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CNL HEALTH CARE PROPERTIES, INC.
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Supplement No. 1, dated May 12, 1999
to Prospectus, dated September 18, 1998
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This Supplement is part of, and should be read in conjunction with, the
Prospectus dated September 18, 1998. This Supplement replaces all prior
Supplements to the Prospectus. Capitalized terms used in this Supplement have
the same meaning as in the Prospectus unless otherwise stated herein.
As of March 26, 1999, the Company had not acquired any properties nor
entered into any initial commitments to acquire any properties. Information
regarding proposed properties for which the Company receives initial
commitments, as well as property acquisitions that occur after March 26, 1999,
will be reported in a subsequent Supplement.
RISK FACTORS
TAX RISKS
Our leases may be recharacterized as financings which would eliminate
depreciation deductions on health care properties. Our tax counsel, Shaw Pittman
Potts & Trowbridge, is of the opinion, based upon certain assumptions, that the
leases of health care and seniors' housing facilities where we would own the
underlying land would constitute leases for federal income tax purposes.
However, with respect to the health care and seniors' housing facilities where
we would not own the underlying land, Shaw Pittman is unable to render this
opinion. If the lease of a health care and seniors' housing facility does not
constitute a lease for federal income tax purposes, it will be treated as a
financing arrangement. In the opinion of Shaw Pittman, the income derived from
such a financing arrangement would satisfy the 75% and the 95% gross income
tests for REIT qualification because it would be considered to be interest on a
loan secured by real property. Nevertheless, the recharacterization of a lease
in this fashion may have adverse tax consequences for us, in particular that we
would not be entitled to claim depreciation deductions with respect to the
health care facility (although we would be entitled to treat part of the
payments we would receive under the arrangement as the repayment of principal).
In such event, in some taxable years our taxable income, and the corresponding
obligation to distribute 95% of such income, would be increased. Any increase in
our distribution requirements may limit our ability to invest in additional
health care and seniors' housing facilities and to make additional mortgage
loans.
MANAGEMENT COMPENSATION
For information concerning compensation and fees to be paid to the
Advisor and its Affiliates which have been incurred since the date of inception
of the Company, see "Certain Relationships and Related Transactions."
SELECTED FINANCIAL DATA
The following table sets forth certain financial information for the
Company, and should be read in conjunction with "Management's Discussion and
Analysis of Financial Condition and Results of Operations " and the Financial
Statements included in Appendix B.
<TABLE>
<CAPTION>
<S> <C>
Quarter Ended Year Ended
March 31, 1999 (1) March 31, 1998 (1) December 31,
(Unaudited) (Unaudited) 1998 (1) 1997 (1) (2)
----------------- ----------------- -------------- ------------
Revenues $ - $ - $ - $ -
Net earnings - - -
Cash distributions declared - - - -
March 31, 1999 March 31, 1998 December 31, December 31,
(Unaudited) (Unaudited) 1998 1997
----------- ----------- ------------ ------------
Total assets $1,115,219 $282,378 $976,579 $280,330
Total stockholder's equity 200,000 200,000 200,000 200,000
</TABLE>
(1) As of the date of this Prospectus, no significant operations had
commenced and the Company was in its development stage. No operations
will commence until such time as the Company has sold at least 250,000
Shares ($2,500,000).
(2) Selected financial data for 1997 represents the period December 22,
1997 (date of inception) through December 31, 1997.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The Company is a Maryland corporation that was organized on December
22, 1997, to acquire Properties related to health care and seniors' housing
facilities located across the United States. The Health Care Facilities may
include congregate living, assisted living and skilled nursing facilities,
continuing care retirement communities and life care communities, and medical
office buildings and walk-in clinics. The Properties will be leased on a
long-term, "triple-net" basis. The Company may also provide Mortgage Loans to
operators of Health Care Facilities in the aggregate principal amount of
approximately 5% to 10% of the Company's total assets. The Company also may
offer Secured Equipment Leases to operators of Health Care Facilities. The
aggregate principal amount of Secured Equipment Leases is not expected to exceed
10% of the Company's total assets.
The Company's primary investment objectives are to preserve, protect,
and enhance the Company's Assets while (i) making Distributions commencing in
the initial year of Company operations; (ii) obtaining fixed income through the
receipt of base rent, and increasing the Company's income (and distributions)
and providing protection against inflation through automatic fixed increases in
base rent or increases in the base rent based on increases in consumer price
indices, over the term of the lease, and obtaining fixed income through the
receipt of payments from Mortgage Loans and Secured Equipment Leases; (iii)
qualifying and remaining qualified as a REIT for federal income tax purposes;
and (iv) providing stockholders of the Company with liquidity of their
investment within five to ten years after commencement of the offering, either
in whole or in part, through (a) Listing, or (b) the commencement of the orderly
Sale of the Company's Assets, and distribution of the proceeds thereof (outside
the ordinary course of business and consistent with its objective of qualifying
as a REIT).
<PAGE>
In connection with this offering, the Company registered for sale an
aggregate of $155,000,000 of Shares (15,500,000 Shares at $10 per Share), with
500,000 of such Shares available only to stockholders who elect to participate
in the Company's Reinvestment Plan. The offering of Shares commenced on
September 18, 1998 and will terminate no later than September 18, 1999, unless
the Company elects to extend the offering to a date no later than September 18,
2000, in states that permit such extension.
This information contains forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933. 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 real estate conditions, availability of proceeds
from the Company's offering, the ability of the Company to obtain a Line of
Credit or Permanent Financing on satisfactory terms, 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 tenants and borrowers to
make payments under their respective leases, Mortgage Loans or Secured Equipment
Leases.
LIQUIDITY AND CAPITAL RESOURCES
A capital contribution of $200,000 from the Advisor is the Company's
sole source of capital until the Company sells the minimum number of 250,000
Shares ($2,500,000). As of April 23, 1999, subscription funds totalling $905,990
had been deposited with the escrow agent for the offering. Until subscription
proceeds for the Company total at least $2,500,000 (250,000 Shares), the
proceeds will be held in escrow. In the event subscriptions for at least 250,000
Shares are not obtained by September 18, 1999, the subscriptions will be
returned promptly with interest to investors.
The Company will use Net Offering Proceeds (Gross Proceeds less fees
and expenses of the offering) from this offering to purchase Properties and to
invest in Mortgage Loans. See "Investment Objectives and Policies." In addition,
the Company intends to borrow money to acquire Assets and to pay certain related
fees. The Company intends to encumber Assets in connection with such borrowing.
The Company plans to obtain a revolving Line of Credit initially in an amount up
to $45,000,000, and may, in addition, also obtain Permanent Financing. The Line
of Credit may be increased at the discretion of the Board of Directors and may
be repaid with offering proceeds, working capital or Permanent Financing.
Although the Board of Directors anticipates that the Line of Credit initially
may be in the amount of $45,000,000 and the aggregate amount of any Permanent
Financing shall not exceed 30% of the Company's total Assets, the maximum amount
the Company may borrow is 300% of the Company's Net Assets. The Company has
engaged in preliminary discussions with potential lenders but has not yet
received a commitment for the Line of Credit or any Permanent Financing and
there is no assurance that the Company will obtain the Line of Credit or any
Permanent Financing on satisfactory terms.
Upon the receipt of subscriptions of at least 250,000 Shares and the
initial release of funds from escrow, Company funds will be invested in
short-term, highly liquid U.S. Government securities or in other short-term,
highly liquid investments with appropriate safety of principal, pending
investment in suitable Properties and Mortgage Loans. Management anticipates
that after the Company has invested in Assets, lease and mortgage payments paid
to the Company by the tenants and borrowers will be sufficient to pay operating
expenses, provide cash Distributions to the stockholders and service debt.
At March 31, 1999 and December 31, 1998 and 1997, the Company's total
assets were $1,115,219, $976,579 and $280,330, respectively. The increase in
total assets reflects deferred offering costs incurred during the quarter ended
March 31, 1999 and the year ended December 31, 1998, respectively.
During the year ended December 31, 1998 and the period December 22,
1997 (date of inception) through December 31, 1997, Affiliates of the Company
incurred $562,739 and $43,397, respectively, for certain Organizational and
Offering Expenses. As of December 31, 1998 and 1997, the Company owed the
Affiliates $685,372 and $58,600, respectively, for such amounts, unpaid fees and
administrative expenses. In addition, during the quarters ended March 31, 1999
and 1998, Affiliates of the Company incurred $128,789 and $146,489,
respectively, for certain organizational and offering expenses. As of March 31,
1999, the Company owed Affiliates $911,689 for such amounts, unpaid fees and
administrative expenses. In the event the minimum offering proceeds are not
received by the Company, the Company will have no obligation to repay such
amounts. Further, the Advisor has agreed to pay all Organizational and Offering
Expenses (excluding selling commissions and the marketing support and due
diligence expense reimbursement fee) in excess of three percent of Gross
Proceeds.
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 the date of this Prospectus, 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. The number of Properties to be acquired and the number of
Mortgage Loans to be invested in by the Company will depend upon the amount of
Net Offering Proceeds available and the amount of funds borrowed to acquire
Properties and make Mortgage Loans. The number of Secured Equipment Leases to be
offered is currently undetermined, but the Company will fund the Secured
Equipment Leases with the proceeds from the Line of Credit or Permanent
Financing, and the Company has undertaken, consistent with its objective of
qualifying as a REIT for federal income tax purposes, to ensure that the value
of the Secured Equipment Leases, in the aggregate, will not exceed 25% of the
Company's total assets and that the value of the Secured Equipment Leases to a
single lessee, in the aggregate, will not exceed 5% of the Company's total
assets. Management is not aware of any material trends, favorable or
unfavorable, in either capital resources or the outlook for long-term cash
generation, nor does management expect any material changes in the availability
and relative cost of such capital resources, other than as referred to in this
Prospectus.
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
As of the date of this Prospectus, no significant operations had
commenced because the Company was in its development stage. No operations will
commence until such time as the Company has sold at least 250,000 Shares
($2,500,000). Management is not aware of any known trends or uncertainties,
other than national economic conditions, which may reasonably be expected to
have a material impact, favorable or unfavorable, on revenues or income from the
acquisition and operations of real properties, other than those Properties
referred to in this Prospectus.
There currently are no material changes being considered in the
objectives and policies of the Company as set forth in this Prospectus.
Year 2000 Compliance. The Year 2000 problem concerns the inability of
information and non-information technology systems to properly recognize and
process date-sensitive information beyond January 1, 2000. The Company does not
have any information or non-information technology systems. The Advisor and
affiliates of the Advisor provide all services requiring the use of information
and non-information technology systems pursuant to an advisory agreement with
the Company. The information technology system of the Affiliates of the Advisor
consists of a network of personal computers and servers built using hardware and
software from mainstream suppliers. The non-information technology systems of
the Affiliates of the Advisor are primarily facility related and include
building security systems, elevators, fire suppressions, HVAC, electrical
systems and other utilities. The Affiliates of the Advisor have no internally
generated programmed software coding to correct, as substantially all of the
software utilized by the Advisor and Affiliates is purchased or licensed from
external providers.
In early 1998, the Advisor and Affiliates formed a Year 2000 committee
(the "Y2K Team") for the purpose of identifying, understanding and addressing
the various issues associated with Year 2000 compliance. The Y2K Team consists
of members from the Advisor and its Affiliates, including representatives from
senior management, information systems, telecommunications, legal, office
management, accounting and property management. The Y2K Team's initial step in
assessing the Company's Year 2000 ("Y2K") readiness consists of identifying any
systems that are date sensitive and, accordingly, could have potential Y2K
problems. The Y2K Team is in the process of conducting inspections, interviews
and tests to identify which of the Company's systems could have a potential Y2K
problem.
The information system of the Advisor and its Affiliates is comprised
of hardware and software applications from mainstream suppliers; accordingly,
the Y2K Team is in the process of contacting the respective vendors and
manufacturers to verify the Y2K compliance of their products. In addition, the
Y2K Team has also requested and is evaluating documentation from other companies
with which the Company has a material third party relationship, including the
Company's major vendors, financial institutions and transfer agent. The Company
depends on its financial institutions for availability of cash and financing and
its transfer agent to maintain and track investor information. The Y2K Team has
also requested and is evaluating documentation from the non-information
technology systems providers of the Advisor and Affiliates. Although the Advisor
continues to receive positive responses from its third party relationships
regarding their Y2K compliance, the Advisor cannot be assured that the financial
institutions, transfer agent, other vendors and non-information technology
system providers have adequately considered the impact of the Year 2000. The
Advisor is not able to measure the effect on the operations of the Advisor and
its Affiliates of any third party's failure to adequately address the impact of
the Year 2000.
The Advisor and its Affiliates have identified and have implemented
upgrades for certain hardware equipment. In addition, the Advisor and its
Affiliates have identified certain software applications which will require
upgrades to become Year 2000 compliant. The Advisor expects all of these
upgrades as well as any other necessary remedial measures on the information
technology systems used in the business activities and operations of the Company
to be completed by September 30, 1999, although, the Advisor cannot be assured
that the upgrade solutions provided by the vendors have addressed all possible
Year 2000 issues. The Advisor does not expect the aggregate cost of the Year
2000 remedial measures to be material to the results of operations of the
Company.
The Advisor and Affiliates have received certification from the
Company's transfer agent of its Y2K compliance. Due to the material relationship
of the Company with its transfer agent, the Y2K Team is evaluating the Year 2000
compliance of the systems of the transfer agent and expects to have the
evaluation completed by September 30, 1999. Despite the positive response from
the transfer agent and the evaluation of the transfer agent's system by the Y2K
Team, the Advisor cannot be assured that the transfer agent has addressed all
possible Year 2000 issues. In the event that the systems of the transfer agent
are not Y2K compliant, the worst case scenario of the Advisor would be that the
Advisor would have to allocate resources to internally perform the functions of
the transfer agent. The Advisor does not anticipate that the additional cost of
these resources would have a material impact on the Company.
Based upon the progress the Advisor and Affiliates have made in
addressing the Year 2000 issues and their plan and timeline to complete the
compliance program, the Advisor does not foresee significant risks associated
with its Year 2000 compliance at this time. The Advisor plans to address its
significant Y2K issues prior to being affected by them; therefore, it has not
developed a comprehensive contingency plan. However, if the Advisor identifies
significant risks related to its Year 2000 compliance or if its progress
deviates from the anticipated timeline, the Advisor will develop contingency
plans as deemed necessary at that time.
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The Directors and executive officers of the Company are listed below:
Name Age Position with the Company
---- --- -------------------------
James M. Seneff, Jr. 52 Director, Chairman of the Board, and Chief
Executive Officer
Robert A. Bourne 52 Director and President
David W. Dunbar 46 Independent Director
Timothy S. Smick 47 Independent Director
Edward A. Moses 57 Independent Director
Phillip M. Anderson, Jr. 39 Chief Operating Officer and Executive Vice
President
Daniel L. Simmons 46 Executive Vice President
Jeanne A. Wall 40 Executive Vice President
Lynn E. Rose 50 Secretary and Treasurer
James M. Seneff, Jr. Director, Chairman of the Board and Chief
Executive Officer. Mr. Seneff currently holds the position of director, Chairman
of the Board and Chief Executive Officer of CNL Health Care Advisors, Inc., the
Advisor , and CNL Health Care Development, Inc. Mr. Seneff also serves as a
director, Chairman of the Board and Chief Executive Officer of CNL American
Properties Fund, Inc. and CNL Hospitality Properties, Inc., public, unlisted
real estate investment trusts, and CNL Fund Advisors, Inc. and CNL Hospitality
Advisors, Inc., their advisors, respectively. Mr. Seneff is a principal
stockholder of CNL Group, Inc., a diversified real estate company, and has
served as a director, Chairman of the Board and Chief Executive Officer since
its formation in 1980. CNL Group, Inc. is the parent company of CNL Securities
Corp., which is acting as the Managing Dealer in this offering, CNL Investment
Company, CNL Health Care Advisors, Inc., CNL Fund Advisors, Inc. and CNL
Hospitality Advisors, Inc. Mr. Seneff has been a director, Chairman of the Board
and Chief Executive Officer of CNL Securities Corp. since its formation in 1979.
Mr. Seneff also has held the position of a director, Chairman of the Board,
Chief Executive Officer and President of CNL Management Company, a registered
investment advisor, since its formation in 1976. In addition, Mr. Seneff serves
as a director, Chairman of the Board and Chief Executive Officer of CNL
Investment Company. Mr. Seneff has served as Chairman of the Board and Chief
Executive Officer of Commercial Net Lease Realty, Inc. since 1992, and served as
Chairman of the Board and Chief Executive Officer of CNL Realty Advisors, Inc.
from its inception in 1991 through 1997 at which time such company merged with
Commercial Net Lease Realty, Inc., a public real estate investment trust that is
listed on the New York Stock Exchange. Mr. Seneff has also held the position of
a director, Chairman of the Board and Chief Executive Officer of CNL
Institutional Advisors, Inc., a registered investment advisor, since its
inception in 1990. Mr. Seneff also serves as a director of First Union National
Bank of Florida, N.A. Mr. Seneff previously served on the Florida State
Commission on Ethics and is a former member and past Chairman of the State of
Florida Investment Advisory Council, which recommends to the Florida Board of
Administration investments for various Florida employee retirement funds. The
Florida Board of Administration, Florida's principal investment advisory and
money management agency, oversees the investment of more than $60 billion of
retirement funds. Since 1971, Mr. Seneff has been active in the acquisition,
development, and management of real estate projects and, directly or through an
affiliated entity, has served as a general partner or joint venturer in over 100
real estate ventures involved in the financing, acquisition, construction, and
rental of restaurants, office buildings, apartment complexes, hotels, and other
real estate. Included in these real estate ventures are approximately 65
privately offered real estate limited partnerships with investment objectives
similar to one or more of the Company's investment objectives, in which Mr.
Seneff, directly or through an affiliated entity, serves or has served as a
general partner. Mr. Seneff received his degree in Business Administration from
Florida State University in 1968.
Robert A. Bourne. Director and President. Mr. Bourne currently holds
the position of director and President of the Advisor and serves as a director,
President and Treasurer of CNL Health Care Development, Inc. Mr. Bourne has also
served as Vice Chairman of the Board and Treasurer of CNL American Properties
Fund, Inc. since February 1999 and serves as a director, Vice Chairman of the
Board and President of CNL Hospitality Properties, Inc. , public, unlisted real
estate investment trusts. Mr. Bourne has served as a director of CNL American
Properties Fund, Inc. since May 1994, and previously served as President from
May 1994 through February 1999. In addition, Mr. Bourne serves as a director,
Vice Chairman of the Board , and Treasurer of CNL Fund Advisors, Inc. and a
director, Vice Chairman of the Board and President of CNL Hospitality Advisors,
Inc., the advisors to the two REITs above, respectively. Mr. Bourne served as
President of CNL Fund Advisors, Inc. from the date of its inception in 1994
through October 1997. Mr. Bourne is President and Treasurer of CNL Group, Inc.,
a director, President, Treasurer and a registered principal of CNL Securities
Corp. (the Managing Dealer of this offering), a director, President and
Treasurer of CNL Investment Company, and a director, Treasurer and Chief
Investment Officer of CNL Institutional Advisors, Inc., a registered investment
advisor. Mr. Bourne served as President of CNL Institutional Advisors, Inc. from
the date of its inception through June 30, 1997. In addition, Mr. Bourne served
as President from July 1992 to February 1996, served as Secretary and Treasurer
from February 1996 through December 1997, and has served as a director since
July 1992 and Vice Chairman of the Board since February 1996, of Commercial Net
Lease Realty, Inc. , a public real estate investment trust that is listed on the
New York Stock Exchange. Mr. Bourne also served as President from 1991 to
February 1996, as a director from 1991 through December 1997, and as Vice
Chairman of the Board and Treasurer from February 1996 through December 1997, of
CNL Realty Advisors, Inc. at which time such company merged with Commercial Net
Lease Realty, Inc. Upon graduation from Florida State University in 1970, where
he received a B.A. in Accounting, with honors, Mr. Bourne worked as a certified
public accountant and, from September 1971 through December 1978 was employed by
Coopers & Lybrand, Certified Public Accountants, where he held the position of
tax manager beginning in 1975. From January 1979 until June 1982, Mr. Bourne was
a partner in the accounting firm of Cross & Bourne and from July 1982 through
January 1987 he was a partner in the accounting firm of Bourne & Rose, P.A.,
Certified Public Accountants. Mr. Bourne, who joined CNL Securities Corp. in
1979, has participated as a general partner or joint venturer in over 100 real
estate ventures involved in the financing, acquisition, construction, and rental
of restaurants, office buildings, apartment complexes, hotels, and other real
estate. Included in these real estate ventures are approximately 64 privately
offered real estate limited partnerships with investment objectives similar to
one or more of the Company's investment objectives, in which Mr. Bourne,
directly or through an affiliated entity, serves or has served as a general
partner.
David W. Dunbar. Independent Director. Mr. Dunbar serves as chairman
and chief executive officer of Peoples Bank, which he organized and founded in
1996. Mr. Dunbar is also a member of the boards of directors of Morton Plant
Mease Health Care, Inc., an 841-bed, not-for-profit hospital, Morton Plant Mease
Hospital Foundation and North Bay Hospital, a 122-bed facility. In addition, Mr.
Dunbar serves as a member of the Florida Elections Commission, the body
responsible for investigating and holding hearings regarding alleged violations
of Florida's campaign finance laws. During 1994 and 1995, Mr. Dunbar was a
member of the board of directors and an executive officer of Peoples State Bank.
Mr. Dunbar was the chief executive officer of Republic Bank from 1991 through
1993. From 1988 through 1991, Mr. Dunbar developed commercial and medical office
buildings and, through a financial consulting company he founded, provided
specialized lending services for real estate development clients, specialized
construction litigation support for national insurance companies and strategic
planning services for institutional clients. In 1990, Mr. Dunbar was the chief
executive officer, developer and owner of a 60,000 square foot medical office
building located on the campus of Memorial Hospital in Tampa, Florida. In
addition, in 1990, Mr. Dunbar served as the Governor's appointee to the State of
Florida Taxation and Budget Reform Commission, a 25 member, blue ribbon
commission established to review, study and make appropriate recommendations for
changes to state tax laws. Mr. Dunbar received a degree in finance from Florida
State University. He is also a graduate of the American Bankers Association
National Commercial Lending School at the University of Oklahoma and the School
of Banking of the South at Louisiana State University.
Edward A. Moses. Independent Director. Dr. Moses has served as dean of
the Roy E. Crummer Graduate School of Business at Rollins College since 1994,
and as a professor and NationsBank professor of finance since 1989. As dean, Dr.
Moses is presently establishing a comprehensive program of executive education
for health care management at the Roy E. Crummer Graduate School of Business.
From 1985 to 1989 he served as dean and professor of finance at the University
of North Florida. He has also served in academic and administrative positions at
the University of Tulsa, Georgia State University and the University of Central
Florida. Dr. Moses has written six textbooks in the fields of investments and
corporate finance as well as numerous articles in leading business journals. He
has held offices in a number of professional organizations, including president
of the Southern Finance and Eastern Finance Associations, served on the Board of
the Southern Business Administration Association, and served as a consultant for
major banks as well as a number of Fortune 500 companies. He currently serves as
a faculty member in the Graduate School of Banking at Louisiana State
University. Dr. Moses received a B.S. in Accounting from the Wharton School at
the University of Pennsylvania in 1965 and an M.B.A. (1967) and Ph.D. in finance
from the University of Georgia in 1971.
Timothy S. Smick. Independent Director. From 1996 through February
1998, Mr. Smick served as chief operating officer, executive vice president and
a member of the board of directors of Sunrise Assisted Living, Inc., one of the
nation's leading providers of assisted living care for seniors with 68
communities located in 13 states. In addition, Mr. Smick served as president of
Sunrise Management Inc., a wholly owned subsidiary of Sunrise Assisted Living,
Inc. During 1995, Mr. Smick served as a senior housing consultant to LaSalle
Advisory, Ltd., a pension fund advisory company. From 1985 through 1994, Mr.
Smick was chairman and chief executive officer of PersonaCare, Inc., a company
he co-founded that provided sub-acute, skilled nursing and assisted living care
with 12 facilities in six states with revenues of $87 million. Mr. Smick's
health care industry experience also includes serving as the regional operations
director for Manor Healthcare, Inc., a division of ManorCare, Inc., and as
operations director for Allied Health & Management, Inc. Prior to co-founding
PersonaCare, Inc., Mr. Smick was a partner in Duncan & Smick, a commercial real
estate development firm. Mr. Smick received a B.A. in English from Wheaton
College and pursued graduate studies at Loyola College.
Phillip M. Anderson, Jr. Chief Operating Officer and Executive Vice
President. Mr. Anderson joined CNL Health Care Advisors, Inc. in January 1999
and is responsible for the planning and implementation of CNL's interest in
health care industry investments, including acquisitions, development, project
analysis and due diligence. He currently serves as the Chief Operating Officer
of both the Advisor and CNL Health Care Development, Inc. From 1987 through
1998, Mr. Anderson was employed by Classic Residence by Hyatt. Classic Residence
by Hyatt ("Classic") is affiliated with Hyatt Hotels and Chicago's Pritzker
family. Classic acquires, develops, owns and operates seniors' housing, assisted
living, skilled nursing and Alzheimer's facilities throughout the United States.
Mr. Anderson's responsibilities grew from overseeing construction of Classic's
first properties to acquiring and developing new properties. After assuming
responsibility for acquisitions, Mr. Anderson doubled the number of senior
living apartments/beds ("units") in the portfolio by adding over 1,200 units. In
addition, the development of an additional 1,000 units of seniors' housing
commenced under Mr. Anderson's direction. Mr. Anderson also served on Classic's
Executive Committee charged with the responsibility of monitoring performance of
existing properties and development projects. Mr. Anderson has been a member of
the American Senior Housing Association since 1994 and currently serves on the
executive board. He graduated from the Georgia Institute of Technology in 1982,
where he received a B.S. in Civil Engineering, with honors.
Daniel L. Simmons. Executive Vice President. Mr. Simmons serves as
Executive Vice President of the Advisor. Since 1996, Mr. Simmons has served as a
consultant to The Celebration Company, a subsidiary of The Walt Disney Company,
regarding seniors' housing issues. In addition, since 1997, Mr. Simmons has
consulted for Celebration Associates, Inc., a master planned community
development and advisory firm, on issues relating to health care, seniors'
housing and commercial projects. From November 1997 to June 1998, Mr. Simmons
served as a consultant to CNL Group, Inc., providing advice on issues regarding
health care property development and management. From 1984 to 1993, Mr. Simmons
was a co-founder and partner in the Johnson Simmons Company, where he was
responsible for site acquisition, design, development, financing and regulatory
matters for three continuing care communities. Mr. Simmons was also responsible
for the development, financing and operations associated with the restaurant and
commercial properties divisions of the Johnson Simmons Company. During his
tenure, Johnson Simmons Company developed and managed over 1,100 units of
seniors' housing and 300 skilled nursing beds, held in excess of $100 million in
assets, and employed more than 1,200 people. From 1983 to 1984, Mr. Simmons
served as director of development for Cadem Corporation, a subsidiary of
National Medical Enterprises. At Cadem, he was responsible for site, design,
development and regulatory issues for proposed seniors' housing projects. From
1982 to 1983, Mr. Simmons served as vice president of Southern Management
Services Corporation, where he was responsible for the development and
operations of seniors' housing, assisted living, and skilled nursing facilities.
He was also responsible for all regulatory issues with the State of Florida,
Department of Insurance, and the current Agency for Health Care Administration
regarding the licensing and regulation of continuing care retirement
communities, nursing homes and assisted living facilities. Mr. Simmons attended
Florida State University and the University of South Florida and was a founding
member of the National Association of Senior Living Industries.
Jeanne A. Wall. Executive Vice President. Ms. Wall serves as Executive
Vice President of the Advisor. Ms. Wall is also Executive Vice President of CNL
American Properties Fund, Inc. and CNL Hospitality Properties, Inc., public,
unlisted real estate investment trusts, and Executive Vice President of CNL Fund
Advisors, Inc. and Executive Vice President and director of CNL Hospitality
Advisors, Inc., their advisors, respectively. Ms. Wall currently serves as
Executive Vice President of CNL Group, Inc., a diversified real estate company.
Ms. Wall has served as Chief Operating Officer of CNL Investment Company and of
CNL Securities Corp. since November 1994 and has served as Executive Vice
President of CNL Investment Company since January 1991. In 1984, Ms. Wall joined
CNL Securities Corp. and in 1985, became Vice President. In 1987, she became a
Senior Vice President and in July 1997, became Executive Vice President of CNL
Securities Corp. In this capacity, Ms. Wall serves as national marketing and
sales director and oversees the national marketing plan for the CNL investment
programs. In addition, Ms. Wall oversees product development and communications
and investor services for programs offered through participating brokers. Ms.
Wall also has served as Senior Vice President of CNL Institutional Advisors,
Inc., a registered investment advisor, from 1990 to 1993, as Vice President of
CNL Realty Advisors, Inc. from its inception in 1991 through 1997, and as Vice
President of Commercial Net Lease Realty, Inc., a public real estate investment
trust that is listed on the New York Stock Exchange, from 1992 through 1997. Ms.
Wall holds a B.A. in Business Administration from Linfield College and is a
registered principal of CNL Securities Corp. Ms. Wall currently serves as a
trustee on the Board of the Investment Program Association and is a member of
the Corporate Advisory Council for the International Association for Financial
Planning and previously served on the Direct Participation Program committee for
the National Association of Securities Dealers, Inc.
Lynn E. Rose. Secretary and Treasurer. Ms. Rose serves as Secretary,
Treasurer and a director of the Advisor and Secretary of CNL Health Care
Development, Inc. Ms. Rose is also Secretary of CNL American Properties Fund,
Inc. and Secretary and Treasurer of CNL Hospitality Properties, Inc., public,
unlisted real estate investment trusts, and Secretary and director of CNL Fund
Advisors, Inc. and Secretary, Treasurer and a director of CNL Hospitality
Advisors, Inc., their advisors, respectively. Ms. Rose, a certified public
accountant, has served as Secretary since 1987, as Chief Financial Officer since
December 1993, and previously served as Controller from 1987 until December 1993
of CNL Group, Inc. In addition, Ms. Rose has served as Chief Financial Officer
and Secretary of CNL Securities Corp. since July 1994. She also previously
served as Chief Operating Officer and Vice President of CNL Shared Services,
Inc. (formerly CNL Corporate Services, Inc.) from November 1994 to January 1999
and has served as Secretary since November 1994. Ms. Rose also has served as
Chief Financial Officer and Secretary of CNL Institutional Advisors, Inc. since
its inception in 1990. In addition, she served as Secretary and a director of
CNL Realty Advisors, Inc. from its inception in 1991 through 1997, and as
Treasurer of CNL Realty Advisors, Inc. from 1991 to February 1996. In addition,
Ms. Rose served as Secretary and Treasurer of Commercial Net Lease Realty, Inc.,
a public real estate investment trust listed on the New York Stock Exchange,
from 1992 to February 1996. Ms. Rose also currently serves as Secretary for
approximately 50 additional corporations. Ms. Rose oversees the legal
compliance, accounting, tenant compliance, and reporting for over 250
corporations, partnerships
<PAGE>
and joint ventures. Prior to joining CNL, Ms. Rose was a partner with Robert A.
Bourne in the accounting firm of Bourne & Rose, P.A., Certified Public
Accountants. Ms. Rose holds a B.A. in Sociology from the University of Central
Florida. She was licensed as a certified public accountant in 1979.
THE ADVISOR AND THE ADVISORY AGREEMENT
THE ADVISOR
CNL Health Care Advisors, Inc. is a Florida corporation organized in
July 1997 to provide management, advisory and administrative services. The
Company entered into the Advisory Agreement with the Advisor effective September
15, 1998. CNL Health Care Advisors, Inc., as Advisor, has a fiduciary
responsibility to the Company and the stockholders.
The directors and officers of the Advisor are as follows:
James M. Seneff, Jr. Chairman of the Board, Chief Executive Officer,
and Director
Robert A. Bourne President and Director
Phillip M. Anderson, Jr. Chief Operating Officer and Executive Vice
President
Daniel L. Simmons Executive Vice President
Jeanne A. Wall Executive Vice President
Lynn E. Rose Secretary, Treasurer and Director
The backgrounds of these individuals are described above under
"Management -- Directors and Executive Officers."
THE ADVISORY AGREEMENT
The Advisory Agreement, which was entered into by the Company with the
unanimous approval of the Board of Directors, including the Independent
Directors, expires one year after the date of execution, subject to successive
one-year renewals upon mutual consent of the parties. The current Advisory
Agreement expires on September 15, 1999. In the event that a new Advisor is
retained, the previous Advisor will cooperate with the Company and the Directors
in effecting an orderly transition of the advisory functions. The Board of
Directors (including a majority of the Independent Directors) shall approve a
successor Advisor only upon a determination that the Advisor possesses
sufficient qualifications to perform the advisory functions for the Company and
that the compensation to be received by the new Advisor pursuant to the new
Advisory Agreement is justified.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Managing Dealer is entitled to receive Selling Commissions
amounting to 7.5% of the total amount raised from the sale of Shares for
services in connection with the offering of Shares, a substantial portion of
which will be paid as commissions to other broker-dealers. For the quarter ended
March 31, 1999 and the year ended December 31, 1998, the Company had incurred
$16,763 and $1,912, respectively of such fees, of which $14,945 and $1,785,
respectively, will be paid by CNL Securities Corp. as commissions to other
broker-dealers. These fees will not be paid until subscriptions for at least
250,000 Shares ($2,500,000) have been obtained from the offering.
In addition, the Managing Dealer 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. For the quarter ended March 31, 1999 and the year ended
December 31, 1998, the Company had incurred $1,118 and $128, respectively, of
such fees, the majority of which will be reallowed to other broker-dealers and
from which all bona fide due diligence expenses will be paid. These fees will
not be paid until subscriptions for at least 250,000 Shares ($2,500,000) have
been obtained from the offering.
In addition, the Company has agreed to issue and sell Soliciting Dealer
Warrants to the Managing Dealer. The price for each warrant will be $0.0008 and
one warrant will be issued for every 25 Shares sold by the Managing Dealer. All
or a portion of the Soliciting Dealer Warrants may be reallowed to Soliciting
Dealers with prior written approval from, and in the sole discretion of the
Managing Dealer, except where prohibited by either federal or state securities
laws. The holder of a Soliciting Dealer Warrant will be entitled to purchase one
Share from the Company at a price of $12.00 during the five year period
commencing with the date the offering begins. No Soliciting Dealer Warrant,
however, will be exercisable until one year from the date of issuance. The
Company had not issued any Soliciting Dealer Warrants to the Managing Dealer as
of March 31, 1999. Mr. Seneff is Chairman of the Board of Directors and Chief
Executive Officer and Mr. Bourne is a director, President and Treasurer of the
Managing Dealer.
The Advisor is entitled to receive Acquisition Fees for services in
identifying the Properties and structuring the terms of the acquisition and
leases of the Properties and structuring the terms of the Mortgage Loans equal
to 4.5% of Total Proceeds. During the quarter ended March 31, 1999 and the year
ended December 31, 1998, the Company incurred $10,058 and $1,148, respectively,
of such fees. Such fees are included in other assets. These fees will not be
paid until subscriptions for at least 250,000 Shares ($2,500,000) have been
obtained from the offering.
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. For
the quarter ended March 31, 1999, the year ended December 31, 1998 and the
period December 22, 1997 (date of inception) through December 31, 1997, the
Company incurred $70,291, $196,184 and $15,202, respectively, for these
services. Such amounts are included in deferred offering costs. Mr. Seneff is
Chairman of the Board of Directors and Chief Executive Officer and Mr. Bourne is
a director and President of the Advisor.
The Company believes that all amounts paid or payable by the Company to
Affiliates are fair and comparable to amounts that would be paid for similar
services provided by unaffiliated third parties.
PRIOR PERFORMANCE INFORMATION
The information presented in this section represents the historical
experience of certain real estate programs organized by certain officers and
directors of the Advisor. Prior public programs have invested only in restaurant
properties and hotel properties and have not invested in Health Care Facilities.
Investors in the Company should not assume that they will experience returns, if
any, comparable to those experienced by investors in such prior public real
estate programs. Investors who purchase Shares will not thereby acquire any
ownership interest in any partnerships or corporations to which the following
information relates.
Two Directors of the Company, Robert A. Bourne and James M. Seneff,
Jr., individually or with others have served as general partners of 88 and 89
real estate limited partnerships, respectively, including 18 publicly offered
CNL Income Fund partnerships, and as directors and officers of two unlisted
public REITs. None of these limited partnerships or unlisted REITs has been
audited by the IRS. Of course, there is no guarantee that the Company will not
be audited. Based on an analysis of the operating results of the prior programs,
Messrs. Bourne and Seneff believe that each of such programs has met or is
meeting its principal investment objectives in a timely manner.
CNL Realty Corporation, which was organized as a Florida corporation in
November 1985 and whose sole stockholders are Messrs. Bourne and Seneff,
currently serves as the corporate general partner with Messrs. Bourne and Seneff
as individual general partners of 18 CNL Income Fund limited partnerships, all
of which were organized to invest in fast-food, family-style and, in the case of
two of the partnerships, casual-dining restaurant properties . Messrs. Bourne
and Seneff also currently serve as directors and officers of CNL American
Properties Fund, Inc. , an unlisted public REIT, organized to invest in
fast-food, family-style and casual-dining restaurant properties, mortgage loans
and secured equipment leases; and CNL Hospitality Properties Inc., an unlisted
public REIT organized to invest in hotel properties, mortgage loans and secured
equipment leases. Both REITs have investment objectives similar to those of the
Company. As of December 31, 1998, the 18 partnerships and the two unlisted
public REITs had raised a total of $1,404,977,615 from a total of 82,982
investors, and had invested in 1,139 fast-food, family-style and casual-dining
restaurant properties, and two hotels. None of the 18 public partnerships or the
two unlisted public REITs has invested in Health Care Facilities. Certain
additional information relating to the offerings and investment history of the
18 public partnerships and the two unlisted public REITs is set forth below.
<TABLE>
<CAPTION>
<S> <C>
Number of Date 90% of Net
Limited Proceeds Fully
Maximum Partnership Invested or
Name of Offering Units or Committed to
Entity Amount (1) Date Closed Shares Sold Investment (2)
- ------ ---------- ----------- ----------- --------------
CNL Income $15,000,000 December 31, 1986 30,000 December 1986
Fund, Ltd. (30,000 units)
CNL Income $25,000,000 August 21, 1987 50,000 November 1987
Fund II, Ltd. (50,000 units)
CNL Income $25,000,000 April 29, 1988 50,000 June 1988
Fund III, Ltd. (50,000 units)
CNL Income $30,000,000 December 6, 1988 60,000 February 1989
Fund IV, Ltd. (60,000 units)
CNL Income $25,000,000 June 7, 1989 50,000 December 1989
Fund V, Ltd. (50,000 units)
CNL Income $35,000,000 January 19, 1990 70,000 May 1990
Fund VI, Ltd. (70,000 units)
CNL Income $30,000,000 August 1, 1990 30,000,000 January 1991
Fund VII, Ltd. (30,000,000 units)
CNL Income $35,000,000 March 7, 1991 35,000,000 September 1991
Fund VIII, Ltd. (35,000,000 units)
CNL Income $35,000,000 September 6, 1991 3,500,000 November 1991
Fund IX, Ltd. (3,500,000 units)
CNL Income $40,000,000 April 22, 1992 4,000,000 June 1992
Fund X, Ltd. (4,000,000 units)
CNL Income $40,000,000 October 8, 1992 4,000,000 September 1992
Fund XI, Ltd. (4,000,000 units)
CNL Income $45,000,000 April 15, 1993 4,500,000 July 1993
Fund XII, Ltd. (4,500,000 units)
CNL Income $40,000,000 September 13, 1993 4,000,000 August 1993
Fund XIII, Ltd. (4,000,000 units)
CNL Income $45,000,000 March 23, 1994 4,500,000 May 1994
Fund XIV, Ltd. (4,500,000 units)
CNL Income $40,000,000 September 22, 1994 4,000,000 December 1994
Fund XV, Ltd. (4,000,000 units)
CNL Income $45,000,000 July 18, 1995 4,500,000 August 1995
Fund XVI, Ltd. (4,500,000 units)
CNL Income $30,000,000 October 10, 1996 3,000,000 December 1996
Fund XVII, Ltd. (3,000,000 units)
CNL Income $35,000,000 February 6, 1998 3,500,000 December 1997
Fund XVIII, Ltd (3,500,000 units)
CNL American $747,464,413 (3) (3) (3)
Properties Fund, Inc. (74,746,441 shares)
CNL Hospitality $165,000,000 (4) (4) (4)
Properties, Inc. (16,500,000 shares)
</TABLE>
- ---------------------
(1) The amount stated includes the exercise by the general partners of each
partnership of their option to increase by $5,000,000 the maximum size of
the offering of CNL Income Fund, Ltd., CNL Income Fund II, Ltd., CNL Income
Fund III, Ltd., CNL Income Fund IV, Ltd., CNL Income Fund VI, Ltd., CNL
Income Fund VIII, Ltd., CNL Income Fund X, Ltd., CNL Income Fund XII, Ltd.,
CNL Income Fund XIV, Ltd., CNL Income Fund XVI, Ltd. and CNL Income Fund
XVIII, Ltd.
(2) For a description of the property acquisitions by these programs, see the
table set forth on the following page.
(3) In April 1995, CNL American Properties Fund, Inc., commenced an offering of
a maximum of 16,500,000 shares of common stock ($165,000,000). On February
6, 1997, the initial offering closed upon receipt of subscriptions
totalling $150,591,765 (15,059,177 shares), including $591,765 (59,177
shares) through the reinvestment plan. Following completion of the initial
offering on February 6, 1997, CNL American Properties Fund, Inc. commenced
a subsequent offering (the "1997 Offering") of up to 27,500,000 shares
($275,000,000) of common stock. On March 2, 1998, the 1997 Offering closed
upon receipt of subscriptions totalling $251,872,648 (25,187,265 shares),
including $1,872,648 (187,265 shares) through the reinvestment plan.
Following completion of the 1997 Offering on March 2, 1998, CNL American
Properties Fund, Inc. commenced a subsequent offering (the "1998 Offering")
of up to 34,500,000 shares ($345,000,000) of common stock. As of December
31, 1998, CNL American Properties Fund, Inc. had received subscriptions
totalling $345,000,000 (34,500,000 shares), including $3,107,848 (310,785
shares) through the reinvestment plan, from the 1998 Offering and had
purchased 409 properties. As of December 31, 1998, net proceeds to CNL
American Properties Fund, Inc. from its Initial Offering, 1997 Offering,
1998 Offering and capital contributions from its advisor, after deduction
of stock issuance costs, totalled $670,336,817. Approximately $549,917,000
of such amount had been invested or committed for investment. The 1998
Offering closed in January 1999, upon receipt of the proceeds from the last
subscriptions.
(4) Effective July 9, 1997, CNL Hospitality Properties, Inc. (formerly CNL
American Realty Fund, Inc.) commenced an offering of up to 16,500,000
shares of ($165,000,000) of common stock. As of December 31, 1998, CNL
Hospitality Properties, Inc. had received subscriptions totalling
$43,019,080 (4,301,908 shares), including $37,299 (3,730 shares) through
the reinvestment plan. As of such date, CNL Hospitality Properties, Inc.
had purchased , directly or indirectly, two properties.
As of December 31, 1998, Mr. Seneff and Mr. Bourne, directly or through
affiliated entities, also had served as joint general partners of 69 nonpublic
real estate limited partnerships. The offerings of all of these 69 nonpublic
limited partnerships had terminated as of December 31, 1998. These 69
partnerships raised a total of $185,927,353 from approximately 4,519 investors,
and purchased, directly or through participation in a joint venture or limited
partnership, interests in a total of 216 projects as of December 31, 1998. These
216 projects consist of 19 apartment projects (comprising 10% of the total
amount raised by all 69 partnerships), 13 office buildings (comprising 5% of the
total amount raised by all 69 partnerships), 169 fast-food, family-style, or
casual-dining restaurant property and business investments (comprising 69% of
the total amount raised by all 69 partnerships), one condominium development
(comprising 0.5% of the total amount raised by all 69 partnerships), four
hotels/motels (comprising 5% of the total amount raised by all 69 partnerships),
eight commercial/retail properties (comprising 10% of the total amount raised by
all 69 partnerships), and two tracts of undeveloped land (comprising 0.5% of the
total amount raised by all 69 partnerships).
Mr. Bourne also has served, without Mr. Seneff, as a general partner of
one additional nonpublic real estate limited partnership program which raised a
total of $600,000 from 13 investors and purchased, through participation in a
limited partnership, one apartment building located in Georgia with a purchase
price of $1,712,000.
Mr. Seneff also has served, without Mr. Bourne, as a general partner of
two additional nonpublic real estate limited partnerships which raised a total
of $240,000 from 12 investors and purchased two office buildings with an
aggregate purchase price of $928,390. Both of the office buildings are located
in Florida.
Of the 90 real estate limited partnerships whose offerings had closed
as of December 31, 1998 (including 18 CNL Income Fund limited partnerships) in
which Mr. Seneff and/or Mr. Bourne serve or have served as general partners in
the past, 39 invested in restaurant properties leased on a "triple-net" basis,
including eight which also invested in franchised restaurant businesses
(accounting for approximately 93% of the total amount raised by all 90 real
estate limited partnerships).
The following table sets forth summary information, as of December 31,
1998, regarding property acquisitions by the 18 limited partnerships and the two
unlisted REITs.
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Name of Type of Method of Type of
Entity Property Location Financing Program
- ------ -------- -------- --------- -------
CNL Income Fund, Ltd. 22 fast-food or AL, AZ, CA, FL, GA, All cash Public
family-style LA, MD, OK, PA, TX,
restaurants VA, WA
CNL Income Fund II, 49 fast-food or AL, AZ, CO, FL, GA, All cash Public
Ltd. family-style IL, IN, KS, LA, MI,
restaurants MN, MO, NC, NM, OH,
TN, TX, WA, WY
CNL Income Fund III, 37 fast-food or AZ, CA, CO, FL, GA, All cash Public
Ltd. family-style IA, IL, IN, KS, KY,
restaurants MD, MI, MN, MO, NC,
NE, OK, TX
<PAGE>
Name of Type of Method of Type of
Entity Property Location Financing Program
- ------ -------- -------- --------- -------
CNL Income Fund IV, 46 fast-food or AL, DC, FL, GA, IL, All cash Public
Ltd. family-style IN, KS, MA, MD, MI,
restaurants MS, NC, OH, PA, TN,
TX, VA
CNL Income Fund V, 35 fast-food or AZ, FL, GA, IL, IN, All cash Public
Ltd. family-style MI, NH, NY, OH, SC,
restaurants TN, TX, UT, WA
CNL Income Fund VI, 56 fast-food or AR, AZ, FL, GA, IL, All cash Public
Ltd. family-style IN, KS, MA, MI, MN,
restaurants NC, NE, NM, NY, OH,
OK, PA, TN, TX, VA,
WA, WY
CNL Income Fund VII, 49 fast-food or AZ, CO, FL, GA, IN, All cash Public
Ltd. family-style LA, MI, MN, NC, OH,
restaurants SC, TN, TX, UT, WA
CNL Income Fund 42 fast-food or AZ, FL, IN, LA, MI, All cash Public
VIII, Ltd. family-style MN, NC, NY, OH, TN,
restaurants TX, VA
CNL Income Fund IX, 43 fast-food or AL, CO, FL, GA, IL, All cash Public
Ltd. family-style IN, LA, MI, MN, MS,
restaurants NC, NH, NY, OH, SC,
TN, TX
CNL Income Fund X, 52 fast-food or AL, CA, CO, FL, ID, All cash Public
Ltd. family-style IL, LA, MI, MO, MT,
restaurants NC, NH, NM, NY, OH,
PA, SC, TN, TX
CNL Income Fund XI, 41 fast-food or AL, AZ, CA, CO, CT, All cash Public
Ltd. family-style FL, KS, LA, MA, MI,
restaurants MS, NC, NH, NM, OH,
OK, PA, SC, TX, VA, WA
CNL Income Fund XII, 50 fast-food or AL, AZ, CA, FL, GA, All cash Public
Ltd. family-style LA, MO, MS, NC, NM,
restaurants OH, SC, TN, TX, WA
CNL Income Fund 50 fast-food or AL, AR, AZ, CA, CO, All cash Public
XIII, Ltd. family-style FL, GA, IN, KS, LA,
restaurants MD, NC, OH, PA, SC,
TN, TX, VA
<PAGE>
Name of Type of Method of Type of
Entity Property Location Financing Program
- ------ -------- -------- --------- -------
CNL Income Fund XIV, 65 fast-food or AL, AZ, CO, FL, GA, All cash Public
Ltd. family-style KS, LA, MN, MO, MS,
restaurants NC, NJ, NV, OH, SC,
TN, TX, VA
CNL Income Fund XV, 55 fast-food or AL, CA, FL, GA, KS, All cash Public
Ltd. family-style KY, MN, MO, MS, NC,
restaurants NJ, NM, OH, OK, PA,
SC, TN, TX, VA
CNL Income Fund XVI, 48 fast-food or AZ, CA, CO, DC, FL, All cash Public
Ltd. family-style GA, ID, IN, KS, MN,
restaurants MO, NC, NM, NV, OH,
TN, TX, UT, WI
CNL Income Fund 29 fast-food, CA, FL, GA, IL, IN, All cash Public
XVII, Ltd. family-style or MI, NC, NV, OH, SC,
casual-dining TN, TX
restaurants
CNL Income Fund 24 fast-food, AZ, CA, FL, GA, IL, All cash Public
XVIII, Ltd. family-style or KY, MD, MN, NC, NV,
casual-dining NY, OH, TN, TX
restaurants
CNL American 409 fast-food, AL, AZ, CA, CO, CT, All cash Public REIT
Properties Fund, Inc. family-style, or DE, FL, GA, IA, ID,
casual-dining IL, IN, KS, KY, MD,
restaurants MI, MN, MO, MS, NC,
NE, NJ, NM, NV, NY,
OH, OK, OR, PA, RI,
SC, TN, TX, UT, VA,
WA, WI, WV
CNL Hospitality 2 limited service, GA (1) Public REIT
Properties, Inc. extended stay or
full service hotels
</TABLE>
- ------------------
(1) In connection with the acquisition of its two properties, CNL
Hospitality Properties, Inc. used proceeds from its line of credit in
addition to net offering proceeds. As of March 31, 1999, CNL
Hospitality Properties, Inc. had repaid amounts borrowed on its line of
credit using additional net offering proceeds.
A more detailed description of the acquisitions by real estate limited
partnerships and the unlisted REITs sponsored by Messrs. Bourne and Seneff is
set forth in prior performance Table VI, included in Part II of the registration
statement filed with the Securities and Exchange Commission for this offering. A
copy of Table VI is available to stockholders from the Company upon request,
free of charge. In addition, upon request to the Company, the Company will
provide, without charge, a copy of the most recent Annual Report on Form 10-K
filed with the Securities and Exchange Commission for CNL Income Fund, Ltd., CNL
Income Fund II, Ltd., CNL Income Fund III, Ltd., CNL Income Fund IV, Ltd., CNL
Income Fund V, Ltd., CNL Income Fund VI, Ltd., CNL Income Fund VII, Ltd., CNL
Income Fund VIII, Ltd., CNL Income Fund IX, Ltd., CNL Income Fund X, Ltd., CNL
Income Fund XI, Ltd., CNL Income Fund XII, Ltd., CNL Income Fund XIII, Ltd., CNL
Income Fund XIV, Ltd., CNL Income Fund XV, Ltd., CNL Income Fund XVI, Ltd., CNL
Income Fund XVII, Ltd., CNL Income Fund XVIII, Ltd., CNL American Properties
Fund, Inc. and CNL Hospitality Properties, Inc. as well as a copy, for a
reasonable fee, of the exhibits filed with such reports.
In order to provide potential purchasers of Shares in the Company with
information to enable them to evaluate the prior experience of the Messrs.
Seneff and Bourne as general partners of real estate limited partnerships and as
directors and officers of the two unlisted REITs, including those set forth in
the foregoing table, certain financial and other information concerning those
limited partnerships and the two unlisted REITs with investment objectives
similar to one or more of the Company's investment objectives is provided in the
Prior Performance Tables included as Appendix C. Information about the previous
public partnerships, the offerings of which became fully subscribed between
January 1994 and December 1998, is included therein. Potential stockholders are
encouraged to examine the Prior Performance Tables attached as Appendix C (in
Table III), which include information as to the operating results of these prior
partnerships, for more detailed information concerning the experience of Messrs.
Seneff and Bourne.
SUMMARY OF THE
ARTICLES OF INCORPORATION AND BYLAWS
DESCRIPTION OF CAPITAL STOCK
General. The Company has authorized a total of 206,000,000 shares of
capital stock, consisting of 100,000,000 shares of Common Stock, $0.01 par value
per share, 3,000,000 shares of Preferred Stock ("Preferred Stock"), and
103,000,000 additional shares of excess stock ("Excess Shares"), $0.01 par value
per share. Of the 103,000,000 Excess Shares, 100,000,000 are issuable in
exchange for Common Stock and 3,000,000 are issuable in exchange for Preferred
Stock as described below at "Restriction of Ownership." As of March 26, 1999,
the Company had 20,000 shares of Common Stock outstanding and no Preferred Stock
or Excess Shares outstanding. The Board of Directors may determine to engage in
future offerings of Common Stock of up to the number of unissued authorized
shares of Common Stock available.
<PAGE>
LIMITATION OF LIABILITY AND INDEMNIFICATION
The Company has entered into indemnification agreements with each of
the Company's officers and Directors. The indemnification agreements require,
among other things, that the Company indemnify its officers and Directors to the
fullest extent permitted by law, and advance to the officers and Directors all
related expenses, subject to reimbursement if it is subsequently determined that
indemnification is not permitted. In accordance with these agreements, the
Company must indemnify and advance all expenses reasonably incurred by officers
and Directors seeking to enforce their rights under the indemnification
agreements. The Company also must cover officers and Directors under the
Company's directors' and officers' liability insurance. Although these
indemnification agreements offer substantially the same scope of coverage
afforded by the indemnification provisions in the Articles of Incorporation and
the Bylaws, it provides greater assurance to Directors and officers that
indemnification will be available because these contracts cannot be modified
unilaterally by the Board of Directors or by the stockholders.
FEDERAL INCOME TAX CONSIDERATIONS
TAXATION OF THE COMPANY
General. The Company expects to elect to be taxed as a REIT for federal
income tax purposes, as defined in Sections 856 through 860 of the Code,
commencing with its taxable year ending December 31, 1999. The Company believes
that it will be organized and will operate in such a manner as to qualify as a
REIT, and the Company intends to continue to operate in such a manner, but no
assurance can be given that it will operate in a manner so as to qualify or
remain qualified as a REIT. The provisions of the Code pertaining to REITs are
highly technical and complex. Accordingly, this summary is qualified in its
entirety by the applicable Code sections, rules and regulations issued
thereunder, and administrative and judicial interpretations thereof.
If the Company qualifies for taxation as a REIT, it generally will not
be subject to federal corporate income tax on its net income that is currently
distributed to holders of Shares. This treatment substantially eliminates the
"double taxation" (at the corporate and stockholder levels) that generally
results from an investment in a corporation. However, the Company will be
subject to federal income tax in the following circumstances. First, the Company
will be taxed at regular corporate rates on any undistributed real estate
investment trust taxable income, including undistributed net capital gains.
Second, under certain circumstances, the Company may be subject to the
alternative minimum tax on its items of tax preference. Third, if the Company
has net income from foreclosure property, it will be subject to tax on such
income at the highest corporate rate. Foreclosure property generally means real
property (and any personal property incident to such real property) which is
acquired as a result of a default either on a lease of such property or on
indebtedness which such property secured and with respect to which an
appropriate election is made. Fourth, if the Company has net income derived from
prohibited transactions, such income will be subject to a 100% tax. A prohibited
transaction generally includes a sale or other disposition of property (other
than foreclosure property) that is held primarily for sale to customers in the
ordinary course of business. Fifth, if the Company should fail to satisfy the
75% gross income test or the 95% gross income test (as discussed below), but has
nonetheless maintained its qualification as a REIT because certain other
requirements have been met, it will be subject to a 100% tax on the net income
attributable to the greater of the amount by which the Company fails the 75% or
95% test. Sixth, if, during each calendar year, the Company fails to distribute
at least the sum of (i) 85% of its real estate investment trust ordinary income
for such year; (ii) 95% of its real estate investment trust capital gain net
income for such year; and (iii) any undistributed taxable income from prior
periods, the Company will be subject to a 4% excise tax on the excess of such
required distribution over the amounts actually distributed. Seventh, if the
Company acquires any asset from a C corporation (i.e. a corporation generally
subject to full corporate level tax) in a transaction in which the basis of the
asset in the Company's hands is determined by reference to the basis of the
asset (or any other property) in the hands of the C corporation, and the Company
recognizes gain on the disposition of such asset during the 10-year period
beginning on the date on which such asset was acquired by the Company, then, to
the extent of such property's "built-in gain" (the excess of the fair market
value of such property at the time of acquisition by the Company over the
adjusted basis in the property at such time), such gain will be subject to tax
at the highest regular corporate rate applicable (as provided in regulations
promulgated by the United States Department of Treasury under the Code
("Treasury Regulations") that have not yet been promulgated). (The results
described above with respect to the recognition of "built-in gain" assume that
the Company will make an election pursuant to IRS Notice 88-19.)
If the Company fails to qualify as a REIT for any taxable year and
certain relief provisions do not apply, the Company will be subject to federal
income tax (including alternative minimum tax) as an ordinary corporation on its
taxable income at regular corporate rates without any deduction or adjustment
for distributions to holders of Shares. To the extent that the Company would, as
a consequence, be subject to tax liability for any such taxable year, the amount
of cash available for satisfaction of its liabilities and for distribution to
holders of Shares would be reduced. Distributions made to holders of Shares
generally would be taxable as ordinary income to the extent of current and
accumulated earnings and profits and, subject to certain limitations, would be
eligible for the corporate dividends received deduction, but there can be no
assurance that any such Distributions would be made. The Company would not
<PAGE>
be eligible to elect REIT status for the four taxable years after the taxable
year during which it failed to qualify as a REIT, unless its failure to qualify
was due to reasonable cause and not willful neglect and certain other
requirements were satisfied.
Opinion of Counsel. Based upon representations made by officers of the
Company with respect to relevant factual matters, upon the existing Code
provisions, rules and regulations promulgated thereunder (including proposed
regulations) and reported administrative and judicial interpretations thereof,
upon Counsel's independent review of such documents as Counsel deemed relevant
in the circumstances and upon the assumption that the Company will operate in
the manner described in this Prospectus, Counsel has advised the Company that,
in its opinion, commencing with the Company's taxable year ending December 31,
1999, the Company will be organized in conformity with the requirements for
qualification as a REIT, and the Company's proposed method of operation will
enable it to meet the requirements for qualification as a REIT. It must be
emphasized, however, that the Company's ability to qualify and remain qualified
as a REIT is dependent upon actual operating results and future actions by and
events involving the Company and others, and no assurance can be given that the
actual results of the Company's operations and future actions and events will
enable the Company to satisfy in any given year the requirements for
qualification and taxation as a REIT.
REPORTS TO STOCKHOLDERS
The Company will furnish each stockholder with its audited annual
report within 120 days following the close of each fiscal year. These annual
reports will contain the following: (i) financial statements, including a
balance sheet, statement of operations, statement of stockholders' equity, and
statement of cash flows, prepared in accordance with generally accepted
accounting principles which are audited and reported on by independent certified
public accountants; (ii) the ratio of the costs of raising capital during the
period to the capital raised; (iii) the aggregate amount of advisory fees and
the aggregate amount of other fees paid to the Advisor and any Affiliate of the
Advisor by the Company and including fees or charges paid to the Advisor and any
Affiliate of the Advisor by third parties doing business with the Company; (iv)
the Operating Expenses of the Company, stated as a percentage of the Average
Invested Assets (the average of the aggregate book value of the assets of the
Company, for a specified period, invested, directly or indirectly, in equity
interests in and loans secured by real estate, before reserves for depreciation
or bad debts or other similar non-cash reserves, computed by taking the average
of such values at the end of each month during such period) and as a percentage
of its Net Income; (v) a report from the Independent Directors that the policies
being followed by the Company are in the best interest of its stockholders and
the basis for such determination; (vi) separately stated, full disclosure of all
material terms, factors and circumstances surrounding any and all transactions
involving the Company, Directors, Advisor and any Affiliate thereof occurring in
the year for which the annual report is made, and the Independent Directors
shall be specifically charged with a duty to examine and comment in the report
on the fairness of such transactions; and (vii) Distributions to the
stockholders for the period, identifying the source of such Distributions and if
such information is not available at the time of the distribution, a written
explanation of the relevant circumstances will accompany the Distributions (with
the statement as to the source of Distributions to be sent to stockholders not
later than 60 days after the end of the fiscal year in which the distribution
was made).
Within 75 days following the close of each Company fiscal year, each
stockholder that is a Qualified Plan will be furnished with an annual statement
of Share valuation to enable it to file annual reports required by ERISA as they
relate to its investment in the Company. For any period during which the Company
is making a public offering of shares of Common Stock, the statement will report
an estimated value of each share at the public offering price per share, which
during the term of this offering is $10 per share. If no public offering is
ongoing, and until Listing, the statement will report an estimated value of each
share, based on (i) appraisal updates performed by the Company based on a review
of the existing appraisal and lease of each Property, focusing on a
re-examination of the capitalization rate applied to the rental stream to be
derived from that Property; and (ii) a review of the outstanding Mortgage Loans
and Secured Equipment Leases focusing on a determination of present value by a
re-examination of the capitalization rate applied to the stream of payments due
under the terms of each Mortgage Loan and Secured Equipment Leases. The Company
may elect to deliver such reports to all stockholders. Stockholders will not be
forwarded copies of appraisals or updates. In providing such reports to
stockholders, neither the Company nor its Affiliates thereby make any warranty,
guarantee, or representation that (i) the stockholders or the Company, upon
liquidation, will actually realize the estimated value per Share, or (ii) the
stockholders will realize the estimated net asset value if they attempt to sell
their Shares.
EXPERTS
The audited balance sheets of the Company as of December 31, 1998 and
1997, and the related statements of stockholder's equity for the year ended
December 31, 1998 and for the period December 22, 1997 (date of inception)
through December 31, 1997, included in this Prospectus, have been included
herein in reliance on the report of PricewaterhouseCoopers LLP, independent
accountants, given on the authority of that firm as experts in accounting and
auditing.
DEFINITIONS
"Reinvestment Agent" or "Agent" means the independent agent, which
currently is MMS Securities, Inc., for Participants in the Reinvestment Plan.
"Secured Equipment Lease Servicing Fee" means the fee payable to the
Advisor by the Company out of the proceeds of the Line of Credit or Permanent
Financing for negotiating Secured Equipment Leases and supervising the Secured
Equipment Lease program equal to 2% of the purchase price of the Equipment
subject to each Secured Equipment Lease and paid upon entering into such lease
or loan. No other fees will be payable in connection with the Secured Equipment
Lease program.
<PAGE>
APPENDIX B
FINANCIAL INFORMATION
-------------------------------------------------
| |
| THE FINANCIAL STATEMENTS INCLUDED IN THIS |
| APPENDIX B UPDATE AND REPLACE APPENDIX B |
| TO THE ATTACHED PROSPECTUS, DATED SEPTEMBER |
| 18, 1998. |
-------------------------------------------------
<PAGE>
INDEX TO FINANCIAL STATEMENTS
CNL HEALTH CARE PROPERTIES, INC.
(A Development Stage Maryland Corporation)
Page
----
Updated Unaudited Financial Statements:
Balance Sheets as of March 31, 1999 and December 31, 1998 B-1
Statements of Stockholder's Equity for the quarter ended
March 31, 1999 and the year ended December 31, 1998 B-2
Notes to Financial Statements for the quarters ended March
31, 1999 and 1998 B-3
Audited Financial Statements:
Report of Independent Accountants B-6
Balance Sheets as of December 31, 1998 and 1997 B-7
Statements of Stockholder's Equity for the year ended
December 31, 1998, and the period December 22, 1997
(date of inception) through December 31, 1997 B-8
Notes to Financial Statements for the year ended December
31, 1998, and the period December 22, 1997 (date of
inception) through December 31, 1997 B-9
<PAGE>
CNL HEALTH CARE PROPERTIES, INC.
(A Development Stage Maryland Corporation)
BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, December 31,
1999 1998
--------------- ----------------
<S> <C>
ASSETS
Cash $ 92 $ 92
Deferred offering costs 1,103,922 975,339
Other 11,205 1,148
-------------- ------------
1,115,219 $976,579
============== ============
LIABILITIES AND STOCKHOLDER'S EQUITY
Liabilities:
Due to related parties $911,689 $685,372
Accounts payable and accrued expenses 3,530 91,207
-------------- ------------
Total liabilities 915,219 776,579
-------------- ------------
Stockholder's equity:
Preferred stock, without par value.
Authorized and unissued 3,000,000 shares - -
Excess shares, $.01 par value per share.
Authorized and unissued 103,000,000 shares - -
Common stock, $.01 par value per share.
Authorized 100,000 shares, issued and
outstanding 20,000 shares 200 200
Capital in excess of par value 199,800 199,800
-------------- ------------
200,000 200,000
-------------- ------------
$1,115,219 $976,579
============== ============
</TABLE>
See accompanying notes to financial statements.
<PAGE>
CNL HEALTH CARE PROPERTIES, INC.
(A Development Stage Maryland Corporation)
STATEMENTS OF STOCKHOLDER'S EQUITY
Quarter Ended March 31, 1999 and
Year Ended December 31, 1998
<TABLE>
<CAPTION>
Common stock
----------------------- Capital in
Number Par excess of
of Shares value par value Total
---------- --------- ------------- ------------
<S> <C>
Balance at December 31, 1997 20,000 $200 $199,800 $200,000
Subscriptions received for common
stock through public offering 2,550 26 25,474 25,500
Subscriptions held in escrow (2,550 ) (26 ) (25,474 ) (25,500 )
---------- -------- ------------ ------------
Balance at December 31, 1998 20,000 200 199,800 200,000
Subscriptions received for common
stock through public offering 22,350 224 223,276 223,500
Subscriptions held in escrow (22,350 ) (224 ) (223,276 ) (223,500 )
---------- -------- ------------ ------------
Balance at March 31, 1999 20,000 $200 $199,800 $200,000
========== ======== ============ ============
</TABLE>
See accompanying notes to financial statements.
<PAGE>
CNL HEALTH CARE PROPERTIES, INC.
(A Development Stage Maryland Corporation)
NOTES TO FINANCIAL STATEMENTS
Quarters Ended March 31, 1999 and 1998
1. Significant Accounting Policies:
Basis of Presentation - The accompanying unaudited 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, 1999, may not be indicative of the results
that may be expected for the year ending December 31, 1999. Amounts as
of December 31, 1998, 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 Form 10-K of CNL
Health Care Properties, Inc. (the "Company") for the year ended
December 31, 1998.
The Company is in the development stage and has not begun operations.
New Accounting Standard - In April 1998, the American Institute of
Certified Public Accountants issued Statement of Position ("SOP") 98-5,
"Reporting on the Costs of Start-Up Activities," which became effective
for the Company January 1, 1999. This SOP requires start-up and
organization costs to be expensed as incurred and also requires
previously deferred start-up costs to be recognized as a cumulative
effect adjustment in the statement of earnings. The Company plans to
expense $20,000 of organization costs once it becomes operational.
Management of the Company does not believe the adoption of this SOP
will have a material effect on the Company's financial position.
2. Deferred Offering Costs:
The Company has and will continue to incur certain costs in connection
with the offering, including filing fees, legal, accounting, marketing
and printing costs and escrow fees, which will be deducted from the
gross proceeds of the offering. Certain preliminary costs incurred
prior to raising capital have been and will be advanced by affiliates
of the Company.
3. Related Party Arrangements:
Certain affiliates of the Company will receive fees and compensation in
connection with the offering, and the acquisition, management, and sale
of the assets of the Company.
<PAGE>
CNL HEALTH CARE PROPERTIES, INC.
(A Development Stage Maryland Corporation)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Quarters Ended March 31, 1999 and 1998
3. Related Party Arrangements - Continued:
CNL Securities Corp. is entitled to receive commissions amounting to
7.5% of the total amount raised from the sale of shares for services in
connection with the offering of the shares, a substantial portion of
which will be paid as commissions to other broker-dealers. During the
quarter ended March 31, 1999, the Company incurred $16,763 of such
fees, of which $14,945 will be paid by CNL Securities Corp. as
commissions to other broker-dealers. These fees will not be paid until
subscriptions for at least 250,000 shares ($2,500,000) have been
obtained from the offering.
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, 1999, the Company incurred $1,118 of such fee, the majority of
which will be reallowed to other broker-dealers and from which all bona
fide due diligence expenses will be paid. These fees will not be paid
until subscriptions for at least 250,000 shares ($2,500,000) have been
obtained from the offering.
In addition, the Company has agreed to issue and sell soliciting dealer
warrants ("Soliciting Dealer Warrants") to CNL Securities Corp. The
price for each warrant will be $0.0008 and one warrant will be issued
for every 25 shares sold by the managing dealer. All or a portion of
the Soliciting Dealer Warrants may be reallowed to soliciting dealers
with prior written approval from, and in the sole discretion of, the
managing dealer, except where prohibited by either federal or state
securities laws. The holder of a Soliciting Dealer Warrant will be
entitled to purchase one share of common stock from the Company at a
price of $12.00 during the five year period commencing with the date
the offering begins. No Soliciting Dealer Warrant, however, will be
exercisable until one year from the date of issuance.
CNL Health Care Advisors, Inc. 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 of the shares on a
national securities exchange or over-the-counter market, but excluding
that portion of the permanent financing used to finance secured
equipment leases. During the quarter ended March 31, 1999, the Company
incurred $10,058 of such fees. Such fees are included in other assets
at March 31, 1999. These fees will not be paid until subscriptions for
at least 250,000 shares ($2,500,000) have been obtained from the
offering.
<PAGE>
CNL HEALTH CARE PROPERTIES, INC.
(A Development Stage Maryland Corporation)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Quarters Ended March 31, 1999 and 1998
3. Related Party Arrangements - Continued:
CNL Health Care Advisors, Inc. 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), on a day-to-day basis. For the quarters ended March
31, 1999 and 1998, $70,291 and $12,629, respectively, were classified
as deferred offering costs for these services.
Amounts due to related parties consisted of the following at:
<TABLE>
<CAPTION>
March 31, December 31,
1999 1998
-------------- ---------------
<S> <C>
Due to CNL Health Care Advisors, Inc.:
Expenditures incurred on behalf of the
Company $599,587 $470,798
Accounting and administrative services 281,677 211,386
Acquisition fees 11,205 1,148
--------------- ----------------
892,469 683,332
--------------- ----------------
Due to CNL Securities Corp.:
Commissions 17,975 1,912
Marketing support and due diligence
expense reimbursement fee 1,245 128
--------------- ----------------
19,220 2,040
---------------
----------------
$911,689 $685,372
=============== ================
</TABLE>
4. Subsequent Event:
During the period April 1, 1999 through April 23, 1999, the Company
received subscription proceeds of 65,699 shares ($656,990) of common
stock.
<PAGE>
Report of Independent Accountants
To the Board of Directors
CNL Health Care Properties, Inc.
In our opinion, the accompanying balance sheets and the related statements of
stockholder's equity present fairly in all material respects, the financial
position of CNL Health Care Properties, Inc. (a development stage Maryland
corporation) at December 31, 1998 and 1997 in conformity with generally accepted
accounting principles. These financial statements are the responsibility of the
Company's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
statements in accordance with generally accepted auditing standards which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above.
PRICEWATERHOUSECOOPERS LLP
Orlando, Florida
January 15, 1999
<PAGE>
CNL HEALTH CARE PROPERTIES, INC.
(A Development Stage Maryland Corporation)
BALANCE SHEETS
<TABLE>
<CAPTION>
December 31, December 31,
1998 1997
------------ -----------
<S> <C>
ASSETS
Cash $ 92 $200,000
Deferred offering costs 975,339 80,330
Other assets 1,148 --
----------- -----------
$976,579 $280,330
=========== ===========
LIABILITIES AND STOCKHOLDER'S EQUITY
Liabilities:
Due to related parties $685,372 $58,600
Accounts payable and accrued expenses 91,207 21,730
----------- -----------
Total liabilities 776,579 80,330
----------- -----------
Stockholder's equity:
Preferred stock, without par value per share
Authorized and unissued 3,000,000 shares -- --
Excess shares, $.01 par value per share
Authorized and unissued 103,000,000 shares -- --
Common stock, $.01 par value per share
Authorized 100,000,000 and 100,000
shares, respectively; 20,000 shares
issued and outstanding 200 200
Capital in excess of par value 199,800 199,800
----------- -----------
Total stockholder's equity 200,000 200,000
----------- -----------
$976,579 $280,330
=========== ===========
See accompanying notes to financial statements.
<PAGE>
CNL HEALTH CARE PROPERTIES, INC.
(A Development Stage Maryland Corporation)
STATEMENTS OF STOCKHOLDER'S EQUITY
Year Ended December 31, 1998 and the Period
December 22, 1997 (Date of Inception) through
December 31, 1997
Common stock
----------------------- Capital in
Number Par excess of
of Shares value par value Total
---------- --------- ------------ ------------
Balance, December 22, 1997
(Date of Inception) -- $ -- $ -- $ --
Cash received from sale
of common stock to
CNL Health Care
Advisors, Inc. 20,000 200 199,800 200,000
---------- --------- ------------ ------------
Balance at December 31, 1997 20,000 200 199,800 200,000
Subscriptions received for common
stock through public offering 2,550 26 25,474 25,500
Subscriptions held in escrow at
December 31, 1998 (2,550 ) (26 ) (25,474 ) (25,500 )
---------- --------- ------------ ------------
Balance at December 31, 1998 20,000 $ 200 $ 199,800 $ 200,000
========== ========= ============ ============
</TABLE>
See accompanying notes to financial statements.
<PAGE>
CNL HEALTH CARE PROPERTIES, INC.
(A Development Stage Maryland Corporation)
NOTES TO FINANCIAL STATEMENTS
Year Ended December 31, 1998 and the Period
December 22, 1997 (Date of Inception) through
December 31, 1997
1. Significant Accounting Policies:
Organization and Nature of Business - CNL Health Care Properties, Inc.
(the "Company") was organized pursuant to the laws of the state of
Maryland on December 22, 1997. The Company intends to use the proceeds
from its public offering (the "Offering") (see Note 2), after deducting
offering expenses, primarily to acquire real estate properties (the
"Properties") related to health care and seniors' housing facilities
(the "Health Care Facilities") located across the United States. The
Health Care Facilities may include congregate living, assisted living
and skilled nursing facilities, continuing care retirement communities
and life care communities, and medical office buildings and walk-in
clinics. The Company may provide mortgage financing (the "Mortgage
Loans") to operators of Health Care Facilities in the aggregate
principal amount of approximately 5% to 10% of the Company's total
assets. The Company also may offer furniture, fixture and equipment
financing ("Secured Equipment Leases") to operators of Health Care
Facilities. Secured Equipment Leases will be funded from the proceeds
of a loan in an amount up to ten percent of the Company's total assets.
As of December 31, 1998, the Company was in the development stage and
had not begun operations.
Income Taxes - The Company intends to make an election to be taxed as a
real estate investment trust ("REIT") under Sections 856 through 860 of
the Internal Revenue Code commencing with its taxable year ending
December 31, 1999. If the Company qualifies for taxation as a REIT, the
Company generally will not be subject to federal corporate income tax
to the extent it distributes its REIT taxable income to its
stockholders, so long as it distributes at least 95 percent of its REIT
taxable income. REITs are subject to a number of other organizational
and operational requirements. Even if the Company qualifies for
taxation as a REIT, it may be subject to certain state and local taxes
on its income and property, and federal income and excise taxes on its
undistributed income.
Use of Estimates - Management of the Company has made a number of
estimates and assumptions relating to the reporting of assets and
liabilities to prepare these financial statements in conformity with
generally accepted accounting principles. Actual results could differ
from those estimates.
New Accounting Standard - In April 1998, the American Institute of
Certified Public Accountants issued Statement of Position ("SOP") 98-5,
"Reporting on the Costs of Start-Up Activities," which will be
effective for the Company as of January 1, 1999. This SOP requires
start-up and organization costs to be expensed as incurred and also
requires previously deferred start-up costs to be recognized as a
cumulative effect adjustment in the statement of earnings. Management
of the Company does not believe that adoption of this SOP will have a
material effect on the Company's financial position or results of
operations.
<PAGE>
CNL HEALTH CARE PROPERTIES, INC.
(A Development Stage Maryland Corporation)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Year Ended December 31, 1998 and the Period
December 22, 1997 (Date of Inception) through
December 31, 1997
2. Public Offering:
The Company has filed a currently effective registration statement on
Form S-11 with the Securities and Exchange Commission. A maximum of
15,500,000 shares ($155,000,000) may be sold, including 500,000 shares
($5,000,000) which are available only to stockholders who elect to
participate in the Company's reinvestment plan. The Company has adopted
a reinvestment plan pursuant to which stockholders may elect to have
the full amount of their cash distributions from the Company reinvested
in additional shares of common stock of the Company. In addition, the
Company has registered 600,000 shares issuable upon the exercise of
warrants granted to the managing dealer of the Offering. As of December
31, 1998, the Company had received subscription proceeds of $25,500
(2,550 shares). Until subscription proceeds for the Company total
$2,500,000 (250,000 shares), the proceeds will be held in escrow.
3. Deferred Offering Costs:
The Company has and will continue to incur certain costs in connection
with the Offering, including filing fees, legal, accounting, marketing
and printing costs and escrow fees, which will be deducted from the
gross proceeds of the Offering. Certain preliminary costs incurred
prior to raising capital have been and will be advanced by an affiliate
of the Company. CNL Health Care Advisors, Inc. (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.
As of December 31, 1998, the Company had incurred $975,339 in
organizational and offering costs which has been treated as deferred
offering costs. Once the Company receives the minimum amount of
subscriptions, the offering costs will be charged to stockholders'
capital subject to the three percent cap described above.
4. Capitalization:
In September 1998, the Company amended the Articles of Incorporation to
increase the number of authorized shares of capital stock from 100,000
shares to 206,000,000 shares (consisting of 100,000,000 common shares,
3,000,000 preferred shares and 103,000,000 excess shares).
5. Related Party Arrangements:
On December 22, 1997 (date of inception), CNL Health Care Advisors,
Inc. contributed $200,000 in cash to the Company and became its sole
stockholder.
The Advisor and certain affiliates of the Company will receive fees and
compensation in connection with the Offering, and the acquisition,
management, and sale of the assets of the Company.
<PAGE>
CNL HEALTH CARE PROPERTIES, INC.
(A Development Stage Maryland Corporation)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Year Ended December 31, 1998 and the Period
December 22, 1997 (Date of Inception) through
December 31, 1997
5. Related Party Arrangements - Continued:
CNL Securities Corp. is entitled to receive commissions amounting to
7.5% of the total amount raised from the sale of shares for services in
connection with the offering of the shares, a substantial portion of
which will be paid as commissions to other broker-dealers. During the
year ended December 31, 1998, the Company incurred $1,912 of such fees
of which $1,785 will be paid by CNL Securities Corp. as commissions to
other broker-dealers. These fees will not be paid until subscriptions
for at least 250,000 shares ($2,500,000) have been obtained from the
Offering.
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 year ended December
31, 1998, the Company incurred $128 of such fee, the majority of which
will be reallowed to other broker-dealers and from which all bona fide
due diligence expenses will be paid. These fees will not be paid until
subscriptions for at least 250,000 shares ($2,500,000) have been
obtained from the Offering.
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 year ended December 31, 1998, the Company incurred $1,148 of such
fees. Such fees are included in other assets at December 31, 1998.
These fees will not be paid until subscriptions for at least 250,000
shares ($2,500,000) have been obtained from the Offering.
In addition, the Company has agreed to issue and sell soliciting dealer
warrants ("Soliciting Dealer Warrants") to CNL Securities Corp. The
price for each warrant will be $0.0008 and one warrant will be issued
for every 25 shares sold by the managing dealer. All or a portion of
the Soliciting Dealer Warrants may be reallowed to soliciting dealers
with prior written approval from, and in the sole discretion of the
managing dealer, except where prohibited by either federal or state
securities laws. The holder of a Soliciting Dealer Warrant will be
entitled to purchase one share of common stock from the Company at a
price of $12.00 during the five year period commencing with the date
the offering begins. No Soliciting Dealer Warrant, however, will be
exercisable until one year from the date of issuance.
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), on
a day-to-day basis. For the year ended December 31, 1998 and the period
December 22, 1997 (date of inception) through December 31, 1997,
$196,184 and $15,202, respectively, were classified as deferred
offering costs for these services.
<PAGE>
CNL HEALTH CARE PROPERTIES, INC.
(A Development Stage Maryland Corporation)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Year Ended December 31, 1998 and the Period
December 22, 1997 (Date of Inception) through
December 31, 1997
5. Related Party Arrangements - Continued:
Amounts due to related parties consisted of the following at:
<TABLE>
<CAPTION>
December 31, December 31,
1998 1997
------------- -------------
<S> <C>
Due to the Advisor:
Expenditures incurred for organizational
and offering expenses on behalf
of the Company $470,798 $43,398
Accounting and administrative
services 211,386 15,202
Acquisition fees 1,148 --
------------- -----------
683,332 58,600
------------- -----------
Due to CNL Securities Corp.:
Commissions 1,912 --
Marketing support and due diligence
expense reimbursement fee 128 --
------------- -----------
2,040 --
------------- -----------
$685,372 $58,600
============= ===========
</TABLE>
6. Subsequent Event:
During the period January 1, 1999 through January 15, 1999, the Company
received subscription proceeds of 1,000 shares ($10,000) of common
stock.
<PAGE>
APPENDIX C
PRIOR PERFORMANCE TABLES
----------------------------------------------
| THE FOLLOWING INFORMATION UPDATES AND |
| REPLACES THE CORRESPONDING INFORMATION IN |
| APPENDIX C TO THE ATTACHED PROSPECTUS, |
| DATED SEPTEMBER 18, 1998. |
----------------------------------------------
<PAGE>
APPENDIX C
PRIOR PERFORMANCE TABLES
The information in this Appendix C contains certain relevant summary
information concerning certain prior public programs sponsored by two of the
Company's principals (who also serve as the Chairman of the Board and President
of the Company) and their Affiliates (the "Prior Public Programs") which were
formed to invest in restaurant properties leased on a triple-net basis to
operators of national and regional fast-food and family-style restaurant chains,
or in the case of CNL Hospitality Properties, Inc., to invest in restaurant
properties and hotel properties. No Prior Public Programs sponsored by the
Company's Affiliates have invested in health care facilities leased on a
triple-net basis to operators of health care facilities.
A more detailed description of the acquisitions by the Prior Public
Programs is set forth in Part II of the registration statement filed with the
Securities and Exchange Commission for this Offering and is available from the
Company upon request, without charge. In addition, upon request to the Company,
the Company will provide, without charge, a copy of the most recent Annual
Report on Form 10-K filed with the Securities and Exchange Commission for CNL
Income Fund, Ltd., CNL Income Fund II, Ltd., CNL Income Fund III, Ltd., CNL
Income Fund IV, Ltd., CNL Income Fund V, Ltd., CNL Income Fund VI, Ltd., CNL
Income Fund VII, Ltd., CNL Income Fund VIII, Ltd., CNL Income Fund IX, Ltd., CNL
Income Fund X, Ltd., CNL Income Fund XI, Ltd., CNL Income Fund XII, Ltd., CNL
Income Fund XIII, Ltd., CNL Income Fund XIV, Ltd., CNL Income Fund XV, Ltd., CNL
Income Fund XVI, Ltd., CNL Income Fund XVII, Ltd., CNL Income Fund XVIII, Ltd.,
CNL American Properties Fund, Inc., and CNL Hospitality Properties, Inc. as well
as a copy, for a reasonable fee, of the exhibits filed with such reports.
The investment objectives of the Prior Public Programs generally
include preservation and protection of capital, the potential for increased
income and protection against inflation, and potential for capital appreciation,
all through investment in restaurant properties, or in the case of CNL
Hospitality Properties, Inc., through investment in restaurant properties and
hotel properties. In addition, the investment objectives of the Prior Public
Programs included making partially tax-sheltered distributions.
Stockholders should not construe inclusion of the following tables as
implying that the company will have results comparable to those reflected in
such tables. Distributable cash flow, federal income tax deductions, or other
factors could be substantially different. Stockholders should note that, by
acquiring shares in the company, they will not be acquiring any interest in any
prior public programs.
Description of Tables
The following Tables are included herein:
Table I - Experience in Raising and Investing Funds
Table II - Compensation to Sponsor
Table III - Operating Results of Prior Programs
Table V - Sales or Disposal of Properties
Unless otherwise indicated in the Tables, all information contained in
the Tables is as of December 31, 1998. The following is a brief description of
the Tables:
C-1
<PAGE>
Table I - Experience in Raising and Investing Funds
Table I presents information on a percentage basis showing the
experience of two of the principals of the Company and their Affiliates in
raising and investing funds for the Prior Public Programs, the offerings of
which became fully subscribed between January 1994 and December 1998.
The Table sets forth information on the offering expenses incurred and
amounts available for investment expressed as a percentage of total dollars
raised. The Table also shows the percentage of property acquisition cost
leveraged, the date the offering commenced, and the time required to raise funds
for investment.
Table II - Compensation to Sponsor
Table II provides information, on a total dollar basis, regarding
amounts and types of compensation paid to the two of the Company's principals
and their Affiliates which sponsored the Prior Public Programs.
The Table indicates the total offering proceeds and the portion of such
offering proceeds paid or to be paid to two of the principals of the Company and
their Affiliates in connection with the Prior Public Programs, the offerings of
which became fully subscribed between January 1994 and December 1998. The Table
also shows the amounts paid to two of the principals of the Company and their
Affiliates from cash generated from operations and from cash generated from
sales or refinancing by each of the Prior Public Programs on a cumulative basis
commencing with inception and ending December 31, 1998.
Table III - Operating Results of Prior Programs
Table III presents a summary of operating results for the period from
inception through December 31, 1998, of the Prior Public Programs, the offerings
of which became fully subscribed between January 1994 and December 1998.
The Table includes a summary of income or loss of the Prior Public
Programs, which are presented on the basis of generally accepted accounting
principles ("GAAP"). The Table also shows cash generated from operations, which
represents the cash generated from operations of the properties of the Prior
Public Programs, as distinguished from cash generated from other sources
(special items). The section of the Table entitled "Special Items" provides
information relating to cash generated from or used by items which are not
directly related to the operations of the properties of the Prior Public
Programs, but rather are related to items of an investing or financing nature.
These items include proceeds from capital contributions of investors and
disbursements made from these sources of funds, such as syndication (or stock
issuance) and organizational costs, acquisition of the properties and other
costs which are related more to the organization of the entity and the
acquisition of properties than to the actual operations of the entities.
The Table also presents information pertaining to investment income,
returns of capital on a GAAP basis, cash distributions from operations, sales
and refinancing proceeds expressed in total dollar amounts as well as
distributions and tax results on a per $1,000 investment basis.
Table IV - Results of Completed Programs
Table IV is omitted from this Appendix C because none of the Prior
Public Programs have completed operations (meaning they no longer hold
properties).
Table V - Sales or Disposal of Properties
Table V provides information regarding the sale or disposal of
properties owned by the Prior Public Programs between January 1994 and December
1998.
The Table includes the selling price of the property, the cost of the
property, the date acquired and the date of sale.
C-2
<PAGE>
TABLE I
EXPERIENCE IN RAISING AND INVESTING FUNDS
<TABLE>
<CAPTION>
CNL Income CNL Income CNL Income CNL American
Fund XIV, Fund XV, Fund XVI, Properties Fund,
Ltd. Ltd. Ltd. Inc.
---------- ---------- ---------- ----------------
(Note 1)
<S> <C>
Dollar amount offered $45,000,000 $40,000,000 $45,000,000 $745,000,000
=========== =========== =========== ============
Dollar amount raised 100.0% 100.0% 100.0% 100.0%
----------- ----------- ----------- ------------
Less offering expenses:
Selling commissions
and discounts (8.5) (8.5) (8.5) (7.5)
Organizational expenses (3.0) (3.0) (3.0) (2.2)
Marketing support and
due diligence expense
reimbursement fees
(includes amounts
reallowed to
unaffiliated
entities) (0.5) (0.5) (0.5) (0.5)
----------- ----------- ----------- -----------
(12.0) (12.0) (12.0) (10.2)
----------- ----------- ----------- -----------
Reserve for operations -- -- -- --
----------- ----------- ----------- -----------
Percent available for
investment 88.0% 88.0% 88.0% 89.8%
=========== =========== =========== ===========
Acquisition costs:
Cash down payment 82.5% 82.5% 82.5% 85.3%
Acquisition fees paid
to affiliates 5.5 5.5 5.5 4.5
Loan costs -- -- -- --
----------- ----------- ----------- -----------
Total acquisition costs 88.0% 88.0% 88.0% 89.8%
=========== =========== =========== ===========
Percent leveraged
(mortgage financing
divided by total
acquisition costs) -- -- -- --
Date offering began 8/27/93 2/23/94 9/02/94 4/19/95, 2/06/97
and 3/02/98
Length of offering (in
months) 6 6 9 22, 13 and 9,
respectively
Months to invest 90% of
amount available for
investment measured
from date of offering 11 10 11 23, 16 and 11,
respectively
Note 1: Pursuant to a Registration Statement on Form S-11 under the Securities Act of 1933, as
amended, effective March 29, 1995, CNL American Properties Fund, Inc. ("APF") registered
for sale $165,000,000 of shares of common stock (the "Initial Offering"), including
$15,000,000 available only to stockholders participating in the company's reinvestment
plan. The Initial Offering of APF commenced April 19, 1995, and upon completion of the
Initial Offering on February 6, 1997, had received subscription proceeds of $150,591,765
(15,059,177 shares), including $591,765 (59,177 shares) issued pursuant to the
reinvestment plan. Pursuant to a Registration Statement on Form S-11 under the
Securities Act of 1933, as amended, effective January 31, 1997, APF registered for sale
$275,000,000 of shares of common stock (the "1997 Offering"), including $25,000,000
available only to stockholders participating in the company's reinvestment plan. The
1997 Offering of APF commenced following the completion of the Initial Offering on
February 6, 1997, and upon completion of the 1997 Offering on March 2, 1998, had received
subscription proceeds of $251,872,648 (25,187,265 shares), including $1,872,648 (187,265
shares) issued pursuant to the reinvestment plan. Pursuant to a Registration Statement
on Form S-11 under the Securities Act of 1933, as amended, effective May 12, 1998, APF
registered for sale $345,000,000 of shares of common stock (the "1998 Offering". The
1998 Offering of APF commenced
</TABLE>
C-3
<PAGE>
CNL Income CNL Income CNL Hospitality
Fund XVII, Fund XVIII, Properties,
Ltd. Ltd. Inc.
---------- ----------- ---------------
(Note 2)
$30,000,000 $35,000,000
100.0% 100.0%
----------- -----------
(8.5) (8.5)
(3.0) (3.0)
(0.5) (0.5)
----------- -----------
(12.0) (12.0)
----------- -----------
-- --
----------- -----------
88.0% 88.0%
=========== ===========
83.5% 83.5%
4.5 4.5
-- --
----------- -----------
88.0% 88.0%
=========== ===========
-- --
9/02/95 9/20/96
12 17
15 17
Note 1
(Continued): following the completion of the 1997 Offering on March 2,
1998. As of December 31, 1998, APF had received subscriptions
totalling approximately $345,000,000 from the 1998 Offering,
including $3,107,848 issued pursuant to the company's
reinvestment plan. The 1998 Offering became fully subscribed
in December 1998 and proceeds from the last subscriptions were
received in January 1999.
Note 2: Pursuant to a Registration Statement on Form S-11 under the
Securities Act of 1933, as amended, effective July 9, 1997,
CNL Hospitality Properties, Inc. registered for sale
$165,000,000 of shares of common stock, including $15,000,000
available only to stockholders participating in the company's
reinvestment plan. The offering of shares of CNL Hospitality
Properties, Inc. commenced July 9, 1997.
C-4
<PAGE>
TABLE II
COMPENSATION TO SPONSOR
<TABLE>
<CAPTION>
CNL Income CNL Income CNL Income CNL American
Fund XIV, Fund XV, Fund XVI, Properties Fund,
Ltd. Ltd. Ltd. Inc.
---------- ---------- ----------- ----------------
(Note 1)
<S> <C>
Date offering commenced 8/27/93 2/23/94 9/02/94 4/19/95, 2/06/97
and 3/02/98
Dollar amount raised $45,000,000 $40,000,000 $45,000,000 $747,253,675
=========== =========== =========== ============
Amount paid to sponsor from
proceeds of offering:
Selling commissions and
discounts 3,825,000 3,400,000 3,825,000 56,044,026
Real estate commissions - - - -
Acquisition fees 2,475,000 2,200,000 2,475,000 33,595,134
Marketing support and
due diligence expense
reimbursement fees
(includes amounts
reallowed to
unaffiliated entities) 225,000 200,000 225,000 3,736,268
----------- ----------- ----------- ------------
Total amount paid to sponsor 6,525,000 5,800,000 6,525,000 93,375,428
=========== =========== =========== ============
Dollar amount of cash generated
from operations before
deducting payments to
sponsor:
1998 3,662,593 3,343,292 3,765,104 42,216,874
1997 3,734,726 3,419,967 3,909,781 18,514,122
1996 3,841,163 3,557,073 3,911,609 6,096,045
1995 3,823,939 3,361,477 2,619,840 594,425
1994 2,897,432 1,154,454 212,171 -
1993 329,957 - - -
Amount paid to sponsor from operations
(administrative, accounting and
management fees):
1998 148,049 126,564 141,410 3,100,599
1997 128,536 113,372 129,357 1,437,908
1996 134,867 122,391 157,883 613,505
1995 114,095 122,107 138,445 95,966
1994 84,801 37,620 7,023 -
1993 8,220 - - -
Dollar amount of property sales and
refinancing before deducting payments
to sponsor:
Cash (Note 3) 5,168,000 3,312,297 1,385,384 9,046,652
Notes - - - -
Amount paid to sponsors
from property sales and
refinancing:
Real estate commissions - - - -
Incentive fees - - - -
Other (Note 2) - - - -
Note 1: Pursuant to a Registration Statement on Form S-11 under the Securities Act of 1933, as
amended, effective March 29, 1995, CNL American Properties Fund, Inc. ("APF") registered
for sale $165,000,000 of shares of common stock (the "Initial Offering"), including
$15,000,000 available only to stockholders participating in the company's reinvestment
plan. The Initial Offering of APF commenced April 19, 1995, and upon completion of the
Initial Offering on February 6, 1997, had received subscription proceeds of $150,591,765
(15,059,177 shares), including $591,765 (59,177 shares) issued pursuant to the
reinvestment plan. Pursuant to a Registration Statement on Form S-11 under the
Securities Act of 1933, as amended, effective January 31, 1997, APF registered for sale
$275,000,000 of shares of common stock (the "1997 Offering"), including $25,000,000
available only to stockholders participating in the company's reinvestment plan. The
1997 Offering of APF commenced following the completion of the Initial Offering on
February 6, 1997, and upon completion of the 1997 Offering on March 2, 1998, had received
subscription proceeds of $251,872,648 (25,187,265 shares), including $1,872,648 (187,265
shares) issued pursuant to the reinvestment plan. Pursuant to a Registration Statement
on Form S-11 under the Securities Act of 1933, as amended, effective May 12, 1998, APF
registered for sale $345,000,000 of shares of common stock (the "1998 Offering"). The
1998 Offering of APF commenced following the completion of the 1997 Offering on March 2,
1998. As of December 31, 1998, APF had received subscriptions totalling approximately
$345,000,000 from the 1998 Offering, including $3,107,848 issued pursuant to the
company's reinvestment plan. The 1998 Offering became fully subscribed in December 1998
and proceeds from the last subscriptions were received in January 1999. The amounts
shown represent the combined results of the Initial Offering, the 1997 Offering and the
1998 Offering as of December 31, 1998, including shares issued pursuant to the company's
reinvestment plans.
Note 2: For negotiating secured equipment leases and supervising the secured
equipment lease program, APF is entitled to receive a one-time secured
equipment lease servicing fee of two percent of the purchase price of
the equipment that is the subject of a secured equipment lease. During
the years ended December 31, 1998, 1997 and 1996, APF incurred $54,998,
$87,665 and $70,070, respectively, in secured equipment lease servicing
fees.
</TABLE>
C-5
<PAGE>
CNL Income CNL Income CNL Hospitality
Fund XVII, Fund XVIII, Properties,
Ltd. Ltd. Inc.
---------- ----------- ---------------
(Note 4)
9/02/95 9/20/96
$30,000,000 $35,000,000
2,550,000 2,975,000
- -
1,350,000 1,575,000
150,000 175,000
--------- ---------
4,050,000 4,725,000
========= =========
2,638,733 2,964,628
2,611,191 1,459,963
1,340,159 30,126
11,671 -
- -
- -
117,814 132,890
116,077 98,207
107,211 2,980
2,659 -
- -
- -
- -
- -
- -
- -
- -
Note 3: Excludes properties sold and substituted with replacement
properties, as permitted under the terms of the lease agreements.
<TABLE>
<CAPTION>
<S> <C>
Note 4: Pursuant to a Registration Statement on Form S-11 under the Securities Act of 1933,
as amended, effective July 9, 1997, CNL Hospitality Properties, Inc. registered for
sale $165,000,000 of shares of common stock, including $15,000,000 available only to
stockholders participating in the company's reinvestment plan. The offering of
shares of CNL Hospitality Properties, Inc. commenced September 11, 1997. As of
December 31, 1998, CNL Hospitality Properties, Inc. had sold 4,301,908 shares,
representing subscription proceeds of $43,019,080 from the offering, including 3,730
shares ($37,299) through the reinvestment plan. From the commencement of the
offering through December 31, 1998, total selling commissions and discounts were
$3,226,431, marketing support and due diligence expense reimbursement fees were
$215,095, and acquisition fees were $1,935,859, for a total amount paid to sponsor
of $5,377,385. CNL Hospitality Properties, Inc. had cash generated from operations
for the period October 15, 1997 (the date funds were originally released from
escrow) through December 31, 1998, of $2,799,434. CNL Hospitality Properties, Inc.
made payments of $215,379 to the sponsor from operations for this period.
</TABLE>
C-6
<PAGE>
TABLE III
Operating Results of Prior Programs
CNL INCOME FUND XIV, LTD.
<TABLE>
<CAPTION>
1992
(Note 1) 1993 1994 1995
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Gross revenue $ 0 $ 256,234 $ 3,135,716 $ 4,017,266
Equity in earnings of joint ventures 0 1,305 35,480 338,717
Profit (Loss) from sale of properties
(Notes 4, 6, 7, 8 and 9) 0 0 0 (66,518)
Provision for loss on building (Note 10) 0 0 0 0
Interest income 0 27,874 200,499 50,724
Less: Operating expenses 0 (14,049) (181,980) (248,840)
Interest expense 0 0 0 0
Depreciation and amortization 0 (28,918) (257,640) (340,112)
------------ ------------ ------------ ------------
Net income - GAAP basis 0 242,446 2,932,075 3,751,237
============ ============ ============ ============
Taxable income
- from operations 0 278,845 2,482,240 3,162,165
============ ============ ============ ============
- from gain (loss) on sale 0 0 0 0
============ ============ ============ ============
Cash generated from operations
(Notes 2 and 3) 0 321,737 2,812,631 3,709,844
Cash generated from sales (Notes 4, 6,
7, 8 and 9) 0 0 0 696,012
Cash generated from refinancing 0 0 0 0
------------ ------------ ------------ ------------
Cash generated from operations, sales
and refinancing 0 321,737 2,812,631 4,405,856
Less: Cash distributions to investors
(Note 5)
- from operating cash flow 0 (9,050) (2,229,952) (3,543,751)
- from sale of properties 0 0 0 0
- from cash flow from prior period 0 0 0 0
------------ ------------ ------------ ------------
Cash generated (deficiency) after cash
distributions 0 312,687 582,679 862,105
Special items (not including sales and
refinancing):
Limited partners' capital
contributions 0 28,785,100 16,214,900 0
General partners' capital
contributions 1,000 0 0 0
Syndication costs 0 (2,771,892) (1,618,477) 0
Acquisition of land and buildings 0 (13,758,004) (11,859,237) (964,073)
Investment in direct financing leases 0 (4,187,268) (5,561,748) (75,352)
Investment in joint ventures 0 (315,209) (1,561,988) (1,087,218)
Return of capital from joint venture 0 0 0 0
Reimbursement of organization,
syndication and acquisition costs
paid on behalf of CNL Income Fund
XIV, Ltd. by related parties 0 (706,215) (376,738) (577)
Increase in other assets 0 (444,267) 0 0
Increase (decrease) in restricted cash 0 0 0 0
Other 0 0 0 5,530
------------ ------------ ------------ ------------
Cash generated (deficiency) after cash
distributions and special items 1,000 6,914,932 (4,180,609) (1,259,585)
============ ============ ============ ============
TAX AND DISTRIBUTION DATA PER
$1,000 INVESTED
Federal income tax results:
Ordinary income (loss)
- from operations 0 16 56 70
============ ============ ============ ============
- from recapture 0 0 0 0
============ ============ ============ ============
Capital gain (loss) (Notes 4, 6, 7,
8 and 9) 0 0 0 0
============ ============ ============ ============
</TABLE>
C-7
<PAGE>
<TABLE>
<CAPTION>
1996 1997 1998
------------ ------------ ------------
<S> <C> <C> <C>
Gross revenue $ 3,999,813 $ 3,918,582 $ 3,440,910
Equity in earnings of joint ventures 459,137 309,879 317,654
Profit (Loss) from sale of properties
(Notes 4, 6, 7, 8 and 9) 0 0 112,206
Provision for loss on building (Note 10) 0 0 (37,155)
Interest income 44,089 40,232 73,246
Less: Operating expenses (246,621) (262,592) (326,960)
Interest expense 0 0 0
Depreciation and amortization (340,089) (340,161) (380,814)
------------ ------------ ------------
Net income - GAAP basis 3,916,329 3,665,940 3,199,087
============ ============ ============
Taxable income
- from operations 3,236,329 3,048,675 3,230,884
============ ============ ============
- from gain (loss) on sale 0 47,256 53,034
============ ============ ============
Cash generated from operations
(Notes 2 and 3) 3,706,296 3,606,190 3,514,544
Cash generated from sales (Notes 4, 6,
7, 8 and 9) 0 318,592 1,648,110
Cash generated from refinancing 0 0 0
------------ ------------ ------------
Cash generated from operations, sales
and refinancing 3,706,296 3,924,782 5,162,654
Less: Cash distributions to investors
(Note 5)
- from operating cash flow (3,706,296) (3,606,190) (3,514,544)
- from sale of properties 0 0 0
- from cash flow from prior period (6,226) (106,330) (197,976)
------------ ------------ ------------
Cash generated (deficiency) after cash
distributions (6,226) 212,262 1,450,134
Special items (not including sales and
refinancing):
Limited partners' capital
contributions 0 0 0
General partners' capital
contributions 0 0 0
Syndication costs 0 0 0
Acquisition of land and buildings 0 0 (605,712)
Investment in direct financing leases 0 0 (931,237)
Investment in joint ventures (7,500) (121,855) (568,498)
Return of capital from joint venture 0 51,950 0
Reimbursement of organization,
syndication and acquisition costs
paid on behalf of CNL Income Fund
XIV, Ltd. by related parties 0 0 0
Increase in other assets 0 0 0
Increase (decrease) in restricted cash 0 (318,592) 318,592
Other 0 0 0
------------ ------------ ------------
Cash generated (deficiency) after cash
distributions and special items (13,726) (176,235) (336,721)
============ ============ =============
TAX AND DISTRIBUTION DATA PER
$1,000 INVESTED
Federal income tax results:
Ordinary income (loss)
- from operations 71 67 71
============ ============ ============
- from recapture 0 0 0
============ ============ ============
Capital gain (loss) (Notes 4, 6, 7,
8 and 9) 0 1 1
============ ============ ============
</TABLE>
C-8
<PAGE>
TABLE III - CNL INCOME FUND XIV, LTD. (continued)
<TABLE>
<CAPTION>
1992
(Note 1) 1993 1994 1995
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Cash distributions to investors
Source (on GAAP basis)
- from investment income 0 1 51 79
- from capital gain 0 0 0 0
- from return of capital 0 0 0 0
- from investment income from prior
period 0 0 0 0
------------ ------------ ------------ ------------
Total distributions on GAAP basis (Note 5) 0 1 51 79
============ ============ ============ ============
Source (on cash basis)
- from sales 0 0 0 0
- from operations 0 1 51 79
- from cash flow from prior period 0 0 0 0
------------ ------------ ------------ ------------
Total distributions on cash basis (Note 5) 0 1 51 79
============ ============ ============ ============
Total cash distributions as a percentage of
original $1,000 investment (Note 11) 0.00% 4.50% 6.50% 8.06%
Total cumulative cash distributions
per $1,000 investment from inception 0 1 52 131
Amount (in percentage terms) remaining invested
in program properties at the end of each year
(period) presented (original total
acquisition cost of properties retained,
divided by original total acquisition cost of
all properties in program) (Notes 4, 6, 7, 8
and 9) N/A 100% 100% 100%
</TABLE>
C-9
<PAGE>
<TABLE>
<CAPTION>
1996 1997 1998
------------ ------------ ------------
<S> <C> <C> <C>
Cash distributions to investors
Source (on GAAP basis)
- from investment income
- from capital gain 83 81 68
- from return of capital 0 0 2
- from investment income from prior 0 0 0
period
0 2 12
Total distributions on GAAP basis (Note 5) ------------ ------------ ------------
83 83 82
============ ============ ============
Source (on cash basis)
- from sales
- from operations 0 0 4
- from cash flow from prior period 83 81 78
0 2 0
Total distributions on cash basis (Note 5) ------------ ------------ ------------
83 83 82
Total cash distributions as a percentage of ============ ============ ============
original $1,000 investment (Note 11)
Total cumulative cash distributions 8.25% 8.25% 8.25%
per $1,000 investment from inception
214 297 379
Amount (in percentage terms) remaining invested
in program properties at the end of each year
(period) presented (original total
acquisition cost of properties retained,
divided by original total acquisition cost of
all properties in program) (Notes 4, 6, 7, 8
and 9) 100% 100% 100%
</TABLE>
Note 1: Pursuant to a registration statement on Form S-11 under the Securities
Act of 1933, as amended, CNL Income Fund XIV, Ltd. ("CNL XIV") and CNL
Income Fund XIII, Ltd. each registered for sale $40,000,000 units of
limited partnership interests ("Units"). The offering of Units of CNL
Income Fund XIII, Ltd. commenced March 17, 1993. Pursuant to the
registration statement, CNL XIV could not commence until the offering
of Units of CNL Income Fund XIII, Ltd. was terminated. CNL Income Fund
XIII, Ltd. terminated its offering of Units on August 26, 1993, at
which time the maximum offering proceeds of $40,000,000 had been
received. Upon the termination of the offering of Units of CNL Income
Fund XIII, Ltd., CNL XIV commenced its offering of Units. Activities
through September 13, 1993, were devoted to organization of the
partnership and operations had not begun.
Note 2: Cash generated from operations includes cash received from tenants,
plus distributions from joint ventures, less cash paid for expenses,
plus interest received.
Note 3: Cash generated from operations per this table agrees to cash
generated from operations per the statement of cash flows included in
the financial statements of CNL Income Fund XIV, Ltd.
Note 4: During 1995, the partnership sold two of its properties to a tenant for
its original purchase price, excluding acquisition fees and
miscellaneous acquisition expenses. The net sales proceeds were used to
acquire two additional properties. As a result of these transactions,
the partnership recognized a loss for financial reporting purposes of
$66,518 primarily due to acquisition fees and miscellaneous acquisition
expenses the partnership had allocated to the property and due to the
accrued rental income relating to future scheduled rent increases that
the partnership had recorded and reversed at the time of sale. In
addition, during 1996, Wood-Ridge Real Estate Joint Venture, in which
the partnership owns a 50% interest, sold its two properties to the
tenant and recognized a gain of approximately $261,100 for financial
reporting purposes. As a result, the partnership's pro rata share of
such gain of approximately $130,550 is included in equity in earnings
of unconsolidated joint ventures for 1996.
Note 5: As a result of the partnership's change in investor services agents in
1993, distributions are now declared at the end of each quarter and
paid in the following quarter. Since this table generally presents
distributions on a cash basis (rather than amounts declared),
distributions on a cash basis for 1993 only reflect payments for three
quarters. Distributions declared for the quarters ended December 31,
1993, 1994, 1995, 1996 and 1997, are reflected in the 1994, 1995, 1996,
1997 and 1998 columns, respectively, for distributions on a cash basis
due to the payment of such distributions in January 1994, 1995, 1996,
1997 and 1998, respectively. As a result of 1994, 1995, 1996, 1997 and
1998 distributions being presented on a cash basis, distributions
declared and unpaid as of December 31, 1994, 1995, 1996, 1997 and 1998
are not included in the 1994, 1995, 1996, 1997 and 1998 totals,
respectively.
Note 6: In January 1998, the partnership sold its property in Madison, Alabama,
to a third party for $740,000 and received net sales proceeds of
$696,486. Due to the fact that during 1997 the partnership wrote off
$13,314 in accrued rental income (non-cash accounting adjustments
relating to the straight-lining of future scheduled rent increases over
the lease term in accordance with generally accepted accounting
principles), no gain or loss was incurred for financial reporting
purposes in January 1998 relating to this sale. In April 1998, the
partnership reinvested a portion of the net sales proceeds from the
sale of the property in Madison, Alabama in Melbourne Joint Venture,
with an affiliate of the partnership which has the same general
partners. The partnership intends to use the remaining proceeds to
invest in an additional property or for other partnership purposes.
Note 7: In January 1998, the partnership sold one of its properties in
Richmond, Virginia for $512,462 and received net sales proceeds of
$512,246, resulting in a gain of $70,798 for financial reporting
purposes. The partnership reinvested the net sales proceeds in a
property in Fayetteville, North Carolina.
Note 8: In April 1998, the partnership reached an agreement to accept
$360,000 for the property in Riviera Beach, Florida, which was taken
through a right of way taking in December 1997. The partnership had
received preliminary sales proceeds of $318,592 as of December 31,
1997. Upon agreement and receipt of the final sales price of $360,000,
the partnership recognized a gain of $41,408 for financial reporting
purposes. The partnership reinvested the net sales proceeds in a
property in Fayetteville, North Carolina.
Note 9: In July 1998, the Partnership sold one of its properties in Richmond,
Virginia for $415,000 and received net sales proceeds of $397,970. Due
to the fact that during 1998 the partnership wrote off $12,060 in
accrued rental income (non-cash accounting adjustments relating to the
straight-lining of future scheduled rent increases over the lease term
in accordance with generally accepted accounting principles), no gain
or loss was incurred for financial reporting purposes in July 1998
relating to this sale. In October 1998, the partnership reinvested the
net sales proceeds from the sale of the property in Richmond, Virginia
in a property in Fayetteville, North Carolina.
Note 10: At December 31, 1998, the Partnership recorded a provision for loss
on building in the amount of $37,155 for financial reporting purposes
relating to a Long John Silver's Property whose lease was rejected by
the tenant. The tenant of this Property filed for bankruptcy and ceased
payment of rents under the terms of its lease agreement. The allowance
represents the difference between the carrying value of the Property at
December 31, 1998 and the estimated net realizable value for the
Property.
C-10
<PAGE>
TABLE III
Operating Results of Prior Programs
CNL INCOME FUND XV, LTD.
<TABLE>
<CAPTION>
1993
(Note 1) 1994 1995 1996
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Gross revenue $ 0 $ 1,143,586 $ 3,546,320 $ 3,632,699
Equity in earnings of joint ventures 0 8,372 280,606 392,862
Profit (Loss) from sale of properties
(Note 4) 0 0 (71,023) 0
Provision for loss on land and buildings
(Note 7) 0 0 0 0
Interest income 0 167,734 88,059 43,049
Less: Operating expenses 0 (62,926) (228,319) (235,319)
Interest expense 0 0 0 0
Depreciation and amortization 0 (70,848) (243,175) (248,232)
------------ ------------ ------------ ------------
Net income - GAAP basis 0 1,185,918 3,372,468 3,585,059
============ ============ ============ ============
Taxable income
- from operations 0 1,026,715 2,861,912 2,954,318
============ ============ ============ ============
- from gain on sale 0 0 0 0
============ ============ ============ ============
Cash generated from operations
(Notes 2 and 3) 0 1,116,834 3,239,370 3,434,682
Cash generated from sales (Note 4) 0 0 811,706 0
Cash generated from refinancing 0 0 0 0
------------ ------------ ------------ ------------
Cash generated from operations, sales
and refinancing 0 1,116,834 4,051,076 3,434,682
Less: Cash distributions to investors
(Notes 5, 6 and 9)
- from operating cash flow 0 (635,944) (2,650,003) (3,200,000)
- from sale of properties 0 0 0 0
- from cash flow from prior period 0 0 0 0
------------ ------------ ------------ ------------
Cash generated (deficiency) after cash
distributions 0 480,890 1,401,073 234,682
Special items (not including sales and
refinancing):
Limited partners' capital contri-
butions 0 40,000,000 0 0
General partners' capital contri-
butions 1,000 0 0 0
Syndication costs 0 (3,892,003) 0 0
Acquisition of land and buildings 0 (22,152,379) (1,625,601) 0
Investment in direct financing
leases 0 (6,792,806) (2,412,973) 0
Investment in joint ventures 0 (1,564,762) (720,552) (129,939)
Return of capital from joint venture 0 0 0 0
Reimbursement of organization,
syndication and acquisition costs
paid on behalf of CNL Income Fund
XV, Ltd. by related parties 0 (1,098,197) (23,507) 0
Increase in other assets 0 (187,757) 0 0
Other (38) (6,118) 25,150 0
------------ ------------ ------------ ------------
Cash generated (deficiency) after cash
distributions and special items 962 4,786,868 (3,356,410) 104,743
============ ============ ============ ============
TAX AND DISTRIBUTION DATA PER $1,000
INVESTED
Federal income tax results:
Ordinary income (loss)
- from operations 0 33 71 73
============ ============ ============ ============
- from recapture 0 0 0 0
============ ============ ============ ============
Capital gain (loss) (Note 4) 0 0 0 0
============ ============ ============ ============
</TABLE>
C-11
<PAGE>
1997 1998
------------ ------------
Gross revenue $ 3,622,123 $ 3,179,911
Equity in earnings of joint ventures 239,249 236,553
Profit (Loss) from sale of properties
(Note 4) 0 0
Provision for loss on land and buildings
(Note 7) 0 (280,907)
Interest income 46,642 54,576
Less: Operating expenses (224,761) (265,748)
Interest expense 0 0
Depreciation and amortization (248,348) (281,888)
------------ ------------
Net income - GAAP basis 3,434,905 2,642,497
============ ============
Taxable income
- from operations 2,856,893 2,847,638
============ ============
- from gain on sale 47,256 0
============ ============
Cash generated from operations
(Notes 2 and 3) 3,306,595 3,216,728
Cash generated from sales (Note 4) 0 0
Cash generated from refinancing 0 0
Cash generated from operations, sales
and refinancing 3,306,595 3,216,728
Less: Cash distributions to investors
(Notes 5, 6 and 9)
- from operating cash flow (3,280,000) (3,216,728)
- from sale of properties 0 0
- from cash flow from prior period 0 (183,272)
Cash generated (deficiency) after cash
distributions 26,595 (183,272)
Special items (not including sales and
refinancing):
Limited partners' capital contri-
butions 0 0
General partners' capital contri-
butions 0 0
Syndication costs 0 0
Acquisition of land and buildings 0 0
Investment in direct financing
leases 0 0
Investment in joint ventures 0 (216,992)
Return of capital from joint venture 51,950 0
Reimbursement of organization,
syndication and acquisition costs
paid on behalf of CNL Income Fund
XV, Ltd. by related parties 0 0
Increase in other assets 0 0
Other 0 0
------------ ------------
Cash generated (deficiency) after cash
distributions and special items 78,545 (400,264)
============ ============
TAX AND DISTRIBUTION DATA PER $1,000
INVESTED
Federal income tax results:
Ordinary income (loss)
- from operations 71 70
============ ============
- from recapture 0 0
============ ============
Capital gain (loss) (Note 4) 1 0
============ ============
C-12
<PAGE>
TABLE III - CNL INCOME FUND XV, LTD. (continued)
<TABLE>
<CAPTION>
1993
(Note 1) 1994 1995 1996
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Cash distributions to investors
Source (on GAAP basis)
- from investment income 0 21 66 80
- from capital gain 0 0 0 0
- from investment income from prior
period 0 0 0 0
------------ ------------ ------------ ------------
Total distributions on GAAP basis (Note 5) 0 21 66 80
============ ============ ============ ============
Source (on cash basis)
- from sales 0 0 0 0
- from refinancing 0 0 0 0
- from operations 0 21 66 80
- from investment income from prior period 0 0 0 0
------------ ------------ ------------ ------------
Total distributions on cash basis (Note 5) 0 21 66 80
============ ============ ============ ============
Total cash distributions as a percentage
of original $1,000 investment (Notes 6,
8 and 9).0.00% 5.00% 7.25% 8.20%
Total cumulative cash distributions per
$1,000 investment from inception 0 21 87 167
Amount (in percentage terms) remaining
invested in program properties at the
end of each year (period) presented
(original total acquisition cost of
properties retained, divided by original
total acquisition cost of all properties
in program) (Note 4) N/A 100% 100% 100%
</TABLE>
Note 1: The registration statement relating to this offering of Units of CNL
Income Fund XV, Ltd. became effective February 23, 1994. Activities
through March 23, 1994, were devoted to organization of the partnership
and operations had not begun.
Note 2: Cash generated from operations includes cash received from tenants,
plus distributions from joint venture, less cash paid for expenses,
plus interest received.
Note 3: Cash generated from operations per this table agrees to cash
generated from operations per the statement of cash flows included in
the financial statements of CNL Income Fund XV, Ltd.
Note 4: During 1995, the partnership sold three of its properties to a tenant
for its original purchase price, excluding acquisition fees and
miscellaneous acquisition expenses. The majority of the net sales
proceeds were used to acquire additional properties. As a result of
these transactions, the partnership recognized a loss for financial
reporting purposes of $71,023 primarily due to acquisition fees and
miscellaneous acquisition expenses the partnership had allocated to the
three properties and due to the accrued rental income relating to
future scheduled rent increases that the partnership had recorded and
reversed at the time of sale. In addition, during 1996, Wood-Ridge Real
Estate Joint Venture, in which the partnership owns a 50% interest,
sold its two properties to the tenant and recognized a gain of
approximately $261,100 for financial reporting purposes. As a result,
the partnership's pro rata share of such gain of approximately $130,550
is included in equity in earnings of unconsolidated joint ventures for
1996.
Note 5: Distributions declared for the quarters ended December 31, 1994,
1995, 1996 and 1997 are reflected in the 1995, 1996, 1997 and 1998
columns, respectively, due to the payment of such distributions in
January 1995, 1996, 1997 and 1998, respectively. As a result of
distributions being presented on a cash basis, distributions declared
and unpaid as of December 31, 1994, 1995, 1996, 1997 and 1998 are not
included in the 1994, 1995, 1996, 1997 and 1998 totals, respectively.
Note 6: On December 31, 1996, CNL Income Fund XV, Ltd. declared a special
distribution of cumulative excess operating reserves equal to .20% of
the total invested capital. Accordingly, the total yield for 1996 was
8.20%
Note 7. During the year ended December 31, 1998, the Partnership established
an allowance for loss on land and buildings of $280,907 for financial
reporting purposes relating to two of the four Long John Silver's
properties whose leases were rejected by the tenant. The tenant of
these properties filed for bankruptcy and ceased payment of rents under
the terms of the lease agreements. The loss represents the difference
between the carrying value of the Properties at December 31, 1998 and
the current estimated net realizable value for these Properties.
Note 8: Total cash distributions as a percentage of original $1,000 investment
are calculated based on actual distributions declared for the period.
(See Note 5 above)
Note 9: Cash distributions for 1998 include an additional amount equal to
0.50% of invested capital which was earned in 1997 or prior years, but
declared payable in the first quarter of 1998.
C-13
<PAGE>
1997 1998
------------ ------------
Cash distributions to investors
Source (on GAAP basis)
- from investment income 82 65
- from capital gain 0 0
- from investment income from prior
period 0 20
------------ ------------
Total distributions on GAAP basis (Note 5) 82 85
============ ============
Source (on cash basis)
- from sales 0 0
- from refinancing 0 0
- from operations 82 80
- from investment income from prior period 0 5
------------ ------------
Total distributions on cash basis (Note 5) 82 85
============ ============
Total cash distributions as a percentage
of original $1,000 investment (Notes 6,
8 and 9).0.00% 8.00% 8.50%
Total cumulative cash distributions per
$1,000 investment from inception 249 334
Amount (in percentage terms) remaining
invested in program properties at the
end of each year (period) presented
(original total acquisition cost of
properties retained, divided by original
total acquisition cost of all properties
in program) (Note 4) 100% 100%
C-14
<PAGE>
TABLE III
Operating Results of Prior Programs
CNL INCOME FUND XVI, LTD.
<TABLE>
<CAPTION>
1993
(Note 1) 1994 1995 1996
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Gross revenue $ 0 $ 186,257 $ 2,702,504 $ 4,343,390
Equity in earnings from joint venture 0 0 0 19,668
Profit from sale of properties (Notes 4
and 5) 0 0 0 124,305
Provision for loss on building (Note 8) 0 0 0 0
Interest income 0 21,478 321,137 75,160
Less: Operating expenses 0 (10,700) (274,595) (261,878)
Interest expense 0 0 0 0
Depreciation and amortization 0 (9,458) (318,205) (552,447)
------------ ------------ ------------ ------------
Net income - GAAP basis 0 187,577 2,430,841 3,748,198
============ ============ ============ ============
Taxable income
- from operations 0 189,864 2,139,382 3,239,830
============ ============ ============ ============
- from gain on sale (Notes 4 and 5) 0 0 0 0
============ ============ ============ ============
Cash generated from operations
(Notes 2 and 3) 0 205,148 2,481,395 3,753,726
Cash generated from sales (Notes 4 and 5) 0 0 0 775,000
Cash generated from refinancing 0 0 0 0
------------ ------------ ------------ ------------
Cash generated from operations, sales
and refinancing 0 205,148 2,481,395 4,528,726
Less: Cash distributions to investors
(Note 6)
- from operating cash flow 0 (2,845) (1,798,921) (3,431,251)
- from sale of properties 0 0 0 0
------------ ------------ ------------ ------------
Cash generated (deficiency) after cash
distributions 0 202,303 682,474 1,097,475
Special items (not including sales and
refinancing):
Limited partners' capital contri-
butions 0 20,174,172 24,825,828 0
General partners' capital contri-
butions 1,000 0 0 0
Syndication costs 0 (1,929,465) (2,452,743) 0
Acquisition of land and buildings 0 (13,170,132) (16,012,458) (2,355,627)
Investment in direct financing
leases 0 (975,853) (5,595,236) (405,937)
Investment in joint ventures 0 0 0 (775,000)
Reimbursement of organization,
syndication and acquisition costs
paid on behalf of CNL Income Fund
XVI, Ltd. by related parties 0 (854,154) (405,569) (2,494)
Increase in other assets 0 (443,625) (58,720) 0
Increase (decrease) in restricted cash 0 0 0 0
Reimbursement from developer of
construction costs 0 0 0 0
Other (36) (20,714) 20,714 0
------------ ------------ ------------ ------------
Cash generated (deficiency) after cash
distributions and special items 964 2,982,532 1,004,290 (2,441,583)
============ ============ ============ ============
TAX AND DISTRIBUTION DATA PER $1,000
INVESTED
Federal income tax results:
Ordinary income (loss)
- from operations 0 17 53 71
============ ============ ============ ============
- from recapture 0 0 0 0
============ ============ ============ ============
Capital gain (loss) (Notes 4 and 5) 0 0 0 0
============ ============ ============ ============
</TABLE>
C-15
<PAGE>
1997 1998
------------ ------------
Gross revenue $ 4,308,853 $ 3,901,555
Equity in earnings from joint venture 73,507 132,002
Profit from sale of properties (Notes 4
and 5) 41,148 0
Provision for loss on building (Note 8) 0 (266,257)
Interest income 73,634 60,199
Less: Operating expenses (272,932) (295,141)
Interest expense 0 0
Depreciation and amortization (563,883) (555,360)
------------ ------------
Net income - GAAP basis 3,660,327 2,976,998
============ ============
Taxable income
- from operations 3,178,911 3,153,618
============ ============
- from gain on sale (Notes 4 and 5) 64,912 0
============ ============
Cash generated from operations
(Notes 2 and 3) 3,780,424 3,623,694
Cash generated from sales (Notes 4 and 5) 610,384 0
Cash generated from refinancing 0 0
------------ ------------
Cash generated from operations, sales
and refinancing 4,390,808 3,623,694
Less: Cash distributions to investors
(Note 6)
- from operating cash flow (3,600,000) (3,623,694)
- from sale of properties 0 (66,306)
------------ ------------
Cash generated (deficiency) after cash
distributions 790,808 (66,306)
Special items (not including sales and
refinancing):
Limited partners' capital contri-
butions 0 0
General partners' capital contri-
butions 0 0
Syndication costs 0 0
Acquisition of land and buildings (23,501) (3,545)
Investment in direct financing
leases (29,257) (28,403)
Investment in joint ventures 0 (744,058)
Reimbursement of organization,
syndication and acquisition costs
paid on behalf of CNL Income Fund
XVI, Ltd. by related parties 0 0
Increase in other assets 0 0
Increase (decrease) in restricted cash (610,384) 610,384
Reimbursement from developer of
construction costs 0 161,648
Other 0 0
------------ ------------
Cash generated (deficiency) after cash
distributions and special items 127,666 (70,280)
============ ============
TAX AND DISTRIBUTION DATA PER $1,000
INVESTED
Federal income tax results:
Ordinary income (loss)
- from operations 70 69
============ ============
- from recapture 0 0
============ ============
Capital gain (loss) (Notes 4 and 5) 1 0
============ ============
C-16
<PAGE>
TABLE III - CNL INCOME FUND XVI, LTD. (continued)
<TABLE>
<CAPTION>
1993
(Note 1) 1994 1995 1996
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Cash distributions to investors
Source (on GAAP basis)
- from investment income 0 1 45 76
- from capital gain 0 0 0 0
- from investment income from
prior period 0 0 0 0
------------ ------------ ------------ ------------
Total distributions on GAAP basis (Note 6) 0 1 45 76
============ ============ ============ ============
Source (on cash basis)
- from sales 0 0 0 0
- from refinancing 0 0 0 0
- from operations 0 1 45 76
- from prior period 0 0 0 0
------------ ------------ ------------ ------------
Total distributions on cash basis (Note 6) 0 1 45 76
============ ============ ============ ============
Total cash distributions as a percentage
of original $1,000 investment (Notes 7
and 9) 0.00% 4.50% 6.00% 7.88%
Total cumulative cash distributions per
$1,000 investment from inception 0 1 46 122
Amount (in percentage terms) remaining
invested in program properties at the
end of each year (period) presented
(original total acquisition cost of
properties retained, divided by original
total acquisition cost of all properties
in program) (Notes 4 and 5) N/A 100% 100% 100%
</TABLE>
Note 1: Pursuant to a registration statement on Form S-11 under the Securities
Act of 1933, as amended, CNL Income Fund XVI, Ltd. ("CNL XVI") and CNL
Income Fund XV, Ltd. each registered for sale $40,000,000 units of
limited partnership interests ("Units"). The offering of Units of CNL
Income Fund XV, Ltd. commenced February 23, 1994. Pursuant to the
registration statement, CNL XVI could not commence until the offering
of Units of CNL Income Fund XV, Ltd. was terminated. CNL Income Fund
XV, Ltd. terminated its offering of Units on September 1, 1994, at
which time the maximum offering proceeds of $40,000,000 had been
received. Upon the termination of the offering of Units of CNL Income
Fund XV, Ltd., CNL XVI commenced its offering of Units. Activities
through September 22, 1994, were devoted to organization of the
partnership and operations had not begun.
Note 2: Cash generated from operations includes cash received from tenants,
less cash paid for expenses, plus interest received.
Note 3: Cash generated from operations per this table agrees to cash
generated from operations per the statement of cash flows included in
the financial statements of CNL Income Fund XVI, Ltd.
Note 4: In April 1996, CNL Income Fund XVI, Ltd. sold one of its properties
and received net sales proceeds of $775,000, resulting in a gain of
$124,305 for financial reporting purposes. In October 1996, the
partnership reinvested the net sales proceeds in an additional property
as tenants-in-common with an affiliate of the general partners.
Note 5: In March 1997, CNL Income Fund XVI, Ltd. sold one of its properties
and received net sales proceeds of $610,384, resulting in a gain of
$41,148 for financial reporting purposes. In January 1998, the
partnership reinvested the net sales proceeds in an additional property
as tenants-in-common with affiliates of the general partners.
Note 6: Distributions declared for the quarters ended December 31, 1994,
1995, 1996 and 1997 are reflected in the 1995, 1996, 1997 and 1998
columns, respectively, due to the payment of such distributions in
January 1995, 1996, 1997 and 1998, respectively. As a result of
distributions being presented on a cash basis, distributions declared
and unpaid as of December 31, 1994, 1995, 1996, 1997 and 1998 are not
included in the 1994, 1995, 1996, 1997 and 1998 totals, respectively.
Note 7: Cash distributions for 1998 include an additional amount equal to
0.20% of invested capital which was earned in 1997 but declared payable
in the first quarter of 1998.
Note 8: During the year ended December 31, 1998, the Partnership recorded a
provision for loss on building of $266,257 for financial reporting
purposes relating to a Long John Silver's property in Celina, Ohio. The
tenant of this property filed for bankruptcy and ceased payment of
rents under the terms of its lease agreement. The allowance represents
the difference between the Property's carrying value at December 31,
1998 and the estimated net realizable value for this Property.
Note 9: Total cash distributions as a percentage of original $1,000 investment
are calculated based on actual distributions declared for the period.
(See Note 6 above)
C-17
<PAGE>
1997 1998
------------ ------------
Cash distributions to investors
Source (on GAAP basis) 80 65
- from investment income 0 0
- from capital gain
- from investment income from
prior period 0 17
------------ ------------
Total distributions on GAAP basis (Note 6) 80 82
============ ============
Source (on cash basis)
- from sales 0 0
- from refinancing 0 0
- from operations 80 81
- from prior period 0 1
----------- ------------
Total distributions on cash basis (Note 6) 80 82
============ ============
Total cash distributions as a percentage
of original $1,000 investment (Notes 7
and 9) 8.00% 8.20%
Total cumulative cash distributions per
$1,000 investment from inception 202 284
Amount (in percentage terms) remaining
invested in program properties at the
end of each year (period) presented
(original total acquisition cost of
properties retained, divided by original
total acquisition cost of all properties
in program) (Notes 4 and 5) 100% 100%
C-18
<PAGE>
TABLE III
Operating Results of Prior Programs
CNL AMERICAN PROPERTIES FUND, INC.
<TABLE>
<CAPTION>
1994 1997
(Note 1) 1995 1996 (Note 2)
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Gross revenue $ 0 $ 539,776 $ 4,363,456 $ 15,516,102
Equity in earnings of joint venture 0 0 0 0
Provision for loss on land and buildings
(Note 12) 0 0 0 0
Interest income 0 119,355 1,843,228 3,941,831
Less: Operating expenses 0 (186,145) (908,924) (2,066,962)
Interest expense 0 0 0 0
Depreciation and amortization 0 (104,131) (521,871) (1,795,062)
Minority interest in income of
consolidated joint venture 0 (76) (29,927) (31,453)
------------ ------------ ------------ ------------
Net income - GAAP basis 0 368,779 4,745,962 15,564,456
============ ============ ============ ============
Taxable income
- from operations (Note 8) 0 379,935 4,894,262 15,727,311
============ ============ ============ ============
- from gain (loss) on sale 0 0 0 (41,115)
============ ============ ============ ============
Cash generated from operations
(Notes 4 and 5) 0 498,459 5,482,540 17,076,214
Cash generated from sales (Note 7) 0 0 0 6,289,236
Cash generated from refinancing 0 0 0 0
------------ ------------ ------------ ------------
Cash generated from operations, sales
and refinancing 0 498,459 5,482,540 23,365,450
Less: Cash distributions to investors
(Note 9)
- from operating cash flow 0 (498,459) (5,439,404) (16,854,297)
- from sale of properties 0 0 0 0
- from cash flow from prior period 0 0 0 0
- from return of capital (Note 10) 0 (136,827) 0 0
------------ ------------ ------------ ------------
Cash generated (deficiency) after cash
distributions 0 (136,827) 43,136 6,511,153
Special items (not including sales of
real estate and refinancing):
Subscriptions received from
stockholders 0 38,454,158 100,792,991 222,482,560
Sale of common stock to CNL Fund
Advisors, Inc. 200,000 0 0 0
Retirement of shares of common stock
(Note 13) 0 0 0 0
Contributions from minority interest 0 200,000 97,419 0
Distributions to holder of minority
interest 0 0 (39,121) (34,020)
Stock issuance costs (19) (3,680,704) (8,486,188) (19,542,862)
Acquisition of land and buildings 0 (18,835,969) (36,104,148) (143,542,667)
Investment in direct financing
leases 0 (1,364,960) (13,372,621) (39,155,974)
Proceeds from sale of equipment direct
financing leases 0 0 0 962,274
Investment in joint venture 0 0 0 0
Purchase of other investments 0 0 0 0
Investment in mortgage notes
receivable 0 0 (13,547,264) (4,401,982)
Collections on mortgage notes
receivable 0 0 133,850 250,732
Investment in equipment notes receivable 0 0 0 (12,521,401)
Collections on equipment notes receivable 0 0 0 0
Investment in certificate of deposit 0 0 0 (2,000,000)
Proceeds of borrowing on line of
credit 0 0 3,666,896 19,721,804
Payment on line of credit 0 0 (145,080) (20,784,577)
Reimbursement of organization,
acquisition, and deferred offering
and stock issuance costs paid on
behalf of CNL American Properties
Fund, Inc. by related parties (199,036) (2,500,056) (939,798) (2,857,352)
Increase in intangibles and other assets 0 (628,142) (1,103,896) 0
Other 0 0 (54,533) 49,001
------------ ------------ ------------ ------------
Cash generated (deficiency) after cash
distributions and special items 945 11,507,500 30,941,643 5,136,689
============ ============ ============ ============
TAX AND DISTRIBUTION DATA PER $1,000
INVESTED (Note 6)
Federal income tax results:
Ordinary income (loss) (Note 11)
- from operations (Note 8) 0 20 61 67
============ ============ ============ ============
- from recapture 0 0 0 0
============ ============ ============ ============
Capital gain (loss) 0 0 0 0
============ ============ ============ ============
</TABLE>
C-19
<PAGE>
1998
(Note 3)
--------------
Gross revenue $ 33,202,491
Equity in earnings of joint venture 16,018
Provision for loss on land and buildings
(Note 12) (611,534)
Interest income 8,984,546
Less: Operating expenses (5,354,859)
Interest expense 0
Depreciation and amortization (4,054,098)
Minority interest in income of
consolidated joint venture (30,156)
--------------
Net income - GAAP basis 32,152,408
==============
Taxable income
- from operations (Note 8) 33,553,390
==============
- from gain (loss) on sale (149,948)
==============
Cash generated from operations
(Notes 4 and 5) 39,116,275
Cash generated from sales (Note 7) 2,385,941
Cash generated from refinancing 0
-------------
Cash generated from operations, sales
and refinancing 41,502,216
Less: Cash distributions to investors
(Note 9)
- from operating cash flow (39,116,275)
- from sale of properties 0
- from cash flow from prior period (265,053)
- from return of capital (Note 10) (67,821)
------------
Cash generated (deficiency) after cash
distributions 2,053,067
Special items (not including sales of
real estate and refinancing):
Subscriptions received from
stockholders 385,523,966
Sale of common stock to CNL Fund
Advisors, Inc. 0
Retirement of shares of common stock
(Note 13) (639,528)
Contributions from minority interest 0
Distributions to holder of minority
interest (34,073)
Stock issuance costs (34,579,650)
Acquisition of land and buildings (200,101,667)
Investment in direct financing
leases (47,115,435)
Proceeds from sale of equipment direct
financing leases 0
Investment in joint venture (974,696)
Purchase of other investments (16,083,055)
Investment in mortgage notes
receivable (2,886,648)
Collections on mortgage notes
receivable 291,990
Investment in equipment notes receivable (7,837,750)
Collections on equipment notes receivable 1,263,633
Investment in certificate of deposit 0
Proceeds of borrowing on line of
credit 7,692,040
Payment on line of credit (8,039)
Reimbursement of organization,
acquisition, and deferred offering
and stock issuance costs paid on
behalf of CNL American Properties
Fund, Inc. by related parties (4,574,925)
Increase in intangibles and other assets (6,281,069)
Other (95,101)
--------------
Cash generated (deficiency) after cash
distributions and special items 75,613,060
==============
TAX AND DISTRIBUTION DATA PER $1,000
INVESTED (Note 6)
Federal income tax results:
Ordinary income (loss) (Note 11)
- from operations (Note 8) 63
==============
- from recapture 0
==============
Capital gain (loss) 0
==============
C-20
<PAGE>
TABLE III - CNL AMERICAN PROPERTIES FUND, INC. (continued)
<TABLE>
<CAPTION>
1994 1997
(Note 1) 1995 1996 (Note 2)
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Cash distributions to investors
Source (on GAAP basis)
- from investment income 0 19 59 66
- from capital gain 0 0 0 0
- from investment income from
prior period 0 0 0 0
- from return of capital (Note 10) 0 14 8 6
------------ ------------ ------------ ------------
Total distributions on GAAP basis (Note 11) 0 33 67 72
============ ============ ============ ============
Source (on cash basis)
- from sales 0 0 0 0
- from refinancing 0 0 0 0
- from operations 0 26 67 72
- from cash flow from prior period 0 0 0 0
- from return of capital (Note 10) 0 7 0 0
------------ ------------ ------------ ------------
Total distributions on cash basis (Note 11) 0 33 67 72
============ ============ ============ ============
Total cash distributions as a percentage
of original $1,000 investment (Note 6 and 9) 0.00% 5.34% 7.06% 7.45%
Total cumulative cash distributions per
$1,000 investment from inception 0 33 100 172
Amount (in percentage terms) remaining invested in
program properties at the end of each year
(period) presented (original total acquisition
cost of properties retained, divided by original
total acquisition cost of all properties in
program) (Note 7) N/A 100% 100% 100%
</TABLE>
Note 1: Pursuant to a Registration Statement on Form S-11 under the Securities
Act of 1933, as amended, effective March 29, 1995, CNL American
Properties Fund, Inc. ("APF") registered for sale $165,000,000 of
shares of common stock (the "Initial Offering"), including $15,000,000
available only to stockholders participating in the company's
reinvestment plan. The Initial Offering of APF commenced April 19,
1995, and upon completion of the Initial Offering on February 6, 1997,
had received subscription proceeds of $150,591,765 (15,059,177 shares),
including $591,765 (59,177 shares) issued pursuant to the reinvestment
plan. Pursuant to a Registration Statement on Form S-11 under the
Securities Act of 1933, as amended, effective January 31, 1997, APF
registered for sale $275,000,000 of shares of common stock (the "1997
Offering"), including $25,000,000 available only to stockholders
participating in the company's reinvestment plan. The 1997 Offering of
APF commenced following the completion of the Initial Offering on
February 6, 1997, and upon completion of the 1997 Offering on March 2,
1998, had received subscription proceeds of $251,872,648 (25,187,265
shares), including $1,872,648 (187,265 shares) issued pursuant to the
reinvestment plan. Pursuant to a Registration Statement on Form S-11
under the Securities Act of 1933, as amended, effective May 12, 1998,
APF registered for sale $345,000,000 of shares of common stock (the
"1998 Offering"). The 1998 Offering of APF commenced following the
completion of the 1997 Offering on March 2, 1998. As of December 31,
1998, APF had received subscriptions totalling approximately
$345,000,000 from the 1998 Offering, including $3,107,848 issued
pursuant to the company's reinvestment plan. The 1998 Offering became
fully subscribed in December 1998 and proceeds from the last
subscriptions were received in January 1999. Activities through June 1,
1995, were devoted to organization of APF and operations had not begun.
Note 2: The amounts shown represent the combined results of the Initial
Offering and the 1997 Offering.
Note 3: The amounts shown represent the combined results of the Initial
Offering, 1997 Offering and 1998 Offering.
Note 4: Cash generated from operations includes cash received from tenants,
less cash paid for expenses, plus interest received.
Note 5: Cash generated from operations per this table agrees to cash
generated from operations per the statement of cash flows included in
the financial statements of APF.
Note 6: Total cash distributions as a percentage of original $1,000
investment are calculated based on actual distributions declared for
the period.
Note 7: In May 1997 and July 1997, APF sold four properties and one property,
respectively, to a tenant for $5,254,083 and $1,035,153, respectively,
which was equal to the carrying value of the properties at the time of
sale. In May and July 1998, APF sold two and one properties,
respectively, to third parties for $1,605,154 and $1,152,262,
respectively, (and received net sales proceeds of approximately
$1,233,700 and $629,435, respectively, after deduction of construction
costs incurred but not paid by APF as of the date of the sale) which
approximated the carrying value of the properties at the time of sale.
As a result, no gain or loss was recognized for financial reporting
purposes. The company reinvested the proceeds from the sale of
properties in additional properties.
Note 8: Taxable income presented is before the dividends paid deduction.
Note 9: For the years ended December 31, 1998, 1997, 1996 and 1995, 84.87%,
93.33%, 90.25% and 59.82%, respectively, of the distributions received
by stockholders were considered to be ordinary income and 15.13%,
6.67%, 9.75% and 40.18%, respectively, were considered a return of
capital for federal income tax purposes. No amounts distributed to
stockholders for the years ended December 31, 1998, 1997, 1996 and 1995
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.
C-21
<PAGE>
1998
(Note 3)
--------------
Cash distributions to investors
Source (on GAAP basis)
- from investment income 60
- from capital gain 0
- from investment income from
prior period 0
- from return of capital (Note 10) 14
--------------
Total distributions on GAAP basis (Note 11) 74
==============
Source (on cash basis)
- from sales 0
- from refinancing 0
- from operations 73
- from cash flow from prior period 1
- from return of capital (Note 10) 0
--------------
Total distributions on cash basis (Note 11) 74
==============
Total cash distributions as a percentage
of original $1,000 investment (Note 6 and 9) 7.62%
Total cumulative cash distributions per
$1,000 investment from inception 246
Amount (in percentage terms) remaining invested in
program properties at the end of each year
(period) presented (original total acquisition
cost of properties retained, divided by original
total acquisition cost of all properties in
program) (Note 7) 100%
Note 10: Cash distributions presented above as a return of capital on a GAAP
basis represent the amount of cash distributions in excess of
accumulated net income on a GAAP basis. Accumulated net income
includes deductions for depreciation and amortization expense and
income from certain non-cash items. This amount is not required to
be presented as a return of capital except for purposes of this
table, and APF has not treated this amount as a return of capital
for any other purpose.
Note 11: Tax and distribution data and total distributions on GAAP basis
were computed based on the weighted average shares outstanding
during each period presented.
Note 12: During the year ended December 31, 1998, APF recorded provisions
for losses on land and buildings in the amount of $611,534 for
financial reporting purposes relating to two Shoney's properties
and two Boston Market Properties. The tenants of these properties
experienced financial difficulties and ceased payment of rents
under the terms of their lease agreements. The allowances represent
the difference between the carrying value of the Properties at
December 31, 1998 and the estimated net realizable value for these
Properties.
Note 13: In October 1998, the Board of Directors of APF elected to implement
APF's redemption plan. Under the redemption plan, APF elected to
redeem shares, subject to certain conditions and limitations.
During the year ended December 31, 1998, 69,514 shares were
redeemed at $9.20 per share ($639,528) and retired from shares
outstanding of common stock.
C-22
<PAGE>
TABLE III
Operating Results of Prior Programs
CNL INCOME FUND XVII, LTD.
<TABLE>
<CAPTION>
1995
(Note 1) 1996 1997 1998
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Gross revenue $ 0 $ 1,195,263 $ 2,643,871 $ 2,816,845
Equity in earnings of unconsolidated
joint ventures 0 4,834 100,918 140,595
Interest income 12,153 244,406 69,779 51,240
Less: Operating expenses (3,493) (169,536) (181,865) (182,681)
Interest expense 0 0 0 0
Depreciation and amortization (309) (179,208) (387,292) (369,209)
Minority interest in income of
consolidated joint venture 0 (41,854) (62,632)
------------ ------------ ------------ ------------
Net income - GAAP basis 8,351 1,095,759 2,203,557 2,394,158
============ ============ ============ ============
Taxable income
- from operations 12,153 1,114,964 2,058,601 2,114,039
============ ============ ============ ============
- from gain on sale 0 0 0 0
============ ============ ============ ============
Cash generated from operations
(Notes 2 and 3) 9,012 1,232,948 2,495,114 2,520,919
Cash generated from sales 0 0 0 0
Cash generated from refinancing 0 0 0 0
------------ ------------ ------------ ------------
Cash generated from operations, sales
and refinancing 9,012 1,232,948 2,495,114 2,520,919
Less: Cash distributions to investors
(Note 4)
- from operating cash flow (1,199) (703,681) (2,177,584) (2,400,000)
- from sale of properties 0 0 0 0
------------ ------------ ------------ ------------
Cash generated (deficiency) after cash
distributions 7,813 529,267 317,530 120,919
Special items (not including sales and
refinancing):
Limited partners' capital contri-
butions 5,696,921 24,303,079 0 0
General partners' capital contri-
butions 1,000 0 0 0
Contributions from minority interest 0 140,676 278,170 0
Distribution to holder of minority
interest 0 0 (41,507) (49,023)
Syndication costs (604,348) (2,407,317) 0 0
Acquisition of land and buildings (332,928) (19,735,346) (1,740,491) 0
Investment in direct financing
leases 0 (1,784,925) (1,130,497) 0
Investment in joint ventures 0 (201,501) (1,135,681) (124,452)
Reimbursement of organization,
syndication and acquisition costs
paid on behalf of CNL Income Fund
XVII, Ltd. by related parties (347,907) (326,483) (25,444) 0
Increase in other assets (221,282) 0 0 0
Reimbursement from developer of
construction costs 0 0 0 306,100
Other (410) 410 0 0
------------ ------------ ------------ ------------
Cash generated (deficiency) after cash
distributions and special items 4,198,859 517,860 (3,477,920) 253,544
============ ============ ============ ============
TAX AND DISTRIBUTION DATA PER $1,000
INVESTED
Federal income tax results:
Ordinary income (loss)
- from operations 36 37 69 70
============ ============ ============ ============
- from recapture 0 0 0 0
============ ============ ============ ============
Capital gain (loss) 0 0 0 0
============ ============ ============ ============
</TABLE>
C-23
<PAGE>
TABLE III - CNL INCOME FUND XVII, LTD. (continued)
<TABLE>
<CAPTION>
1995
(Note 1) 1996 1997 1998
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Cash distributions to investors
Source (on GAAP basis)
- from investment income 4 23 73 79
- from capital gain 0 0 0 0
- from investment income from
prior period 0 0 0 1
------------ ------------ ------------ ------------
Total distributions on GAAP basis (Note 4) 0 23 73 80
============ ============ ============ ============
Source (on cash basis)
- from sales 0 0 0 0
- from refinancing 0 0 0 0
- from operations 4 23 73 80
------------ ------------ ------------ ------------
Total distributions on cash basis (Note 4) 4 23 73 80
============ ============ ============ ============
Total cash distributions as a percentage
of original $1,000 investment (Note 5) 5.00% 5.50% 7.625% 8.00%
Total cumulative cash distributions per
$1,000 investment from inception 4 27 100 180
Amount (in percentage terms) remaining
invested in program properties at the
end of each year (period) presented
(original total acquisition cost of
properties retained, divided by original
total acquisition cost of all properties
in program) (Note 6) N/A 98% 100% 98%
</TABLE>
Note 1: Pursuant to a registration statement on Form S-11 under the Securities
Act of 1933, as amended, effective August 11, 1995, CNL Income Fund
XVII, Ltd. ("CNL XVII") and CNL Income Fund XVIII, Ltd. each registered
for sale $30,000,000 units of limited partnership interests ("Units").
The offering of Units of CNL Income Fund XVII, Ltd. commenced September
2, 1995. Pursuant to the registration statement, CNL XVIII could not
commence until the offering of Units of CNL Income Fund XVII, Ltd. was
terminated. CNL Income Fund XVII, Ltd. terminated its offering of Units
on September 19, 1996, at which time subscriptions for the maximum
offering proceeds of $30,000,000 had been received. Upon the
termination of the offering of Units of CNL Income Fund XVII, Ltd., CNL
XVIII commenced its offering of Units. Activities through November 3,
1995, were devoted to organization of the partnership and operations
had not begun.
Note 2: Cash generated from operations includes cash received from tenants,
plus distributions from joint ventures, less cash paid for expenses,
plus interest received.
Note 3: Cash generated from operations per this table agrees to cash
generated from operations per the statement of cash flows included in
the financial statements of CNL XVII.
Note 4: Distributions declared for the quarters ended December 31, 1995,
1996 and 1997 are reflected in the 1996, 1997 and 1998 columns,
respectively, due to the payment of such distributions in January 1996,
1997 and 1998, respectively. As a result of distributions being
presented on a cash basis, distributions declared and unpaid as of
December 31, 1996, 1997 and 1998 are not included in the 1996, 1997 and
1998 totals, respectively.
Note 5: Total cash distributions as a percentage of original $1,000 investment
are calculated based on actual distributions declared for the period.
(See Note 4 above)
Note 6: During 1998, CNL Income Fund XVII, Ltd. received approximately $306,100
in reimbursements from the developer upon final reconciliation of total
construction costs relating to the properties in Aiken, South Carolina
and Weatherford, Texas, in accordance with the related development
agreements. The partnership intends to reinvest the funds in additional
properties.
C-24
<PAGE>
TABLE III
Operating Results of Prior Programs
CNL INCOME FUND XVIII, LTD.
<TABLE>
<CAPTION>
1995
(Note 1) 1996 1997 1998
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Gross revenue $ 0 $ 1,373 $ 1,291,416 $ 2,956,349
Equity in earnings of joint venture 0 0 0 0
Provision for loss on land (Note 5) 0 0 0 (197,466)
Interest income 0 30,241 161,826 141,408
Less: Operating expenses 0 (3,992) (156,403) (223,496)
Interest expense 0 0 0 0
Depreciation and amortization 0 (712) (142,079) (374,473)
------------ ------------ ------------ ------------
Net income - GAAP basis 0 26,910 1,154,760 2,302,322
============ ============ ============ ============
Taxable income
- from operations 0 30,223 1,318,750 2,324,746
============ ============ ============ ============
- from gain on sale 0 0 0 0
============ ============ ============ ============
Cash generated from operations
(Notes 2 and 3) 0 27,146 1,361,756 2,831,738
Cash generated from sales 0 0 0 0
Cash generated from refinancing 0 0 0 0
------------ ------------ ------------ ------------
Cash generated from operations, sales
and refinancing 0 27,146 1,361,756 2,831,738
Less: Cash distributions to investors
(Note 4)
- from operating cash flow 0 (2,138) (855,957) (2,468,400)
- from sale of properties 0 0 0 0
------------ ------------ ------------ ------------
Cash generated (deficiency) after cash
distributions 0 25,008 505,799 363,338
Special items (not including sales and
refinancing):
Limited partners' capital contri-
butions 0 8,498,815 25,723,944 854,241
General partners' capital contri-
butions 1,000 0 0 0
Contributions from minority interest 0 0 0 0
Syndication costs 0 (845,657) (2,450,214) (161,142)
Acquisition of land and buildings 0 (1,533,446) (18,581,999) (3,134,046)
Investment in direct financing leases 0 0 (5,962,087) (12,945)
Investment in joint venture 0 0 0 (166,025)
Increase in restricted cash 0 0 0 0
Reimbursement of organization,
syndication and acquisition costs
paid on behalf of CNL Income Fund
XVIII, Ltd. by related parties 0 (497,420) (396,548) (37,135)
Increase in other assets 0 (276,848) 0 0
Other (20) (107) (66,893) (10,000)
------------ ------------ ------------ ------------
Cash generated (deficiency) after cash
distributions and special items 980 5,370,345 (1,227,998) (2,303,714)
============ ============ ============ ============
TAX AND DISTRIBUTION DATA PER $1,000
INVESTED
Federal income tax results:
Ordinary income (loss)
- from operations 0 6 57 66
============ ============ ============ ============
- from recapture 0 0 0 0
============ ============ ============ ============
Capital gain (loss) 0 0 0 0
============ ============ ============ ============
</TABLE>
C-25
<PAGE>
TABLE III - CNL INCOME FUND XVIII, LTD. (continued)
<TABLE>
<CAPTION>
1995
(Note 1) 1996 1997 1998
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Cash distributions to investors
Source (on GAAP basis)
- from investment income 0 0 38 65
- from capital gain 0 0 0 0
- from investment income from prior
period 0 0 0 6
------------ ------------ ------------ ------------
Total distributions on GAAP basis (Note 4) 0 0 38 71
============ ============ ============ ============
Source (on cash basis)
- from sales 0 0 0 0
- from refinancing 0 0 0 0
- from operations 0 0 38 71
------------ ------------ ------------ ------------
Total distributions on cash basis (Note 4) 0 0 38 71
============ ============ ============ ============
Total cash distributions as a percentage
of original $1,000 investment from
inception 0.00% 5.00% 5.75% 7.63%
Total cumulative cash distributions per
$1,000 investment (Note 6) 0 0 38 109
Amount (in percentage terms) remaining
invested in program properties at the
end of each year (period) presented
(original total acquisition cost of
properties retained, divided by original
total acquisition cost of all properties
in program) N/A 83% 95% 96%
</TABLE>
Note 1: Pursuant to a registration statement on Form S-11 under the
Securities Act of 1933, as amended, effective August 11, 1995, CNL
Income Fund XVIII, Ltd ("CNL XVIII") and CNL Income Fund XVII, Ltd.
each registered for sale $30,000,000 units of limited partnership
interest ("Units"). The offering of Units of CNL Income Fund XVII, Ltd.
commenced September 2, 1995. Pursuant to the registration statement,
CNL XVIII could not commence until the offering of Units of CNL Income
Fund XVII, Ltd. was terminated. CNL Income Fund XVII, Ltd. terminated
its offering of Units on September 19, 1996, at which time the maximum
offering proceeds of $30,000,000 had been received. Upon the
termination of the offering of Units of CNL Income Fund XVII, Ltd., CNL
XVIII commenced its offering of Units. Activities through October 11,
1996, were devoted to organization of the partnership and operations
had not begun.
Note 2: Cash generated from operations includes cash received from tenants,
less cash paid for expenses, plus interest received.
Note 3: Cash generated from operations per this table agrees to cash
generated from operations per the statement of cash flows included in
the financial statements of CNL XVIII.
Note 4: Distributions declared for the quarters ended December 1996 and 1997
are reflected in the 1997 and 1998 columns, respectively, due to the
payment of such distributions in January 1997 and 1998, respectively.
As a result of distributions being presented on a cash basis,
distributions declared and unpaid as of December 31, 1997 and 1998 are
not included in the 1997 and 1998 totals, respectively.
Note 5: During the year ended December 31, 1998, the partnership established
an allowance for loss on land of $197,466 for financial reporting
purposes relating to the property in Minnetonka, Minnesota. The tenant
of this Boston Market property declared bankruptcy and rejected the
lease relating to this property. The loss represents the difference
between the Property's carrying value at December 31, 1998 and the
current estimate of net realizable value.
Note 6: Total cash distributions as a percentage of original $1,000 investment
are calculated based on actual distributions declared for the period.
(See Note 4 above)
Note 7: Certain data for columns representing less than 12 months have been
annualized.
C-26
<PAGE>
TABLE V
SALES OR DISPOSALS OF PROPERTIES
<TABLE>
<CAPTION>
================================================================================================================
Selling Price, Net of
Closing Costs and GAAP Adjustments
----------------------------------------------------------
Purchase
Cash money Adjustments
received Mortgage mortgage resulting
net of balance taken from
Date Date of closing at time back by application
Property Acquired Sale costs of sale program of GAAP Total
================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
CNL Income Fund, Ltd.:
Burger King -
San Dimas, CA (14) 02/05/87 06/12/92 $1,169,021 0 0 0 $1,169,021
Wendy's -
Fairfield, CA (14) 07/01/87 10/03/94 1,018,490 0 0 0 1,018,490
Wendy's -
Casa Grande, AZ 12/10/86 08/19/97 795,700 0 0 0 795,700
Wendy's -
North Miami, FL (9) 02/18/86 08/21/97 473,713 0 0 0 473,713
Popeye's -
Kissimmee, FL (14) 12/31/86 04/30/98 661,300 0 0 0 661,300
CNL Income Fund II, Ltd.:
Golden Corral -
Salisbury, NC 05/29/87 07/21/93 746,800 0 0 0 746,800
Pizza Hut -
Graham, TX 08/24/87 07/28/94 261,628 0 0 0 261,628
Golden Corral -
Medina, OH (11) 11/18/87 11/30/94 825,000 0 0 0 825,000
Denny's -
Show Low, AZ (8) 05/22/87 01/31/97 620,800 0 0 0 620,800
KFC -
Eagan, MN 06/01/87 06/02/97 623,882 0 42,000 0 665,882
KFC -
Jacksonville, FL 09/01/87 09/09/97 639,363 0 0 0 639,363
Wendy's -
Farmington Hills, MI (12) 05/18/87 10/09/97 833,031 0 0 0 833,031
Wendy's -
Farmington Hills, MI (13) 05/18/87 10/09/97 1,085,259 0 0 0 1,085,259
Denny's -
Plant City, FL 11/23/87 10/24/97 910,061 0 0 0 910,061
Pizza Hut -
Mathis, TX 12/17/87 12/04/97 297,938 0 0 0 297,938
KFC -
Avon Park, FL 09/02/87 12/10/97 501,975 0 0 0 501,975
CNL Income Fund III, Ltd.:
Wendy's -
Chicago, IL (14) 06/02/88 01/10/97 496,418 0 0 0 496,418
Perkins -
Bradenton, FL 06/30/88 03/14/97 1,310,001 0 0 0 1,310,001
Pizza Hut -
Kissimmee, FL 02/23/88 04/08/97 673,159 0 0 0 673,159
</TABLE>
<TABLE>
<CAPTION>
=========================================================================================
Cost of Properties
Including Closing and
Soft Costs
--------------------------------------- Excess
Total (deficiency)
acquisition of property
cost, capital operating cash
Original improvements receipts over
mortgage closing and cash
Property financing soft costs (1) Total expenditures
==========================================================================================
<S> <C> <C> <C> <C>
CNL Income Fund, Ltd.:
Burger King -
San Dimas, CA (14) 0 $955,000 $955,000 $214,021
Wendy's -
Fairfield, CA (14) 0 861,500 861,500 156,990
Wendy's -
Casa Grande, AZ 0 667,255 667,255 128,445
Wendy's -
North Miami, FL (9) 0 385,000 385,000 88,713
Popeye's -
Kissimmee, FL (14) 0 475,360 475,360 185,940
CNL Income Fund II, Ltd.:
Golden Corral -
Salisbury, NC 0 642,800 642,800 104,000
Pizza Hut -
Graham, TX 0 205,500 205,500 56,128
Golden Corral -
Medina, OH (11) 0 743,000 743,000 82,000
Denny's -
Show Low, AZ (8) 0 484,185 484,185 136,615
KFC -
Eagan, MN 0 601,100 601,100 64,782
KFC -
Jacksonville, FL 0 405,000 405,000 234,363
Wendy's -
Farmington Hills, MI (12) 0 679,000 679,000 154,031
Wendy's -
Farmington Hills, MI (13) 0 887,000 887,000 198,259
Denny's -
Plant City, FL 0 820,717 820,717 89,344
Pizza Hut -
Mathis, TX 0 202,100 202,100 95,838
KFC -
Avon Park, FL 0 345,000 345,000 156,975
CNL Income Fund III, Ltd.:
Wendy's -
Chicago, IL (14) 0 591,362 591,362 (94,944)
Perkins -
Bradenton, FL 0 1,080,500 1,080,500 229,501
Pizza Hut -
Kissimmee, FL 0 474,755 474,755 198,404
</TABLE>
C-27
<PAGE>
TABLE V
SALES OR DISPOSALS OF PROPERTIES
<TABLE>
<CAPTION>
================================================================================================================
Selling Price, Net of
Closing Costs and GAAP Adjustments
----------------------------------------------------------
Purchase
Cash money Adjustments
received Mortgage mortgage resulting
net of balance taken from
Date Date of closing at time back by application
Property Acquired Sale costs of sale program of GAAP Total
================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
Burger King -
Roswell, GA 06/08/88 06/20/97 257,981 0 685,000 0 942,981
Wendy's -
Mason City, IA 02/29/88 10/24/97 217,040 0 0 0 217,040
Taco Bell -
Fernandina Beach, FL (14) 04/09/88 01/15/98 721,655 0 0 0 721,655
Denny's -
Daytona Beach, FL (14) 07/12/88 01/23/98 1,008,976 0 0 0 1,008,976
Wendy's -
Punta Gorda, FL 02/03/88 02/20/98 665,973 0 0 0 665,973
Po Folks -
Hagerstown, MD 06/21/88 06/10/98 788,884 0 0 0 788,884
Denny's -
Hazard, KY 02/01/88 12/23/98 432,625 0 0 0 432,625
CNL Income Fund IV, Ltd.:
Taco Bell -
York, PA 03/22/89 04/27/94 712,000 0 0 0 712,000
Burger King -
Hastings, MI 08/12/88 12/15/95 518,650 0 0 0 518,650
Wendy's -
Tampa, FL 12/30/88 09/20/96 1,049,550 0 0 0 1,049,550
Checkers -
Douglasville, GA 12/08/94 11/07/97 380,695 0 0 0 380,695
Taco Bell -
Fort Myers, FL (14) 12/22/88 03/02/98 794,690 0 0 0 794,690
Denny's -
Union Township, OH (14) 11/01/88 03/31/98 674,135 0 0 0 674,135
Perkins -
Leesburg, FL 01/11/89 07/09/98 529,288 0 0 0 529,288
Taco Bell -
Naples, FL 12/22/88 09/03/98 533,127 0 0 0 533,127
CNL Income Fund V, Ltd.:
Perkins -
Myrtle Beach, SC (2) 02/28/90 08/25/95 0 0 1,040,000 0 1,040,000
Ponderosa -
St. Cloud, FL (6) (14) 06/01/89 10/24/96 73,713 0 1,057,299 0 1,131,012
Franklin National Bank -
Franklin, TN 06/26/89 01/07/97 960,741 0 0 0 960,741
Shoney's -
Smyrna, TN 03/22/89 05/13/97 636,788 0 0 0 636,788
KFC -
Salem, NH 05/31/89 09/22/97 1,272,137 0 0 0 1,272,137
</TABLE>
<TABLE>
<CAPTION>
=========================================================================================
Cost of Properties
Including Closing and
Soft Costs
--------------------------------------- Excess
Total (deficiency)
acquisition of property
cost, capital operating cash
Original improvements receipts over
mortgage closing and cash
Property financing soft costs (1) Total expenditures
==========================================================================================
<S> <C> <C> <C> <C>
Burger King -
Roswell, GA 0 775,226 775,226 167,755
Wendy's -
Mason City, IA 0 190,252 190,252 26,788
Taco Bell -
Fernandina Beach, FL (14) 0 559,570 559,570 162,085
Denny's -
Daytona Beach, FL (14) 0 918,777 918,777 90,799
Wendy's -
Punta Gorda, FL 0 684,342 684,342 (18,369)
Po Folks -
Hagerstown, MD 0 1,188,315 1,188,315 (399,431)
Denny's -
Hazard, KY 0 647,622 647,622 (214,997)
CNL Income Fund IV, Ltd.:
Taco Bell -
York, PA 0 616,501 616,501 95,499
Burger King -
Hastings, MI 0 419,936 419,936 98,714
Wendy's -
Tampa, FL 0 828,350 828,350 221,200
Checkers -
Douglasville, GA 0 363,768 363,768 16,927
Taco Bell -
Fort Myers, FL (14) 0 597,998 597,998 196,692
Denny's -
Union Township, OH (14) 0 872,850 872,850 (198,715)
Perkins -
Leesburg, FL 0 737,260 737,260 (207,972)
Taco Bell -
Naples, FL 0 410,546 410,546 122,581
CNL Income Fund V, Ltd.:
Perkins -
Myrtle Beach, SC (2) 0 986,418 986,418 53,582
Ponderosa -
St. Cloud, FL (6) (14) 0 996,769 996,769 134,243
Franklin National Bank -
Franklin, TN 0 1,138,164 1,138,164 (177,423)
Shoney's -
Smyrna, TN 0 554,200 554,200 82,588
KFC -
Salem, NH 0 1,079,310 1,079,310 192,827
</TABLE>
C-28
<PAGE>
TABLE V
SALES OR DISPOSALS OF PROPERTIES
<TABLE>
<CAPTION>
================================================================================================================
Selling Price, Net of
Closing Costs and GAAP Adjustments
----------------------------------------------------------
Purchase
Cash money Adjustments
received Mortgage mortgage resulting
net of balance taken from
Date Date of closing at time back by application
Property Acquired Sale costs of sale program of GAAP Total
================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
Perkins -
Port St. Lucie, FL 11/14/89 09/23/97 1,216,750 0 0 0 1,216,750
Hardee's -
Richmond, VA 02/17/89 11/07/97 397,785 0 0 0 397,785
Wendy's -
Tampa, FL 02/16/89 12/29/97 805,175 0 0 0 805,175
Denny's -
Port Orange, FL (14) 07/10/89 01/23/98 1,283,096 0 0 0 1,283,096
Shoney's -
Tyler, TX 03/20/89 02/17/98 844,229 0 0 0 894,229
CNL Income Fund VI, Ltd.:
Hardee's -
Batesville, AR 11/02/89 05/24/94 791,211 0 0 0 791,211
Hardee's -
Heber Springs, AR 02/13/90 05/24/94 638,270 0 0 0 638,270
Hardee's -
Little Canada, MN 11/28/89 06/29/95 899,503 0 0 0 899,503
Jack in the Box -
Dallas, TX 06/28/94 12/09/96 982,980 0 0 0 982,980
Denny's -
Show Low, AZ (8) 05/22/87 01/31/97 349,200 0 0 0 349,200
KFC -
Whitehall Township, MI 02/26/90 07/09/97 629,888 0 0 0 629,888
Perkins -
Naples, FL 12/26/89 07/09/97 1,487,725 0 0 0 1,487,725
Burger King -
Plattsmouth, NE 01/19/90 07/18/97 699,400 0 0 0 699,400
Shoney's -
Venice, FL 08/03/89 09/17/97 1,206,696 0 0 0 1,206,696
Jack in the Box -
Yuma, AZ (10) 07/14/94 10/31/97 510,653 0 0 0 510,653
Denny's -
Deland, FL 03/22/90 01/23/98 1,236,971 0 0 0 1,236,971
Wendy's -
Liverpool, NY 12/08/89 02/09/98 145,221 0 0 0 145,221
Perkin's -
Melbourne, FL 02/03/90 02/12/98 552,910 0 0 0 552,910
Hardee's
Bellevue, NE 05/03/90 06/05/98 900,000 0 0 0 900,000
</TABLE>
<TABLE>
<CAPTION>
=========================================================================================
Cost of Properties
Including Closing and
Soft Costs
--------------------------------------- Excess
Total (deficiency)
acquisition of property
cost, capital operating cash
Original improvements receipts over
mortgage closing and cash
Property financing soft costs (1) Total expenditures
==========================================================================================
<S> <C> <C> <C> <C>
Perkins -
Port St. Lucie, FL 0 1,203,207 1,203,207 13,543
Hardee's -
Richmond, VA 0 695,464 695,464 (297,679)
Wendy's -
Tampa, FL 0 657,800 657,800 147,375
Denny's -
Port Orange, FL (14) 0 1,021,000 1,021,000 262,096
Shoney's -
Tyler, TX 0 770,300 770,300 73,929
CNL Income Fund VI, Ltd.:
Hardee's -
Batesville, AR 0 605,500 605,500 185,711
Hardee's -
Heber Springs, AR 0 532,893 532,893 105,377
Hardee's -
Little Canada, MN 0 821,692 821,692 77,811
Jack in the Box -
Dallas, TX 0 964,437 964,437 18,543
Denny's -
Show Low, AZ (8) 0 272,354 272,354 76,846
KFC -
Whitehall Township, MI 0 725,604 725,604 (95,716)
Perkins -
Naples, FL 0 1,083,869 1,083,869 403,856
Burger King -
Plattsmouth, NE 0 561,000 561,000 138,400
Shoney's -
Venice, FL 0 1,032,435 1,032,435 174,261
Jack in the Box -
Yuma, AZ (10) 0 448,082 448,082 62,571
Denny's -
Deland, FL 0 1,000,000 1,000,000 236,971
Wendy's -
Liverpool, NY 0 341,440 341,440 (196,219)
Perkin's -
Melbourne, FL 0 692,850 692,850 (139,940)
Hardee's
Bellevue, NE 0 899,512 899,512 488
</TABLE>
C-29
<PAGE>
TABLE V
SALES OR DISPOSALS OF PROPERTIES
<TABLE>
<CAPTION>
================================================================================================================
Selling Price, Net of
Closing Costs and GAAP Adjustments
----------------------------------------------------------
Purchase
Cash money Adjustments
received Mortgage mortgage resulting
net of balance taken from
Date Date of closing at time back by application
Property Acquired Sale costs of sale program of GAAP Total
================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
CNL Income Fund VII, Ltd.:
Taco Bell -
Kearns, UT 06/14/90 05/19/92 700,000 0 0 0 700,000
Hardee's -
St. Paul, MN 08/09/90 05/24/94 869,036 0 0 0 869,036
Perkins -
Florence, SC (3) 08/28/90 08/25/95 0 0 1,160,000 0 1,160,000
Church's Fried Chicken -
Jacksonville, FL (4) (14) 04/30/90 12/01/95 0 0 240,000 0 240,000
Shoney's -
Colorado Springs, CO 07/03/90 07/24/96 1,044,909 0 0 0 1,044,909
Hardee's -
Hartland, MI 07/10/90 10/23/96 617,035 0 0 0 617,035
Hardee's -
Columbus, IN 09/04/90 05/30/97 223,590 0 0 0 223,590
KFC -
Dunnellon, FL 08/02/90 10/07/97 757,800 0 0 0 757,800
Jack in the Box -
Yuma, AZ (10) 07/14/94 10/31/97 471,372 0 0 0 471,372
CNL Income Fund VIII, Ltd.:
Denny's -
Ocoee, FL 03/16/91 07/31/95 1,184,865 0 0 0 1,184,865
Church's Fried Chicken -
Jacksonville, FL (4) (14) 09/28/90 12/01/95 0 0 240,000 0 240,000
Church's Fried Chicken -
Jacksonville, FL (5) (14) 09/28/90 12/01/95 0 0 220,000 0 220,000
Ponderosa -
Orlando, FL (6) (14) 12/17/90 10/24/96 0 0 1,353,775 0 1,353,775
CNL Income Fund IX, Ltd.:
Burger King -
Woodmere, OH (15) 05/31/91 12/12/96 918,445 0 0 0 918,445
Burger King -
Alpharetta, GA 09/20/91 06/30/97 1,053,571 0 0 0 1,053,571
CNL Income Fund X, Ltd.:
Shoney's -
Denver, CO 03/04/92 08/11/95 1,050,186 0 0 0 1,050,186
Jack in the Box -
Freemont, CA 03/26/92 09/23/97 1,366,550 0 0 0 1,366,550
</TABLE>
<TABLE>
<CAPTION>
=========================================================================================
Cost of Properties
Including Closing and
Soft Costs
--------------------------------------- Excess
Total (deficiency)
acquisition of property
cost, capital operating cash
Original improvements receipts over
mortgage closing and cash
Property financing soft costs (1) Total expenditures
==========================================================================================
<S> <C> <C> <C> <C>
CNL Income Fund VII, Ltd.:
Taco Bell -
Kearns, UT 0 560,202 560,202 139,798
Hardee's -
St. Paul, MN 0 742,333 742,333 126,703
Perkins -
Florence, SC (3) 0 1,084,905 1,084,905 75,095
Church's Fried Chicken -
Jacksonville, FL (4) (14) 0 233,728 233,728 6,272
Shoney's -
Colorado Springs, CO 0 893,739 893,739 151,170
Hardee's -
Hartland, MI 0 841,642 841,642 (224,607)
Hardee's -
Columbus, IN 0 219,676 219,676 3,914
KFC -
Dunnellon, FL 0 546,333 546,333 211,467
Jack in the Box -
Yuma, AZ (10) 0 413,614 413,614 57,758
CNL Income Fund VIII, Ltd.:
Denny's -
Ocoee, FL 0 949,199 949,199 235,666
Church's Fried Chicken -
Jacksonville, FL (4) (14) 0 238,153 238,153 1,847
Church's Fried Chicken -
Jacksonville, FL (5) (14) 0 215,845 215,845 4,155
Ponderosa -
Orlando, FL (6) (14) 0 1,179,210 1,179,210 174,565
CNL Income Fund IX, Ltd.:
Burger King -
Woodmere, OH (15) 0 918,445 918,445 0
Burger King -
Alpharetta, GA 0 713,866 713,866 339,705
CNL Income Fund X, Ltd.:
Shoney's -
Denver, CO 0 987,679 987,679 62,507
Jack in the Box -
Freemont, CA 0 1,102,766 1,102,766 263,784
</TABLE>
C-30
<PAGE>
TABLE V
SALES OR DISPOSALS OF PROPERTIES
<TABLE>
<CAPTION>
===============================================================================================================
Selling Price, Net of
Closing Costs and GAAP Adjustments
----------------------------------------------------------
Purchase
Cash money Adjustments
received Mortgage mortgage resulting
net of balance taken from
Date Date of closing at time back by application
Property Acquired Sale costs of sale program of GAAP Total
===============================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
Jack in the Box -
Sacramento, CA 12/19/91 01/20/98 1,234,175 0 0 0 1,234,175
Pizza Hut -
Billings, MT 04/16/92 10/07/98 359,990 0 0 0 359,990
CNL Income Fund XI, Ltd.:
Burger King -
Philadelphia, PA 09/29/92 11/07/96 1,044,750 0 0 0 1,044,750
Burger King -
Columbus, OH (19) 06/29/92 09/30/98 795,264 0 0 0 795,264
Burger King -
Nashua, NH 06/29/92 10/07/98 1,630,296 0 0 0 1,630,296
CNL Income Fund XII, Ltd.:
Golden Corral -
Houston, TX 12/28/92 04/10/96 1,640,000 0 0 0 1,640,000
Long John Silver's -
Monroe, NC 06/30/93 12/31/98 483,550 0 0 0 483,550
CNL Income Fund XIII, Ltd.:
Checkers -
Houston, TX 03/31/94 04/24/95 286,411 0 0 0 286,411
Checkers -
Richmond, VA 03/31/94 11/21/96 550,000 0 0 0 550,000
Denny's -
Orlando, FL 09/01/93 10/24/97 932,849 0 0 0 932,849
CNL Income Fund XIV, Ltd.:
Checkers -
Knoxville, TN 03/31/94 03/01/95 339,031 0 0 0 339,031
Checkers -
Dallas, TX 03/31/94 03/01/95 356,981 0 0 0 356,981
TGI Friday's -
Woodridge, NJ (7) 01/01/95 09/27/96 1,753,533 0 0 0 1,753,533
Wendy's -
Woodridge, NJ (7) 11/28/94 09/27/96 747,058 0 0 0 747,058
Hardee's -
Madison, AL 12/14/93 01/08/98 700,950 0 0 0 700,950
Checkers -
Richmond, VA (#548) 03/31/94 01/29/98 512,462 0 0 0 512,462
Checkers -
Riviera Beach, FL 03/31/94 04/14/98 360,000 0 0 0 360,000
Checkers -
Richmond, VA (#486) 03/31/94 07/27/98 397,985 0 0 0 397,985
</TABLE>
<TABLE>
<CAPTION>
==========================================================================================
Cost of Properties
Including Closing and
Soft Costs
--------------------------------------- Excess
Total (deficiency)
acquisition of property
cost, capital operating cash
Original improvements receipts over
mortgage closing and cash
Property financing soft costs (1) Total expenditures
===========================================================================================
<S> <C> <C> <C> <C>
Jack in the Box -
Sacramento, CA 0 969,423 969,423 264,752
Pizza Hut -
Billings, MT 0 302,000 302,000 57,990
CNL Income Fund XI, Ltd.:
Burger King -
Philadelphia, PA 0 818,850 818,850 225,900
Burger King -
Columbus, OH (19) 0 795,264 795,264 0
Burger King -
Nashua, NH 0 1,217,015 1,217,015 413,281
CNL Income Fund XII, Ltd.:
Golden Corral -
Houston, TX 0 1,636,643 1,636,643 3,357
Long John Silver's -
Monroe, NC 0 239,788 239,788 243,762
CNL Income Fund XIII, Ltd.:
Checkers -
Houston, TX 0 286,411 286,411 0
Checkers -
Richmond, VA 0 413,288 413,288 136,712
Denny's -
Orlando, FL 0 934,120 934,120 (1,271)
CNL Income Fund XIV, Ltd.:
Checkers -
Knoxville, TN 0 339,031 339,031 0
Checkers -
Dallas, TX 0 356,981 356,981 0
TGI Friday's -
Woodridge, NJ (7) 0 1,510,245 1,510,245 243,288
Wendy's -
Woodridge, NJ (7) 0 672,746 672,746 74,312
Hardee's -
Madison, AL 0 658,977 658,977 41,973
Checkers -
Richmond, VA (#548) 0 382,435 382,435 130,027
Checkers -
Riviera Beach, FL 0 276,409 276,409 83,591
Checkers -
Richmond, VA (#486) 0 352,034 352,034 45,951
</TABLE>
C-31
<PAGE>
TABLE V
SALES OR DISPOSALS OF PROPERTIES
<TABLE>
<CAPTION>
===============================================================================================================
Selling Price, Net of
Closing Costs and GAAP Adjustments
----------------------------------------------------------
Purchase
Cash money Adjustments
received Mortgage mortgage resulting
net of balance taken from
Date Date of closing at time back by application
Property Acquired Sale costs of sale program of GAAP Total
===============================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
CNL Income Fund XV, Ltd.:
Checkers -
Knoxville, TN 05/27/94 03/01/95 263,221 0 0 0 263,221
Checkers -
Leavenworth, KS 06/22/94 03/01/95 259,600 0 0 0 259,600
Checkers -
Knoxville, TN 07/08/94 03/01/95 288,885 0 0 0 288,885
TGI Friday's -
Woodridge, NJ (7) 01/01/95 09/27/96 1,753,533 0 0 0 1,753,533
Wendy's -
Woodridge, NJ (7) 11/28/94 09/27/96 747,058 0 0 0 747,058
CNL Income Fund XVI, Ltd.:
Long John Silver's -
Appleton, WI 06/24/95 04/24/96 775,000 0 0 0 775,000
Checker's -
Oviedo, FL 11/14/94 02/28/97 610,384 0 0 0 610,384
Boston Market -
Madison, TN (16) 05/05/95 05/08/98 774,851 0 0 0 774,851
Boston Market -
Chattanooga, TN (17) 05/05/95 06/16/98 713,386 0 0 0 713,386
CNL Income Fund XVII, Ltd.:
Boston Market -
Troy, OH (18) 07/24/96 06/16/98 857,487 0 0 0 857,487
CNL American Properties Fund, Inc.:
TGI Friday's -
Orange, CT 10/30/95 05/08/97 1,312,799 0 0 0 1,312,799
TGI Friday's -
Hazlet, NJ 07/15/96 05/08/97 1,324,109 0 0 0 1,324,109
TGI Friday's -
Marlboro, NJ 08/01/96 05/08/97 1,372,075 0 0 0 1,372,075
TGI Friday's -
Hamden, CT 08/26/96 05/08/97 1,245,100 0 0 0 1,245,100
Boston Market -
Southlake, TX 07/02/97 07/21/97 1,035,153 0 0 0 1,035,135
Boston Market -
Franklin, TN (20) 08/18/95 04/14/98 950,361 0 0 0 950,361
Boston Market -
Grand Island, NE (21) 09/19/95 04/14/98 837,656 0 0 0 837,656
Burger King -
Indian Head Park, IL 04/03/96 05/05/98 674,320 0 0 0 674,320
</TABLE>
<TABLE>
<CAPTION>
=========================================================================================
Cost of Properties
Including Closing and
Soft Costs
--------------------------------------- Excess
Total (deficiency)
acquisition of property
cost, capital operating cash
Original improvements receipts over
mortgage closing and cash
Property financing soft costs (1) Total expenditures
==========================================================================================
<S> <C> <C> <C> <C>
CNL Income Fund XV, Ltd.:
Checkers -
Knoxville, TN 0 263,221 263,221 0
Checkers -
Leavenworth, KS 0 259,600 259,600 0
Checkers -
Knoxville, TN 0 288,885 288,885 0
TGI Friday's -
Woodridge, NJ (7) 0 1,510,245 1,510,245 243,288
Wendy's -
Woodridge, NJ (7) 0 672,746 672,746 74,312
CNL Income Fund XVI, Ltd.:
Long John Silver's -
Appleton, WI 0 613,838 613,838 161,162
Checker's -
Oviedo, FL 0 506,311 506,311 104,073
Boston Market -
Madison, TN (16) 0 774,851 774,851 0
Boston Market -
Chattanooga, TN (17) 0 713,386 713,386 0
CNL Income Fund XVII, Ltd.:
Boston Market -
Troy, OH (18) 0 857,487 857,487 0
CNL American Properties Fund, Inc
TGI Friday's -
Orange, CT 0 1,310,980 1,310,980 1,819
TGI Friday's -
Hazlet, NJ 0 1,294,237 1,294,237 29,872
TGI Friday's -
Marlboro, NJ 0 1,324,288 1,324,288 47,787
TGI Friday's -
Hamden, CT 0 1,203,136 1,203,136 41,964
Boston Market -
Southlake, TX 0 1,035,135 1,035,135 0
Boston Market -
Franklin, TN (20) 0 950,361 950,361 0
Boston Market -
Grand Island, NE (21) 0 837,656 837,656 0
Burger King -
Indian Head Park, IL 0 670,867 670,867 3,453
</TABLE>
C-32
<PAGE>
TABLE V
SALES OR DISPOSALS OF PROPERTIES
<TABLE>
<CAPTION>
===============================================================================================================
Selling Price, Net of
Closing Costs and GAAP Adjustments
----------------------------------------------------------
Purchase
Cash money Adjustments
received Mortgage mortgage resulting
net of balance taken from
Date Date of closing at time back by application
Property Acquired Sale costs of sale program of GAAP Total
===============================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
Boston Market -
Dubuque, IA (22) 10/04/95 05/08/98 969,159 0 0 0 969,159
Boston Market -
Merced, CA (23) 10/06/96 05/08/98 930,834 0 0 0 930,834
Boston Market -
Arvada, CO (24) 07/21/97 07/28/98 1,152,262 0 0 0 1,152,262
</TABLE>
<TABLE>
<CAPTION>
=========================================================================================
Cost of Properties
Including Closing and
Soft Costs
--------------------------------------- Excess
Total (deficiency)
acquisition of property
cost, capital operating cash
Original improvements receipts over
mortgage closing and cash
Property financing soft costs (1) Total expenditures
==========================================================================================
<S> <C> <C> <C> <C>
Boston Market -
Dubuque, IA (22) 0 969,159 969,159 0
Boston Market -
Merced, CA (23) 0 930,834 930,834 0
Boston Market -
Arvada, CO (24) 0 1,152,262 1,152,262 0
</TABLE>
(1) Amounts shown do not include pro rata share of original offering costs or
acquisition fees.
(2) Amount shown is face value and does not represent discounted current value.
The mortgage note bears interest at a rate of 10.25% per annum and provides
for a balloon payment of $1,006,004 in July 2000.
(3) Amount shown is face value and does not represent discounted current value.
The mortgage note bears interest at a rate of 10.25% per annum and provides
for a balloon payment of $1,106,657 in July 2000.
(4) Amounts shown are face value and do not represent discounted current value.
Each mortgage note bears interest at a rate of 10.00% per annum and
provides for a balloon payment of $218,252 in December 2005.
(5) Amount shown is face value and does not represent discounted current value.
The mortgage note bears interest at a rate of 10.00% per annum and provides
for a balloon payment of $200,324 in December 2005.
(6) Amounts shown are face value and do not represent discounted current value.
Each mortgage note bears interest at a rate of 10.75% per annum and
provides for 12 monthly payments of interest only and thereafter, 168 equal
monthly payments of principal and interest.
(7) CNL Income Fund XIV, Ltd. and CNL Income Fund XV, Ltd. each owned a 50
percent interest in Wood-Ridge Real Estate Joint Venture, which owned two
properties. The amounts presented for CNL Income Fund XIV, Ltd. and CNL
Income Fund XV, Ltd. represent each partnership's 50 percent interest in
the properties owned by Wood-Ridge Real Estate Joint Venture.
(8) CNL Income Fund II, Ltd. owns a 64 percent interest and CNL Income Fund VI,
Ltd. owns a 36 percent interest in this joint venture. The amounts
presented for CNL Income Fund II, Ltd. and CNL Income Fund VI, Ltd.
represent each partnership's percent interest in the property owned by Show
Low Joint Venture.
(9) CNL Income Fund, Ltd. owns a 50 percent interest in this joint venture. The
amounts presented represent the partnerships percent interest in the
property owned by Seventh Avenue Joint Venture. A third party owns the
remaining 50 percent interest in this joint venture.
(10) CNL Income Fund VI, Ltd. and CNL Income Fund VII, Ltd. own a 52 percent and
48 percent interest, respectively, in the property in Yuma, Arizona. The
amounts presented for CNL Income Fund VI, Ltd. and CNL Income Fund VII,
Ltd. represent each partnership's respective interest in the property.
(11) Cash received net of closing costs includes $198,000 received as a lease
termination fee.
(12) Cash received net of closing costs includes $93,885 received as a lease
termination fee.
(13) Cash received net of closing costs includes $120,115 received as a lease
termination fee.
(14) Closing costs deducted from net sales proceeds do not include deferred,
subordinated real estate disposition fees payable to CNL Fund Advisors or
its affiliates.
(15) The Burger King property in Woodmere, Ohio was exchanged on December 12,
1996 for a Burger King property in Carrboro, NC at the option of the tenant
as permitted under the terms of the lease agreement. Due to the exchange,
the Burger King property in Carrboro, NC is being leased under the same
lease as the Burger King property in Woodmere, OH.
(16) The Boston Market property in Madison, TN was exchanged on May 8, 1998 for
a Boston Market property in Lawrence, KS at the option of the tenant as
permitted under the terms of the lease agreement. Due to the exchange, the
Boston Market property in Lawrence, KS is being leased under the same lease
as the Boston Market property in Madison, TN.
(17) The Boston Market property in Chattanooga, TN was exchanged on June 16,
1998 for a Boston Market property in Indianapolis, IN at the option of the
tenant as permitted under the terms of the lease agreement. Due to the
exchange, the Boston Market property in Indianapolis, IN is being leased
under the same lease as the Boston Market property in Chattanooga, TN.
(18) The Boston Market property in Troy, OH was exchanged on June 16, 1998 for a
Boston Market property in Inglewood, CA at the option of the tenant as
permitted under the terms of the lease agreement. Due to the exchange, the
Boston Market property in Inglewood, CA is being leased under the same
lease as the Boston Market property in Troy, OH.
(19) The Burger King property in Columbus, OH was exchanged on September 30,
1998 for a Burger King property in Danbury, CT at the option of the tenant
as permitted under the terms of the lease agreement. Due to the exchange,
the Burger King property in Danbury, CT is being leased under the same
lease as the Burger King property in Columbus, OH.
C-33
<PAGE>
(20) The Boston Market property in Franklin, TN was exchanged on April 14, 1998
for a Boston Market property in Glendale, AZ at the option of the tenant as
permitted under the terms of the lease agreement. Due to the exchange, the
Boston Market property in Glendale, AZ is being leased under the same lease
as the Boston Market property in Franklin, TN.
(21) The Boston Market property in Grand Island, NE was exchanged on April 14,
1998 for a Boston Market property in Warwick, RI at the option of the
tenant as permitted under the terms of the lease agreement. Due to the
exchange, the Boston Market property in Warwick, RI is being leased under
the same lease as the Boston Market property in Grand Island, NE.
(22) The Boston Market property in Dubuque, IA was exchanged on May 8, 1998 for
a Boston Market property in Columbus, OH at the option of the tenant as
permitted under the terms of the lease agreement. Due to the exchange, the
Boston Market property in Columbus, OH is being leased under the same lease
as the Boston Market property in Dubuque, IA.
(23) Cash received net of closing costs includes $362,949 in construction costs
incurred but not paid by CNL American Properties Fund, Inc. as of the
closing date, which were deducted from the actual net sales proceeds
received by CNL American Properties Fund, Inc.
(24) Cash received net of closing costs includes $522,827 in construction costs
incurred but not paid by CNL American Properties Fund, Inc. as of the
closing date, which were deducted from the actual net sales proceeds
received by CNL American Properties Fund, Inc.
C-34
<PAGE>
APPENDIX D
SUBSCRIPTION DOCUMENT
-----------------------------------------------
| THE SUBSCRIPTION DOCUMENT INCLUDED IN THIS |
| APPENDIX D UPDATES AND REPLACES APPENDIX D |
| TO THE ATTACHED PROSPECTUS, DATED SEPTEMBER |
| 18, 1998. |
----------------------------------------------
<PAGE>
CNL
HEALTH CARE
PROPERTIES, INC.
- --------------------------------------------------------------------------------
Up to 15,500,000 Shares -- $10.00 per Share
Minimum Purchase -- 250 Shares ($2,500)
100 Shares ($1,000) for IRAs, Keogh, and Qualified Plans
(Minimum purchase may be higher in certain states)
================================================================================
PLEASE READ CAREFULLY this Subscription Agreement and the Notices (on the back
of the Agreement) before completing this document. TO SUBSCRIBE FOR SHARES,
complete and sign, where appropriate, and deliver the Subscription Agreement,
along with your check, to your Registered Representative. YOUR CHECK SHOULD BE
MADE PAYABLE TO:
SOUTHTRUST ASSET MANAGEMENT COMPANY OF FLORIDA, N.A.
ALL ITEMS ON THE SUBSCRIPTION AGREEMENT MUST BE COMPLETED IN ORDER FOR YOUR
SUBSCRIPTION TO BE PROCESSED.
================================================================================
Overnight Packages: Regular Mail Packages:
Attn: Investor Services Attn: Investor Services
400 E. South Street Post Office Box 1033
Orlando, Florida 32801 Orlando, Florida 32802-1033
For Telephone Inquiries:
CNL SECURITIES CORP.
(407) 650-1000 OR (800) 522-3863
<PAGE>
CNL HEALTH CARE PROPERTIES, INC.
- --------------------------------------------------------------------------------
1.--------------- INVESTMENT ---------------------------------------------------
This subscription is in the amount of $ _____________ for the purchase of ______
Shares ($10.00 per Share). The minimum initial subscription is 250 Shares
($2,500); 100 Shares ($1,000) for IRA, Keogh and qualified plan accounts (except
in states with higher minimum purchase requirements). |_| ADDITIONAL PURCHASE
|_| REINVESTMENT PLAN - Investor elects to participate in Plan (See prospectus
for details.)
2.--------------- SUBSCRIBER INFORMATION ---------------------------------------
Name (1st) |_| M |_| F Date of Birth (MM/DD/YY)
----------------- -------------
Name (2nd) |_| M |_| F Date of Birth (MM/DD/YY)
----------------- -------------
Address
-------------------------------------------------------------------------
City State Zip Code
------------------------- -------------- ---------------------
Custodian Account No. Daytime Phone # ( )
------------------- ---- ---------------
|_| U.S. Citizen |_| Resident Alien |_| Foreign Resident Country
-------
|_| Check if Subscriber is a U.S. citizen residing outside the U.S.
Income Tax Filing State
--------------------------------------------------------
ALL SUBSCRIBERS: State of Residence of Subscriber/Plan Beneficiary
(required)
----------------------------------------------------
Taxpayer Identification Number: For most individual taxpayers, it is their
Social Security number. Note: If the purchase is in more than one name, the
number should be that of the first person listed. For IRAs, Keoghs and qualified
plans, enter both the Social Security number and the custodian taxpayer
identification number.
Taxpayer ID# - Social Security # - -
------------------ ------ -------- ---------
3. --------------- INVESTOR MAILING ADDRESS ------------------------------------
For the Subscriber of an IRA, Keogh, or qualified plan to receive informational
mailings, please complete if different from address in Section 2.
Name
----------------------------------------------------------------------------
Address
-------------------------------------------------------------------------
City State Zip Code
----------------------------- --------------- --------------
Daytime Phone #( )
------- ---------------------------
4. --------------- DIRECT DEPOSIT ADDRESS --------------------------------------
Investors requesting direct deposit of distribution checks to another financial
institution or mutual fund, please complete below. In no event will the Company
or Affiliates be responsible for any adverse consequences of direct deposit.
Company
-------------------------------------------------------------------------
Address
-------------------------------------------------------------------------
City State Zip Code
----------------------------- ------------ ---------------
Account No. Phone #( )
-------------------------------- ------ ------------------
5. --------------- FORM OF OWNERSHIP -------------------------------------------
(Select only one)
|_|INDIVIDUAL-one signature required (1)
|_|HUSBAND AND WIFE, AS COMMUNITY PROPERTY- two
signatures required (15)
|_|TENANTS IN COMMON-two signatures required (9)
|_|TENANTS BY THE ENTIRETY-two signatures required (31)
|_|S-CORPORATION (22)
|_|C-CORPORATION (5)
|_|IRA-custodian signature required (23)
|_|ROTH IRA-custodian signature required (36)
|_|SEP-custodian signature required (38)
|_|TAXABLE TRUST (7)
|_|TAX-EXEMPT TRUST (20)
|_|JOINT TENANTS WITH RIGHT OF SURVIVORSHIP - all parties must sign (8)
|_|A MARRIED PERSON/SEPARATE PROPERTY - one signature required (34)
|_|KEOGH (H.R.10) - trustee signature required (24)
|_|CUSTODIAN - custodian signature required (33)
|_|PARTNERSHIP (3)
|_|NON-PROFIT ORGANIZATION (12)
|_|PENSION PLAN - trustee signature(s) required (19)
|_|PROFIT SHARING PLAN - trustee signature(s) required (27)
|_|CUSTODIAN UGMA-STATE of _________ - custodian signature required (16)
|_|CUSTODIAN UTMA-STATE of _________ - custodian signature required (42)
|_|ESTATE - Personal Representative signature required (13)
|_|REVOCABLE GRANTOR TRUST - grantor signature required (25)
|_|IRREVOCABLE TRUST - trustee signature required (21)
<PAGE>
CNL Health Care Properties, Inc.
6. -------------- SUBSCRIBER SIGNATURES ----------------------------------------
If the Subscriber is executing the Subscriber Signature Page, the Subscriber
understands that, BY EXECUTING THIS AGREEMENT A SUBSCRIBER DOES NOT WAIVE ANY
RIGHTS HE MAY HAVE UNDER THE SECURITIES ACT OF 1933 OR THE SECURITIES EXCHANGE
ACT OF 1934 OR UNDER ANY STATE SECURITIES LAW:
X
--------------------------------------------- --------------------------
Signature of 1st Subscriber Date
X
--------------------------------------------- --------------------------
Signature of 2nd Subscriber Date
7. -------------- BROKER/DEALER INFORMATION ------------------------------------
Broker/Dealer NASD Firm Name
----------------------------------------------------
Registered Representative
-------------------------------------------------------
Branch Mail Address
-------------------------------------------------------------
City State Zip Code
---------------------------------- ---------- ---------------
|_| Please check if new address
Phone #( ) Fax #( ) |_| Sold CNL before
------ ------------- ------ -------------
Shipping Address
----------------------------------------------------------------
City State Zip Code
---------------------------------- ----------- ---------------
|_| Telephonic Subscriptions (check here): If the Registered Representative
and Branch Manager are executing the signature page on behalf of the
Subscriber, both must sign below. Registered Representatives and Branch
Managers may not sign on behalf of residents of Florida, Iowa, Maine,
Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Nebraska, New
Mexico, North Carolina, Ohio, Oregon, South Dakota, Tennessee or
Washington. [NOTE: Not to be executed until Subscriber(s) has (have)
acknowledged receipt of final prospectus.] Telephonic subscriptions may
not be completed for IRA accounts.
|_| Deferred Commission Option (check here): The Deferred Commission Option
means an agreement between a stockholder, the participating
Broker/Dealer and the Managing Dealer to have Selling Commissions paid
over a seven year period as described in "The Offering -- Plan of
Distribution." This option will only be available with prior
authorization by the Broker/Dealer.
|_| Registered Investment Advisor (RIA) (check here): This investment is
made through the RIA in its capacity as an RIA and not in its capacity
as a Registered Representative, if applicable. If an owner or principal
or any member of the RIA firm is an NASD licensed Registered
Representative affiliated with a Broker/Dealer, the transaction should
be conducted through that Broker/Dealer, not through the RIA.
PLEASE READ CAREFULLY THE REVERSE SIDE OF THIS SIGNATURE PAGE AND
SUBSCRIPTION AGREEMENT BEFORE COMPLETING
X
-------------------------------- -------------- ---------------------------
Principal, Branch Manager or Date Print or Type Name of
Other Authorized Signature Person Signing
X
-------------------------------- -------------- ---------------------------
Registered Representative/ Date Print or Type Name of
Investment Advisor Signature Person Signing
- --------------------------------------------------------------------------------
Make check payable to : SOUTHTRUST ASSET MANAGEMENT COMPANY OF FLORIDA, N.A.,
ESCROW AGENT
<TABLE>
<CAPTION>
<S> <C>
Please remit check and For overnight delivery, please send to: For Office Use Only
subscription document to:
CNL SECURITIES CORP.
CNL SECURITIES CORP. Attn: Investor Services Sub. #
Attn: Investor Services 400 E. South Street -------------
Post Office Box 1033 Orlando, FL 32801 Admit Date
Orlando, FL 32802-1033 (407) 650- 1000 ---------
(800) 522-3863 (800) 522-3863 Amount
-------------
Region
-------------
RSVP#
--------------
</TABLE>
- --------------------------------------------------------------------------------
<PAGE>
NOTICE TO ALL INVESTORS:
(a) The purchase of Shares by an IRA, Keogh, or other tax-qualified plan does
not, by itself, create the plan.
(b) The Company, in its sole and absolute discretion, may accept or reject the
Subscriber's subscription which if rejected will be promptly returned to the
Subscriber, without interest. Non-U.S. stockholders (as defined in the
Prospectus) will be admitted as stockholders with the approval of the Advisor.
(c) THE SALE OF SHARES SUBSCRIBED FOR HEREUNDER MAY NOT BE COMPLETED UNTIL AT
LEAST FIVE BUSINESS DAYS AFTER THE DATE THE SUBSCRIBER RECEIVES A FINAL
PROSPECTUS. EXCEPT AS PROVIDED IN THIS NOTICE, THE NOTICE BELOW, AND IN THE
PROSPECTUS, THE SUBSCRIBER WILL NOT BE ENTITLED TO REVOKE OR WITHDRAW HIS
SUBSCRIPTION.
The subscriber is asked to refer to the prospectus concerning the Deferred
Commission Option outlined in "The Offering -- Plan of Distribution." This
option will only be available with prior authorization by the Broker/Dealer.
NOTICE TO NORTH CAROLINA RESIDENTS: By signing this Subscription Agreement,
North Carolina investors acknowledge receipt of the Prospectus and represent
that they meet the suitability standards for North Carolina investors listed in
the Prospectus.
BROKER/DEALER AND FINANCIAL ADVISOR:
By signing this subscription agreement, the signers certify that they recognize
and have complied with their obligations under the NASD's Conduct Rules, and
hereby further certify as follows: (i) a copy of the Prospectus, including the
Subscription Agreement attached thereto as Appendix D, as amended and/or
supplemented to date, has been delivered to the Subscriber; (ii) they have
discussed such investor's prospective purchase of Shares with such investor and
have advised such investor of all pertinent facts with regard to the liquidity,
valuation, and marketability of the Shares; and (iii) they have reasonable
grounds to believe that the purchase of Shares is a suitable investment for such
investor, that such investor meets the suitability standards applicable to such
investor set forth in the Prospectus and related supplements, if any, that such
investor is legally capable of purchasing such Shares and will not be in
violation of any laws for having engaged in such purchase, and that such
investor is in a financial position to enable such investor to realize the
benefits of such an investment and to suffer any loss that may occur with
respect thereto and will maintain documentation on which the determination was
based for a period of not less than six years; (iv) under penalties of perjury,
(a) the information provided in this Subscription Agreement to the best of our
knowledge and belief is true, correct, and complete, including, but not limited
to, the number shown above as the Subscriber's taxpayer identification number;
(b) to the best of our knowledge and belief, the Subscriber is not subject to
backup withholding either because the Subscriber has not been notified that the
Subscriber is subject to backup withholding as result of failure to report all
interest or dividends or the Internal Revenue Service has notified the
subscriber that the Subscriber is no longer subject to backup withholding under
Section 3406(a)(1)(C) of the Internal Revenue Code of 1986, as amended; and (c)
to the best of our knowledge and belief, the Subscriber is not a nonresident
alien, foreign corporation, foreign trust, or foreign estate for U.S. tax
purposes, and we hereby agree to notify the Company if it comes to the attention
of either of us that the Subscriber becomes such a person within sixty (60) days
of any event giving rise to the Subscriber becoming such a person.