acquired.
     Tractor Supply currently files its financial statements in reports filed with the Securities and Exchange Commission, and the following summary financial data regarding Tractor Supply are taken from its previously filed public reports:
                                 
    For the Six    
    Months Ended   For the Fiscal Year Ended
    6/28/2008   12/29/2007   12/30/2006   12/31/2005
    (unaudited)           (in thousands)        
Consolidated Statements of Operations
                               
Revenues
  $ 898,327     $ 2,703,212     $ 2,369,612     $ 2,067,979  
Operating Income (Loss)
    77,126       160,041       148,020       136,444  
Net Income (Loss)
    47,018       96,241       91,008       85,669  
                                 
    As of   As of the Fiscal Year Ended
    6/28/2008   12/29/2007   12/30/2006   12/31/2005
    (unaudited)           (in thousands)        
Consolidated Balance Sheets
                               
Total Assets
  $ 1,176,319     $ 1,057,971     $ 998,258     $ 814,795  
Long-term Debt
    2,093       2,351       2,808       10,739  
Stockholders’ Equity
    591,690       565,337       598,904       477,698  
     For more detailed financial information regarding Tractor Supply, please refer to its financial statements, which are publicly available with the Securities and Exchange Commission at http://www.sec.gov.

F-9


 

SUMMARY FINANCIAL DATA
WALGREEN CO.
     We have acquired the following properties (the “Walgreens properties”) leased to, or guaranteed by, Walgreen Co. (“Walgreens”) between April 30, 2008, the date of our prospectus, and October 27, 2008:
                                 
Property Location   Date Acquired     Purchase Price     Square Feet     Year Built  
Elmira, NY
    5/1/2008     $ 6,076,000       14,820       2007  
Hibbing, MN
    5/14/2008       4,200,000       14,820       2007  
Essex, MD
    5/30/2008       6,488,000       14,820       2007  
Bath, NY
    6/2/2008       4,236,005       12,222       2008  
Chino Valley, AZ
    6/2/2008       5,435,000       14,820       2006  
Albany, GA
    6/11/2008       4,600,000       14,820       2008  
Rome, NY
    7/15/2008       4,477,727       13,770       2007  
Columbus, MS
    7/24/2008       4,420,000       14,450       2004  
Mobile, AL
    8/28/2008       5,415,000       13,650       2007  
Crossville, TN (2)
    9/30/2008       4,450,000       15,070       2001  
Tulsa, OK (2)
    9/30/2008       2,950,000       13,500       1994  
Newton, IA (2)
    9/30/2008       4,330,000       15,047       2000  
Jacksonville, FL (1)
    9/30/2008       5,050,000       15,120       2000  
Akron, OH (1)
    9/30/2008       2,820,000       13,500       1994  
Seattle, WA (1)
    9/30/2008       6,770,000       14,410       2002  
LaMarque, TX (1)
    9/30/2008       4,510,000       15,120       2000  
Saginaw, MI (1)
    9/30/2008       4,200,000       15,120       2001  
Tulsa, OK (1)
    9/30/2008       2,190,000       13,000       1993  
Broken Arrow, OK (1)
    9/30/2008       2,100,000       13,000       1993  
Evansville, IN
    (3 )     5,032,000       14,820       2007  
 
                           
Total
          $ 89,749,732       285,899          
 
                           
 
(1)   Property was acquired from Cole Credit Property Fund LP, an affiliate of our advisor. Our board of directors, including all of the independent directors, approved the transaction as being fair and reasonable to us, at a price in excess of the cost to Cole Credit Property Fund LP, but substantial justification exists for such excess, such excess is reasonable and the costs of the interest did not exceed its current fair market value as determined by an independent appraiser approved by our independent directors.
 
(2)   Property was acquired from Cole Credit Property Fund II LP, an affiliate of our advisor. Our board of directors, including all of the independent directors, approved the transaction as being fair and reasonable to us, at a price in excess of the cost to Cole Credit Property Fund II LP, but substantial justification exists for such excess, such excess is reasonable and the costs of the interest did not exceed its current fair market value as determined by an independent appraiser approved by our independent directors.
 
(3)   Our advisor has identified this property as a potential suitable investment for us. The acquisition of such property is subject to a number of conditions. A significant condition to acquiring any potential acquisition is our ability to raise sufficient proceeds in this offering to pay a portion of the purchase price. Such financing may not be available on acceptable terms or at all.
     Walgreens operates over 6,700 stores in 49 states, the District of Columbia, and Puerto Rico. Walgreens has a Standard & Poor’s credit rating of “A+” and the company’s stock is publicly traded on the New York Stock Exchange under the ticker symbol “WAG”.
     In evaluating the Walgreens properties as potential acquisitions and determining the appropriate amount of consideration to be paid for our interests therein, a variety of factors were considered, including: our consideration of property condition reports; unit-level store performance; property location, visibility and access; age of the property, physical condition and curb appeal; neighboring property uses; local market conditions, including vacancy rates; area demographics, including trade area population and average household income; neighborhood growth patterns and economic conditions; and the presence of demand generators. After reasonable inquiry, we are not aware of any material factors relating to these properties, other than those discussed above, that would cause the reported financial information not to be necessarily indicative of future operating results.

F-10


 

     Because the Walgreens properties are each 100% leased to a single tenant on a long-term basis under a net lease that transfers substantially all of the operating costs to the tenant, we believe that the financial condition and results of operations of the tenant, Walgreens, are more relevant to investors than the financial statements of the property acquired in order to enable investors to evaluate the credit-worthiness of the lessee. Additionally, because the properties are subject to a net lease, the historical property financial statements provide limited information other than rental income, which is disclosed in the section captioned “Investment Objectives and Policies — Real Property Investments” beginning on page 87 of the prospectus. As a result, pursuant to the guidance provided by the Securities and Exchange Commission, we have not provided audited statements of the properties acquired.
     Walgreens currently files its financial statements in reports filed with the Securities and Exchange Commission, and the following summary financial data regarding Walgreens are taken from its previously filed public reports:
                                 
    For the Three    
    Months Ended   For the Fiscal Year Ended
    5/31/2008   8/31/2007   8/30/2006   8/31/2005
    (unaudited)           (in millions)        
Consolidated Statements of Operations
                               
Revenues
  $ 15,015.7     $ 53,762.0     $ 47,409.0     $ 42,201.6  
Operating Income
    913.8       3,150.7       2,701.5       2,424.0  
Net Income
    572.3       2,041.3       1,750.6       1,559.5  
                                 
    As of   As of the Fiscal Year Ended
    5/31/2008   8/31/2007   8/30/2006   8/31/2005
    (unaudited)           (in millions)        
Consolidated Balance Sheets
                               
Total Assets
  $ 21,587.6     $ 19,313.6     $ 17,131.1     $ 14,608.8  
Long-term Debt
    1,400.7       1,306.8       1,118.9       997.7  
Stockholders’ Equity
    12,535.0       11,104.3       10,115.8       8,889.7  
     For more detailed financial information regarding Walgreens, please refer to its financial statements, which are publicly available with the Securities and Exchange Commission at http://www.sec.gov.

F-11


 

SUMMARY FINANCIAL DATA
KOHL’S CORPORATION
     We have acquired the following property (the “KO Grand Forks property”) guaranteed by Kohl’s Corporation (“Kohl’s”) between April 30, 2008, the date of our prospectus, and October 27, 2008:
                                 
Property Location   Date Acquired   Purchase Price   Square Feet   Year Built
Grand Forks, ND
    6/11/2008     $ 8,525,000       68,725       2006  
     Kohl’s operates over 950 retail department stores in 47 states. Kohl’s has a Standard and Poor’s credit rating of “BBB+” and its stock is publicly traded on the New York Stock Exchange under the symbol “KSS.”
     In evaluating the KO Grand Forks property as a potential acquisition and determining the appropriate amount of consideration to be paid for our interests therein, a variety of factors were considered, including: our consideration of property condition reports; unit-level store performance; property location, visibility and access; age of the property, physical condition and curb appeal; neighboring property uses; local market conditions, including vacancy rates; area demographics, including trade area population and average household income; neighborhood growth patterns and economic conditions; and the presence of demand generators. After reasonable inquiry, we are not aware of any material factors relating to the KO Grand Forks property, other than those discussed above, that would cause the reported financial information not to be necessarily indicative of future operating results.
     Because the KO Grand Forks property is 100% leased to a single tenant on a long-term basis under a net lease that transfers substantially all of the operating costs to the tenant, we believe that the financial condition and results of operations of the lease guarantor, Kohl’s, are more relevant to investors than the financial statements of the property acquired in order to enable investors to evaluate the credit-worthiness of the lessee. Additionally, because the property is subject to a net lease, the historical property financial statements provide limited information other than rental income, which is disclosed in the section captioned “Investment Objectives and Policies — Real Property Investments” beginning on page 87 of the prospectus. As a result, pursuant to the guidance provided by the Securities and Exchange Commission, we have not provided audited statements of the property acquired.
     Kohl’s currently files its financial statements in reports filed with the Securities and Exchange Commission, and the following summary financial data regarding Kohl’s are taken from its previously filed public reports:
                                 
    For the Six    
    Months Ended   For the Fiscal Year Ended
    8/2/2008   2/2/2008   2/3/2007   1/28/2006
    (unaudited)           (in thousands)        
Consolidated Statements of Operations
                               
Revenues
  $ 7,349,749     $ 16,473,734     $ 15,596,910     $ 13,444,397  
Operating Income
    677,976       1,804,477       1,814,801       1,416,181  
Net Income
    388,970       1,083,851       1,108,681       841,960  
                                 
    As of   As of the Fiscal Year Ended
    8/2/2008   2/2/2008   2/3/2007   1/28/2006
    (unaudited)           (in thousands)        
Consolidated Balance Sheets
                               
Total Assets
  $ 10,875,514     $ 10,560,082     $ 9,041,177     $ 9,153,494  
Long-term Debt
    2,049,661       2,051,875       1,040,057       1,046,104  
Stockholders’ Equity
    6,233,199       6,101,603       5,603,395       5,957,338  
     For more detailed financial information regarding Kohl’s, please refer to its financial statements, which are publicly available with the Securities and Exchange Commission at http://www.sec.gov .

F-12


 

SUMMARY FINANCIAL DATA
CVS CORPORATION
         We acquired the following properties (the “CVS properties”) guaranteed by CVS Corporation, (“CVS”) between April 30, 2008, the date of our prospectus, and October 27, 2008:
                                 
Property Location   Date Acquired     Purchase Price     Square Feet     Year Built  
Onley, VA
    5/8/2008     $ 5,486,000       13,225       2007  
Columbia, TN (Nashville) (2)
    9/30/2008       2,400,000       10,715       1998  
Columbia, TN (James Campbell) (2)
    9/30/2008       2,600,000       10,759       1998  
Hamilton, OH (1)
    9/30/2008       3,600,000       11,180       1999  
Mechanicsville, NY (1)
    9/30/2008       2,600,000       10,125       1998  
Atlanta, GA
    10/7/2008       3,841,000       12,013       2006  
 
                           
Total
          $ 20,527,000       68,017          
 
                           
 
(1)   Property was acquired from Cole Credit Property Fund LP, an affiliate of our advisor. Our board of directors, including all of the independent directors, approved the transaction as being fair and reasonable to us, at a price in excess of the cost to Cole Credit Property Fund LP, but substantial justification exists for such excess, such excess is reasonable and the costs of the interest did not exceed its current fair market value as determined by an independent appraiser approved by our independent directors.
 
(2)   Property was acquired from Cole Credit Property Fund II LP, an affiliate of our advisor. Our board of directors, including all of the independent directors, approved the transaction as being fair and reasonable to us, at a price in excess of the cost to Cole Credit Property Fund II LP, but substantial justification exists for such excess, such excess is reasonable and the costs of the interest did not exceed its current fair market value as determined by an independent appraiser approved by our independent directors.
         CVS operates over 6,200 stores in 40 states. CVS has a Standard & Poor’s credit rating of “BBB+” and the company’s stock is publicly traded on the New York Stock Exchange under the ticker symbol “CVS.”
     In evaluating the CVS properties as potential acquisitions and determining the appropriate amount of consideration to be paid for our interests therein, a variety of factors were considered, including: our consideration of property condition reports; unit-level store performance; property location, visibility and access; age of the property, physical condition and curb appeal; neighboring property uses; local market conditions, including vacancy rates; area demographics, including trade area population and average household income; neighborhood growth patterns and economic conditions; and the presence of demand generators. After reasonable inquiry, we are not aware of any material factors relating to the CVS properties, other than those discussed above, that would cause the reported financial information not to be necessarily indicative of future operating results.
     Because the CVS properties are 100% leased to a single tenant on a long-term basis under a net lease that transfers substantially all of the operating costs to the tenant, we believe that the financial condition and results of operations of the guarantor, CVS, are more relevant to investors than the financial statements of the property acquired in order to enable investors to evaluate the credit-worthiness of the lessee. Additionally, because the property is subject to a net lease, the historical property financial statements provide limited information other than rental income, which is disclosed in the section captioned “Investment Objectives and Policies — Real Property Investments” beginning on page 87 of the prospectus. As a result, pursuant to guidance provided by the Securities and Exchange Commission, we have not provided audited financial statements of the property acquired.

F-13


 

     CVS currently files its financial statements in reports filed with the Securities and Exchange Commission, and the following summary financial data regarding CVS is taken from its previously filed public reports:
                                 
    For the 26 Weeks    
    Ended   For the Fiscal Year Ended
    6/28/2008   12/29/2007   12/30/2006   12/31/2005
    (unaudited)           (in millions)        
Consolidated Statements of Operations
                               
Revenues
  $ 42,466.3     $ 76,329.5     $ 43,821.4     $ 37,006.7  
Operating Income
    2,848.2       4,793.3       2,441.6       2,019.5  
Net Income
    1,523.3       2,637.0       1,368.9       1,224.7  
                                 
    As of   As of the Fiscal Year Ended
    6/28/2008   12/29/2007   12/30/2006   12/31/2005
    (unaudited)   (in millions)
Consolidated Balance Sheets
                               
Total Assets
  $ 54,467.0     $ 54,721.9     $ 20,574.1     $ 15,283.4  
Long-term Debt
    9,208.3       9,207.6       3,651.5       2,368.3  
Stockholders’ Equity
    33,010.2       31,321.9       9,917.6       8,331.2  
        For more detailed financial information regarding CVS, please refer to its financial statements, which are publicly available with the Securities and Exchange Commission at http://www.sec.gov .

F-14


 

SUMMARY FINANCIAL DATA
PETSMART, INC.
          We acquired the following properties (the “PetSmart properties”) leased to PetSmart, Inc. (“PetSmart”) between April 30, 2008, the date of our prospectus, and October 27, 2008:
                                 
Property Location   Date Acquired     Purchase Price     Square Feet     Year Built  
McCarran, NV
    7/2/2008     $ 51,525,000       872,710       2008  
Chattanooga, TN
    8/5/2008       4,815,000       26,040       1996  
Daytona Beach, FL
    8/5/2008       5,333,000       26,194       1996  
Fredericksburg, VA
    8/5/2008       5,199,000       26,051       1997  
 
                           
Total
          $ 66,872,000       950,995          
 
                           
          PetSmart operates over 1,000 stores. PetSmart has a Standard & Poor’s credit rating of “BB” and the company’s stock is publicly traded on the Nasdaq Global Select Market under the ticker symbol “PETM”.
          In evaluating the PetSmart properties as potential acquisitions and determining the appropriate amount of consideration to be paid for our interests therein, a variety of factors were considered, including: our consideration of property condition reports; unit-level store performance; property location, visibility and access; age of the property, physical condition and curb appeal; neighboring property uses; local market conditions, including vacancy rates; area demographics, including trade area population and average household income; neighborhood growth patterns and economic conditions; and the presence of demand generators. After reasonable inquiry, we are not aware of any material factors relating to these properties, other than those discussed above, that would cause the reported financial information not to be necessarily indicative of future operating results.
          Because the PetSmart properties are each 100% leased to a single tenant on a long-term basis under a net lease that transfers substantially all of the operating costs to the tenant, we believe that the financial condition and results of operations of the tenant, PetSmart, are more relevant to investors than the financial statements of the property acquired in order to enable investors to evaluate the credit-worthiness of the lessee. Additionally, because the properties are subject to a net lease, the historical property financial statements provide limited information other than rental income, which is disclosed in the section captioned “Investment Objectives and Policies — Real Property Investments” beginning on page 87 of the prospectus. As a result, pursuant to the guidance provided by the Securities and Exchange Commission, we have not provided audited statements of the properties acquired.
          PetSmart currently files its financial statements in reports filed with the Securities and Exchange Commission, and the following summary financial data regarding PetSmart are taken from its previously filed public reports:
                                 
    For the 26    
    Weeks Ended   For the Fiscal Year Ended
    8/3/2008   2/3/2008   1/28/2007   1/29/2006
    (unaudited)           (in thousands)        
Consolidated Statements of Operations
                               
Revenues
  $ 2,454,879     $ 4,672,656     $ 4,233,857     $ 3,760,499  
Operating Income
    155,668       351,513       321,834       311,380  
Net Income
    78,459       258,684       185,069       182,490  
                                 
    As of   As of the Fiscal Year Ended
    8/3/2008   2/3/2008   1/28/2007   1/29/2006
    (unaudited)           (in thousands)        
Consolidated Balance Sheets
                               
Total Assets
  $ 2,288,750     $ 2,167,257     $ 2,053,477     $ 1,863,691  
Long-term Debt
    546,965       508,765       431,334       351,564  
Stockholders’ Equity
    1,020,516       986,597       1,000,894       940,750  
          For more detailed financial information regarding PetSmart, please refer to its financial statements, which are publicly available with the Securities and Exchange Commission at http://www.sec.gov.

F-15


 

SUMMARY FINANCIAL DATA
THE HOME DEPOT, INC.
          We acquired the following properties (the “Home Depot properties”) leased to Home Depot USA, Inc., a wholly-owned subsidiary of The Home Depot, Inc. (“Home Depot”) between April 30, 2008, the date of our prospectus, and October 27, 2008:
                                 
Property Location   Date Acquired     Purchase Price     Square Feet     Year Built  
Lakewood, CO
    8/27/2008     $ 11,300,000       102,000       2006  
Colma, CA (1)
    9/30/2008       39,310,000       99,970       1995  
 
                           
 
          $ 50,610,000       201,970          
 
                           
 
(1)   Property was acquired from Cole Credit Property Fund LP and Cole Credit Property Fund II LP, affiliates of our advisor. Our board of directors, including all of the independent directors, approved the transaction as being fair and reasonable to us, at a price in excess of the cost to Cole Credit Property Fund LP and Cole Credit Property Fund II LP, but substantial justification exists for such excess, such excess is reasonable and the costs of the interest did not exceed its current fair market value as determined by an independent appraiser approved by our independent directors.
     Home Depot operates as the world’s largest home improvement retailer. As of the end of the second quarter of fiscal 2008, Home Depot operated 2,257 stores. Home Depot has a Standard & Poor’s credit rating of BBB+ and its stock is publicly traded on the New York Stock Exchange under the ticker symbol “HD.”
     In evaluating the Home Depot properties as a potential acquisition and determining the appropriate amount of consideration to be paid for our interests therein, a variety of factors were considered, including our consideration of property condition reports; unit-level store performance; property location, visibility and access; age of the property, physical condition and curb appeal; neighboring property uses; local market conditions, including vacancy rates; area demographics, including trade area population and average household income; neighborhood growth patterns and economic conditions; and the presence of demand generators. After reasonable inquiry, we are not aware of any material factors relating to the Home Depot properties other than those discussed above that would cause the reported financial information not to be necessarily indicative of future operating results.
     Because the Home Depot properties are each 100% leased to a single tenant on a long-term basis under a net lease that transfers substantially all of the operating costs to the tenant, we believe that the financial condition and results of operations of the tenant, Home Depot, are more relevant to investors than the financial statements of the property acquired in order to enable investors to evaluate the credit-worthiness of the lessee. Additionally, because the properties are subject to a net lease, the historical property financial statements provide limited information other than rental income, which is disclosed in the section captioned “Investment Objectives and Policies — Real Property Investments” beginning on page 87 of the prospectus. As a result, pursuant to the guidance provided by the Securities and Exchange Commission, we have not provided audited statements of the property acquired.

F-16


 

Home Depot currently files its financial statements in reports filed with the Securities and Exchange Commission, and the following summary financial data regarding Home Depot are taken from its previously filed public reports:
                                 
    For the Six    
    Months Ended   For the Fiscal Year Ended
    8/3/2008   2/3/2008   1/28/2007   1/29/2006
    (unaudited)           (in millions)        
Consolidated Statements of Operations
                               
Revenues
  $ 38,897     $ 77,349     $ 79,022     $ 77,019  
Operating Income
    2,770       7,242       8,866       9,047  
Net Income
    1,558       4,395       5,761       5,838  
                                 
    As of   As of the Fiscal Year Ended
    8/3/2008   2/3/2008   1/28/2007   1/29/2006
    (unaudited)           (in millions)        
Consolidated Balance Sheets
                               
Total Assets
  $ 45,099     $ 44,324     $ 52,263     $ 44,405  
Long-term Debt
    11,366       11,383       11,643       2,672  
Stockholders’ Equity
    18,649       17,714       25,030       26,909  
For more detailed financial information regarding Home Depot please refer to its financial statements, which are publicly available with the Securities and Exchange Commission at http://www.sec.gov .

F-17


 

SUMMARY FINANCIAL DATA
LOWE’S COMPANIES, INC.
          We acquired the following property (“LO Chester property”) guaranteed by Lowe’s Companies, Inc. (“Lowe’s”) between April 30, 2008, the date of our prospectus, and October 27, 2008:
                             
Property Location   Date Acquired   Purchase Price   Square Feet   Year Built
Chester, NY
  9/19/2008   $ 7,037,037       131,798       2008  
     Lowe’s operates over 1,500 retail home improvement stores across the United States and Canada. Lowe’s has a Standard & Poor’s Credit Rating of “A+” and its stock is publicly traded on the New York Stock Exchange under the ticker symbol “LOW”.
     In evaluating the LO Chester Property as a potential acquisition and determining the appropriate amount of consideration to be paid for our interests therein, a variety of factors were considered, including our consideration of property condition reports; unit-level store performance; property location, visibility and access; age of the property, physical condition and curb appeal; neighboring property uses; local market conditions, including vacancy rates; area demographics, including trade area population and average household income; neighborhood growth patterns and economic conditions; and the presence of demand generators. After reasonable inquiry, we are not aware of any material factors relating to the LO Chester Property other than those discussed above, that would cause the reported financial information not to be necessarily indicative of future operating results.
     Because the LO Chester property is 100% leased to a single tenant on a long-term basis under a net lease that transfers substantially all of the operating costs to the tenant, we believe that the financial condition and results of operations of the guarantor, Lowe’s, are more relevant to investors than the financial statements of the individual property acquired in order to enable investors to evaluate the credit-worthiness of the lessee. Additionally, because the property is subject to a net lease, the historical property financial statements provide limited information other than rental income, which is disclosed in the section captioned “Investment Objectives and Policies — Real Property Investments” beginning on page 87 of the prospectus. As a result, pursuant to guidance provided by the Securities and Exchange Commission, we have not provided audited financial statements of the properties acquired.
     Lowe’s currently files its financial statements in reports filed with the Securities and Exchange Commission, and the following summary financial data regarding Lowe’s are taken from its previously filed public reports:
                                 
    For the Six    
    Months Ended   For the Fiscal Year Ended
    8/1/2008   2/1/2008   2/2/2007   2/3/2006
    (unaudited)           (in millions)        
Consolidated Statements of Operations
                               
Revenues
  $ 26,519     $ 48,283     $ 46,927     $ 43,243  
Operating Income
    3,372       6,071       6,314       5,634  
Net Income
    1,545       2,809       3,105       2,765  
                                 
    As of   As of the Fiscal Year Ended
    8/1/2008   2/1/2008   2/2/2007   2/3/2006
    (unaudited)           (in millions)        
Consolidated Balance Sheets
                               
Total Assets
  $ 32,549     $ 30,869     $ 27,767     $ 24,639  
Long-term Debt
    5,050       5,576       4,325       3,499  
Stockholders’ Equity
    17,506       16,098       15,725       14,296  
For more detailed financial information regarding Lowe’s, please refer to its financial statements, which are publicly available with the Securities and Exchange Commission at http://www.sec.gov .

F-18


 

SUMMARY FINANCIAL DATA
OFFICE DEPOT, INC.
          We acquired the following properties (the “Office Depot properties”) leased to, or guaranteed by, Office Depot, Inc. (“Office Depot”) between April 30, 2008, the date of our prospectus, and October 27, 2008:
                                 
Property Location   Date Acquired     Purchase Price     Square Feet     Year Built  
Laurel, MS (1)
    9/30/2008     $ 2,650,000       20,515       2002  
London, KY (1)
    9/30/2008       3,500,000       20,468       2001  
 
                           
Total
          $ 6,150,000       40,983          
 
                           
 
(1)   Property was acquired from Cole Credit Property Fund LP, an affiliate of our advisor. Our board of directors, including all of the independent directors, approved the transaction as being fair and reasonable to us, at a price in excess of the cost to Cole Credit Property Fund LP, but substantial justification exists for such excess, such excess is reasonable and the costs of the interest did not exceed its current fair market value as determined by an independent appraiser approved by our independent directors.
          Office Depot is a global supplier of office products and services. Office Depot operates over 1,200 stores in the United States and Canada. Office Depot has a Standard & Poor’s credit rating of “BB+” and its stock is publicly traded on the New York Stock Exchange under the ticker symbol “ODP”.
          In evaluating the Office Depot properties as potential acquisitions and determining the appropriate amount of consideration to be paid for our interests therein, a variety of factors were considered, including our consideration of property condition reports; unit-level store performance; property location, visibility and access; age of the property, physical condition and curb appeal; neighboring property uses; local market conditions, including vacancy rates; area demographics, including trade area population and average household income; neighborhood growth patterns and economic conditions; and the presence of demand generators. After reasonable inquiry, we are not aware of any material factors relating to the Office Depot properties other than those discussed above, that would cause the reported financial information not to be necessarily indicative of future operating results.
          Because the Office Depot properties are 100% leased to a single tenant on a long-term basis under a net lease that transfers substantially all of the operating costs to the tenant, we believe that the financial condition and results of operations of the tenant, Office Depot, are more relevant to investors than the financial statements of the individual property acquired in order to enable investors to evaluate the credit-worthiness of the lessee. Additionally, because the properties are subject to a net lease, the historical property financial statements provide limited information other than rental income, which is disclosed in the section captioned “Investment Objectives and Policies — Real Property Investments” beginning on page 87 of the prospectus. As a result, pursuant to guidance provided by the Securities and Exchange Commission, we have not provided audited financial statements of the properties acquired.

F-19


 

          Office Depot currently files its financial statements in reports filed with the Securities and Exchange Commission, and the following summary financial data regarding Office Depot are taken from its previously filed public reports:
                                 
    For the Six                
    Months Ended     For the Fiscal Year Ended  
    6/28/2008   12/29/2007   12/30/2006   12/31/2005
    (unaudited)           (in thousands)        
Consolidated Statements of Operations
                               
Revenues
  $ 7,567,090     $ 15,527,537     $ 15,010,781     $ 14,278,944  
Operating Income
    103,668       483,601       713,187       348,042  
Net Income
    66,771       395,615       503,471       273,792  
    As of   As of the Fiscal Year Ended
    6/28/2008   12/29/2007   12/30/2006   12/31/2005
    (unaudited)           (in thousands)        
Consolidated Balance Sheets
                               
Total Assets
  $ 7,318,382     $ 7,256,540     $ 6,557,438     $ 6,098,525  
Long-term Debt
    615,653       607,462       570,752       569,098  
Stockholders’ Equity
    3,261,794       3,083,844       2,597,447       2,739,221  
          For more detailed financial information regarding Office Depot, please refer to its financial statements, which are publicly available with the Securities and Exchange Commission at http://www.sec.gov.

F-20


 

SUMMARY FINANCIAL DATA
STAPLES, INC.
     We acquired the following property (the “ST Angola Property”) leased to Staples the Office Superstore East, Inc., a wholly owned subsidiary of Staples, Inc. (“Staples”) between April 30, 2008, the date of our prospectus, and October 27, 2008:
                             
Property Location   Date Acquired   Purchase Price   Square Feet   Year Built
Angola, IN (1)
  9/30/2008   $ 3,200,000       24,049       1999  
 
(1)   Property was acquired from Cole Credit Property Fund II LP, an affiliate of our advisor. Our board of directors, including all of the independent directors, approved the transaction as being fair and reasonable to us, at a price in excess of the cost to Cole Credit Property Fund II LP, but substantial justification exists for such excess, such excess is reasonable and the costs of the interest did not exceed its current fair market value as determined by an independent appraiser approved by our independent directors.
     Staples currently operates more than 2,000 stores worldwide and is headquartered in Naperville, Illinois. Staples has an S&P credit rating of “BBB” and its common stock is traded on The Nasdaq Global Select Market under the symbol “SPLS.”
     In evaluating the ST Angola Property as a potential acquisition and determining the appropriate amount of consideration to be paid for our interest therein, a variety of factors were considered, including our consideration of property condition reports; unit-level store performance; property location, visibility and access; age of the property, physical condition and curb appeal; neighboring property uses; local market conditions, including vacancy rates; area demographics, including trade area population and average household income; neighborhood growth patterns and economic conditions; and the presence of demand generators. After reasonable inquiry, we are not aware of any material factors relating to the ST Angola Property other than those discussed above that would cause the reported financial information not to be necessarily indicative of future operating results.
     Because the ST Angola Property is 100% leased to a single tenant on a long-term basis under a net lease that transfers substantially all of the operating costs to the tenant, we believe that the financial condition and results of operations of the tenant, Staples, are more relevant to investors than the financial statements of the properties acquired in order to enable investors to evaluate the credit-worthiness of the lessee. Additionally, because the properties are subject to a net lease, the historical property financial statements provide limited information other than rental income, which is disclosed in the section captioned “Investment Objectives and Policies — Real Property Investments” beginning on page 87 of the prospectus. As a result, pursuant to the guidance provided by the SEC, we have not provided audited statements of the properties acquired.
     Staples currently files its financial statements in reports filed with the Securities and Exchange Commission, and the following summary financial data regarding Staples are taken from its previously filed public reports:
                                 
    For the 26    
    Weeks Ended   For the Fiscal Year Ended
    8/2/2008   2/2/2008   2/3/2007   1/28/2006
    (unaudited)           (in thousands)        
Consolidated Statements of Operations
                               
Revenues
  $ 9,959,274     $ 19,372,682     $ 18,160,789     $ 16,078,852  
Operating Income
    567,381       1,548,249       1,463,069       1,234,081  
Net Income
    362,515       995,670       973,677       784,117  
                                 
    As of   As of the Fiscal Year Ended
    8/2/2008   2/2/2008   2/3/2007   1/28/2006
    (unaudited)           (in thousands)        
Consolidated Balance Sheets
                               
Total Assets
  $ 15,208,744     $ 9,036,344     $ 8,397,265     $ 7,732,720  
Long-term Debt
    864,843       342,169       316,465       527,606  
Stockholders’ Equity
    5,940,873       5,718,007       5,021,665       4,481,601  
     For more detailed financial information regarding Staples, please refer to its financial statements, which are publicly available with the SEC at http://www.sec.gov .

F-21


 

SUMMARY FINANCIAL DATA
BEST BUY CO., INC.
     We acquired the following property (the “BB Las Cruces Property”) leased to Best Buy Co., Inc. (“Best Buy”) between April 30, 2008, the date of our prospectus, and October 27, 2008:
                             
Property Location   Date Acquired   Purchase Price   Square Feet   Year Built
Las Cruces, NM (1)
  9/30/08   $ 6,100,000       30,000       2002  
 
(1)   Property was acquired from Cole Credit Property Fund II LP, an affiliate of our advisor. Our board of directors, including all of the independent directors, approved the transaction as being fair and reasonable to us, at a price in excess of the cost to Cole Credit Property Fund II LP, but substantial justification exists for such excess, such excess is reasonable and the costs of the interest did not exceed its current fair market value as determined by an independent appraiser approved by our independent directors.
     Best Buy is a specialty retailer of consumer electronics, appliances and related services, and operates approximately 950 stores. Best Buy has a Standard & Poor’s credit rating of “BBB” and the company’s stock is publicly traded on the New York Stock Exchange under the ticker symbol “BBY.”
     In evaluating the BB Las Cruces Property as a potential acquisition and determining the appropriate amount of consideration to be paid for our interest therein, a variety of factors were considered, including our consideration of property condition reports; unit-level store performance; property location, visibility and access; age of the property, physical condition and curb appeal; neighboring property uses; local market conditions, including vacancy rates; area demographics, including trade area population and average household income; neighborhood growth patterns and economic conditions; and the presence of demand generators. After reasonable inquiry, we are not aware of any material factors relating to the BB Las Cruces Property other than those discussed above that would cause the reported financial information not to be necessarily indicative of future operating results.
     Because the BB Las Cruces Property is 100% leased to a single tenant on a long-term basis under a net lease that transfers substantially all of the operating costs to the tenant, we believe that the financial condition and results of operations of the tenant, Best Buy, are more relevant to investors than the financial statements of the individual property acquired in order to enable investors to evaluate the credit-worthiness of the lessee. Additionally, because the property is subject to a net lease, the historical property financial statements provide limited information other than rental income, which is disclosed in the section captioned “Investment Objectives and Policies — Real Property Investments” beginning on page 87 of the prospectus. As a result, pursuant to guidance provided by the Securities and Exchange Commission, we have not provided audited financial statements of the property acquired.

F-22


 

     Best Buy currently files its financial statements in reports filed with the Securities and Exchange Commission, and the following summary financial data regarding Best Buy are taken from its previously filed public reports:
                                 
    For the Six    
    Months Ended   For the Fiscal Year Ended
    8/30/2008   3/1/2008   3/3/2007   2/25/2006
    (unaudited)           (in millions)        
Consolidated Statements of Operations
                               
Revenues
  $ 18,791     $ 40,023     $ 35,934     $ 30,848  
Operating Income
    616       2,161       1,999       1,644  
Net Income
    381       1,407       1,377       1,140  
                                 
    As of   As of the Fiscal Year Ended
    8/30/2008   3/1/2008   3/3/2007   2/25/2006
    (unaudited)           (in millions)        
Consolidated Balance Sheets
                               
Total Assets
  $ 17,522     $ 12,758     $ 13,570     $ 11,864  
Long-term Debt
    1,136       627       590       178  
Stockholders’ Equity
    4,752       4,484       6,201       5,257  
     For more detailed financial information regarding Best Buy, please refer to its financial statements, which are publicly available with the Securities and Exchange Commission at http://www.sec.gov .

F-23


 

SUMMARY FINANCIAL DATA
AT&T INC.
          We acquired the following property (the “AT Santa Clara Property”) leased to AT&T Wireless Services, Inc. Corporation., (“AT&T”), which is a wholly-owned subsidiary of AT&T, Inc between April 30, 2008, the date of our prospectus, and October 27, 2008:
                                         
Property Location           Date Acquired   Purchase Price   Square Feet   Year Built
Santa Clara, CA (1)
    (1 )     9/30/2008     $ 10,200,000       33,257       2002  
 
(1)   Property was acquired from Cole Credit Property Fund II LP, an affiliate of our advisor. Our board of directors, including all of the independent directors, approved the transaction as being fair and reasonable to us, at a price in excess of the cost to Cole Credit Property Fund II LP, but substantial justification exists for such excess, such excess is reasonable and the costs of the interest did not exceed its current fair market value as determined by an independent appraiser approved by our independent directors.
          AT&T has a Standard & Poor’s credit rating of “A” and the company’s stock is publicly traded on the New York Stock Exchange under the ticker symbol “T.”
     In evaluating the AT Santa Clara Property as a potential acquisition and determining the appropriate amount of consideration to be paid for our interests therein, a variety of factors were considered, including our consideration of property condition reports; unit-level store performance; property location, visibility and access; age of the property, physical condition and curb appeal; neighboring property uses; local market conditions, including vacancy rates; area demographics, including trade area population and average household income; neighborhood growth patterns and economic conditions; and the presence of demand generators. After reasonable inquiry, we are not aware of any material factors relating to the AT Santa Clara Property, other than those discussed above, that would cause the reported financial information not to be necessarily indicative of future operating results.
     Because the AT Santa Clara Property is 100% leased to a single tenant on a long-term basis under a net lease that transfers substantially all of the operating costs to the tenant, we believe that the financial condition and results of operations of the lessee, AT&T, are more relevant to investors than the financial statements of the property acquired in order to enable investors to evaluate the credit-worthiness of the lessee. Additionally, because the property is subject to a net lease, the historical property financial statements provide limited information other than rental income, which is disclosed in the section captioned “Investment Objectives and Policies — Real Property Investments” beginning on page 87 of the prospectus. As a result, pursuant to guidance provided by the Securities and Exchange Commission, we have not provided audited financial statements of the properties acquired.
     AT&T currently files its financial statements in reports filed with the Securities and Exchange Commission, and the following summary financial data regarding AT&T is taken from its previously filed public reports:
                                 
    For the Six    
    Months Ended   For the Fiscal Year Ended
    June 30, 2008   12/31/2007   12/31/2006   12/31/2005
    (unaudited)           (in millions)        
Consolidated Statements of Operations
                               
Revenues
  $ 61,610     $ 118,928     $ 63,055     $ 43,764  
Operating Income
    12,547       20,404       10,288       6,168  
Net Income
    7,233       11,951       7,356       4,786  
                                 
    As of   As of the Fiscal Year Ended
    June 30, 2008   12/31/2007   12/31/2006   12/31/2005
    (unaudited)           (in millions)        
Consolidated Balance Sheets
                               
Total Assets
  $ 284,508     $ 275,644     $ 270,634     $ 145,632  
Long-term Debt
    63,675       57,255       50,063       26,115  
Stockholders’ Equity
    111,937       115,367       115,540       54,690  
     For more detailed financial information regarding AT&T, please refer to its financial statements, which are publicly available with the Securities and Exchange Commission at http://www.sec.gov .

F-24


 

SUMMARY FINANCIAL DATA
PAYLESS SHOESOURCE, INC.
          We acquired the following property (the “PL Columbia Property”) leased to Payless ShoeSource Inc., (“Payless”), which is a wholly-owned subsidiary of Collective Brands, Inc (“Collective Brands”) between April 30, 2008, the date of our prospectus, and October 27, 2008:
                             
Property Location   Date Acquired   Purchase Price   Square Feet   Year Built
Columbia, SC (1)
  9/30/2008   $ 1,400,000       5,534       1998  
 
(1)   Property was acquired from Cole Credit Property Fund LP, an affiliate of our advisor. Our board of directors, including all of the independent directors, approved the transaction as being fair and reasonable to us, at a price in excess of the cost to Cole Credit Property Fund LP, but substantial justification exists for such excess, such excess is reasonable and the costs of the interest did not exceed its current fair market value as determined by an independent appraiser approved by our independent directors.
          Payless operates over 4,500 retail stores in 16 countries and territories and the company’s stock is publicly traded on the New York Stock Exchange under the ticker symbol “PSS.”
     In evaluating the PL Columbia Property as a potential acquisition and determining the appropriate amount of consideration to be paid for our interests therein, a variety of factors were considered, including our consideration of property condition reports; unit-level store performance; property location, visibility and access; age of the property, physical condition and curb appeal; neighboring property uses; local market conditions, including vacancy rates; area demographics, including trade area population and average household income; neighborhood growth patterns and economic conditions; and the presence of demand generators. After reasonable inquiry, we are not aware of any material factors relating to the PL Columbia Property, other than those discussed above, that would cause the reported financial information not to be necessarily indicative of future operating results.
     Because the PL Columbia Property is 100% leased to a single tenant on a long-term basis under a net lease that transfers substantially all of the operating costs to the tenant, we believe that the financial condition and results of operations of the lessee, Payless, are more relevant to investors than the financial statements of the property acquired in order to enable investors to evaluate the credit-worthiness of the lessee. Additionally, because the property is subject to a net lease, the historical property financial statements provide limited information other than rental income, which is disclosed in the section captioned “Investment Objectives and Policies — Real Property Investments” beginning on page 87 of the prospectus. As a result, pursuant to guidance provided by the Securities and Exchange Commission, we have not provided audited financial statements of the properties acquired.
     Collective Brands currently files its financial statements in reports filed with the Securities and Exchange Commission, and the following summary financial data regarding Collective Brands is taken from its previously filed public reports:
                                 
    For the 26 Weeks   For the Fiscal Year Ended
    Ended 8/2/2008   2/2/2008   2/3/2007   1/28/2006
    (unaudited)           (in millions)        
Consolidated Statements of Operations
                               
Revenues
  $ 1,844.1     $ 3,035.4     $ 2,796.7     $ 2,665.7  
Operating Income
    64.8       91.3       166.4       117.7  
Net Income
    27.8       42.7       122.0       66.4  
                                 
    As of   As of the Fiscal Year Ended
    8/2/2008   2/2/2008   2/3/2007   1/28/2006
    (unaudited)           (in millions)        
Consolidated Balance Sheets
                               
Total Assets
  $ 2,650.9     $ 2,415.2     $ 1,427.4     $ 1,314.5  
Long-term Debt
    1,126.3       914.9       201.7       204.2  
Stockholders’ Equity
    742.9       702.9       700.1       652.0  
          For more detailed financial information regarding Payless, please refer to its financial statements, which are publicly available with the Securities and Exchange Commission at http://www.sec.gov .

F-25


 

SUMMARY FINANCIAL DATA
TJX COMPANIES, INC.
          We acquired the following property (the “TJ Staunton Property”) leased to the TJX Companies, Inc., (“TJX”) between April 30, 2008, the date of our prospectus, and October 27, 2008:
                             
Property Location   Date Acquired   Purchase Price   Square Feet   Year Built
Staunton, VA (1)
  9/30/2008   $ 4,300,000       78,823       1988  
 
(1)   Property was acquired from Cole Credit Property Fund II LP, LLC, an affiliate of our advisor. Our board of directors, including all of the independent directors, approved the transaction as being fair and reasonable to us, at a price in excess of the cost to Cole Credit Property Fund II LP, LLC, but substantial justification exists for such excess, such excess is reasonable and the costs of the interest did not exceed its current fair market value as determined by an independent appraiser approved by our independent directors.
          TJX operates 2,500 stores internationally and the company’s stock is publicly traded on the New York Stock Exchange under the ticker symbol “TJX.”
     In evaluating the TJ Staunton Property as a potential acquisition and determining the appropriate amount of consideration to be paid for our interests therein, a variety of factors were considered, including our consideration of property condition reports; unit-level store performance; property location, visibility and access; age of the property, physical condition and curb appeal; neighboring property uses; local market conditions, including vacancy rates; area demographics, including trade area population and average household income; neighborhood growth patterns and economic conditions; and the presence of demand generators. After reasonable inquiry, we are not aware of any material factors relating to the TJ Staunton Property, other than those discussed above, that would cause the reported financial information not to be necessarily indicative of future operating results.
     Because the TJ Staunton property is 100% leased to a single tenant on a long-term basis under a net lease that transfers substantially all of the operating costs to the tenant, we believe that the financial condition and results of operations of the lessee, TJX, are more relevant to investors than the financial statements of the property acquired in order to enable investors to evaluate the credit-worthiness of the lessee. Additionally, because the property is subject to a net lease, the historical property financial statements provide limited information other than rental income, which is disclosed in the section captioned “Investment Objectives and Policies — Real Property Investments” beginning on page 87 of the prospectus. As a result, pursuant to guidance provided by the Securities and Exchange Commission, we have not provided audited financial statements of the properties acquired.
     TJX currently files its financial statements in reports filed with the Securities and Exchange Commission, and the following summary financial data regarding TJX is taken from its previously filed public reports:
                                 
    For the 26 Weeks   For the Fiscal Year Ended
    Ended 7/26/2008   1/26/2008   1/27/2007   1/28/2006
    (unaudited)           (in thousands)        
Consolidated Statements of Operations
                               
Revenues
  $ 8,985,417     $ 18,647,126     $ 17,404,637     $ 15,955,943  
Operating Income
    611,484       1,438,113       1,267,374       1,038,001  
Net Income
    394,072       771,750       738,039       690,423  
                                 
    As of   As of the Fiscal Year Ended
    7/26/2008   1/26/2008   1/27/2007   1/28/2006
    (unaudited)           (in thousands)        
Consolidated Balance Sheets
                               
Total Assets
  $ 6,792,555     $ 6,599,934     $ 6,619,915     $ 5,496,305  
Long-term Debt
    1,596,128       1,664,793       1,588,331       1,351,800  
Stockholders’ Equity
    2,113,574       2,131,245       2,154,278       1,892,654  
          For more detailed financial information regarding TJX, please refer to its financial statements, which are publicly available with the Securities and Exchange Commission at http://www.sec.gov .

F-26


 

SUMMARY FINANCIAL DATA
BJ’S WHOLESALE CLUB, INC.
          We acquired the following property (the “BJ FT. Lauderdale Property”) leased to the BJ’s Wholesale Club, Inc., (“BJ’s”) between April 30, 2008, the date of our prospectus, and October 27, 2008:
                             
Property Location   Date Acquired   Purchase Price   Square Feet   Year Built
FT. Lauderdale, FL
  9/23/2008   $ 28,272,857       119,598       2007  
          BJ’s operates 177 warehouse clubs in 16 states and employs approximately 20,800. BJ’s common stock is publicly traded on the New York Stock Exchange under the ticker symbol “BJ.”
     In evaluating the BJ Ft. Lauderdale Property as a potential acquisition and determining the appropriate amount of consideration to be paid for our interests therein, a variety of factors were considered, including our consideration of property condition reports; unit-level store performance; property location, visibility and access; age of the property, physical condition and curb appeal; neighboring property uses; local market conditions, including vacancy rates; area demographics, including trade area population and average household income; neighborhood growth patterns and economic conditions; and the presence of demand generators. After reasonable inquiry, we are not aware of any material factors relating to the BJ Ft. Lauderdale Property, other than those discussed above, that would cause the reported financial information not to be necessarily indicative of future operating results.
     Because the BJ Ft. Lauderdale Property is 100% leased to a single tenant on a long-term basis under a net lease that transfers substantially all of the operating costs to the tenant, we believe that the financial condition and results of operations of the lessee, BJ’s, are more relevant to investors than the financial statements of the property acquired in order to enable investors to evaluate the credit-worthiness of the lessee. Additionally, because the property is subject to a net lease, the historical property financial statements provide limited information other than rental income, which is disclosed in the section captioned “Investment Objectives and Policies — Real Property Investments” beginning on page 87 of the prospectus. As a result, pursuant to guidance provided by the Securities and Exchange Commission, we have not provided audited financial statements of the properties acquired.
     BJ’s currently files its financial statements in reports filed with the Securities and Exchange Commission, and the following summary financial data regarding BJ’s is taken from its previously filed public reports:
                                     
    For the 26 Weeks   For the Fiscal Year Ended
    Ended 8/2/2008   2/2/2008   2/3/2007   1/28/2006
    (unaudited)           (in thousands)        
Consolidated Statements of Operations
                               
Revenues
  $ 5,005,782     $ 9,005,002     $ 8,480,218     $ 7,914,103  
Operating Income
    86,900       195,291       144,383       214,673  
Net Income
    53,680       122,861       72,016       128,533  
                                 
    As of   As of the Fiscal Year Ended
    8/2/2008   2/2/2008   2/3/2007   1/28/2006
    (unaudited)           (in thousands)        
Consolidated Balance Sheets
                               
Total Assets
  $ 2,015,441     $ 2,046,519     $ 1,993,014     $ 1,989,849  
Long-term Debt
    1,436       1,715       2,243       2,737  
Stockholders’ Equity
    985,542       980,492       1,019,887       1,015,979  
          For more detailed financial information regarding BJ’s, please refer to its financial statements, which are publicly available with the Securities and Exchange Commission at http://www.sec.gov .

F-27


 

Cole Credit Property Trust II, Inc.
Pro Forma Consolidated Balance Sheet
As of June 30, 2008
(Unaudited)
     The following unaudited Pro Forma Consolidated Balance Sheet is presented as if the Company had acquired the properties described in Note B to the Pro Forma Consolidated Balance Sheet on June 30, 2008. The Company commenced its initial public offering on June 27, 2005. The Company terminated its initial public offering on May 22, 2007. The Company commenced its follow-on offering of 150,000,000 shares of common stock on May 23, 2007. Of these shares, the Company is offering 143,050,000 shares in a primary offering and 6,000,000 shares pursuant to our distribution reinvestment plan.
     This Pro Forma Consolidated Balance Sheet should be read in conjunction with the historical financial statements and notes thereto for the quarter ended June 30, 2008. The Pro Forma Consolidated Balance Sheet is unaudited and is not necessarily indicative of what the actual financial position would have been had the Company completed the above transactions on June 30, 2008, nor does it purport to represent its future financial position. This Pro Forma Consolidated Balance sheet only includes the significant property acquisitions pursuant to SEC Rule 3-14 of Regulation S-X and significant mortgage loan acquisitions.

F-28


 

Cole Credit Property Trust II, Inc.
Pro Forma Consolidated Balance Sheet
As of June 30, 2008
(Unaudited)
                         
    June 30,     Acquisition     Pro Forma  
    2008,     Pro Forma     June 30,  
    As Reported     Adjustments     2008  
    (a)     (b)          
ASSETS
Investment in real estate assets:
                       
Land
  $ 561,525,098     $ 150,950,763     $ 712,475,861  
Buildings and improvements, less accumulated depreciation of $42,671,369 at June 30, 2008
    1,365,441,696       461,085,356       1,826,527,052  
Real estate assets under direct financing leases, net of unearned income of $20,952,672 at June 30, 2008
    38,962,331             38,962,331  
Acquired intangible lease assets, less accumulated amortization of $24,002,976 at June 30, 2008
    270,763,301       54,479,375       325,242,676  
 
                 
Total real estate assets
    2,236,692,426       666,515,494       2,903,207,920  
Investment in mortgages receivable, less accumulated amortization of $392,833 at June 30, 2008
    86,117,652             86,117,652  
 
                 
Total investment in real estate assets
    2,322,810,078       666,515,494       2,989,325,572  
 
                       
Cash and cash equivalents
    43,801,769       (43,801,769 )      
Restricted cash
    8,347,978             8,347,978  
Rents and tenant receivables, less allowance for doubtful accounts of $1,502,004 at June 30, 2008
    12,405,416             12,405,416  
Prepaid expenses, mortgage loan deposits and other assets
    1,476,963             1,476,963  
Deferred financing costs, less accumulated amortization of $3,792,856 at June 30, 2008
    19,860,216       4,185,171       24,045,387  
 
                 
Total assets
  $ 2,408,702,420     $ 626,898,896     $ 3,035,601,316  
 
                 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Mortgage notes payable
  $ 1,038,583,645     $ 311,733,660     $ 1,350,317,305  
Accounts payable and accrued expenses
    9,162,304             9,162,304  
Escrowed investor proceeds
    2,796,522             2,796,522  
Due to affiliates
    640,479             640,479  
Acquired below market lease intangibles, less accumulated amortization of $6,005,464 at June 30, 2008
    114,314,242       11,302,969       125,617,211  
Distributions payable
    8,012,300             8,012,300  
Deferred rent and other liabilities
    4,452,587             4,452,587  
 
                 
Total liabilities
    1,177,962,079       323,036,629       1,500,998,708  
 
                 
Redeemable common stock
    38,484,278             38,484,278  
 
                 
Preferred stock, $0.01 par value; 10,000,000 shares authorized, none issued and outstanding at June 30, 2008
                 
Common stock, $.01 par value; 240,000,000 shares authorized, 144,589,086 shares issued and outstanding at June 30, 2008
    1,445,891       337,625       1,783,516  
Capital in excess of par value
    1,268,578,715       303,524,643       1,572,103,358  
Accumulated distributions in excess of earnings
    (77,768,543 )           (77,768,543 )
 
                 
Total stockholders’ equity
    1,192,256,063       303,862,268       1,496,118,331  
 
                 
Total liabilities and stockholders’ equity
  $ 2,408,702,420     $ 626,898,896     $ 3,035,601,316  
 
                 
See accompanying Notes to Pro Forma Consolidated Financial Statements (Unaudited).

F-29


 

Cole Credit Property Trust II, Inc.
Pro Forma Consolidated Statement of Operations
For the Six Months Ended June 30, 2008
(Unaudited)
     The following unaudited Pro Forma Consolidated Statement of Operations is presented as if the Company had acquired the properties described in Note C to the Pro Forma Consolidated Statements of Operations on January 1, 2008 or the date significant operations commenced.
     This Pro Forma Consolidated Statement of Operations should be read in conjunction with the historical financial statements and notes thereto for the six months ended June 30, 2008. The Pro Forma Consolidated Statement of Operations is unaudited and is not necessarily indicative of what the actual results of operations would have been had the Company completed the above transactions on the later of January 1, 2008 or commencement of operations, nor does it purport to represent its future operations. This Pro Forma Consolidated Statement of Operations only includes the significant acquisitions pursuant to SEC Rule 3-14 of Regulation S-X and significant mortgage loan acquisitions.
                         
    For the             Pro Forma for the  
    Six Months Ended     Acquisition     Six Months  
    June 30, 2008     Pro Forma     Ended  
    As Reported     Adjustments     June 30, 2008  
    (a)     (c)          
Revenues:
                       
Rental and other income
  $ 76,072,272     $ 25,003,282 (d)   $ 101,075,554  
Tenant reimbursement income
    4,044,098       330,735       4,374,833  
Earned income from direct financing leases
    1,117,755             1,117,755  
Interest income on mortgages receivable
    3,554,262             3,554,262  
 
                 
Total Revenue
    84,788,387       25,334,017       110,122,404  
 
                 
 
                       
Expenses:
                       
General and administrative
    2,079,890       31,417       2,111,307  
Property operating expenses
    6,140,183       407,172       6,547,355  
Property and asset management fees
    3,954,929       1,317,348 (e)(f)     5,272,277  
Depreciation
    17,992,484       6,373,202 (g)     24,365,686  
Amortization
    9,495,169       2,967,155 (g)     12,462,324  
Impairment of real estate assets
    3,550,000             3,550,000  
 
                 
Total operating expenses
    43,212,655       11,096,294       54,308,949  
 
                 
Operating income
    41,575,732       14,237,723       55,813,455  
 
                 
 
                       
Other income (expense):
                       
Interest income
    628,276             628,276  
Interest expense
    (34,569,901 )     (10,390,567 )(h)     (44,960,468 )
 
                 
Total other expense
    (33,941,625 )     (10,390,567 )     (44,332,192 )
 
                 
Net income
  $ 7,634,107     $ 3,847,156     $ 11,481,263  
 
                 
 
                       
Net income per common share:
                       
Basic and diluted
  $ 0.06             $ 0.07  
 
                   
 
                       
Weighted average number of common shares outstanding:
                       
Basic
    117,448,582       43,163,144 (i)     160,611,726  
 
                 
Diluted
    117,451,552       43,163,144 (i)     160,614,696  
 
                 
See accompanying Notes to Pro Forma Consolidated Financial Statements (Unaudited)

F-30


 

Cole Credit Property Trust II, Inc.
Notes to Pro Forma Consolidated Financial Statements
June 30, 2008
(Unaudited)
a.   Reflects the Company’s historical balance sheet as of June 30, 2008 and the Company’s historical results of operations for the six months ended June 30, 2008.
 
b.   Reflects preliminary purchase price allocations related to the following 2008 acquisitions completed subsequent to June 30, 2008:
    Completed Acquisitions
 
    The WG Rome property, the WG Columbus property, the PM McCarran property, the PM Chattanooga property, the PM Daytona Beach property, the PM Fredericksburg property, the HD Lakewood property, the WG Mobile property, the LO Chester property, BJ Ft. Lauderdale property, the Winter Garden Village property, the Cumming Town Center property, the BB Las Cruces property, the ST Angola property, the TJ Staunton property, the AT Santa Clara property, CV Columbia (Nashville) property, the CV Columbia (James Campbell), the WG Crossville property, the WG Tulsa property, the WG Jacksonville property, the WG Newton property, the CV Hamilton property, the WG Akron property, the WG Seattle property, the WG LaMarque property, the CV Mechanicsville property, the OD Laurel property, the HD Colma property, the WG Saginaw property, the WG Tulsa property, the WG Broken Arrow property, the OD London property, the PL Columbia property, the CV Atlanta property and the TS Baldwinsville property.
 
    Probable Acquisitions
 
    The WG Evansville property and the Church’s Chicken properties.
 
c.   Reflects the pro forma results of operations for the six months ended June 30, 2008 for the following acquisitions (collectively the “Pro Forma Properties”):
 
    Completed Acquisitions
 
    The TS Rome property, the SB Altus property, the CM Greenville property, the Millstein Audit properties, the Millstein Public Tenant properties, The FE Mishawaka property, the SB Stillwater property, the WG Oneida property, the SB Memphis property, the SB Ponca City property, the SB Kingsport property, the WG Batesville property, the TS Clovis property, the BJ’s Haverhill property, the WG Elmira property, the TS Carroll property, the CV Onley property, WG Hibbing property, the WG Essex property, the WG Bath property, the WG Chino Valley property, the KO Grand Forks property, the WG Albany property, the WG Rome property, the WG Columbus property, the PM Chattanooga property, the PM Daytona Beach property, the PM Fredericksburg property, the HD Lakewood property, the WG Mobile property, the LO Chester property, BJ Ft. Lauderdale property, the Winter Garden Village property, the Cumming Town Center property, the BB Las Cruces property, the ST Angola property, the TJ Staunton property, the AT Santa Clara property, CV Columbia (Nashville) property, the CV Columbia (James Campbell), the WG Crossville property, the WG Tulsa property, the WG Jacksonville property, the WG Newton property, the CV Hamilton property, the WG Akron property, the WG Seattle property, the WG LaMarque property, the CV Mechanicsville property, the OD Laurel property, the HD Colma property, the WG Saginaw property, the WG Tulsa property, the WG Broken Arrow property, the OD London property, the PL Columbia property, the CV Atlanta property and the TS Baldwinsville property were acquired during 2008.
 
    Probable Acquisitions
 
    The WG Evansville property and the Church’s Chicken properties.
d.   Represents the straight line rental revenues and amortization of above and below market leases for the Pro Forma Properties in accordance with their respective lease agreements.
 
e.   Reflects the annualized asset management fee of 0.25% (a monthly rate of 0.02083%) of the aggregate asset value of the Pro Forma Properties’ which is payable to our Advisor.

F-31


 

Cole Credit Property Trust II, Inc.
Notes to Pro Forma Consolidated Financial Statements
June 30, 2008
(Unaudited)
f.   Reflects the property management fee equal to 2% of gross revenues of the Pro Forma Properties which is payable to an affiliate of our Advisor.
 
g.   Represents depreciation and amortization expense for the Pro Forma Properties. Depreciation and amortization expense are based on the Company’s preliminary purchase price allocation. All assets are depreciated on a straight line basis. The estimated useful lives of our assets by class are generally as follows:
     
Building
  40 years
Tenant improvements
  Lesser of useful life or lease term
Intangible lease assets
  Lesser of useful life or lease term
h.   Represents interest expense associated with the debt incurred to finance the Pro Forma Properties.

F-32


 

Cole Credit Property Trust II, Inc.
Notes to Pro Forma Consolidated Financial Statements
June 30, 2008
(Unaudited)
The following table provides certain information about each of the loans:
Fixed Rate Tranches
                         
                    Maturity
Property   Amount   Interest Rate   Date
CM Greenville
  $ 15,125,000       5.90 %     12/1/2016  
TS Carroll
    1,213,630       5.87 %     9/30/2010  
CV Onley
    3,328,988       5.87 %     9/30/2010  
WG Hibbing
    2,548,624       5.87 %     9/30/2010  
WG Essex
    3,937,017       5.87 %     9/30/2010  
WG Bath
    2,590,065       5.87 %     9/30/2010  
WG Chino Valley
    3,298,040       5.87 %     9/30/2010  
KO Grand Forks
    5,173,099       5.87 %     9/30/2010  
HD Lakewood
    8,350,000       5.80 %     8/10/2031  
MT Winter Garden
    105,700,000       6.10 %     10/1/2015  
MT Cumming
    33,700,000       6.10 %     10/1/2015  
PL Columbia
    860,000       4.29 %     12/11/2008  
WG Jacksonville
    2,510,750       4.29 %     12/11/2008  
CV Hamilton
    1,787,500       4.29 %     12/11/2008  
WG Seattle
    3,349,500       4.29 %     12/11/2008  
WG LaMarque
    2,277,000       4.29 %     12/11/2008  
CV Mechanicville
    1,290,000       4.29 %     12/11/2008  
OD Laurel
    1,270,000       4.29 %     12/11/2008  
HD Colma
    21,613,000       4.80 %     4/11/2009  
WG Saginaw
    2,282,500       4.29 %     12/11/2008  
WG Tulsa
    1,215,500       4.29 %     12/11/2008  
WG Broken Arrow
    1,127,500       4.29 %     12/11/2008  
OD London
    1,680,000       4.29 %     12/11/2008  
BB Las Cruces
    3,809,000       4.46 %     5/11/2011  
ST Angola
    1,999,000       4.46 %     5/11/2011  
TJ Staunton
    3,116,000       4.46 %     5/11/2011  
AT Santa Clara
    6,032,000       4.46 %     5/11/2011  
WG Tulsa
    1,926,000       4.46 %     5/11/2011  
WG Crossville
    2,753,000       4.46 %     5/11/2011  
CV Columbia (Nashville)
    1,715,000       6.44 %     6/11/2011  
CV Columbia (James Campbell)
    1,735,000       6.44 %     6/11/2011  
WG Newton
    2,393,000       5.06 %     10/11/2009  
TS Baldwinsville
    2,024,013       6.00 %     12/1/2025  

F-33


 

Cole Credit Property Trust II, Inc.
Notes to Pro Forma Consolidated Financial Statements
June 30, 2008
(Unaudited)
Variable Rate Tranches
                 
                Maturity
Property   Amount   Interest Rate (2)   Date
AR New Castle
  $ 1,063,201     LIBOR + 1.95%   2/1/2009 (1)
BA Delray Beach
    10,632,014     LIBOR + 1.95%   2/1/2009 (1)
MU Houston
    13,467,218     LIBOR + 1.95%   2/1/2009 (1)
CM Pineville
    7,017,129     LIBOR + 1.95%   2/1/2009 (1)
CM Raleigh
    6,520,969     LIBOR + 1.95%   2/1/2009 (1)
CC Kennesaw
    14,176,019     LIBOR + 1.95%   2/1/2009 (1)
OD Alcoa
    2,888,364     LIBOR + 1.95%   2/1/2009 (1)
AS Lufkin
    3,685,765     LIBOR + 1.95%   2/1/2009 (1)
BS Atlanta
    1,754,282     LIBOR + 1.95%   2/1/2009 (1)
CV Indianapolis
    2,675,724     LIBOR + 1.95%   2/1/2009 (1)
MA Indianapolis
    10,242,174     LIBOR + 1.95%   2/1/2009 (1)
BC Voorhees
    3,189,604     LIBOR + 1.95%   2/1/2009 (1)
BB Wichita
    8,080,331     LIBOR + 1.95%   2/1/2009 (1)
FE Mishawaka
    2,799,764     LIBOR + 1.95%   2/1/2009 (1)
WG Oneida
    3,170,821     LIBOR + 2.00%   9/5/2010
WG Brentwood
    3,560,379     LIBOR + 2.00%   9/5/2010
WG Harriman
    3,208,594     LIBOR + 2.00%   9/5/2010
WG Batesville
    3,359,003     LIBOR + 2.00%   9/5/2010
TS Clovis
    1,931,695     LIBOR + 2.00%   9/5/2010
BJ Haverhill
    12,246,693     LIBOR + 2.00%   9/5/2010
WG Elmira
    3,835,614     LIBOR + 2.00%   9/5/2010
WG Olivette
    4,746,829     LIBOR + 2.50%   9/3/2011
WG Columbia
    3,805,712     LIBOR + 2.50%   9/3/2011
WG Beverly Hills
    2,184,620     LIBOR + 2.50%   9/3/2011
WG Waco
    2,184,620     LIBOR + 2.50%   9/3/2011
WG Albany
    2,791,459     LIBOR + 2.50%   9/3/2011
WG Rome
    2,758,358     LIBOR + 2.50%   9/3/2011
WG Columbus
    2,730,775     LIBOR + 2.50%   9/3/2011
WG Akron
    1,900,000     LIBOR + 2.00%   6/6/2009
 
(1)   Partial repayment of 17% of total loan is due May 1, 2008.
 
(2)   Interest rate used in the calculation is the average of the applicable LIBOR rate for the period presented plus the applicable spread.
i.   Represents a pro forma adjustment to the weighted average common shares outstanding to reflect all shares outstanding on June 30, 2008 as though they were issued on January 1, 2008. As the Company had insufficient capital at January 1, 2008 to acquire the respective properties which are included in the pro forma results of operations, it is necessary to assume all of the shares outstanding as of June 30, 2008 were outstanding on January 1, 2008.

F-34


 

Cole Credit Property Trust II, Inc.
Pro Forma Consolidated Statement of Operations
For the Year Ended December 31, 2007
(Unaudited)
     The following unaudited Pro Forma Consolidated Statement of Operations is presented as if the Company had acquired the properties described in Notes B and C to the Pro Forma Consolidated Statements of Operations on January 1, 2007 or the date significant operations commenced.
     This Pro Forma Consolidated Statement of Operations should be read in conjunction with the historical financial statements and notes thereto for the year ended December 31, 2007 as included elsewhere in this document. The Pro Forma Consolidated Statement of Operations is unaudited and is not necessarily indicative of what the actual results of operations would have been had the Company completed the above transactions on the later of January 1, 2007 or commencement of operations, nor does it purport to represent its future operations. This Pro Forma Consolidated Statement of Operations only includes the significant acquisitions pursuant to SEC Rule 3-14 of Regulation S-X and significant mortgage loan acquisitions.
                                 
                            Pro Forma,  
            Total     Total     For the Year  
    For the Year Ended     2007 Acquisitions     2008 Acquisitions     Ended  
    December 31, 2007     Pro Forma     Pro Forma     December 31,  
    As Reported     Adjustments     Adjustments     2007  
    (a)     (b)     (c)        
Revenues:
                               
Rental income
  $ 82,491,639     $ 22,959,127 (d)   $ 42,884,998 (d)   $ 148,335,764  
Tenant reimbursement income
    5,161,162       907,874       76,792       6,145,828  
Earned income from direct financing leases
    1,075,412       1,210,213             2,285,625  
Interest earned on mortgage receivable
    1,113,937       5,007,090 (e)           6,121,027  
 
                       
Total revenue
    89,842,150       30,084,304       42,961,790       162,888,244  
 
                       
Expenses:
                               
General and administrative
    2,011,322       180,916       102,389       2,294,627  
Property operating expenses
    6,466,677       1,003,112       96,216       7,566,005  
Property and asset management fees
    4,184,271       1,477,496 (g)     2,141,842 (g)     7,803,609  
Depreciation
    20,460,219       4,956,605       9,870,229 (h)     35,287,053  
Amortization
    10,022,054       4,221,208       5,165,988 (h)     19,409,250  
Impairment of real estate assets
    5,400,000                   5,400,000  
 
                       
Total operating expenses
    48,544,543       11,839,337       17,376,664       77,760,544  
 
                       
Real estate operating income
    41,297,607       18,244,967       25,585,126       85,127,700  
 
                       
 
                               
Other income (expense):
                               
Interest income
    2,258,158                   2,258,158  
Interest expense
    (39,075,748 )     (11,554,885 )(i)     (19,528,697 )(j)     (70,159,330 )
 
                       
Total other income (expense)
    (36,817,590 )     (11,554,885 )     (19,528,697 )     (67,901,172 )
 
                       
 
                               
Net income
  $ 4,480,017     $ 6,690,082     $ 6,056,429     $ 17,226,528  
 
                       
 
                               
Net income per common share:
                               
Basic and diluted
  $ 0.07                     $ 0.12  
 
                           
 
                               
Weighted average number of common shares outstanding:
                               
Basic
    60,929,996       32,509,789 (k)     50,152,911 (k)     143,592,696  
 
                       
Diluted
    60,931,316       32,509,789 (k)     50,152,911 (k)     143,594,016  
 
                       
See accompanying Notes to Pro Forma Consolidated Financial Statements (Unaudited).

F-35


 

Cole Credit Property Trust II, Inc.
Notes to Pro Forma Consolidated Financial Statements
For the Year Ended December 31, 2007
(Unaudited)
a.   Reflects the Company’s historical results of operations for the year ended December 31, 2007
 
b.   Reflects the pro forma results of operations for the year ended December 31, 2007 for the following properties (collectively, the “2007 Acquisitions”): the AS Katy Property, the AH St. John Property, the MT Omaha Property, the WG Shreveport Property, the OM Orangeburg Property, the WG Cincinnati Property, the WG Madeira Property, the WG Sharonville Property, the TS Ankeny Property, the OD Enterprise Property, the MT Fairview Heights Property, the RA Lima Property, the RA Plains Property, the SC Anderson Property, the TS Fredericksburg Property, the TS Greenfield Property, the TS Marinette Property, the TS Navasota Property, the ST Greenville Property, the WG Bridgetown Property, the WG Dallas Property, the WM New London Property, the WM Spencer Property, the TS Paw Paw Property, the TS Fairview Property, the CV Florence Property, the RA Allentown Property, the WG Bryan Property, the WG Harris County Property, the RA Fredericksburg Property, the ST Warsaw Property, the BD Rapid City Property, the BD Reading Property, the WG Gainesville Property, the CH Fredericksburg Property, the TS Baytown Property, the SB Covington Property, the SB Sedalia Property, the KG La Grange Property, the LZ Kentwood Property, the CC Mesquite Property, the TS Prior Lake Property, the ST Guntersville Property, the LO Cincinnati Property, the WG Fort Worth Property, the KO Lake Zurich Property, the CC Groveland Property, the ED Salt Lake City Property, the WG Kansas City (Linwood) Property, the WG Kansas City (Troost) Property, the WG Kansas City (63rd St) Property, the WG Kansas City (Independence) Property, the WG Topeka Property, the CNL Portfolio Properties, the CC Taunton Property, the FE Peoria Property, the FE Walker Property, the WM Bay City Property, the CC Aurora property, the HD Bedford Park Property, the WG Dallas (DeSoto) Property, the WG Richmond Property, the WM Washington Property, MT Broadview Property, the WM Borger Property, the WM Whiteville Property, the WG Brentwood Property, the SB Bowling Green Property, the WG Harriman Property, the SB Shawnee Property, the SB Oklahoma City Property, the SB Powell Property, the SB Maryville Property, the SB Seymour Property, the SB Chattanooga Property, the WG Waco Property, the WG Beverly Hills Property and the WG (Seymour) Cincinnati Property.
 
c.   Reflects the pro forma results of operations for the year ended December 31, 2007 for the following properties (collectively, the “2008 Acquisitions”) :
 
         Completed Acquisitions
 
    The TS Rome property, the SB Altus property, the CM Greenville property, the Millstein Audit properties, the Millstein Public Tenant properties, The FE Mishawaka property, the SB Stillwater property, the WG Oneida property, the SB Memphis property, the SB Ponca City property, the SB Kingsport property, the WG Batesville property, the TS Clovis property, the BJ’s Haverhill property, the WG Elmira property, the TS Carroll property, the CV Onley property, WG Hibbing property, the WG Essex property, the WG Bath property, the WG Chino Valley property, the KO Grand Forks property, the WG Albany property, the WG Rome property, the WG Columbus property, the PM McCarran property, the PM Chattanooga property, the PM Daytona Beach property, the PM Fredericksburg property, the HD Lakewood property, the WG Mobile property, the LO Chester property, BJ Ft. Lauderdale property, the Winter Garden Village property, the Cumming Town Center property, the BB Las Cruces property, the ST Angola property, the TJ Staunton property, the AT Santa Clara property, CV Columbia (Nashville) property, the CV Columbia (James Campbell), the WG Crossville property, the WG Tulsa property, the WG Jacksonville property, the WG Newton property, the CV Hamilton property, the WG Akron property, the WG Seattle property, the WG LaMarque property, the CV Mechanicsville property, the OD Laurel property, the HD Colma property, the WG Saginaw property, the WG Tulsa property, the WG Broken Arrow property, the OD London property, the PL Columbia property, the CV Atlanta property and the TS Baldwinsville property.
 
         Probable Acquisitions
 
    The WG Evansville property and the Church’s Chicken properties.
 
d.   Represents the straight line rental revenues and amortization of above and below market leases for the Pro Forma Properties in accordance with their respective lease agreements.
 
e.   Represents a pro forma adjustment related to interest income earned on the Company’s portfolio of mortgage notes that bear interest at a rate of 8.60% to 10.47%.
 
f.   Reflects the annualized asset management fee of 0.25% (a monthly rate of 0.02083%) of the aggregate asset value of the Pro Forma Properties’ which is payable to our Advisor.
 
g.   Reflects the property management fee equal to 2% of gross revenues of the Pro Forma Properties which is payable to an affiliate of our Advisor.

F-36


 

Cole Credit Property Trust II, Inc.
Notes to Pro Forma Consolidated Financial Statements — (Continued)
For the Year Ended December 31, 2007
(Unaudited)
h.   Represents depreciation and amortization expense for the Pro Forma Properties. Depreciation and amortization expense are based on the Company’s preliminary purchase price allocation. All assets are depreciated on a straight line basis. The estimated useful lives of our assets by class are generally as follows:
     
Building
  40 years
Tenant improvements
  Lesser of useful life or lease term
Intangible lease assets
  Lesser of useful life or lease term
i.   Represents interest expense associated with the debt incurred to finance the acquisitions of the 2007 Acquisitions.
The following table provides certain information about each of the loans:
Fixed Rate Tranches
                         
                    Maturity
Property   Amount   Interest Rate   Date
AS Katy
  $ 68,250,000       5.606 %     2/1/2017  
OD Enterprise
    1,850,000       6.291 %     3/1/2017  
MT Omaha
    23,400,000       5.534 %     3/1/2017  
TS Ankeny
    1,950,000       5.649 %     5/1/2017  
OM Orangeburg
    1,875,000       5.608 %     4/1/2012  
WG Cincinnati
    3,341,000       6.001 %     9/1/2016  
WG Sharonville
    2,655,000       5.615 %     4/1/2012  
WG Madeira
    2,876,000       5.702 %     4/1/2012  
RA Fredericksburg
    2,979,000       5.920 %     5/11/2017  
ST Warsaw
    1,850,000       5.733 %     6/1/2017  
WG Shreveport
    2,815,000       5.560 %     4/11/2017  
AH St. John
    4,420,000       5.650 %     7/11/2017  
TS Greenfield
    2,227,500       5.570 %     7/1/2017  
TS Marinette
    1,918,000       5.649 %     5/1/2017  
TS Paw Paw
    2,048,000       5.649 %     5/1/2017  
MT Fairview Heights (Lincoln Place)
    35,432,000       5.696 %     5/1/2017  
RA Plains
    3,380,000       5.599 %     5/1/2017  
TS Navasota
    2,050,000       5.800 %     5/11/2017  
RA Lima
    3,103,000       5.733 %     6/1/2017  
SC Anderson
    8,160,000       5.800 %     5/11/2017  
ST Greenville
    2,955,000       5.510 %     5/1/2017  
TS Fredericksburg
    2,031,250       5.536 %     7/1/2017  
WG Bridgetown
    3,043,000       5.800 %     5/11/2017  
WG Dallas
    2,175,000       5.763 %     6/1/2017  
WM New London
    1,778,000       5.800 %     5/11/2017  
WM Spencer
    1,377,000       5.800 %     6/11/2017  
CVS Florence
    1,706,250       5.733 %     6/1/2017  
RA Allentown
    3,615,000       5.783 %     6/1/2017  
WG Bryan
    4,111,000       5.700 %     6/11/2017  
WG Harris County
    3,673,000       5.700 %     6/11/2017  
TS Fairview
    1,930,500       5.593 %     6/1/2017  
BD Rapid City
    4,393,000       5.660 %     6/11/2017  
BD Reading
    4,257,000       5.660 %     6/11/2017  
WG Gainesville
    2,465,000       5.600 %     6/11/2017  
CH Fredericksburg
    1,504,000       5.550 %     6/11/2017  
TS Baytown
    2,251,000       5.600 %     6/11/2017  
AS Houston
    3,825,000       5.711 %     7/1/2017  
BB Evanston
    5,900,000       5.711 %     7/1/2017  
BB Warwick
    5,350,000       5.711 %     7/1/2017  
EK Mantua
    1,470,000       5.711 %     7/1/2017  

F-37


 

Cole Credit Property Trust II, Inc.
Notes to Pro Forma Consolidated Financial Statements — (Continued)
For the Year Ended December 31, 2007
(Unaudited)
                         
                    Maturity
Property   Amount   Interest Rate   Date
EK Vineland
  $ 3,500,000       5.711 %     7/1/2017  
WC Eureka
    11,247,000       5.711 %     7/1/2017  
KG La Grange
    4,750,000       5.205 %     7/1/2012  
LZ Kentwood
    3,602,000       5.322 %     7/1/2012  
CC Mesquite
    4,305,000       5.322 %     7/1/2012  
TS Prior Lake
    3,283,250       5.733 %     7/1/2017  
ST Guntersville
    2,161,250       5.235 %     8/1/2012  
LO Cincinnati
    13,800,000       5.550 %     8/11/2017  
WG Fort Worth
    3,675,000       5.550 %     8/11/2017  
KO Lake Zurich
    9,075,000       5.550 %     8/11/2017  
CC Groveland
    20,250,000       5.550 %     8/11/2017  
EDS Salt Lake City
    18,000,000       5.550 %     8/11/2017  
WG Kansas City (Linwood)
    2,437,500       5.693 %     8/1/2017  
WG Kansas City (Troost)
    2,464,000       5.793 %     8/1/2017  
WG Kansas City (63rd St)
    3,034,500       5.793 %     8/1/2017  
WG Kansas City (Independence)
    2,990,000       5.693 %     8/1/2017  
WG Topeka
    1,870,000       5.793 %     8/1/2017  
EK Mableton
    1,197,000       5.674 %     8/1/2017  
EK Chattanooga
    1,920,000       5.674 %     8/1/2017  
AS North Richland Hills
    4,217,000       5.833 %     8/1/2017  
CV Amarillo
    1,741,000       5.833 %     8/1/2017  
AS Baton Rouge
    4,687,000       5.833 %     8/1/2017  
AS Houston (Breton)
    3,045,000       5.833 %     8/1/2017  
AS Houston (Southwest)
    4,625,000       5.833 %     8/1/2017  
DB Addison
    5,600,000       5.564 %     8/1/2017  
CV Del City
    2,631,000       5.824 %     8/1/2017  
CC Taunton
    4,323,000       5.322 %     8/1/2012  
FE Peoria
    2,080,000       5.604 %     8/1/2017  
FE Walker
    4,669,000       6.302 %     9/1/2012  
CC Aurora
    4,777,000       6.302 %     9/1/2017  
Broadview Village Square Chicago
    31,500,000       5.861 %     10/1/2017  
Variable Rate Tranches
                 
                Maturity
Property   Amount   Interest Rate (1)   Date
RA Fredericksburg
  $ 1,353,000     LIBOR + 2%   8/2/2007
WG Shreveport
    497,000     LIBOR + 2%   6/22/2007
AH St. John
    780,000     LIBOR + 2%   9/12/2007
TS Navasota
    362,000     LIBOR + 2%   7/18/2007
SC Anderson
    1,440,000     LIBOR + 2%   7/2/2007
WG Bridgetown
    537,000     LIBOR + 2%   8/30/2007
WM New London
    313,000     LIBOR + 2%   8/9/2007
WM Spencer
    243,000     LIBOR + 2%   8/3/2007
WG Bryan
    949,000     LIBOR + 2%   8/18/2007
WG Harris County
    848,000     LIBOR + 2%   8/18/2007
BD Rapid City
    776,000     LIBOR + 2%   9/1/2007
BD Reading
    752,000     LIBOR + 2%   9/1/2007
WG Gainesville
    435,000     LIBOR + 2%   9/1/2007
CH Fredericksburg
    347,000     LIBOR + 2%   9/5/2007
TS Baytown
    397,000     LIBOR + 2%   9/11/2007
HD Bedford Park
    21,250,000     LIBOR + 1.5%   9/13/2008
Cracker Barrel Notes
    36,290,338     LIBOR + 2%   3/31/2008
LoJon/Car Par Notes
    35,000,000     LIBOR + 2.75%   3/27/2008
 
(1)   Interest rate used in the calculation is the average of the applicable LIBOR rate for the period presented plus the applicable spread.

F-38


 

Cole Credit Property Trust II, Inc.
Notes to Pro Forma Consolidated Financial Statements — (Continued)
For the Year Ended December 31, 2007
(Unaudited)
j.   Represents interest expense associated with the debt incurred to finance the 2008 Acquisitions.
The following table provides certain information about each of the loans:
Fixed Rate Tranches
                         
                    Maturity
Property   Amount   Interest Rate   Date
CM Greenville
  $ 15,125,000       5.90 %     12/1/2016  
TS Carroll
    1,213,630       5.87 %     9/30/2010  
CV Onley
    3,328,988       5.87 %     9/30/2010  
WG Hibbing
    2,548,624       5.87 %     9/30/2010  
WG Essex
    3,937,017       5.87 %     9/30/2010  
WG Bath
    2,590,065       5.87 %     9/30/2010  
WG Chino Valley
    3,298,040       5.87 %     9/30/2010  
KO Grand Forks
    5,173,099       5.87 %     9/30/2010  
HD Lakewood
    8,350,000       5.80 %     8/10/2031  
MT Winter Garden
    105,700,000       6.10 %     10/1/2015  
MT Cumming
    33,700,000       6.10 %     10/1/2015  
PL Columbia
    860,000       4.29 %     12/11/2008  
WG Jacksonville
    2,510,750       4.29 %     12/11/2008  
CV Hamilton
    1,787,500       4.29 %     12/11/2008  
WG Seattle
    3,349,500       4.29 %     12/11/2008  
WG LaMarque
    2,277,000       4.29 %     12/11/2008  
CV Mechanicville
    1,290,000       4.29 %     12/11/2008  
OD Laurel
    1,270,000       4.29 %     12/11/2008  
HD Colma
    21,613,000       4.80 %     4/11/2009  
WG Saginaw
    2,282,500       4.29 %     12/11/2008  
WG Tulsa
    1,215,500       4.29 %     12/11/2008  
WG Broken Arrow
    1,127,500       4.29 %     12/11/2008  
OD London
    1,680,000       4.29 %     12/11/2008  
BB Las Cruces
    3,809,000       4.46 %     5/11/2011  
ST Angola
    1,999,000       4.46 %     5/11/2011  
TJ Staunton
    3,116,000       4.46 %     5/11/2011  
AT Santa Clara
    6,032,000       4.46 %     5/11/2011  
WG Tulsa
    1,926,000       4.46 %     5/11/2011  
WG Crossville
    2,753,000       4.46 %     5/11/2011  
CV Columbia (Nashville)
    1,715,000       6.44 %     6/11/2011  
CV Columbia (James Campbell)
    1,735,000       6.44 %     6/11/2011  
WG Newton
    2,393,000       5.06 %     10/11/2009  
TS Baldwinsville
    2,024,013       6.00 %     12/1/2025  

F-39


 

Cole Credit Property Trust II, Inc.
Notes to Pro Forma Consolidated Financial Statements — (Continued)
For the Year Ended December 31, 2007
(Unaudited)
Variable Rate Tranches
                 
                Maturity
Property   Amount   Interest Rate (2)   Date
AR New Castle
  $ 1,063,201     LIBOR + 1.95%   2/1/2009 (1)
BA Delray Beach
    10,632,014     LIBOR + 1.95%   2/1/2009 (1)
MU Houston
    13,467,218     LIBOR + 1.95%   2/1/2009 (1)
CM Pineville
    7,017,129     LIBOR + 1.95%   2/1/2009 (1)
CM Raleigh
    6,520,969     LIBOR + 1.95%   2/1/2009 (1)
CC Kennesaw
    14,176,019     LIBOR + 1.95%   2/1/2009 (1)
OD Alcoa
    2,888,364     LIBOR + 1.95%   2/1/2009 (1)
AS Lufkin
    3,685,765     LIBOR + 1.95%   2/1/2009 (1)
BS Atlanta
    1,754,282     LIBOR + 1.95%   2/1/2009 (1)
CV Indianapolis
    2,675,724     LIBOR + 1.95%   2/1/2009 (1)
MA Indianapolis
    10,242,174     LIBOR + 1.95%   2/1/2009 (1)
BC Voorhees
    3,189,604     LIBOR + 1.95%   2/1/2009 (1)
BB Wichita
    8,080,331     LIBOR + 1.95%   2/1/2009 (1)
FE Mishawaka
    2,799,764     LIBOR + 1.95%   2/1/2009 (1)
WG Oneida
    3,170,821     LIBOR + 2.00%   9/5/2010
WG Brentwood
    3,560,379     LIBOR + 2.00%   9/5/2010
WG Harriman
    3,208,594     LIBOR + 2.00%   9/5/2010
WG Batesville
    3,359,003     LIBOR + 2.00%   9/5/2010
TS Clovis
    1,931,695     LIBOR + 2.00%   9/5/2010
BJ Haverhill
    12,246,693     LIBOR + 2.00%   9/5/2010
WG Elmira
    3,835,614     LIBOR + 2.00%   9/5/2010
WG Olivette
    4,746,829     LIBOR + 2.50%   9/3/2011
WG Columbia
    3,805,712     LIBOR + 2.50%   9/3/2011
WG Beverly Hills
    2,184,620     LIBOR + 2.50%   9/3/2011
WG Waco
    2,184,620     LIBOR + 2.50%   9/3/2011
WG Albany
    2,791,459     LIBOR + 2.50%   9/3/2011
WG Rome
    2,758,358     LIBOR + 2.50%   9/3/2011
WG Columbus
    2,730,775     LIBOR + 2.50%   9/3/2011
WG Akron
    1,900,000     LIBOR + 2.00%   6/6/2009
 
(1)   Partial repayment of 17% of total loan is due May 1, 2008.
 
(2)   Interest rate used in the calculation is the average of the applicable LIBOR rate for the period presented plus the applicable spread.
k.   Represents a pro forma adjustment to the weighted average common shares outstanding to reflect all shares outstanding on December 31, 2007 as though they were issued on January 1, 2007. As the Company had insufficient capital at January 1, 2007 to acquire the respective properties which are included in the pro forma results of operations, it is necessary to assume all of the shares outstanding as of December 31, 2007 were outstanding on January 1, 2007.

F-40


 

 
APPENDIX B
 
(FORM)
COLE CREDIT PROPERTY TRUST II, INC. For Prospectus dated April 30, 2008 Subscription Agreement for the Purchase of Common Stock of Cole Credit Property Trust II, Inc. Please read this Subscription Agreement/Signature Page and the Terms and Conditions before signing. A-INVESTMENT Initial Subscription (Minimum $2,500) Purchase of Cole Credit Property Trust II, Inc. Shares Additional Subscription (Minimum $1,000) REGISTERED REPRESENTATIVE PURCHASE Check enclosed for Subscription Amount $ = RIA — See Section G Subscription Amount Wired Total $      Invested = # of Shares x $10 x $10 Check Sent Separately A completed Subscription Agreement is required for each initial and additional investment. B — TYPE OF OWNERSHIP NON-CUSTODIAL OWNERSHIP (Make Check Payable To: Wells Fargo Bank, N.A., Escrow Agent for Cole Credit Property Trust II, Inc.) (Starter checks are NOT accepted) Individual Ownership Corporate Ownership Uniform Gifts to Minors Act: State of: Joint Tenants with Right of Survivorship Partnership Ownership Custodian for Community Property LLC Ownership Pension or Profit Sharing Plan Tenants — in — Common TOD (Fill out TOD Form to effect designation) Others (specify) Other (specify) Taxable Exempt under § 501A Trust (Specify, i.e. Family, Living, Name of Trustee/ Other Administrator Revocable,etc.) Taxable Grantor A or B Date Trust Established Name of Trustee/Other Administrator CUSTODIAL OWNERSHIP CUSTODIAN INFORMATION Sterling Trust Company (set up fee waived and annual fees discounted) or (Make check payable to the custodian listed and send ALL paperwork directly to the custodian.) Name of Custodian or Trustee Roth IRA Traditional IRA Mailing Address Simplified Employee Pension/Trust (S.E.P) KEOGH City State Zip Pension or Profit Sharing Plan Taxable Exempt under § 501A Investor’s Custodian Account # Name of Trustee/Other Administrator Custodian Telephone No. Other (specify) Custodian Tax ID # C — SUBSCRIBER INFORMATION Subscriber Name Mr. Mrs. Ms. Co-Subscriber Social Security # or Taxpayer ID # Social Security # (Co-Subscriber) Date of Birth/ Date of Incorporation Date of Birth (Co-Subscriber) Mailing Address Home Telephone No. City State Zip Business Telephone No. Street Address (if different from mailing address or mailing address is a P.O. Box) E-mail Address Please Indicate Citizenship Status U.S Citizen Resident Alien City State Zip Non-Resident Alien Employee or Affiliate INTERESTED PARTY (Optional) If you would like a duplicate copy of all communications the Company sends to you to be sent to an additional party (such as your accountant or financial advisor), please complete the following. Name of Interested Party Name of Firm Street Address or P.O. Box Business Telephone No. City State Zip E-mail Address (optional) (CONTINUED ON REVERSE SIDE) COLE CREDIT PROPERTY TRUST II, INC. Mail To: Cole Credit Property Trust II, Inc. c/o DST Systems, Inc. P.O. Box 219312 Kansas City, MO 64121-9312 Phone: 866-341-2653 Facsimile Telephone No. Mr. Mrs. Ms.


B-1


 

 
(FORM)
APPENDIX B COLE CREDIT PROPERTY TRUST II, INC. Subscription Agreement for the Purchase of Common Stock of Cole Credit Property Trust II, Inc. For Prospectus dated April 30, 2008 A-INVESTMENT Purchase of Cole Credit Property Trust II, Inc. Shares $ = x $10 Total $ Invested = # of Shares x $10 Please read this Subscription Agreement/Signature Page and the Terms and Conditions before signing. Initial Subscription (Minimum $2,500) Additional Subscription (Minimum $1,000)REGISTERED REPRESENTATIVE PURCHASE RIA See Section G A completed Subscription Agreement is required for each initial and additional investment. Check enclosed for Subscription Amount Subscription Amount Wired Check Sent Separately B TYPE OF OWNERSHIP NON-CUSTODIAL OWNERSHIP(Make Check Payable To: Wells Fargo Bank, N.A., Escrow Agent for Cole Credit Property Trust II,Inc.) (Starter checks are NOT accepted) Individual Ownership Joint Tenants with Right of Survivorship Community Property Tenants in Common Others (specify) Trust (Specify, i.e. Family, Living, Revocable, etc.) Taxable Grantor A or B Date Trust Established Corporate Ownership Partnership Ownership LLC Ownership TOD (Fill out TOD Form to effect designation) Other (specify) Uniform Gifts to Minors Act: State of: Custodian for Pension or Profit Sharing Plan Taxable Exempt under §501A Name of Trustee/ Other Administrator Name of Trustee/Other Administrator CUSTODIAL OWNERSHIP (Make check payable to the custodian listed and send ALL paperwork directly to the custodian.) Traditional IRA Roth IRA Simplified Employee Pension/Trust (S.E.P) KEOGH Pension or Profit Sharing Plan Taxable Exempt under §501A Name of Trustee/Other Administrator Other (specify) CUSTODIAN INFORMATION Sterling Trust Company (set up fee waived and annual fees discounted) or Name of Custodian or Trustee Mailing Address City State Zip Investor s Custodian Account # Custodian Telephone No. Custodian Tax ID # C SUBSCRIBER INFORMATION Subscriber Name Mr. Mrs. Ms. Social Security # or Taxpayer ID # Date of Birth/Date of Incorporation Mailing Address City State Zip Street Address (if different from mailing address or mailing address is a P.O. Box) City State Zip Co-Subscriber Mr. Mrs. Ms. Social Security # (Co-Subscriber) Date of Birth(Co-Subscriber) Home Telephone No. Business Telephone No. E-mail Address Please Indicate Citizenship Status U.S Citizen Resident Alien No