FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1998
--------------------------
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number
0-24097
CNL American Realty Fund, Inc.
(Exact name of registrant as specified in its charter)
Maryland 59-3396369
(State or other jurisdiction (I.R.S. Employer
of incorporation or organiza- Identification No.)
tion)
400 E. South Street
Orlando, Florida 32801
- ---------------------------- -----------------
(Address of principal (Zip Code)
executive offices)
Registrant's telephone number
(including area code) (407) 422-1574
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Sections 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes X No
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the latest practicable date.
2,112,155 shares of common stock, $.01 par value, outstanding as of May 1, 1998.
<PAGE>
CONTENTS
Part I Page
Item 1. Financial Statements:
Condensed Balance Sheets 1
Condensed Statements of Earnings 2
Condensed Statements of Stockholders'
Equity 3
Condensed Statements of Cash Flows 4-5
Notes to Condensed Financial Statements 6-10
Item 2. Management's Discussion and Analysis
of Financial Condition and
Results of Operations 11-15
Part II
Other Information 16
<PAGE>
CNL AMERICAN REALTY FUND, INC.
CONDENSED BALANCE SHEETS
March 31, December 31,
ASSETS 1998 1997
----------- ----------
Cash and cash equivalents $13,445,934 $ 8,869,838
Certificates of deposit 1,500,000 -
Due from related party - 7,500
Prepaid expenses 10,432 11,179
Organization costs, less
accumulated amortization of
$1,833 and $833 18,167 19,167
Other assets 860,782 535,792
----------- -----------
$15,835,315 $ 9,443,476
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable and accrued
expenses $ 210,816 $ 16,305
Due to related parties 134,034 193,254
----------- -----------
Total liabilities 344,850 209,559
----------- -----------
Commitment (Note 7)
Stockholders' equity:
Preferred stock, without par
value. Authorized and unissued
3,000,000 shares - -
Excess shares, $.01 par value per
share. Authorized and unissued
63,000,000 shares - -
Common stock, $.01 par value per
share. Authorized 60,000,000
shares, issued and outstanding
1,859,885 and 1,152,540,
respectively 18,599 11,525
Capital in excess of par value 15,532,838 9,229,316
Accumulated distributions in excess
of net earnings (60,972) (6,924)
----------- -----------
Total stockholders' equity 15,490,465 9,233,917
----------- -----------
$15,835,315 $ 9,443,476
=========== ===========
See accompanying notes to condensed
financial statements.
1
<PAGE>
CNL AMERICAN REALTY FUND, INC.
CONDENSED STATEMENTS OF EARNINGS
Quarter Ended
March 31,
1998 1997
---------- ----------
Revenues:
Interest income $ 139,153 $ -
---------- ---------
Expenses:
General operating and administrative 85,393 -
Professional fees 5,452 -
Amortization 1,000 -
---------- ---------
91,845 -
---------- ---------
Net Earnings $ 47,308 $ -
========== =========
Earnings Per Share of Common Stock
(Basic and Diluted) $ 0.03 $ -
========== =========
Weighted Average Number of Shares of
Common Stock Outstanding 1,474,288 -
========== =========
See accompanying notes to condensed
financial statements.
2
<PAGE>
CNL AMERICAN REALTY FUND, INC.
CONDENSED STATEMENTS OF STOCKHOLDERS' EQUITY
Quarter Ended March 31, 1998 and
Year Ended December 31, 1997
<TABLE>
<CAPTION>
Accumulated
distributions
Common stock Capital in in excess
Number Par excess of of net
of shares value par value earnings Total
<S> <C>
Balance at
December 31, 1996 20,000 $ 200 $ 199,800 $ - $ 200,000
Subscriptions
received for
common stock
through public
offering and
distribution
reinvestment
plan 1,132,540 11,325 11,314,077 - 11,325,402
Stock issuance
costs - - (2,284,561) - (2,284,561)
Net earnings - - - 22,852 22,852
Distributions
declared and
paid ($.05
per share) - - - (29,776) (29,776)
---------- ------- ----------- --------- -----------
Balance at
December 31, 1997 1,152,540 11,525 9,229,316 (6,924) 9,233,917
Subscriptions
received for
common stock
through public
offering and
distribution
reinvestment
plan 707,345 7,074 7,066,377 - 7,073,451
Stock issuance
costs - - (762,855) - (762,855)
Net earnings - - - 47,308 47,308
Distributions
declared and
paid ($.075
per share) - - - (101,356) (101,356)
---------- ------- ----------- --------- -----------
Balance at
March 31, 1998 1,859,885 $18,599 $15,532,838 $ (60,972) $15,490,465
========== ======= =========== ========= ===========
</TABLE>
See accompanying notes to condensed
financial statements.
3
<PAGE>
CNL AMERICAN REALTY FUND, INC.
CONDENSED STATEMENTS OF CASH FLOWS
Quarter Ended
March 31,
1998 1997
----------- -----------
Increase (Decrease) in Cash and Cash
Equivalents:
Cash Flows from Operating
Activities:
Interest received $ 139,153 $ -
Cash paid for expenses (72,035) -
----------- ----------
Net cash provided by
operating activities 67,118 -
----------- ----------
Cash Flows From Investing
Activities:
Investment in certificates
of deposit (1,500,000) -
Increase in other assets (313,391) -
----------- ----------
Net cash used in
investing activities (1,813,391) -
----------- ----------
Cash Flows From Financing
Activities:
Reimbursement of acquisition
and stock issuance costs
paid by related parties on
behalf of the Company (90,634) -
Subscriptions received from
stockholders 7,263,367 -
Distributions to stockholders (101,356) -
Payment of stock issuance
costs (749,008) -
----------- ----------
Net cash provided by
financing activities 6,322,369 -
----------- ----------
Net Increase in Cash and Cash
Equivalents 4,576,096 -
Cash and Cash Equivalents at
Beginning of Quarter 8,869,838 -
----------- ----------
Cash and Cash Equivalents at End
of Quarter $13,445,934 $ -
=========== ==========
See accompanying notes to condensed
financial statements.
4
<PAGE>
CNL AMERICAN REALTY FUND, INC.
CONDENSED STATEMENTS OF CASH FLOWS - CONTINUED
Quarter Ended
March 31,
1998 1997
----------- ----------
Supplemental Schedule of Non-Cash
Investing and Financing
Activities:
Related parties paid certain
acquisition and stock issuance
costs on behalf of the Company
as follows:
Acquisition costs $ 6,685 $ -
Stock issuance costs 107,367 41,491
----------- -----------
$ 114,052 $ 41,491
=========== ===========
See accompanying notes to condensed
financial statements.
5
<PAGE>
CNL AMERICAN REALTY FUND, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
Quarters Ended March 31, 1998 and 1997
1. Organization and Nature of Business:
CNL American Realty Fund, Inc. (the "Company") was organized in
Maryland on June 12, 1996, primarily to acquire properties
("Properties") located across the United States to be leased on a
long-term, triple-net basis. The Company intends to invest the proceeds
from its public offering, after deducting offering expenses, in hotel
Properties to be leased to operators of national and regional limited
service, extended stay and full service hotel chains (the "Hotel
Chains") and in restaurant Properties to be leased to operators of
selected national and regional fast-food, family-style and casual
dining restaurant chains (the "Restaurant Chains"). The Company may
also provide mortgage financing (the "Mortgage Loans"). The Company
also intends to offer furniture, fixture and equipment financing
("Secured Equipment Leases") to operators of Hotel Chains and
Restaurant Chains.
2. Basis of Presentation:
The accompanying unaudited condensed financial statements have been
prepared in accordance with the instructions to Form 10-Q and do not
include all of the information and note disclosures required by
generally accepted accounting principles. The financial statements
reflect all adjustments, consisting of normal recurring adjustments,
which are, in the opinion of management, necessary to a fair statement
of the results for the interim period presented. Operating results for
the quarter ended March 31, 1998, may not be indicative of the results
that may be expected for the year ending December 31, 1998. Amounts as
of December 31, 1997, included in the financial statements, have been
derived from audited financial statements as of that date.
These unaudited financial statements should be read in conjunction with
the financial statements and notes thereto included in the Company's
Form 10-K for the year ended December 31, 1997.
The Company was a development stage enterprise from June 12, 1996
through October 15, 1997. Since operations had not begun, activities
through October 15, 1997, were devoted to organization of the Company.
Effective, January 1, 1998, the Company adopted Statement of Financial
Accounting Standards No. 130, "Reporting Comprehensive Income." This
Statement requires the reporting of net earnings and all other changes
to equity during the period, except those resulting from investments by
owners and distributions to owners, in a separate statement that begins
6
<PAGE>
CNL AMERICAN REALTY FUND, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS - CONTINUED
Quarters Ended March 31, 1998 and 1997
2. Basis of Presentation - Continued:
with net earnings. Currently the Company's only component of
comprehensive income is net earnings.
3. Other Assets:
Other assets at March 31, 1998 and December 31, 1997, of $860,782 and
$535,792, respectively, consisted of acquisition fees and miscellaneous
acquisition expenses to be allocated to future Properties.
4. Stock Issuance Costs:
The Company has incurred certain expenses of its offering of shares,
including commissions, marketing support and due diligence expense
reimbursement fees, filing fees, legal, accounting, printing and escrow
fees, which have been deducted from the gross proceeds of the offering.
Preliminary costs incurred prior to raising capital were advanced by an
affiliate of the Company, CNL Real Estate Advisors, Inc. (the
"Advisor"). The Advisor has agreed to pay all organizational and
offering expenses (excluding commissions and marketing support and due
diligence expense reimbursement fees) which exceed three percent of the
gross offering proceeds received from the sale of shares of the
Company.
During the quarter ended March 31, 1998 and the year ended December 31,
1997, the Company incurred $762,855 and $2,304,561, respectively, in
organizational and offering costs, including $565,876 and $906,032,
respectively, in commissions and marketing support and due diligence
expense reimbursement fees (see Note 6). Of these amounts $762,855 and
$2,284,561, respectively, have been treated as stock issuance costs and
$20,000 have been treated as organization costs. The stock issuance
costs have been charged to stockholders' equity subject to the three
percent cap described above.
7
<PAGE>
CNL AMERICAN REALTY FUND, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS - CONTINUED
Quarters Ended March 31, 1998 and 1997
5. Distributions:
For the quarter ended March 31, 1998, 100 percent of the distributions
paid to stockholders were considered ordinary income. No amounts
distributed to the stockholders for the quarter ended March 31, 1998
are required to be or have been treated by the Company as a return of
capital for purposes of calculating the stockholders' return on their
invested capital. The characterization for tax purposes of
distributions declared for the quarter ended March 31, 1998 may not be
indicative of the results that may be expected for the year ending
December 31, 1998.
6. Related Party Transactions:
During the quarter ended March 31, 1998, the Company incurred $530,509
in selling commissions due to CNL Securities Corp. for services in
connection with the offering of shares. A substantial portion of this
amount ($495,216) was or will be paid by CNL Securities Corp. as
commissions to other broker dealers.
In addition, CNL Securities Corp. is entitled to receive a marketing
support and due diligence expense reimbursement fee equal to 0.5% of
the total amount raised from the sale of shares, a portion of which may
be reallowed to other broker-dealers. During the quarter ended March
31, 1998, the Company incurred $35,367 of such fees, the majority of
which were reallowed to other broker-dealers and from which all bona
fide due diligence expenses were paid.
The Advisor is entitled to receive acquisition fees for services in
finding, negotiating the leases of and acquiring Properties on behalf
of the Company equal to 4.5% of gross proceeds, loan proceeds from
permanent financing and amounts outstanding on the line of credit, if
any, at the time of listing, but excluding that portion of the
permanent financing used to finance Secured Equipment Leases. During
the quarter ended March 31, 1998, the Company incurred $318,305 of such
fees. Such fees are included in other assets at March 31, 1998.
8
<PAGE>
CNL AMERICAN REALTY FUND, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS - CONTINUED
Quarters Ended March 31, 1998 and 1997
6. Related Party Transactions - Continued:
The Advisor and its affiliates provide various administrative services
to the Company, including services related to accounting; financial,
tax and regulatory compliance reporting; stockholder distributions and
reporting; due diligence and marketing; and investor relations
(including administrative services in connection with the offering of
shares), on a day-to-day basis. The expenses incurred for these
services were classified as follows for the quarters ended March 31:
1998 1997
-------- -------
Deferred offering costs $ - $ 8,805
Stock issuance costs 89,000 -
General operating and
administrative expenses 40,650 -
-------- -------
$129,650 $ 8,805
======== ========
The amounts due to related parties consisted of the following at:
March 31, December 31,
1998 1997
Due to CNL Securities Corp.:
Commissions $ 11,156 $100,709
Marketing support and due
diligence expense reim-
bursement fee 996 7,268
-------- --------
12,152 107,977
-------- --------
Due to CNL Real Estate
Advisors, Inc.:
Expenditures incurred for
organizational and
offering expenses on
behalf of the Company 44,164 21,729
Accounting and
administrative services 26,630 17,376
Acquisition fees 51,088 46,172
-------- --------
121,882 85,277
-------- --------
$134,034 $193,254
======== ========
9
<PAGE>
CNL AMERICAN REALTY FUND, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS - CONTINUED
Quarters Ended March 31, 1998 and 1997
7. Commitment:
The Company has received a commitment letter from a bank for an initial
$30,000,000 revolving line of credit to be used by the Company to
acquire or construct hotels. The commitment letter provides that the
term of the line of credit shall be five years with an annual review to
be performed by the bank to indicate that there has been no substantial
deterioration, in the bank's reasonable opinion, of the credit quality,
and each loan made under the line will be payable interest only,
monthly, for a period not to exceed five years. Advances under the line
of credit will bear interest at competitive rates. Each loan made under
the line of credit will be secured by the assignment of rents and
leases. In addition, the commitment provides that the Company will not
be able to further encumber the applicable hotel Property during the
term of the loan without the bank's consent. As of May 1, 1998, the
documents relating to the line of credit had not been executed.
8. Subsequent Events:
During the period April 1, 1998 through May 1, 1998, the Company
received subscription proceeds for an additional 252,270 shares
($2,522,700) of common stock.
On April 1, 1998 and May 1, 1998, the Company declared distributions
totalling $46,668 and $52,804, respectively, or $.025 per share of
common stock, payable in June 1998, to stockholders of record on April
1, 1998 and May 1, 1998, respectively.
10
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Introduction
CNL American Realty Fund, Inc. (the "Company") is a Maryland
corporation that was organized on June 12, 1996, to acquire properties (the
"Properties") located across the United States to be leased on a long-term,
"triple-net" basis to operators of selected national and regional limited
service, extended stay and full service hotel chains (the "Hotel Chains") and
operators of national and regional fast-food, family-style and casual dining
restaurant chains (the "Restaurant Chains"). The Company is not obligated to
invest in both hotel Properties and restaurant Properties. The Company may also
provide mortgage financing (the "Mortgage Loans") in the aggregate principal
amount of approximately 5% to 10% of the gross offering proceeds. The Company
also intends to offer furniture, fixture and equipment financing ("Secured
Equipment Leases") to operators of Hotel Chains and Restaurant Chains. Secured
Equipment Leases will be funded from the proceeds of financing to be obtained by
the Company. The aggregate outstanding principal amount of Secured Equipment
Leases will not exceed 10% of gross proceeds from the offering.
This information contains forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Act of 1934. Although the Company believes that the expectations reflected in
such forward-looking statements are based upon reasonable assumptions, the
Company's actual results could differ materially from those set forth in the
forward-looking statements. Certain factors that might cause such a difference
include the following: changes in general economic conditions, changes in local
and national real estate conditions, continued availability of proceeds from the
Company's offering, the ability of the Company to obtain a line of credit or
permanent financing, as described above, on satisfactory terms, the ability of
the Company to identify suitable investments, the ability of the Company to
locate suitable tenants for its Properties and borrowers for its Mortgage Loans
and Secured Equipment Leases, and the ability of such tenants and borrowers to
make payments under their respective leases, Mortgage Loans or Secured Equipment
Leases.
Liquidity and Capital Resources
Effective July 9, 1997, the Company commenced its offering of shares of
common stock. As of March 31, 1998, the Company had received aggregate
subscription proceeds of $18,398,853 (1,839,885 shares), from the offering,
including $4,521 (452 shares) through the Company's reinvestment plan.
11
<PAGE>
Liquidity and Capital Resources - Continued
As of March 31, 1998, net proceeds to the Company from its offering of
shares and capital contributions from CNL Real Estate Advisors, Inc. (the
"Advisor"), after deduction of selling commissions, marketing support and due
diligence expense reimbursement fees and organizational and offering expenses
totalled approximately $15,531,000. The Company has incurred approximately
$861,000 in acquisition fees and acquisition expenses, leaving approximately
$14,670,000 in net offering proceeds available for investment in Properties and
Mortgage Loans.
As of May 1, 1998, the Company had received subscription proceeds
(excluding capital contributions from the Advisor) of $20,921,553 (2,092,155
shares) from its offering of shares. As of May 1, 1998, net proceeds to the
Company from its offering of shares and capital contributions from the Advisor,
after deduction of selling commissions, marketing support and due diligence
expense reimbursement fees and organizational and offering expenses totalled
approximately $17,852,000. The Company has incurred approximately $974,000 in
acquisition fees and acquisition expenses, leaving approximately $16,878,000 in
net offering proceeds available for investment in Properties and Mortgage Loans.
The Company is presently negotiating to acquire Properties, but as of
May 1, 1998, the Company had not acquired any Properties or entered into any
Mortgage Loans.
The Company expects to use net offering proceeds from the sale of
shares to purchase Properties and to invest in Mortgage Loans. In addition, the
Company intends to borrow money to acquire Properties, to invest in Mortgage
Loans and Secured Equipment Leases, and to pay certain related fees. The Company
intends to encumber assets in connection with such borrowing.
The Company has received a commitment letter from a bank for an initial
$30,000,000 revolving line of credit to be used by the Company to acquire or
construct hotels. The commitment letter provides that the term of the line of
credit shall be five years with an annual review to be performed by the bank to
indicate that there has been no substantial deterioration, in the bank's
reasonable opinion, of the credit quality, and each loan made under the line
will be payable interest only, monthly, for a period not to exceed five years.
Advances under the line of credit will bear interest at competitive rates. Each
loan made under the line of credit will be secured by the assignment of rents
and leases. In addition, the commitment provides that the Company will not be
able to further encumber the applicable hotel Property during the term of the
loan without the bank's consent. The Company anticipates executing the documents
relating to the $30,000,000 line of credit in the second quarter of 1998;
although, there is no assurance that the Company will obtain such line of
credit. As of May 1, 1998, the documents relating to the line of credit had not
been executed. The Company has not yet received a commitment for any permanent
financing and there is no assurance that the Company will obtain any permanent
financing on satisfactory terms.
12
<PAGE>
Liquidity and Capital Resources - Continued
Properties will be leased on a long-term, triple-net basis, meaning
that tenants are generally required to pay all repairs and maintenance, property
taxes, insurance and utilities. Rental payments under the leases are expected to
exceed the Company's operating expenses. For these reasons, no short-term or
long-term liquidity problems associated with operating the Properties are
currently anticipated by management.
Until Properties are acquired, or Mortgage Loans are entered into, net
offering proceeds are held in short-term, highly liquid investments which
management believes to have appropriate safety of principal. This investment
strategy provides high liquidity in order to facilitate the Company's use of
these funds to acquire Properties at such time as Properties suitable for
acquisition are located or to fund Mortgage Loans. At March 31, 1998, the
Company had $14,945,934 invested in such short-term investments (including
certificates of deposit totalling $1,500,000) as compared to $8,869,838 at
December 31, 1997. The increase in the amount invested in short-term investments
reflects subscription proceeds derived from the sale of shares during the
quarter ended March 31, 1998. These funds will be used primarily to purchase
Properties, to make Mortgage Loans, to pay organizational and offering expenses
and acquisition expenses, to pay distributions to stockholders, to meet other
Company expenses and, in management's discretion, to create cash reserves.
During the quarters ended March 31, 1998 and 1997, affiliates of the
Company incurred on behalf of the Company $107,367 and $41,491, respectively,
for certain organizational and offering expenses. In addition, during the
quarter ended March 31, 1998, affiliates of the Company incurred on behalf of
the Company $6,685 for certain acquisition expenses and $24,304 for certain
operating expenses. As of March 31, 1998, the Company owed the Advisor $121,882
for such amounts, unpaid fees and administrative expenses (including accounting;
financial, tax and regulatory compliance and reporting; stockholder
distributions and reporting; due diligence and marketing; and investor
relations). The Advisor has agreed to pay or reimburse to the Company all
organizational and offering expenses in excess of three percent of gross
offering proceeds.
During the quarter ended March 31, 1998, the Company generated cash
from operations (which includes interest received less cash paid for operating
expenses) of $67,118. Based on current and anticipated future cash from
operations the Company declared distributions to its stockholders of $101,356
during the quarter ended March 31, 1998. No distributions were paid or declared
for the quarter ended March 31, 1997. On April 1, 1998, and May 1, 1998, the
Company declared distributions to stockholders of record on April 1, 1998, and
May 1, 1998, respectively, totalling $46,668 and $52,804, respectively, ($0.025
per share), payable in June 1998.
13
<PAGE>
Liquidity and Capital Resources - Continued
For the quarter ended March 31, 1998, 100 percent of the distributions received
by stockholders were considered to be ordinary income for federal income tax
purposes. No amounts distributed or to be distributed to the stockholders as of
May 1, 1998, were required to be or have been treated by the Company as a return
of capital for purposes of calculating the stockholders' return on their
invested capital.
Due to anticipated low operating expenses, rental income expected to be
obtained from Properties after they are acquired, the fact that the line of
credit and permanent financing have not been obtained and that the Company has
not entered into Mortgage Loans or Secured Equipment Leases, management does not
believe that working capital reserves will be necessary at this time. Management
has the right to cause the Company to maintain reserves if, in their discretion,
they determine such reserves are required to meet the Company's working capital
needs.
As of May 1, 1998, the Company had not entered into any arrangements
creating a reasonable probability that a Property would be acquired by the
Company or that a particular Mortgage Loan or Secured Equipment Lease would be
funded.
Management expects that the cash to be generated from operations will
be adequate to pay operating expenses and to make distributions to stockholders.
Results of Operations
No operations commenced until the Company received the minimum offering
proceeds of $2,500,000 on October 15, 1997. As of May 1, 1998, the Company had
not yet acquired any Properties nor entered into any Mortgage Loans.
During the quarter ended March 31, 1998, the Company earned $139,153 in
interest income from investments in money market accounts and certificates of
deposit. Interest income is expected to increase as the Company invests
subscription proceeds received in the future in highly liquid investments
pending investment in Properties and Mortgage Loans. However, as net offering
proceeds are invested in Properties and used to make Mortgage Loans, the
percentage of the Company's total revenues from interest income from investments
in money market accounts or other short term, highly liquid investments is
expected to decrease.
14
<PAGE>
Results of Operations - Continued
Operating expenses, including amortization expense, were $91,845 for
the quarter ended March 31, 1998. Operating expenses, including amortization
expense, represent only a portion of operating expenses which the Company is
expected to incur during a full year in which the Company owns Properties. The
dollar amount of operating expenses is expected to increase as the Company
acquires Properties and invests in Mortgage Loans. However, general and
administrative expenses as a percentage of total revenues is expected to
decrease as the Company acquires Properties and invests in Mortgage Loans.
Effective January 1, 1998, the Company adopted Statement of Financial
Accounting Standards No. 130, "Reporting Comprehensive Income." This Statement
requires the reporting of net earnings and all other changes to equity during
the period, except those resulting from investments by owners and distributions
to owners, in a separate statement that begins with net earnings. Currently, the
Company's only component of comprehensive income is net earnings.
15
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings. Inapplicable.
Item 2. Changes in Securities. Inapplicable.
Item 3. Defaults upon Senior Securities. Inapplicable.
Item 4. Submission of Matters to a Vote of Security Holders.
Inapplicable.
Item 5. Other Information. Inapplicable.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits - None.
(b) No reports on Form 8-K were filed during the quarter
ended March 31, 1998.
16
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
DATED this 13th day of May, 1998.
CNL AMERICAN REALTY FUND, INC.
By: /s/ James M. Seneff, Jr.
-----------------------------
JAMES M. SENEFF, JR.
Chairman of the Board and
Chief Executive Officer
(Principal Executive Officer)
By: /s/ Robert A. Bourne
-----------------------------
ROBERT A. BOURNE
Director and President
(Principal Financial and
Accounting Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the balance
sheet of CNL American Realty Fund, Inc. at March 31, 1998, and its statement of
income for the three months then ended and is qualified in its entirety by
reference to the Form 10Q of CNL American Realty Fund, Inc. for the three months
ended March 31, 1998.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 14,945,934<F1>
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0<F2>
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 15,835,015
<CURRENT-LIABILITIES> 0<F2>
<BONDS> 0
0
0
<COMMON> 18,599
<OTHER-SE> 15,471,866
<TOTAL-LIABILITY-AND-EQUITY> 15,835,315
<SALES> 0
<TOTAL-REVENUES> 139,153
<CGS> 0
<TOTAL-COSTS> 91,845
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 47,308
<INCOME-TAX> 0
<INCOME-CONTINUING> 47,308
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 47,308
<EPS-PRIMARY> .03
<EPS-DILUTED> .03
<FN>
<F1>Cash includes certificates of deposit totalling $1,500,000.
<F2>Due to the nature of its industry, CNL American Realty Fund, Inc. has an
unclassified balance sheet; therefore, no values are listed above for current
assets and current liabilities.
</FN>
</TABLE>
